<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)( 1 )
OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------------------------------
BLESSINGS CORPORATION
(NAME OF SUBJECT COMPANY)
VA ACQUISITION CORP.
HUNTSMAN PACKAGING CORPORATION
(BIDDERS)
COMMON STOCK, PAR VALUE $.71 PER SHARE
(TITLE OF CLASS OF SECURITIES)
093532109
(CUSIP NUMBER OF CLASS OF SECURITIES)
RICHARD P. DURHAM
HUNTSMAN PACKAGING CORPORATION
500 HUNTSMAN WAY
SALT LAKE CITY, UTAH 84108
(801) 532-5200
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
Copy to:
JOHN L. MACCARTHY, ESQ.
WINSTON & STRAWN
35 WEST WACKER DRIVE
SUITE 4200
CHICAGO, ILLINOIS 60601
(312) 558-5600
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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$ 214,598,457.20 $63,306.54
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* Estimated solely for purposes of calculating the amount of filing fee. The
amount assumes the purchase of 10,343,307 shares of Common Stock, par value
$.71 per share of the subject company (the "Shares"), comprised of (i)
10,126,857 Shares that were outstanding as of March 31, 1998 and (ii)
216,450 Shares that would be issued assuming the exercise as of March 31,
1998 of all the then outstanding stock options to acquire Shares pursuant
to the subject company's stock option plans (the "Stock Option Shares"), at
a price per share of $21.00 in cash, less $2,610,989.85 representing the
number of Stock Option Shares multiplied by an average exercise price of
$12.06 applicable to the stock options relating to the Stock Option Shares.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: NONE FILING PARTY: N/A
FORM OR REGISTRATION NO.: N/A Date Filed: N/A
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CUSIP No. 093532109
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1. NAME OF REPORTING PERSONS:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
VA Acquisition Corp. (87-0579748)
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
BK, AF
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f)
/ /
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
5,925,072*
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8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES
/ /
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 57.3% (fully diluted)
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10. TYPE OF REPORTING PERSON
CO
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* See footnote on following page.
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CUSIP No. 093532109
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1. NAME OF REPORTING PERSONS:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Huntsman Packaging Corporation (87-0496065)
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)/ /
(b)/ /
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
BK
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) / /
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Utah
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
5,925,072*
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8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES / /
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 57.3% (fully diluted)
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10. TYPE OF REPORTING PERSON
CO
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*On April 7, 1998, Huntsman Packaging Corporation ("Parent") and VA
Acquisition Corp., a wholly-owned subsidiary of Parent (the "Purchaser"),
entered into a Tender Agreement and Irrevocable Proxy (the "Tender
Agreement") with Williamson-Dickie Manufacturing Company and the individuals
named therein (collectively, the "Stockholders"), pursuant to which the
Stockholders have agreed, among other things, to validly tender (and not to
withdraw) pursuant to the Purchaser's tender offer all of the Shares (as
defined below) beneficially owned by each such Stockholder (representing an
aggregate of 5,925,072 Shares, or approximately 57.3% of the Shares of the
subject company outstanding as of March 31, 1998 on a fully diluted basis).
Pursuant to the Tender Agreement, each Stockholder has also irrevocably
appointed the Purchaser as the attorney and proxy of such Stockholder 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 subject company, subject to certain limitations and
restrictions. The Tender Agreement is described more fully in Section 12 of
the Offer to Purchase dated April 14, 1998 of Parent and the Purchaser.
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 relates to the offer by VA
Acquisition Corp., a Delaware corporation (the "Purchaser") and wholly-owned
subsidiary of Huntsman Packaging Corporation, a Utah corporation ("Parent"),
to purchase all of the outstanding shares of Common Stock, par value $.71 per
share (the "Shares"), of Blessings Corporation, a Delaware corporation
("Blessings Corporation" or the "Company"), at a price of $21.00 per share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated April 14, 1998 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, together with
the Offer to Purchase and any amendments or supplements hereto or thereto,
collectively constitute the "Offer"), which are attached hereto as Exhibits
99(a)(1) and 99(a)(2), respectively. The item numbers and responses thereto
below are in accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Blessings Corporation, a Delaware
corporation, which has its principal executive offices at 200 Enterprise Drive,
Newport News, Virginia 23603.
(b) The exact title of the class of equity securities being sought in
the Offer is the Common Stock, par value $.71 per share, of the Company. The
information set forth under "Introduction" in the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of the Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Tender Offer Statement is being filed by the
Purchaser and Parent. The information set forth in "Introduction" and
Section 9 ("Certain Information Concerning the Purchaser and Parent") of, and
Schedule I ("Information Concerning the Directors and Executive Officers of
Parent and the Purchaser") to, the Offer to Purchase is incorporated herein
by reference.
(e)-(f) Neither the Purchaser nor Parent nor, to their knowledge, any of
the persons listed in Schedule I ("Information Concerning the Directors and
Executive Officers of Parent and the Purchaser") to the Offer to Purchase,
has during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or
finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) None.
(b) The information set forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Background of
the Offer") and Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company; The Merger Agreement; The Tender Agreement") of the Offer to Purchase
is incorporated herein by reference.
<PAGE>
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in "Introduction," Section 6 ("Price
Range of the Shares; Dividends"), Section 11 ("Background of the Offer"),
Section 12 ("Purpose of the Offer and the Merger; Plans for the Company; The
Merger Agreement; The Tender Agreement") and Section 13 ("Dividends and
Distributions") of the Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent") and Section 12 ("Purpose of
the Offer and the Merger; Plans for the Company; The Merger Agreement; The
Tender Agreement") of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Background of
the Offer") and Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company; The Merger Agreement; The Tender Agreement") of the Offer to Purchase
is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction," Section 10 ("Source and Amount
of Funds") and Section 16 ("Fees and Expenses") of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning the
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 12 ("Purpose of the Offer and the
Merger; Plans for the Company; The Merger Agreement; The Tender Agreement") of
the Offer to Purchase is incorporated herein by reference.
(b)-(c) The information set forth in Section 15 ("Certain Legal Matters")
of the Offer to Purchase is incorporated herein by reference.
<PAGE>
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") and Section 10 ("Source and Amount of Funds") of the Offer to
Purchase is incorporated herein by reference.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits 99(a)(l) and
99(a)(2), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated April 14, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated April 14, 1998.
(a)(8) Text of Press Release dated April 8, 1998 issued by the Company
and Parent.
(a)(9) Text of Press Release dated April 14, 1998 issued by the
Purchaser and Parent.
(b)(1) Credit Agreement dated as of September 30, 1997 among Parent, The
Chase Manhattan Bank, as Administrative Agent, and the lenders
named therein.
(b)(2) Commitment Letter dated April 7, 1998 from The Chase Manhattan
Bank and Chase Securities Inc. to Parent.
(c)(l) Agreement and Plan of Merger dated as of April 7, 1998 by and
among Parent, the Purchaser and the Company.
(c)(2) Tender Agreement and Irrevocable Proxy dated as of April 7, 1998
among Parent, the Purchaser, Williamson-Dickie Manufacturing
Company and the individuals named therein.
(c)(3) Confidentiality Agreement dated as of January 22, 1998 from
Parent for the benefit of the Company.
(c)(4) Bid letter dated as of March 20, 1998 from Parent to the Company.
(c)(5) Exclusivity Letter dated as of March 29, 1998 by and between
Parent and the Company.
(c)(6) Extension to Exclusivity Letter dated as of April 5, 1998 by and
between Parent and the Company.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
Dated: April 14, 1998
VA ACQUISITION CORP.
By: /s/ Richard P. Durham
------------------------------------
Name: Richard P. Durham
Title: President and
Chief Executive Officer
HUNTSMAN PACKAGING CORPORATION
By: /s/ Richard P. Durham
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Name: Richard P. Durham
Title: President and Chief
Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit Name
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99(a)(1) -- Offer to Purchase dated April 14, 1998.
99(a)(2) -- Letter of Transmittal.
99(a)(3) -- Notice of Guaranteed Delivery.
99(a)(4) -- Letter to Brokers, Dealers, Banks, Trust Companies and
Other Nominees.
99(a)(5) -- Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
99(a)(6) -- Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
99(a)(7) -- Form of Summary Advertisement dated April 14, 1998.
99(a)(8) -- Text of Press Release dated April 8, 1998 issued by the
Company and Parent.
99(a)(9) -- Text of Press Release dated April 14, 1998 issued by the
Purchaser and Parent.
99(b)(1) -- Credit Agreement dated as of September 30, 1997 among
Parent, The Chase Manhattan Bank, as Administrative Agent,
and the lenders named therein.
99(b)(2) -- Commitment Letter dated April 7, 1998 from The Chase
Manhattan Bank and Chase Securities Inc. to Parent.
99(c)(1) -- Agreement and Plan of Merger dated as of April 7, 1998 by
and among Parent, the Purchaser and the Company.
99(c)(2) -- Tender Agreement and Irrevocable Proxy dated as of April 7,
1998 among Parent, the Purchaser, Williamson-Dickie
Manufacturing Company and the individuals named therein.
99(c)(3) -- Confidentiality Agreement dated as of January 22, 1998 from
Parent for the benefit of the Company.
99(c)(4) -- Bid Letter dated March 20, 1998 from Parent to the Company.
99(c)(5) -- Exclusivity Letter dated as of March 29, 1998 by and
between Parent and the Company.
99(c)(6) -- Extension to Exclusivity Letter dated as of April 5, 1998
by and between Parent and the Company.
99(d) -- Not applicable.
99(e) -- Not applicable.
99(f) -- Not applicable.
<PAGE>
EXHIBIT 99(a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BLESSINGS CORPORATION
AT
$21.00 NET PER SHARE
BY
VA ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
HUNTSMAN PACKAGING CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MAY 11, 1998, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF BLESSINGS CORPORATION (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED
THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE NUMBER OF SHARES OUTSTANDING
ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE, (2) ANY WAITING PERIODS UNDER
THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (AND THE
REGULATIONS THEREUNDER), AND THE MEXICAN FEDERAL LAW OF ECONOMIC COMPETITION,
APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR
HAVING BEEN TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER, AND (3) THE
SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS DESCRIBED HEREIN. SEE
SECTIONS 12 AND 14.
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IMPORTANT
ANY STOCKHOLDER DESIRING TO TENDER ALL OR ANY PORTION OF SUCH STOCKHOLDER'S
SHARES (AS DEFINED HEREIN) SHOULD EITHER (1) COMPLETE AND SIGN THE LETTER OF
TRANSMITTAL (OR A FACSIMILE THEREOF) IN ACCORDANCE WITH THE INSTRUCTIONS IN THE
LETTER OF TRANSMITTAL AND MAIL OR DELIVER THE CERTIFICATE(S) REPRESENTING
TENDERED SHARES, AND ANY OTHER REQUIRED DOCUMENTS, TO THE DEPOSITARY OR TENDER
SUCH SHARES PURSUANT TO THE PROCEDURE FOR BOOK-ENTRY TRANSFER SET FORTH IN
SECTION 3 OR (2) REQUEST SUCH STOCKHOLDER'S BROKER, DEALER, COMMERCIAL BANK,
TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE TRANSACTION FOR SUCH STOCKHOLDER. A
STOCKHOLDER WHOSE SHARES ARE REGISTERED IN THE NAME OF A BROKER, DEALER,
COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT SUCH BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE IF SUCH STOCKHOLDER
DESIRES TO TENDER SUCH SHARES.
A STOCKHOLDER WHO DESIRES TO TENDER SHARES AND WHOSE CERTIFICATES
REPRESENTING SUCH SHARES ARE NOT IMMEDIATELY AVAILABLE OR WHO CANNOT COMPLY WITH
THE PROCEDURES FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS, MAY TENDER SUCH SHARES
BY FOLLOWING THE PROCEDURE FOR GUARANTEED DELIVERY SET FORTH IN SECTION 3.
QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE INFORMATION
AGENT OR TO THE DEALER MANAGER AT THEIR RESPECTIVE ADDRESSES AND TELEPHONE
NUMBERS SET FORTH ON THE BACK COVER OF THIS OFFER TO PURCHASE. ADDITIONAL COPIES
OF THIS OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL, THE NOTICE OF GUARANTEED
DELIVERY AND OTHER RELATED MATERIALS MAY BE OBTAINED FROM THE INFORMATION AGENT
OR FROM BROKERS, DEALERS, COMMERCIAL BANKS AND TRUST COMPANIES.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
CHASE SECURITIES INC.
April 14, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
INTRODUCTION.................................................................................................... 1
1. Terms of the Offer................................................................................... 3
2. Acceptance for Payment and Payment for Shares........................................................ 4
3. Procedure for Tendering Shares....................................................................... 6
4. Withdrawal Rights.................................................................................... 9
5. Certain Federal Income Tax Consequences.............................................................. 9
6. Price Range of the Shares; Dividends................................................................. 10
7. Effect of the Offer on the Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations........................................................................................ 10
8. Certain Information Concerning the Company........................................................... 11
9. Certain Information Concerning the Purchaser and Parent.............................................. 14
10. Source and Amount of Funds........................................................................... 15
11. Background of the Offer.............................................................................. 17
12. Purpose of the Offer and the Merger; Plans for the Company; The Merger Agreement; The Tender
Agreement.......................................................................................... 18
13. Dividends and Distributions.......................................................................... 29
14. Certain Conditions of the Offer...................................................................... 30
15. Certain Legal Matters................................................................................ 31
16. Fees and Expenses.................................................................................... 34
17. Miscellaneous........................................................................................ 34
Schedule I-- INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER....................................................... I-1
</TABLE>
<PAGE>
To Holders of Common Stock of
Blessings Corporation:
INTRODUCTION
VA Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Huntsman Packaging Corporation, a Utah corporation
("Parent"), hereby offers to purchase all of the outstanding shares of Common
Stock, par value $.71 per share (the "Common Stock" or "Shares"), of Blessings
Corporation, a Delaware corporation (the "Company"), at a purchase price of
$21.00 per Share, net to the seller in cash (the "Offer Price") without interest
thereon, upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, together with any
amendments or supplements hereto or thereto, collectively constitute the
"Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of Chase Securities Inc. ("Chase
Securities"), which is acting as Dealer Manager (the "Dealer Manager"),
ChaseMellon Shareholder Services, L.L.C., which is acting as the Depositary (the
"Depositary"), and MacKenzie Partners, Inc., which is acting as Information
Agent (the "Information Agent"), incurred in connection with the Offer. See
Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY APPROVED
THE OFFER AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT THE OFFER AND
THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE
COMPANY AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER.
For a discussion of the Board's recommendation, see "Item 4. The
Solicitation or Recommendation" set forth in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to stockholders with this Offer to Purchase.
Bowles Hollowell Conner & Co. ("BHCC") has delivered to the Board its
written opinion that, as of April 7, 1998, and based upon and subject to the
matters set forth therein, the consideration to be received pursuant to the
Merger Agreement by the stockholders of the Company in the Offer and the Merger
is fair to such stockholders from a financial point of view. A copy of the
opinion of BHCC is contained in the Schedule 14D-9.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) A
NUMBER OF SHARES WHICH REPRESENTS AT LEAST A MAJORITY (OVER 50%) OF THE NUMBER
OF SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE
"MINIMUM CONDITION"), (2) ANY WAITING PERIODS UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER
(THE "HSR ACT"), AND UNDER THE MEXICAN FEDERAL LAW OF ECONOMIC COMPETITION (THE
"FLEC"), APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING
EXPIRED OR HAVING BEEN TERMINATED PRIOR TO THE EXPIRATION DATE, AND (3) THE
SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS DESCRIBED HEREIN. SEE
SECTIONS 12 AND 14.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of April 7, 1998 (the "Merger Agreement") by and among Parent, the Purchaser
and the Company pursuant to which, following the purchase of Shares by the
Purchaser pursuant to the Offer and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company (the
"Merger"). In the Merger, each outstanding Share (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 General Corporation Law of
the State of Delaware (the "Delaware Law")) will be converted into the right to
receive $21.00, or any higher price per Share paid pursuant to the Offer,
without interest thereon, in cash (the "Merger Consideration") and the Company
will become a wholly-owned subsidiary of Parent. See Section 12.
Concurrently with the execution of the Merger Agreement, Parent and the
Purchaser entered into a Tender Agreement and Irrevocable Proxy dated as of
April 7, 1998 (the "Tender Agreement") with Williamson-Dickie Manufacturing
Company ("Williamson-Dickie") and certain members of senior management of the
Company (together with Williamson-Dickie, the "Stockholders") owning, in the
aggregate, 5,925,072 Shares, or approximately 57.3% of the Shares outstanding on
March 31, 1998 on a fully-diluted basis. Pursuant to the Tender Agreement, the
Stockholders have agreed, among other things, to validly
<PAGE>
tender and sell pursuant to the Offer and not withdraw all Shares which are
beneficially owned by them, provided that the Offer Price is not less than
$21.00, and to irrevocably appoint the Purchaser as the attorney and proxy of
each Stockholder 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, subject to certain limitations and
restrictions.
Based on the representations and warranties of the Company contained in the
Merger Agreement, as of March 31, 1998: (i) 10,126,857 Shares were outstanding
and (ii) 216,450 Shares were reserved for issuance upon exercise of outstanding
stock options to acquire Common Stock (collectively, the "Stock Options") issued
pursuant to the Company's stock option plans.
Based on the foregoing, the Minimum Condition will be satisfied if 5,171,654
Shares are validly tendered and not withdrawn prior to the Expiration Date.
Because the Stockholders own an aggregate of 5,925,072 Shares and are required
to tender (and not withdraw) such Shares pursuant to the Offer, the Minimum
Condition will be satisfied by the tender of such Shares. The number of Shares
required to be validly tendered and not withdrawn in order to satisfy the
Minimum Condition will increase to the extent additional Shares are deemed to be
outstanding on a fully diluted basis under the Merger Agreement.
The consummation of the Merger is subject to the satisfaction or waiver of a
number of conditions, including, if required, the approval of the Merger by the
requisite vote or consent of the stockholders of the Company. Under the Delaware
Law, the stockholder vote necessary to approve the Merger will be the
affirmative vote of at least a majority of the outstanding Shares, including
Shares held by the Purchaser and its affiliates. Accordingly, if the Purchaser
acquires a majority of the outstanding Shares, the Purchaser will have the
voting power required to approve the Merger without the affirmative vote of any
other stockholders of the Company. Furthermore, if the Purchaser acquires at
least 90% of the outstanding Shares pursuant to the Offer or otherwise, the
Purchaser would be able to effect the Merger pursuant to the "short-form" merger
provisions of Section 253 of the Delaware Law, without prior notice to, or any
action by, any other stockholder of the Company. In such event, the Purchaser
intends to effect the Merger as promptly as practicable following the purchase
of Shares in the Offer. See Section 12.
The Merger Agreement and the Tender Agreement are more fully described in
Section 12.
Certain Federal income tax consequences of the sale of the Shares pursuant
to the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
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THE OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not withdrawn in accordance with
Section 4. The term "Expiration Date" means 12:00 Midnight, New York City time,
on Monday, May 11, 1998, unless and until the Purchaser (in its sole discretion,
subject to the terms of the Merger Agreement) shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire.
The Merger Agreement provides that the Purchaser may extend the Offer
without the consent of the Company (i) for one or more periods of 10 business
days, not exceeding 60 days in the aggregate, if any of the conditions set forth
in Section 14 shall not have been satisfied or waived at the scheduled
Expiration Date, (ii) for one or more periods not exceeding 30 days, if required
by any rule, regulation or interpretation of the Securities and Exchange
Commission (the "Commission") applicable to the Offer, or (iii) for an aggregate
period of not more than 10 business days beyond the latest Expiration Date that
would otherwise be permitted under clauses (i) and (ii) immediately above, on
one occasion if on such Expiration Date more than 90% of the issued and
outstanding Shares shall not have been tendered. Moreover, the Purchaser has
agreed in the Merger Agreement that if all the conditions set forth in Section
14 are not satisfied on any Expiration Date, but are then reasonably capable of
being satisfied within 10 business days, the Purchaser will extend the Offer for
a period or periods of not less than 10 days in the aggregate on one occasion if
requested to do so by the Company. As used in this Offer to Purchase, "business
day" has the meaning set forth in Rule 14d-1 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
In the Merger Agreement, the Purchaser expressly reserves the right to
increase the Offer Price, to waive any of the conditions of the Offer, or to
make any other changes in the terms and conditions of the Offer. However, the
Purchaser will not, without the consent of the Company, (i) decrease the Offer
Price or change the form of consideration payable in the Offer, (ii) reduce the
maximum number of Shares to be purchased in the Offer, or (iii) impose
conditions to the Offer in addition to the conditions set forth in Section 14
(or broaden the scope thereof).
Subject to the terms of the Merger Agreement and the Tender Agreement and
the applicable rules and regulations of the Commission, the Purchaser expressly
reserves the right, in its sole discretion, at any time and from time to time,
and regardless of whether or not any of the events or facts set forth in Section
14 hereof shall have occurred or shall have been determined by the Purchaser to
have occurred, (i) to extend the period of time during which the Offer is open,
and thereby delay acceptance for payment of, and the payment for, any Shares, by
giving oral or written notice of such extension to the Depositary and (ii) to
amend the Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
OFFER PRICE FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS
RIGHT TO EXTEND THE OFFER.
If by 12:00 Midnight, New York City time, on Monday, May 11, 1998 (or any
other date or time then set as the Expiration Date), any or all conditions to
the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated, subject to the terms and conditions contained in
the Merger Agreement (including the Purchaser's obligation under the Merger
Agreement in certain circumstances described above to extend the Offer on one
occasion at the Company's request) and the Tender Agreement and to the
applicable rules and regulations of the Commission), to (i) terminate the Offer
and not accept for payment or pay for any Shares and return all tendered Shares
to tendering stockholders, (ii) waive all the unsatisfied conditions and,
subject to complying with the terms of the Merger Agreement and the Tender
Agreement and the applicable rules and regulations of the Commission, accept for
payment and pay for all Shares validly tendered prior to the Expiration Date and
not theretofore withdrawn, (iii) extend the Offer and, subject to the right of
stockholders to withdraw Shares
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until the Expiration Date, retain the Shares that have been tendered during the
period or periods for which the Offer is extended or (iv) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, waiver, amendment or termination will be
followed as promptly as practicable by public announcement thereof. In the case
of an extension, Rule 14e-1(d) under the Exchange Act requires that the
announcement be issued no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date in accordance with
the public announcement requirements of Rule 14d-4(c) under the Exchange Act.
Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to inform
stockholders of such change) and without limiting the manner in which the
Purchaser may choose to make any public announcement, the Purchaser will not
have any obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to the Dow Jones News
Service.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its acceptance for
payment of or payment for Shares or it is unable to pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 4.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14d-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including a waiver of the Minimum Condition), the Purchaser will disseminate
additional tender offer materials and extend the Offer to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer, other than a change in price
or a change in the percentage of securities sought, will depend upon the facts
and circumstances then existing, including the relative materiality of the
changed terms or information. With respect to a change in price or a change in
the percentage of securities sought, a minimum period of 10 business days is
generally required to allow for adequate dissemination to stockholders.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition, the expiration or termination of all waiting periods imposed by the
HSR Act and the FLEC, and the other conditions set forth in Section 14. Subject
to the terms and conditions contained in the Merger Agreement and the Tender
Agreement, the Purchaser reserves the right (but shall not be obligated) to
waive any or all such conditions.
The Company has provided the Purchaser its lists of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed by the Purchaser to record holders of
Shares, and will be furnished by the Purchaser to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 4, promptly after the Expiration Date. Any determination
concerning the satisfaction or waiver of such terms and conditions will be
within the sole discretion of the
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Purchaser, and such determination will be final and binding on all tendering
stockholders. See Sections 1 and 14. The Purchaser expressly reserves the right,
in its sole discretion, to delay acceptance for payment of, or payment for,
Shares in order to comply in whole or in part with any applicable law,
including, without limitation, the HSR Act or the FLEC. Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to
the Purchaser's obligation to pay for or return tendered Shares promptly after
the termination or withdrawal of the Offer).
Parent will file a Notification and Report Form with respect to the Offer
under the HSR Act. The waiting period under the HSR Act with respect to the
Offer will expire at 11:59 p.m., New York City time, on the 15th day after the
filing date, unless early termination of the waiting period is granted. In
addition, the Antitrust Division of the Department of Justice (the "Antitrust
Division") or the Federal Trade Commission (the "FTC") may extend the waiting
period by requesting additional information or documentary material from Parent.
If such a request is made, such waiting period will expire at 11:59 p.m., New
York City time, on the 10th day after substantial compliance by Parent with such
request. Parent will also make a pre-notification filing with the Mexican
Federal Competition Commission with respect to the Offer under the FLEC. The
waiting period under such law with respect to the Offer will expire at 11:59
p.m., New York time, on the 45th day after the filing, unless early termination
of the waiting period is granted. See Section 15 hereof for additional
information concerning the HSR Act, the FLEC and the applicability of the
antitrust laws to the Offer.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates representing Shares or timely confirmation (a "Book-Entry
Confirmation") of the book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in Section 3, (ii) a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer, and (iii) any other documents required by the Letter
of Transmittal. The per Share consideration paid to any stockholder pursuant to
the Offer will be the highest per Share consideration paid to any other
stockholder pursuant to the Offer.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares which are the subject of such Book-Entry
Confirmation, that the participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against such participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares so accepted for payment pursuant to the Offer will be made by deposit
of the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from the Purchaser
and transmitting such payments to tendering stockholders. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT. Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering stockholders, the Purchaser's obligation to make such
payment shall be satisfied and tendering stockholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer. The Purchaser will pay
any stock transfer taxes incident to the transfer to it of validly tendered
Shares, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, as well as any charges and expenses of the Depositary, the
Information Agent and the Dealer Manager.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c ) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on
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behalf of the Purchaser, retain tendered Shares, and such Shares may not be
withdrawn except to the extent tendering stockholders are entitled to exercise,
and duly exercise, withdrawal rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer because of an
invalid tender or otherwise, certificates for any such Shares will be returned,
without expense to the tendering stockholder (or, in the case of Shares
delivered by book-entry transfer of such Shares into the Depositary's account at
the Book-Entry Transfer Facility pursuant to the procedures set forth in Section
3, such Shares will be credited to an account maintained at the Book-Entry
Transfer Facility), as promptly as practicable after the expiration, termination
or withdrawal of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
to be paid per Share pursuant to the Offer, the Purchaser will pay such
increased consideration for all such Shares purchased pursuant to the Offer,
whether or not such Shares were tendered prior to such increase in
consideration.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect
wholly-owned subsidiaries of Parent, the right to purchase Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering stockholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES
VALID TENDER. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees, or an Agent's Message
in connection with a book-entry delivery of Shares, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase prior to
the Expiration Date. In addition, either (i) certificates for tendered Shares
must be received by the Depositary along with the Letter of Transmittal at one
of such addresses or such Shares must be tendered pursuant to the procedure for
book-entry transfer set forth below (and a Book-Entry Confirmation received by
the Depositary), in each case prior to the Expiration Date, or (ii) the
tendering stockholder must comply with the guaranteed delivery procedure set
forth below.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility's system
may make book-entry delivery of Shares by causing the Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account at the Book-Entry
Transfer Facility in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry at the Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedure
described below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Participants in the Book-Entry Transfer Facility may tender their Shares in
accordance with the Book-Entry Transfer Facility's Automated Tender Offer
Program, to the extent it is available to such participants for the Shares they
wish to tender. A stockholder tendering through the Automated Tender Offer
Program must expressly acknowledge that the stockholder has received and agreed
to be bound by the Letter of Transmittal and that the Letter of Transmittal may
be enforced against such stockholder.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH
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RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal if (i) the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
the Book-Entry Transfer Facility's system whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (ii) such Shares are tendered for the account of a
bank, broker, dealer, credit union, savings association or other entity that is
a member in good standing of a recognized Medallion Program approved by The
Securities Transfer Association, Inc. or any other "Eligible Guarantor
Institution" as such term is defined in Rule 17Ad-15 under the Exchange Act
(such member, an "Eligible Institution"). In all other cases, all signatures on
the Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Shares
not tendered or not accepted for payment are to be returned to a person other
than the registered holder of the certificates surrendered, the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as described above. See Instruction 5 to the Letter of
Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary, as provided below, prior to the Expiration Date;
and
(3) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, are received by the Depositary within
three trading days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day on which the American Stock Exchange is
open for business.
Any Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, telex, facsimile transmission or mail to the
Depositary and must include a signature guarantee by an Eligible Institution in
the form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for the Shares or a Book-Entry
Confirmation with respect to such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
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The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer, including
the tendering stockholder's representation and warranty that the tender of such
Shares complies with Rule 14e-4 under the Exchange Act.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%. All
stockholders surrendering Shares pursuant to the Offer should complete and sign
the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proved in
a manner satisfactory to the Purchaser and the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
stockholders should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 10 to the
Letter of Transmittal.
APPOINTMENT. By executing the Letter of Transmittal, the tendering
stockholder will irrevocably appoint designees of the Purchaser as such
stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after April 7, 1998. All such proxies shall be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective when, and only to the extent that, the Purchaser accepts for payment
Shares tendered by such stockholder as provided herein. Upon such acceptance for
payment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be deemed
effective). The designees of the Purchaser will thereby be empowered to exercise
all voting and other rights with respect to such Shares and other securities or
rights in respect of any annual, special or adjourned meeting of the Company's
stockholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Shares, the
Purchaser must be able to exercise full voting and other rights with respect to
such Shares and other securities or rights, including voting at any meeting of
stockholders then scheduled.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser, in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form or
the acceptance for payment of or payment for which may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right
to waive any defect or irregularity in any tender with respect to any particular
Shares, whether or not similar defects or irregularities are waived in the case
of other Shares. No tender of Shares will be deemed to have been validly made
until all defects or irregularities relating thereto have been cured or waived.
None of the Purchaser, Parent, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification. The Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
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4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable, except that Shares tendered pursuant to
the Offer may be withdrawn pursuant to the procedures set forth below at any
time prior to the Expiration Date (which is initially May 11, 1998) and, unless
theretofore accepted for payment and paid for by the Purchaser pursuant to the
Offer, may also be withdrawn at any time after June 12, 1998.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered for the account of an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been tendered pursuant to
the procedures for book-entry transfer set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals
of tenders of Shares may not be rescinded, and any Shares properly withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its reasonable
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent, the Dealer Manager or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW IS FOR
GENERAL INFORMATION ONLY AND IS BASED ON THE LAW AS CURRENTLY IN EFFECT. THE TAX
TREATMENT OF EACH STOCKHOLDER WILL DEPEND IN PART UPON SUCH STOCKHOLDER'S
PARTICULAR SITUATION. SPECIAL TAX CONSEQUENCES NOT DESCRIBED HEREIN MAY BE
APPLICABLE TO PARTICULAR CLASSES OF TAXPAYERS, SUCH AS FINANCIAL INSTITUTIONS,
TAX-EXEMPT ORGANIZATIONS, INSURANCE COMPANIES, BROKER-DEALERS, PERSONS WHO ARE
NOT CITIZENS OR RESIDENTS OF THE UNITED STATES AND STOCKHOLDERS WHO ACQUIRED
THEIR SHARES THROUGH THE EXERCISE OF ANY EMPLOYEE STOCK OPTION OR OTHERWISE AS
COMPENSATION. ALL STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO
THE PARTICULAR TAX CONSEQUENCES OF THE OFFER TO THEM, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX
LAWS.
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for Federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for
Federal income tax purposes, a tendering stockholder will recognize gain or loss
in an amount equal to the difference between the cash received and the
stockholder's adjusted tax basis in the Shares tendered by the stockholder and
purchased pursuant to the Offer or the Merger, as the case may be. Gain or loss
generally will be calculated separately for each block of Shares (i.e., Shares
acquired at the same time and place) tendered and purchased pursuant to the
Offer. Such gain or loss generally will be capital gain or loss if the Shares
disposed of were held as capital assets by the stockholder. Any net capital gain
(i.e., generally, capital gain in excess of capital loss) recognized by an
individual upon a disposition of the Shares pursuant to the Offer that have been
held for more than 18 months will generally be subject to tax at a rate not to
exceed 20%. Net capital gain recognized by an individual upon such a disposition
of Shares that have been held for more than 12 months but for not more than 18
months will be subject to tax at a rate not to exceed 28% and net capital gain
recognized upon the sale of Shares that have been held for 12 months or less
will
9
<PAGE>
be subject to tax at ordinary income tax rates. In addition, any net capital
gain recognized by a corporation upon a disposition of Shares pursuant to the
Offer or the Merger will be subject to tax at ordinary income tax rates.
6. PRICE RANGE OF THE SHARES; DIVIDENDS
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 (the "Company Form 10-K") and information supplied to
the Purchaser by the Company, the Shares are traded on the American Stock
Exchange, Inc. ("American Stock Exchange" or "AMEX") under the trading symbol
"BCO". The following table sets forth, for the fiscal quarters indicated, the
high and low sales prices per Share on the AMEX and the amount of cash dividends
paid per Share in each such quarter. The information set forth in this Section
regarding the Company is entirely taken from or based upon public information
and neither Parent nor the Purchaser assumes responsibility for the accuracy or
completeness of such information.
<TABLE>
<CAPTION>
PRICE RANGE
-------------------- CASH
HIGH LOW DIVIDENDS
--------- --------- -------------
<S> <C> <C> <C>
Fiscal Year Ended December 31, 1996
First Quarter.................................................................. $ 12.00 $ 8.50 $ .10
Second Quarter................................................................. 14.25 9.25 .10
Third Quarter.................................................................. 11.00 8.50 .10
Fourth Quarter................................................................. 11.88 8.63 .10
Fiscal Year Ended December 31, 1997
First Quarter.................................................................. $ 11.25 $ 9.25 $ .00
Second Quarter................................................................. 10.88 9.31 .00
Third Quarter.................................................................. 15.38 10.13 .00
Fourth Quarter................................................................. 15.88 13.75 .00
Fiscal Year Ended December 31, 1998
First Quarter.................................................................. $ 18.13 $ 12.13 $ .00
Second Quarter (through April 13, 1998)........................................ 20.88 17.25 --
</TABLE>
On April 7, 1998, the last full trading day before the public announcement
of the execution of the Merger Agreement and the Purchaser's intention to
acquire the Shares pursuant to the Offer, the closing sales price per Share on
the AMEX was $17.69. On April 13, 1998, the last full trading day before the
commencement of the Offer, the closing sales price per Share on the AMEX was
$20.75. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
MARKET FOR THE SHARES. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares, if any, held by the public. The Purchaser cannot
predict whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for, or
marketability of, the Shares or whether such reduction would cause future market
prices to be greater or less than the Offer Price.
STOCK QUOTATION. The Shares are currently listed and traded on the AMEX,
which constitutes the principal trading market for the Shares. Depending upon
the number of Shares purchased pursuant to the Offer, the Shares may no longer
meet the requirements of the AMEX for continued listing thereon, which require
that an issuer have at least 200,000 publicly held shares, held by at least 300
shareholders, with a market value of at least $1,000,000. Additionally, an
issuer must maintain $2,000,000 in stockholders' equity if the issuer has had
losses in two of the most recent three years, or $4,000,000 if the issuer has
had losses in three of the most recent four years. According to information
provided by the Company, as of
10
<PAGE>
March 31, 1998, there were approximately 753 registered holders of Shares and
10,126,857 Shares were issued and outstanding. If, as a result of the purchase
of Shares pursuant to the Offer or otherwise, the Shares no longer meet the
requirements of the AMEX for continued listing thereon and the Shares in fact
are no longer listed on the AMEX, the market for Shares could be adversely
affected.
In the event that the Shares no longer meet the requirements of the AMEX for
continued listing thereon, it is possible that the Shares would continue to
trade in the over-the-counter market and that price quotations would be reported
by other sources. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon the number of
holders of Shares remaining at such time, the interests in maintaining a market
in Shares on the part of securities firms, the possible termination of
registration of the Shares under the Exchange Act, as described below, and other
factors.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its stockholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with stockholders' meetings, the related requirement
of furnishing an annual report to stockholders, and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant to
Rule 144 or 144A promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), may be impaired or eliminated. The Purchaser intends to seek
delisting of the Shares from the American Stock Exchange and to cause the
Company to apply for termination of registration of the Shares under the
Exchange Act as soon after the completion of the Offer as the requirements for
such delisting and termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal executive offices
located at 200 Enterprise Drive, Newport News, Virginia 23603.
The historical information concerning the Company contained in this Offer to
Purchase, including financial information, has been taken from or based upon
publicly available documents and records on file with the Commission and other
public sources. Neither Parent, the Purchaser nor the Dealer Manager assumes any
responsibility for the accuracy or completeness of the information concerning
the Company contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information to Parent or the Purchaser.
11
<PAGE>
According to the Company Form 10-K, the Company is a diversified
manufacturer and supplier of plastic film products oriented principally towards
health care, agricultural and industrial applications. The Company's operations,
both domestic and international, can be characterized as one business segment
producing extruded polyethylene and polypropylene films through the Edison
Plastics-Registered Trademark- Division domestically and through its
wholly-owned subsidiary, Nacional de Envases Plasticos, S.A. de C.V., and its
associated companies, collectively known as NEPSA-Registered Trademark-, in
Mexico. Through its Edison Converting-TM- Division and NEPSA, the Company has
printing operations which print point-of-purchase messages on its products for a
variety of increasingly sophisticated packaging end-uses.
Set forth below is certain selected historical consolidated financial
information with respect to the Company and its subsidiaries excerpted or
derived from the information contained in the Company Form 10-K. More
comprehensive financial information is included in such reports and other
documents filed by the Company with the Commission, and the following summary is
qualified in its entirety by reference to such reports and such other documents
and all the financial information (including any related notes) contained
therein. Such reports and other documents should be available for inspection and
copies thereof should be obtainable in the manner set forth below under
"Available Information."
BLESSINGS CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................................................ $ 156,309 $ 158,135 $ 174,756
Net earnings............................................................. 5,885 5,012 8,192
Net earnings per share................................................... .58 .49 .81
BALANCE SHEET DATA (AT PERIOD END):
Cash, cash equivalents and short-term investments........................ $ 3,317 $ 5,802 $ 5,106
Property, plant and equipment--net....................................... 69,148 80,574 89,378
Total assets............................................................. 136,094 158,077 165,323
Long-term debt........................................................... 23,747 34,253 30,938
Shareholders' equity..................................................... 70,884 71,748 79,762
</TABLE>
To the knowledge of Parent and the Purchaser, the Company does not as a
matter of course make public forecasts as to its future financial performance.
However, in connection with the preliminary discussions concerning the
feasibility of the Offer and the Merger, the Company prepared and furnished
Parent with certain financial projections.
The projections presented in the table below (the "Projections") are derived
or excerpted from information provided by the Company and are based on numerous
assumptions concerning future events. The Projections have not been adjusted to
reflect the effects of the Offer or the Merger or the incurrence of indebtedness
in connection therewith. The Projections have been prepared utilizing numerous
assumptions, including, among others, the successful launch of certain products
by the Company's U.S. customers, signficant expansion of customer orders in the
Company's U.S. printing and converting operations, the successful development of
the Company's South American operations, and 100% ownership of NEPSA for the
entire fiscal year 1998.
12
<PAGE>
BLESSINGS CORPORATION
CERTAIN PROJECTIONS OF FUTURE OPERATING RESULTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1998 1999
---------- ----------
<S> <C> <C>
Net Sales............................................................. $ 207,381 $ 234,871
Gross Profit.......................................................... 59,104 70,461
EBITDA (Earnings before interest, taxes, depreciation and
amortization)....................................................... 41,054 50,192
</TABLE>
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO COMPLYING WITH PUBLISHED
GUIDELINES OF THE COMMISSION AND ARE INCLUDED HEREIN ONLY BECAUSE SUCH
INFORMATION WAS PROVIDED TO PARENT. THE PROJECTIONS WERE NOT PREPARED WITH A
VIEW TO COMPLIANCE WITH THE GUIDELINES ESTABLISHED BY THE COMMISSION OR THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND
FORECASTS. THE PROJECTIONS REFLECT NUMEROUS ASSUMPTIONS, ALL MADE BY MANAGEMENT
OF THE COMPANY, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS,
ECONOMIC, MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS, ALL OF WHICH ARE
DIFFICULT TO PREDICT, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL AND NONE OF
WHICH WERE SUBJECT TO APPROVAL BY PARENT OR THE PURCHASER. ACCORDINGLY, THERE
CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS WILL
PROVE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY GREATER OR LESS THAN THOSE
CONTAINED IN THE PROJECTIONS. THE INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT
BE REGARDED AS AN INDICATION THAT ANY OF PARENT, THE PURCHASER, THE COMPANY OR
THEIR RESPECTIVE FINANCIAL ADVISORS CONSIDERED OR CONSIDER THE PROJECTIONS TO BE
A RELIABLE PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED
UPON AS SUCH. NEITHER PARENT, THE PURCHASER, THE COMPANY NOR THEIR RESPECTIVE
FINANCIAL ADVISORS ASSUME ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS,
ACCURACY OR COMPLETENESS OF THE PROJECTIONS. NEITHER PARENT, THE PURCHASER, THE
COMPANY NOR ANY OF THEIR FINANCIAL ADVISORS HAS MADE, OR MAKES, ANY
REPRESENTATION TO ANY PERSON REGARDING THE INFORMATION CONTAINED IN THE
PROJECTIONS AND NONE OF THEM INTENDS TO UPDATE OR OTHERWISE REVISE THE
PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO
REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT THAT ANY OR ALL OF THE
ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE SHOWN TO BE IN ERROR.
AVAILABLE INFORMATION. The Company is subject to the reporting requirements
of the Exchange Act and, in accordance therewith, is required to file reports
and other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be disclosed in
proxy statements distributed to the Company's stockholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located in the Citicorp Center, 500 West Madison
Street (Suite 1400), Chicago, Illinois 60661 and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies should be obtainable, by mail, upon
payment of the Commission's customary charges, by writing to the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains an Internet website at http://www.sec.gov that
contains reports, proxy statements and other information. Such information
should also be available for inspection at the library of the American Stock
Exchange, Inc., 86 Trinity Place, New York, New York 10006. Although neither
Parent nor the Purchaser has any knowledge that any such information is untrue,
Parent and the Purchaser take no responsibility for the accuracy or completeness
of information contained in this Offer to Purchase with respect to the Company
or for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information.
13
<PAGE>
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser, a Delaware corporation and a wholly-owned subsidiary of
Parent, was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal offices of the Purchaser are
located at 500 Huntsman Way, Salt Lake City, Utah 84108. All outstanding shares
of capital stock of the Purchaser are owned by Parent. Parent is a Utah
corporation, with its principal office located at 500 Huntsman Way, Salt Lake
City, Utah 84108.
Parent was founded in 1992 and is one of the largest manufacturers of film
and flexible packaging products in North America. Parent's product lines
constitute two business segments, flexible packaging and foam products. The
flexible packaging segment's product lines are comprised of (i) converter films,
that are sold for additional fabrication and resale by other flexible packaging
manufacturers for use in a wide range of consumer and industrial markets, (ii)
barrier films, that contain and protect food and other products, (iii) printed
products, that include printed rollstock, bags and sheets used to package
products in the food and medical industries, (iv) stretch films, that are used
for industrial unitizing and containerization, and (v) PVC films, that are used
by supermarkets, institutions and homes to wrap meat, cheese and produce. The
foam products segment includes meat trays, egg cartons and fast food containers.
In September 1997, Parent was split-off from Huntsman Corporation in a
transaction in which the common stock of Parent was transferred from Huntsman
Corporation to Jon M. Huntsman and The Christena Karen H. Durham Trust and
additional shares of common stock were purchased by Richard P. Durham.
Set forth below is certain selected historical consolidated financial
information with respect to Parent and its subsidiaries excerpted or derived
from Parent's Annual Report on Form 10-K for the fiscal year ended December 31,
1997. More comprehensive financial information is included in such report and
other documents filed by Parent with the Commission, and the following summary
is qualified in its entirety by reference to such report and other documents and
all the financial information (including any related notes) contained therein.
Such report and other documents should be available for inspection and copies
thereof should be obtainable in the manner set forth below under "Available
Information."
HUNTSMAN PACKAGING CORPORATION
SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS:
Sales-net.......................................................................... $ 325.0 $ 339.1 $ 491.1
Cost of sales...................................................................... 273.5 288.9 424.8
--------- --------- ---------
Gross profit..................................................................... 51.5 50.2 66.3
Total operating expenses........................................................... 36.5 42.2 49.2
--------- --------- ---------
Operating income................................................................. 15.0 8.0 17.1
Interest expense-net............................................................... (8.7) (11.6) (16.4)
Other income (expense)-net......................................................... (2.3) (3.8) 0.5
--------- --------- ---------
Income (loss) before income taxes and extraordinary item........................... 4.0 (7.4) 1.2
Income tax expense (benefit)....................................................... 1.7 (4.2) 0.8
--------- --------- ---------
Income (loss) before extraordinary item............................................ 2.3 (3.2) 0.4
Extraordinary item................................................................. -- (1.3 (1) --
--------- --------- ---------
Net income (loss).................................................................. $ 2.3 $ (4.5) $ 0.4
--------- --------- ---------
--------- --------- ---------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD END):
Working capital.................................................................... $ 54.8 $ 74.6 $ 94.1
Total assets....................................................................... 231.7 329.1 409.6
Long-term debt..................................................................... 103.0 187.2 250.5
Total liabilities.................................................................. 160.7 262.1 346.6
Stockholders' equity............................................................... 71.0 67.0 63.0
</TABLE>
- ------------------------
(1) In 1996, the Company refinanced most of its long-term debt and recorded an
extraordinary item for the write-off of previously deferred loan costs.
Except as described in this Offer to Purchase, neither the Purchaser nor
Parent (together, the "Corporate Entities") or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I or any associate or
majority-owned subsidiary of the Corporate Entities or any of the persons so
listed, beneficially owns any equity security of the Company, except for 2,500
Shares beneficially owned by Richard P. Durham, and none of the Corporate
Entities or, to the best knowledge of the Corporate Entities, any of the other
persons referred to above, or any of the respective directors, executive
officers or subsidiaries of any of the foregoing, has effected any transaction
in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, (1) there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand, that
are required to be disclosed pursuant to the rules and regulations of the
Commission and (2) none of the Corporate Entities or, to the best knowledge of
the Corporate Entities, any of the persons listed in Schedule I has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Company.
Except as set forth in this Offer to Purchase, there have been no contacts,
negotiations or transactions between the Purchaser, Parent, or its subsidiaries,
or to the best knowledge of Parent and the Purchaser, any of the persons listed
in Schedule I hereto, on the one hand, and the Company or its executive
officers, directors or affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
election of directors, or a sale of other transfer of a material amount of
assets.
AVAILABLE INFORMATION. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning Parent's directors and officers, their remuneration, any options
granted to them, the principal holders of Parent's securities and any material
interest of such persons in transactions with Parent is disclosed in such
reports and other information filed with the Commission. Such reports and other
information should be available for inspection at the Commission, and copies
thereof should be obtainable from the Commission, in the same manner as set
forth with respect to information concerning the Company in Section 8.
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that approximately $285 million will be required to
acquire all of the Shares pursuant to the Offer and the Merger, to refinance
certain indebtedness of the Company, and to pay fees and expenses related to the
Offer and the Merger. The Purchaser expects to obtain these funds from capital
contributions and/or loans from Parent. Parent, in turn, expects to obtain these
funds from borrowings under an amended and restated credit agreement (the
"Amended Credit Agreement") to be entered into with The Chase Manhattan Bank
("Chase") and a syndicate of financial institutions including Chase on the date
the Purchaser consummates the Offer. Parent has received a Commitment Letter
dated
15
<PAGE>
April 7, 1998 (the "Commitment Letter") from Chase to provide the Amended Credit
Agreement. The Commitment Letter contemplates that Parent's existing $250
million Credit Agreement dated as of September 30, 1997 (the "Existing Credit
Agreement") with Chase and the financial institutions party thereto will be
amended in order to permit the Offer and the Merger and to increase by $285
million (the "Additional Credit Facilities") the available credit facilities
under the Existing Credit Agreement. The Additional Credit Facilities will be
used (i) to finance the purchase of the Shares pursuant to the Offer and the
Merger and to pay the fees and expenses thereof, (ii) to refinance existing
indebtedness of the Company, and (iii) for general corporate purposes.
The commitment and agreements of Chase under the Commitment Letter are
subject to customary conditions, including among other things: (i) that there
has not occurred any material adverse change since December 31, 1997 in the
business, assets, results of operations, conditions (financial or otherwise) or
prospects of or relating to Parent, the Company and their respective
subsidiaries, taken as a whole; (ii) that there has not occurred nor is there
continuing any material adverse change in financial, banking or capital markets
that materially and adversely affects the syndication of bank credit facilities
for comparable transactions; (iii) that there is no default or event of default
under the Existing Credit Agreement on such date; and (iv) that the parties have
negotiated, executed and delivered definitive documentation with respect to the
Amended Credit Agreement.
In addition, $50 million of the $285 million in Additional Credit Facilities
is subject to the condition that the Indenture dated as of September 30, 1997
(the "Indenture") among Parent, each of the guarantors named therein and The
Bank of New York, as Trustee, relating to Parent's existing $125,000,000 of
9 1/8% Senior Subordinated Notes due 2007 (the "Senior Subordinated Notes")
shall have been amended to the extent necessary to permit the Additional Credit
Facilities. The consent of a majority of the holders of the Senior Subordinated
Notes will be required to amend the Indenture. Parent intends to seek such
amendment and expects to receive the necessary consents on or before the date of
consummation of the Offer. In the event that such consents are not received, it
is contemplated that the Additional Credit Facilities will be reduced to $235
million, the current stockholders of Parent will create a special purpose
holding company to own all of the outstanding capital stock of Parent, and such
holding company will borrow $50 million pursuant to a new senior unsecured
credit facility. Although it is not expected to be used, Parent has received a
commitment letter (the "Alternate Commitment Letter") from Chase to provide this
facility in the event that the requisite consent of the holders of the Senior
Subordinated Notes as contemplated above is not received on or before the date
of consummation of the Offer. The commitment and agreements of Chase under the
Alternate Commitment Letter are subject to conditions substantially similar to
those in the Commitment Letter.
The Commitment Letter provides that the Additional Credit Facilities will
consist of new term loans in two tranches. The first tranche in the amount of up
to $185 million will mature on September 30, 2005 and will amortize on a
quarterly basis to be determined. The second tranche in the amount of up to $100
million will mature on June 30, 2006 and will amortize on a quarterly basis
during the first seven years in nominal amounts and in amounts to be determined
thereafter. In addition to quarterly scheduled amortization to be determined,
the Amended Credit Agreement will provide for customary mandatory prepayments
with a percentage of excess cash flow and with certain proceeds from asset sales
and certain proceeds from the issuance of additional debt or equity.
The Additional Credit Facilities will bear interest, at the election of
Parent, at either (i) zero to 1%, depending on certain of Parent's financial
ratios, plus the higher of (a) Chase's prime rate, (b) the federal funds rate
plus 1/2% or (c) Chase's base CD rate plus 1% or (ii) the London Interbank
Offered Rate plus 1.00% to 2.25%, also depending on certain of Parent's
financial ratios.
Parent will pay Chase certain financing, agent administration and other fees
in connection with the Amended Credit Agreement, which Parent believes to be
customary. In addition, the Amended Credit Agreement will provide for a
commitment fee on any amount of the first tranche of new term loans which
16
<PAGE>
is not funded at the time of the initial loans under the Additional Credit
Facilities at the rate of 0.50% per annum.
The obligations of Parent under the Amended Credit Agreement will be
guaranteed by Parent's direct and indirect domestic wholly-owned "unrestricted"
subsidiaries and secured by substantially all of the assets of Parent and its
existing and subsequently acquired "unrestricted" domestic subsidiaries,
including upon consummation of the Merger, the assets of the Company and its
domestic subsidiaries. The Amended Credit Agreement will also be secured by a
pledge of 65% of the capital stock of each of Parent's foreign subsidiaries.
Pending the Merger, the obligations of Parent under the Amended Credit Agreement
will also be secured by the Shares acquired by the Purchaser pursuant to the
Offer.
The definitive documentation with respect to the Amended Credit Agreement
will contain the representations and warranties, covenants, conditions and
events of default contained in the Existing Credit Agreement modified to reflect
the acquisition of the Company. Such covenants include, among other things,
financial covenants relating to maintenance of ratios of indebtedness to EBITDA
and of EBITDA to interest expense, minimum net worth levels and restrictions on
indebtedness, guarantees, acquisitions and other fundamental corporate changes,
capital expenditures, investments, loans and advances, liens, dividends and
other stock payments, asset sales, sale and lease-back transactions, hedging
agreements, transactions with affiliates and issuances of stock.
The Existing Credit Agreement provides for events of default customary in
facilities of this type, including, among others, (i) failure to make a payment
when due; (ii) breach of covenants; (iii) breach of representations or
warranties in any material respect when made; (iv) default under any agreement
relating to debt for borrowed money in excess of $5 million in the aggregate;
(v) bankruptcy defaults; (vi) judgments in excess of $5 million; (vii) change in
control; and (viii) any loan document ceasing to be in full force and effect.
The Amended Credit Agreement will provide for similar events of default.
The foregoing descriptions of the Commitment Letter and the Existing Credit
Agreement are qualified by reference to the text of such letter and agreement
filed as exhibits to the Schedule 14D-1, a copy of which may be obtained from
the offices of the Commission in the manner set forth with respect to
information concerning the Company in Section 8 (except that such information
will not be available at the regional offices of the Commission).
It is anticipated that the indebtedness incurred through borrowings under
the Amended Credit Agreement will be repaid from funds generated internally by
Parent and its subsidiaries, including the Company and its subsidiaries, and
from other sources, which may include the proceeds of the private or public sale
of debt or equity securities or asset dispositions.
The margin regulations promulgated by the Federal Reserve Board place
restrictions on the amount of credit that may be extended for the purposes of
purchasing margin stock (including the Shares) if such credit is secured
directly or indirectly by margin stock. The Purchaser believes that the
financing of the acquisition of the Shares will be in full compliance with the
margin regulations.
11. BACKGROUND OF THE OFFER
In October, 1996, Richard P. Durham, currently the President and Chief
Executive Officer of Parent, and N. Brian Stevenson, currently the Senior Vice
President and General Manager, Packaging Division, of Parent, met in Fort Worth,
Texas with John W. McMackin, Chairman of the Board of Directors of the Company,
and certain members of the Williamson family, to discuss a possible purchase of
the Company. Parent requested, but did not receive, non-public information
concerning the Company. After certain follow-up preliminary discussions, talks
between the parties broke off.
In December, 1997, Mr. Durham again contacted Mr. McMackin to inquire
whether the Company would be interested in exploring a transaction in which
Parent would acquire the Company. Mr. McMackin indicated that he was unable to
discuss such a transaction with Parent at that time. Mr. Durham indicated that
Parent would welcome the opportunity to discuss such a transaction when the
Company was able to discuss it.
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In January, 1998, a representative of BHCC contacted Parent to indicate that
the Board of the Company was reviewing strategic alternatives for the Company
and to inquire whether Parent continued to be interested in pursuing a possible
acquisition of the Company. Following this contact, Parent initiated a review of
certain publicly available information concerning the Company. On January 22,
1998, Parent entered into a confidentiality agreement pursuant to which the
Company agreed to provide Parent with certain information concerning the Company
(the "Confidentiality Agreement"). Parent and the Purchaser have received
certain non-public information from the Company under the terms of the
Confidentiality Agreement. See Section 8.
On February 19, 1998, certain members of Parent's management and certain
members of the Company's management and their advisors met. At this meeting,
members of 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 financial, operations
and legal due diligence review of the Company that included, among other things,
plant tours, management meetings and a review of certain financial, operations
and legal matters.
On March 4, 1998, Parent received from BHCC an invitation to submit an offer
for the acquisition of the Company, along with procedures and guidelines for the
submission of such offer (the "Guidelines"). The Guidelines provided that all
offers were to be received by 12:00 noon (EST) on Friday, March 20, 1998. BHC
also furnished Parent with a proposed form of merger agreement for the
acquisition of the Company, which agreement was to be submitted with proposed
modifications, together with Parent's offer.
On March 20, 1998, Parent submitted a bid letter containing an offer with
respect to the acquisition of the Company. The offer included Parent's proposed
revisions to the proposed form of merger agreement and information regarding
Parent's financing for such offer. Parent's offer was conditioned upon the
completion of certain additional due diligence. Parent's offer also stipulated
that Parent would proceed with the transaction only if the Stockholders, among
other things, granted Parent or its designee an option to purchase their Shares.
Parent's offer remained in effect until 5:00 p.m. (EST) on Friday, March 27,
1998.
On March 21 and March 22, 1998, representatives of BHCC contacted
representatives of Parent. The parties discussed certain aspects of Parent's
offer and the provisions of the proposed merger agreement. On Tuesday, March 24,
1998 representatives of BHCC contacted representatives of Parent and indicated
that the Company would be interested in pursuing negotiations with Parent if
Parent would complete its additional due diligence and consider extending its
offer beyond March 27, 1998. As a result of these conversations, Parent
commenced its additional due diligence. On Friday, March 27 and Saturday, March
28, 1998, representatives of BHCC and representatives of Parent discussed the
requested extension of Parent's offer. As a result of these discussions, Parent
extended its offer until 12:00 midnight on Sunday, April 5, 1998 in exchange for
the Company's agreement to negotiate exclusively with Parent. The expiration
date was subsequently extended to 12:00 midnight on Wednesday, April 8, 1998.
Beginning March 30, 1998, and continuing through April 7, 1998, the parties,
directly and through their respective advisors, negotiated the financial and
legal terms of the Merger Agreement as well as the terms of the Tender
Agreement.
On April 7, 1998, the Board of Directors of the Company met and approved the
Offer and the Merger and the transaction contemplated thereby, including the
Tender Agreement as well as the execution and delivery of the Merger Agreement.
Later that day, the Merger Agreement and the Tender Agreement were executed.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; THE TENDER AGREEMENT
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer and the Merger is to enable Parent, through the
Purchaser, to acquire control of, and the entire equity interest in, the
Company. The Offer is intended to facilitate the acquisition of all of the
Shares. The purpose of the Merger is to acquire all Shares not tendered and
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purchased pursuant to the Offer, the Tender Agreement or otherwise. Parent
regards the acquisition of the Company as a strategic opportunity to increase
its market shares in specific value-added films, to acquire new technology and
more flexible manufacturing facilities, and to gain entry into the growing
Mexican and Latin American personal care and medical products markets.
PLANS FOR THE COMPANY
If the Purchaser acquires control of the Company, Parent and the Purchaser
intend to conduct a detailed review of the Company and its assets, operations,
properties, policies, management and personnel and consider and determine what,
if any, changes would be desirable in light of the circumstances which then
exist.
Except as noted in this Offer to Purchase, the Purchaser and Parent have no
present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, relocation of
operations, or sale or transfer of a material amount of assets, involving the
Company or any subsidiary of the Company or any other material changes in the
Company's capitalization, dividend policy, corporate structure, business or
composition of its management, personnel or Board of Directors.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger 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 Merger Agreement may be
examined, and copies thereof may be obtained, as set forth in Section 8 above.
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 of Common Stock payable in the
Offer or waive certain conditions of the Offer. However, without the prior
written consent of the Company, the Purchaser has agreed not to (i) decrease the
Offer Price or change the form of consideration payable in the Offer, (ii)
reduce the maximum number of Shares sought pursuant to the Offer, or (iii)
impose additional conditions to the Offer (or broaden the scope thereof);
PROVIDED, HOWEVER, 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 60 days
in the aggregate, until such time as such conditions are satisfied or waived,
(b) for one or more periods, not to exceed 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
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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 of 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 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 by virtue of the Merger 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 of capital stock 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 immediately prior to the
Effective Time shall by virtue of the Merger 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
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the awards of Restricted Stock 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) an
aggregate amount of $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 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
stockholders 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 of Common Stock 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
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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 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 as of 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
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(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) 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 its board of directors 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
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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 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 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
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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.
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 Section 14) 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
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 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
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thereof (A) withdraws or modifies in a manner adverse to 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 of 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 Section 8 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
of Common Stock in the Offer, including the Shares owned by the Stockholders,
are subject to the terms and conditions of the Offer.
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 the 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 property or assets; and (v)
no consent, approval, order or authorization of, or registration, declaration or
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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 its 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 heretofore 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.
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
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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 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 Purchaser 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.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two immediately succeeding
paragraphs, and nothing herein shall constitute a waiver by the Purchaser or
Parent of any of its rights under the Merger Agreement or a limitation of
remedies available to the Purchaser or Parent for any breach of the Merger
Agreement, including termination thereof.
If on or after the date of the Merger Agreement, the Company should (a)
split, combine, reclassify or otherwise change the Shares or its capitalization,
(b) acquire currently outstanding Shares or otherwise cause a reduction in the
number of outstanding Shares or other capital stock of the Company or (c) issue
or sell additional Shares, shares of any other class of capital stock, other
securities or any securities convertible into or exchangeable for, or rights,
warrants or options, conditional or otherwise, to acquire, any of the foregoing,
other than Shares issued pursuant to the exercise of outstanding Stock Options,
then, subject to the provisions of Section 14 below, the Purchaser, in its sole
discretion, may make such adjustments as it deems appropriate in the Offer Price
and other terms of the Offer, including, without limitation, the number or type
of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company should declare
or pay any cash dividend on the Shares or other distribution on the Shares, or
issue with respect to the Shares any additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options, conditional or otherwise, to acquire, any
of the foregoing, payable or distributable to stockholders of record on a date
prior to the transfer of the Shares purchased pursuant to the Offer to the
Purchaser or its nominee or transferee on the Company's stock transfer
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records, then, subject to the provisions of Section 14 below, (a) the Offer
Price may, in the sole discretion of the Purchaser, be reduced by the amount of
any such cash dividend or cash distribution and (b) the whole of any such
noncash dividend, distribution or issuance to be received by the tendering
stockholders will (i) be received and held by the tendering stockholders for the
account of the Purchaser and will be required to be promptly remitted and
transferred by each tendering stockholder to the Depositary for the account of
the Purchaser, accompanied by appropriate documentation of transfer, or (ii) at
the direction of the Purchaser, be exercised for the benefit of the Purchaser,
in which case the proceeds of such exercise will promptly be remitted to the
Purchaser. Pending such remittance and subject to applicable law, the Purchaser
will be entitled to all rights and privileges as owner of any such noncash
dividend, distribution, issuance or proceeds and may withhold the entire Offer
Price or deduct from the Offer Price the amount or value thereof, as determined
by the Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, the Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the Commission or the Exchange Act, including Rule 14e-1(c)
thereunder (relating to the Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), to pay for any
Shares tendered, and may delay the acceptance for payment or, subject to the
restriction referred to above, payment for any Shares tendered, and, if required
pursuant to the Merger Agreement, shall extend the Offer for a period of at
least 10 days and may otherwise, subject to the terms of the Merger Agreement,
amend, extend or terminate the Offer (whether or not any Shares have theretofore
been accepted for payment) if, (i) immediately prior to the expiration of the
Offer (as extended in accordance with the Offer), the condition that there shall
be validly tendered and not withdrawn prior to the expiration of the Offer a
number of Shares which represents at least a majority of the number of Shares
outstanding on a fully diluted basis on the date of purchase (the "Minimum
Condition") shall not have been satisfied, (ii) any applicable waiting period
under the HSR Act shall not have expired or been terminated, or any applicable
waiting period under the FLEC shall not have expired or been terminated without
objection from the Mexican Federal Competition Commission, immediately prior to
the expiration of the Offer, or (iii) at any time prior to the acceptance for
payment of Shares, the Purchaser makes a good faith determination that any of
the following conditions exist:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction (whether permanent or temporary)
promulgated, enacted, entered, enforced or deemed applicable to the Offer, or
any other action shall have been taken, by any court or tribunal or
administrative, governmental or regulatory body, agency or authority, whether
foreign, federal, state or local (a "Governmental Entity"), other than the
routine application to the Offer or the Merger of waiting periods under the HSR
Act, that (i) directly or indirectly prohibits, materially delays, or makes
illegal the acceptance for payment of, or the payment for, some or all of the
Shares or otherwise prohibits consummation of the Offer or the Merger; (ii)
directly or indirectly prohibits, materially delays, or imposes material
limitations on the ability of the Purchaser to acquire or hold or to exercise
effectively all rights of ownership of the Shares, including, without
limitation, the right to vote any Shares purchased by the Purchaser on all
matters properly presented to the shareholders of the Company, or effectively to
control in any material respect the business, assets or operations of the
Company, its Subsidiaries, the Purchaser or any of their respective affiliates;
or (iii) otherwise has a Material Adverse Effect; or
(b) (i) the representation and warranties of the Company as set forth in the
Merger Agreement (when read without any exception or qualification as to
knowledge, materiality or Material Adverse Effect) shall not be true and correct
as of the date of the Merger Agreement and as of consummation of the Offer as
though made on or as of such date, but only if the respects in which the
representations and warranties made by the Company are inaccurate would in the
aggregate have a Material Adverse Effect or would materially increase the amount
paid to the Company's stockholders in the Offer and the Merger; (ii) the Company
shall have breached or failed to comply in any material respect with any of its
obligations,
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covenants or agreements under the Merger Agreement; or (iii) any change or event
shall have occurred that has a Material Adverse Effect; or
(c) any person (which includes a "person" as such term is defined in Section
13(d)(3) of the Exchange Act) other than Parent, the Purchaser, or any of their
affiliates or any group of which any of them is a member, shall have entered
into a definitive agreement or an agreement in principle with the Company or any
Subsidiary with respect to an Acquisition Proposal or the Company's Board (or
any committee thereof) shall have adopted a resolution approving any of the
foregoing; or
(d) the Company, Parent and the Purchaser shall have reached an agreement
that the Offer or the Merger Agreement be terminated, or the Merger Agreement
shall have been terminated in accordance with its terms; or
(e) the Company Board (or any committee thereof) shall have withdrawn or
modified (including by amendment of the Schedule 14D-9) in a manner adverse to
Parent or the Purchaser its approval or recommendation of the Offer, the Merger
Agreement or the Merger or shall have recommended another Acquisition Proposal,
or shall have adopted any resolution to effect any of the foregoing which, in
the good faith judgment of the Purchaser in any such case, and regardless of the
circumstances (including any action or omission by the Purchaser) giving rise to
any such condition, makes it inadvisable to proceed with such acceptance for
payment; or
(f) there shall have occurred (i) any general suspension of, or limitation
on prices for trading in securities on the American Stock Exchange, any national
securities exchange or on the Nasdaq National Market System for a period in
excess of 24 hours (excluding suspension or limit resulting solely from physical
damage or interference with such exchanges not related to market conditions),
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) a commencement of a war, armed
hostilities or other national or international crisis directly involving the
United States (other than an action involving United Nations' personnel or
support of United Nations' personnel), (iv) a change in the general financial,
bank or capital markets which materially and adversely affects the ability of
financial institutions in the United States to extend credit or syndicate loans
or (v) in the case of any of the foregoing clauses (i) through (iv) existing at
the time of the commencement of the Offer, a material acceleration or worsening
thereof.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to any such conditions and may be waived by Parent or
the Purchaser in whole or in part at any time and from time to time in its
reasonable discretion, in each case, subject to the terms of the Merger
Agreement. The failure by Parent or the Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time. Any determination by Parent or the Purchaser concerning
the events described herein will be final and binding upon all parties.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, as well as certain representations
made to the Purchaser and Parent in the Merger Agreement by the Company, neither
the Purchaser nor Parent is aware of any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the Purchaser's
acquisition of Shares (and the indirect acquisition of the stock of the
Company's subsidiaries) as contemplated herein or of any approval or other
action by any Governmental Entity that would be required or desirable for the
acquisition or ownership of Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required or desirable, the Purchaser
and Parent currently contemplate that such approval or other action will be
sought, except as described below under "State Takeover Laws." While, except as
otherwise expressly described in this Section 15, the Purchaser does not
presently intend to delay the acceptance for payment of or payment for Shares
tendered pursuant to the
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Offer pending the outcome of any such matter, there can be no assurance that any
such approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that failure to obtain any such approval or
other action might not result in consequences adverse to the Company's business
or that certain parts of the Company's business might not have to be disposed of
if such approvals were not obtained or such other actions were not taken or in
order to obtain any such approval or other action. If certain types of adverse
action are taken with respect to the matters discussed below, the Purchaser
could decline to accept for payment or pay for any Shares tendered. See Section
14 for certain conditions to the Offer.
STATE TAKEOVER LAWS. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
EDGAR V. MITE CORP., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS CORP.
V. DYNAMICS CORP. OF AMERICA, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions. Subsequently, a number of Federal courts ruled
that various state takeover statutes were unconstitutional insofar as they apply
to corporations incorporated outside of the state of enactment.
SECTION 203 OF THE DELAWARE LAW. Section 203 of the Delaware Law, in
general, prohibits a Delaware corporation such as the Company from engaging in a
"Business Combination" (defined to include a variety of transactions, including
mergers) with an "Interested Stockholder" (defined generally as a person that is
the beneficial owner of 15% or more of the corporation's outstanding voting
stock) for a period of three years following the date such person became an
Interested Stockholder unless, among other things, prior to the date such person
became an Interested Stockholder, the board of directors of the corporation
approved either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder. The Board of Directors of the
Company has unanimously approved the Merger Agreement, the Tender Agreement and
the Purchaser's acquisition of Shares pursuant to the Offer and the Tender
Agreement. Therefore, Section 203 of the Delaware Law is inapplicable to the
Merger.
Neither the Company nor the Purchaser has determined whether any other state
takeover laws and regulations will by their terms apply to the Offer, and
neither the Company, the Purchaser nor Parent has presently sought to comply
with any state takeover statute or regulation. The Company and the Purchaser
reserve the right to challenge the applicability or validity of any state law or
regulation purporting to apply to the Offer or the Merger and nothing in this
Offer to Purchase or any action taken in connection with the Offer or the Merger
is intended as a waiver of such right. In the event it is asserted that any
state takeover statute is applicable to the Offer or the Merger and an
appropriate court does not determine that such statute is inapplicable or
invalid as applied to the Offer or the Merger, the Company or Purchaser might be
required to file certain information with, or to receive approvals from, the
relevant state authorities, and the Purchaser might be unable to accept for
payment or pay for Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer or the Merger.
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer, the
acquisition of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent receives
a request for additional information or documentary material from the Antitrust
Division or the FTC or unless early termination of the waiting period is
granted. If, within the initial 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or documentary material from
Parent concerning the Offer, the waiting period will be extended and would
expire at 11:59 p.m., New York City time, on the tenth calendar day after the
date of substantial compliance by Parent with such request. Only one extension
of the waiting period pursuant to a request for additional information is
authorized by
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<PAGE>
the HSR Act. Thereafter, such waiting period may be extended only by court order
or with the consent of Parent. In practice, complying with a request for
additional information or material can take a significant amount of time. In
addition, if the Antitrust Division or the FTC raises substantive issues in
connection with a proposed transaction, the parties frequently engage in
negotiations with the relevant governmental agency concerning possible means of
addressing those issues and may agree to delay consummation of the transaction
while such negotiations continue. Expiration or termination of the applicable
waiting period under the HSR Act is a condition to the Purchaser's obligation to
accept for payment and pay for Shares tendered pursuant to the Offer.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of the
Company or its subsidiaries or Parent or its subsidiaries. Private parties may
also bring legal action under the antitrust laws under certain circumstances.
There can be no assurance that a challenge to the Offer on antitrust grounds
will not be made or, if such a challenge is made, of the results thereof.
MEXICAN FEDERAL LAW OF ECONOMIC COMPETITION. According to the Company Form
10-K, the Company conducts certain operations in Mexico. The Mexican Federal Law
of Economic Competition ("FLEC") requires pre-notification of concentrations
derived from transactions carried out outside of Mexico prior to any legal or
material effect in Mexico. For purposes of the FLEC, a concentration means a
merger, control transaction, acquisition or other act among competitors,
suppliers, customers or other economic agents which results in the concentration
of corporations, partnerships, associations, shares of stock, partnership
interests, trusts or assets in general. Pre-notifications generally are
necessary when the parties to the transaction in question and/or their
affiliates have assets in Mexico and (i) the allocated value of the Mexican
assets subject to the transaction exceed approximately $42,385,965, or (ii) the
transaction results in the accumulation of 35% or more of the assets or shares
of an entity, the asset value or revenues of which exceeds approximately
$42,385,965, or (iii) the transaction involves (a) two or more entities the
aggregate asset value or annual revenue of which exceeds approximately
$169,543,860 and (b) if as a result of such transaction, an entity accumulates
assets or capital stock in excess of approximately $16,954,386. In the case of
transactions subject to the pre-notification requirements, notice must be given
to the Mexican Federal Competition Commission (the "Competition Commission") in
writing and include the information referred to in the FLEC and its regulations.
The Competition Commission may request additional information regarding the
proposed transaction within 20 calendar days following notification, which
additional information must be furnished within 15 calendar days after such
request, unless a justified extension of such period is granted. The Competition
Commission has 45 calendar days after receipt to notify or, if applicable, to
issue its decision. If such time period lapses without notice from the
Competition Commission, the Competition Commission is deemed to have no
objections and the transaction may proceed. In exceptionally complex cases, the
Chairman of the Competition Commission may extend the review period for up to an
additional 60 days. If an illegal concentration is deemed to have occurred, the
Competition Commission may, notwithstanding the imposition of sanctions provided
in the FLEC and elsewhere, (i) allow the consummation of the proposed
transaction on such conditions as it may impose, or (ii) order the total or
partial divestiture of the improper acquisition, the termination of control by
the controlling person, or the elimination of a particular activity, whichever
action it deems appropriate. Parent will make a pre-notification filing with the
Competition Commission pursuant to the FLEC. The expiration or termination of
the waiting period under the FLEC without objection from the Competition
Commission is a condition to the Purchaser's obligation to accept for payment
and pay for Shares tendered pursuant to the Offer.
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<PAGE>
16. FEES AND EXPENSES
Chase Securities is acting as Dealer Manager in connection with the Offer
pursuant to a Dealer Manager Agreement dated April 14, 1998 (the "Dealer Manager
Agreement"). Parent and the Purchaser have agreed to pay the Dealer Manager a
fee of $250,000, payable upon consummation of the Offer, for its services as
Dealer Manager in connection with the Offer. In addition, Parent and the
Purchaser have agreed to reimburse the Dealer Manager for its out-of-pocket
expenses, including the reasonable fees and expenses of its counsel, in
connection with the Offer and to indemnify the Dealer Manager and certain
related persons against certain liabilities and expenses, including certain
liabilities under the Federal securities laws.
The Purchaser has retained MacKenzie Partners, Inc. to act as the
Information Agent and ChaseMellon Shareholder Services, L.L.C. to serve as the
Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under the Federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer. Brokers, dealers, banks and trust companies will be
reimbursed by the Purchaser upon request for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither the Purchaser nor Parent is aware of any jurisdiction in
which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. If the Purchaser
or Parent becomes aware of any state law prohibiting the making of the Offer or
the acceptance of Shares pursuant thereto in such state, the Purchaser will make
a good faith effort to comply with any such state statute or seek to have such
state statute declared inapplicable to the Offer. If, after such good faith
effort, the Purchaser cannot comply with any such state statute or have such
state statute declared inapplicable to the Offer, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders of Shares in
such state. In any jurisdiction the securities, blue sky or other laws of which
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by the Dealer Manager or one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. In addition, the Company has filed with the Commission
the Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act, together with
exhibits, setting forth its recommendation with respect to the Offer and the
reasons for such recommendation and furnishing certain additional related
information. Such Schedules and any amendments thereto, including exhibits,
should be available for inspection and copies should be obtainable in the manner
set forth in Sections 8 and 9 (except that such material will not be available
at the regional offices of the Commission).
VA ACQUISITION CORP.
April 14, 1998
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SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND THE PURCHASER
The following table sets forth the name, age, business address, citizenship
and principal occupation or employment at the present time and during the past
five years of each director and executive officer of Parent and the Purchaser.
Unless otherwise noted, each such person is a citizen of the United States. In
addition, unless otherwise noted, each such person's business address is
Huntsman Packaging Corporation, 500 Huntsman Way, Salt Lake City, Utah 84108.
Directors are indicated with an asterisk.
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL OCCUPATIONS,
NAME OFFICES OR EMPLOYMENTS HELD DURING PAST FIVE YEARS AND AGE.
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Jon M. Huntsman*.......................... Mr. Huntsman is a Director and the Chairman of the Board of Directors
of Parent and has served as Chairman of the Board, Chief Executive
Officer and a Director of Huntsman Corporation, its predecessors and
other Huntsman companies for over 25 years. He is also the Chairman
and founder of the Huntsman Cancer Foundation. In addition, Mr.
Huntsman serves on numerous charitable, civic and industry boards. In
1994, Mr. Huntsman received the prestigious Kavaler Award as the
chemical industry's outstanding Chief Executive Officer. Mr. Huntsman
formerly served as Special Assistant to the President of the United
States and as Vice Chairman of the U.S. Chamber of Commerce. Mr.
Huntsman is 60 years old.
Karen H. Huntsman**....................... Mrs. Huntsman was appointed Vice Chairman of Parent on November 24,
1997, and serves as an officer and director of other Huntsman
companies. She has served as a Vice President and Director of
Huntsman Corporation since 1995 and as a Vice President and director
of Huntsman Chemical Corporation since 1982 and 1986, respectively.
By appointment of the Governor of the State of Utah, Mrs. Huntsman
serves as a member of the Utah State Board of Regents. Mrs. Huntsman
also serves on the board of directors of various corporate and
non-profit entities, including First Security Corporation and
Intermountain Health Care Inc. Mrs. Huntsman is 60 years old.
Richard P. Durham*........................ Mr. 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.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Christena H. Durham*...................... Mrs. Durham was appointed a Director of Parent on October 1, 1997,
and became a Vice President on November 24, 1997. Prior to joining
Parent, Mrs. Durham held no other officer positions or directorships
with any other for-profit organizations. Mrs. Durham also serves on
the Board of Directors of various non-profit organizations, including
the YWCA of Salt Lake City, and as a trustee of the Huntsman
Excellence in Education Foundation. Mrs. Durham is 33 years old.
Jack E. Knott............................. Mr. 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 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......................... Mr. 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........................ Mr. 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.
</TABLE>
I-2
<PAGE>
<TABLE>
<S> <C>
Douglas W. Bengtson....................... Mr. Bengston 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......................... Mr. 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....................... Mr. 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.......................... Mr. 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 Manager. Mr. Brockman holds a B.S. degree in Mechanical
Technology from Indiana State University. Mr. Brockman is 47 years
old.
</TABLE>
I-3
<PAGE>
<TABLE>
<S> <C>
Darren G. Cottle.......................... Mr. 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.......................... Mr. 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............................. Mr. 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.
Patrick H. Price.......................... Mr. Price joined Parent in April 1992 as Vice President
Administration. Prior to joining the Company, he was employed for
fifteen years with Huntsman Chemical Corporation in the human
resource department, holding positions as Director of Personnel and
Director of Benefits. He holds a B.S. degree in Business
Administration from California State University-Northridge. Mr. Price
is 52 years old.
Edwin W. Stranberg........................ Mr. 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.
</TABLE>
- ------------------------
* Such persons are members of the Board of Directors of Parent.
** The Vice Chairman is an advisory position to the Board of Directors of
Parent, but does not vote on matters brought to the Board.
I-4
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL OCCUPATIONS,
NAME OFFICES OR EMPLOYMENTS HELD DURING PAST FIVE YEARS AND AGE.
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Richard P. Durham......................... Mr. Durham became President and Chief Executive Officer of Purchaser
in April 1998. Mr. Durham is the sole member of the Board of
Directors of Purchaser, and also is a Director of Parent and 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............................. Mr. Knott became Executive Vice President and Chief Operating Officer
of Purchaser in April 1998. In addition, Mr. Knott became Executive
Vice President and Chief Operating Officer of Parent on September 1,
1997. Prior to joining the Huntsman organization, 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 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......................... Mr. Sorensen became Executive Vice President and Chief Financial
Officer, Treasurer of Purchaser in April 1998. In addition, Mr.
Sorensen recently joined Parent as Executive Vice President and Chief
Financial Officer. Prior to joining the Huntsman organization, 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.
</TABLE>
I-5
<PAGE>
<TABLE>
<S> <C>
Ronald G. Moffitt......................... Mr. Moffitt became Senior Vice President, Secretary and General
Counsel for Purchaser in April 1998. Mr. 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.
Darren G. Cottle.......................... Mr. Cottle became Vice President and Controller, Assistant Secretary
for Purchaser in April 1998. Mr. Cottle joined the Huntsman
organization in 1989 and has 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.
</TABLE>
I-6
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will
be accepted. The Letter of Transmittal, certificates for Shares and any
other required documents should be sent or delivered by each stockholder
of the Company or such stockholder's broker, dealer, bank, trust company
or other nominee to the Depositary at one of its addresses set forth
below.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3305 120 Broadway, 13th Floor 85 Challenger Road
South Hackensack, NJ New York, NY 10271 Mail Drop Reorganization
07606 Attn: Reorganization Department
Attn: Reorganization Department Ridgefield Park, NJ 07660
Department
Facsimile Transmission
(for Eligible Institutions only):
(201) 329-8936
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(201) 296-4860
--------------------------------
Questions and requests for assistance or for additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to the Information Agent or the
Dealer Manager at their respective telephone numbers and locations
listed below. You may also contact your broker, dealer, bank, trust
company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 929-5500 (CALL COLLECT)
OR
CALL TOLL-FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
CHASE SECURITIES INC.
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 270-3348
(CALL COLLECT)
<PAGE>
EXHIBIT 99(a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
BLESSINGS CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED APRIL 14, 1998,
BY
VA ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
HUNTSMAN PACKAGING CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MAY 11, 1998, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder Services,
Services, L.L.C. Services, L.L.C. L.L.C.
Post Office Box 3301 120 Broadway - 13th 85 Challenger Road
South Hackensack, NJ 07606 Floor Mail Drop Reorg. Dept.
Attn: Reorganization Department New York, NY 10271 Ridgefield Park, NJ 07660
Attn: Reorganization
Department
BY FACSIMILE
TRANSMISSION:
(FOR ELIGIBLE
INSTITUTION ONLY)
(201) 329-8936
Confirm by Telephone to:
(201) 296-4860
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST
SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW
AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE>
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of Blessings Corporation, a Delaware corporation (the "Tendering
Stockholders"), if certificates evidencing Shares ("Certificates") are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase (as defined below)) is used, if delivery of Shares is to be made by
book-entry transfer to an account maintained by ChaseMellon Shareholder
Services, L.L.C. (the "Depositary") at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3 of the Offer to Purchase (as defined below).
Tendering Stockholders whose Certificates are not immediately available or
who cannot deliver either their Certificates for, or a Book-Entry Confirmation
(as defined in Section 2 of the Offer to Purchase) with respect to, their Shares
and all other required documents to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) may tender their Shares
according to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase. See Instruction 2 hereof. Delivery of documents to the
Book-Entry Transfer Facility does not constitute delivery to the Depositary.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON THE CERTIFICATE(S))
<CAPTION>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
DESCRIPTION OF SHARES TENDERED
<CAPTION>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
CERTIFICATE(S) TENDERED
(ATTACH ADDITIONAL LIST IF NECESSARY)
<CAPTION>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
NUMBER OF SHARES
SHARE CERTIFICATE NUMBER(S) (1) REPRESENTED BY CERTIFICATE(S) (1) NUMBER OF SHARES TENDERED (2)
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Total Shares .......................................................
- -------------------------------------------------------------------------------------------------------
(1) Need not be completed by holders of Shares delivering Shares by Book-Entry Transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares represented by Certificates
delivered to the Depositary are being tendered. See Instruction 4.
- -------------------------------------------------------------------------------------------------------
</TABLE>
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
Name of Tendering Institution: _____________________________________________
Book-Entry Transfer Facility Account Number: _______________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s): ___________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
2
<PAGE>
Name of Institution which Guaranteed Delivery: _____________________________
If delivered by book-entry transfer:
Book-Entry Transfer Facility Account Number: _______________________________
Transaction Code Number: ___________________________________________________
3
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to VA Acquisition Corp, a Utah corporation
(the "Purchaser") and a wholly-owned subsidiary of Huntsman Packaging
Corporation, a Delaware corporation ("Parent"), the above-described shares of
Common Stock, par value $.71 per share (the "Shares"), of Blessings Corporation,
a Delaware corporation (the "Company"), at a purchase price of $21.00 per Share,
net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated April 14, 1998 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, together with the Offer to Purchase and any
amendments or supplements hereto or thereto, collectively constitute the
"Offer"). The undersigned understands that the Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to Parent, or to one
or more direct or indirect wholly-owned subsidiaries of Parent, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
holders of the Shares ("Tendering Stockholders") to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms or conditions of any such extension or amendment), the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Purchaser all right,
title and interest in and to all of the Shares that are being tendered hereby
and any and all other Shares or other securities issued or issuable in respect
of such Shares on or after April 7, 1998 (collectively, "Distributions") and
irrevocably constitutes and appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares (and any
Distributions), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Certificates evidencing such Shares (and any Distributions), or transfer
ownership of such Shares (and any Distributions) on the account books maintained
by the Book-Entry Transfer Facility together, in any such case, with all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Purchaser, upon receipt by the Depositary as the undersigned's agent, of the
purchase price with respect to such Shares, (ii) present such Shares (and any
Distributions) for transfer on the books of the Company and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and subject to
the conditions of the Offer.
The undersigned hereby irrevocably appoints each designee of the Purchaser
as the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to all
Shares tendered hereby and accepted for payment and paid for by the Purchaser
(and any Distributions), including, without limitation, the right to vote such
Shares (and any Distributions) in such manner as each such attorney and proxy or
his substitute shall, in his sole discretion, deem proper. All such powers of
attorney and proxies, being deemed to be irrevocable, shall be considered
coupled with an interest in the Shares tendered herewith. Such appointment will
be effective when, and only to the extent that, the Purchaser accepts such
Shares for payment. Upon such acceptance for payment, all prior powers of
attorney and proxies given by the undersigned with respect to such Shares (and
any Distributions) will, without further action, be revoked and no subsequent
powers of attorneys and proxies may be given with respect thereto (and, if
given, will be deemed ineffective). The designees of the Purchaser will, with
respect to the Shares (and any Distributions) for which such appointment is
effective, be empowered to exercise all voting and other rights of the
undersigned with respect to such Shares (and any Distributions) as they in their
sole discretion may deem proper. The Purchaser reserves the absolute right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the acceptance for payment of such Shares, the Purchaser or its designees
are able to exercise full voting rights and all other rights which inure to a
record and beneficial holder with respect to such Shares (and any Distributions)
including voting at any meeting of stockholders then scheduled.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators, trustee in bankruptcy, personal and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable, provided that the Shares tendered pursuant to the Offer
may be withdrawn prior to their acceptance for payment.
4
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any Distributions) and that, when the same are accepted for payment
and paid for by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and that the Shares tendered hereby (and any Distributions)
will not be subject to any adverse claim. The undersigned, upon request, will
execute and deliver any additional documents deemed by the Depositary or the
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of Shares tendered hereby (and any Distributions). In addition, the
undersigned shall promptly remit and transfer to the Depositary for the account
of the Purchaser any and all Distributions issued to the undersigned on or after
April 7, 1998 in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, the Purchaser shall be entitled to all rights
and privileges as owner of any such Distributions and may withhold the entire
purchase price or deduct from the purchase price the amount of value thereof, as
determined by the Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser with respect to such Shares upon the terms and subject to the
conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Purchaser may not be required to accept for payment
any of the Shares tendered hereby or may accept for payment fewer than all of
the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under "Description of Shares Tendered." In the event that both the
"Special Payment Instructions" and the "Special Delivery Instructions" are
completed, please issue the check for the purchase price and/or return any such
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and/or return such certificates (and accompanying documents, as
appropriate) to, the person(s) so indicated. Unless otherwise indicated herein
under "Special Payment Instructions," in the case of a book-entry delivery of
Shares, please credit the account maintained at the Book-Entry Transfer Facility
indicated above with respect to any Shares not accepted for payment. The
undersigned recognizes that the Purchaser has no obligation pursuant to the
"Special Payment Instructions" to transfer any Shares from the name of the
registered holder thereof if the Purchaser does nor accept for payment any of
the Shares tendered hereby.
5
<PAGE>
- --------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than the
undersigned, or if Shares delivered by book-entry transfer that are not
accepted for payment are to be returned by credit to an account maintained
at the Book-Entry Transfer Facility, other than to the account indicated
above.
Issue (check appropriate box(es)):
/ / Check to:
/ / Certificate(s) to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
/ / Credit unpurchased Shares delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below:
____________________________________________________________________________
(DTC ACCOUNT NUMBER)
- ---------------------------------------------------------------
- ---------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTION
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned or
to the undersigned at an address other than that shown above.
Mail (check appropriate box(es)):
/ / Check to:
/ / Certificate(s) to:
Name _______________________________________________________________________
(PLEASE PRINT)
ADDRESS __________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
- -----------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, signatures
on this Letter of Transmittal must be guaranteed by a member firm of a
registered national securities exchange (registered under Section 6 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), by a member
firm of the National Association of Securities Dealers, Inc. (the "NASD"), by a
commercial bank or trust company having an office or correspondent in the United
States, by any bank, broker, dealer, credit union, savings association or other
entity that is a member in good standing of a recognized Medallion Program
approved by The Securities Transfer Association, Inc. or by any other "Eligible
Guarantor Institution" as such term is defined in Rule 17Ad-15 under the
Exchange Act (each of the foregoing constituting an "Eligible Institution"),
unless the Shares tendered hereby are tendered (i) by the registered holder
(which term, for purposes of this document, shall include any participant in the
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of Shares) of such Shares who has completed neither the box
entitled "Special Payment Instructions" nor the box entitled "Special Delivery
Instructions" herein or (ii) for the account of an Eligible Institution. See
Instruction 5. If the Certificates are registered in the name of a person other
than the signer of this Letter of Transmittal, or if payment is to be made or
delivered to, or Certificates evidencing unpurchased Shares are to be issued or
returned to, a person other than the registered owner, then the tendered
Certificates must be endorsed or accompanied by duly executed stock powers, in
either case signed exactly as the name or names of the registered owner or
owners appear on the Certificates, with the signatures on the Certificates or
stock powers guaranteed by an Eligible Institution as provided herein. See
Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
Tendering Stockholders if Certificates evidencing Shares are to be forwarded
herewith or if delivery of Shares is to be made pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer to Purchase. For a
Tendering Stockholder to validly tender Shares pursuant to the Offer, either (a)
a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof), with any required signature guarantees or an Agent's
Message (as defined in the Offer to Purchase) in the case of the book-entry
delivery of Shares, and any other required documents, must be received by the
Depositary at one of its addresses set forth herein on or prior to the
Expiration Date and either (i) Certificates for tendered Shares must be received
by the Depositary at one of such addresses on or prior to the Expiration Date or
(ii) Shares must be delivered pursuant to the procedures for book-entry transfer
set forth in Section 3 of the Offer to Purchase and the Book-Entry Confirmation
must be received by the Depositary on or prior to the Expiration Date or (b) the
Tendering Stockholder must comply with the guaranteed delivery procedures set
forth below and in Section 3 of the Offer to Purchase.
Tendering Stockholders whose Certificates are not immediately available or
who cannot deliver their Certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer on or prior to the
Expiration Date may tender their Shares by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (i) such tender must be made by or through an Eligible Institution,
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Purchaser, must be received by
the Depositary prior to the Expiration Date, and (iii) the Certificates
representing all tendered Shares in proper form for transfer, or a Book-Entry
Confirmation with respect to all tendered Shares, together with a Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees (or in the case of a
book-entry transfer, an Agent's Message) and any other documents required by
this Letter of Transmittal, must be received by the Depositary within three
American Stock Exchange trading days after the date of such Notice of Guaranteed
Delivery. A "trading day" is any day on which the American Stock Exchange is
open for business. If Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING
STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
7
<PAGE>
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All Tendering Stockholders, by execution of
this Letter of Transmittal (or a facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
information required under "Description of Shares Tendered" should be listed on
a separate signed schedule attached hereto.
4. PARTIAL TENDERS. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary herewith are to be tendered hereby,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered." In such case, a new Certificate for the remainder
of the Shares that were evidenced by your old certificate(s) will be sent,
without expense, to the person(s) signing this Letter of Transmittal, unless
otherwise provided in the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal, as soon
as practicable after the Expiration Date. All Shares represented by
Certificate(s) delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or instruments of transfer
are signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority to so act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on such Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificate(s). Signatures on
such Certificate(s) or instruments of transfer must be guaranteed by an Eligible
Institution.
6. TRANSFER TAXES. Except as set forth in this Instruction 6, the Purchaser
will pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or (in the circumstances permitted hereby)
if Certificates for Shares not tendered or not purchased are to be registered in
the name of, any person other than the registered holder(s), or if tendered
Certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any transfer taxes (whether
imposed on the registered holder(s) or such persons) payable on account of the
transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Certificate(s) listed in this Letter of
Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or
Certificates for unpurchased Shares are to be issued in the name of a person
other than the signer of this Letter of Transmittal or if a check is to be sent
and/or such Certificates are to be returned to someone other than the signer of
this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. If any
tendered Shares are not purchased for any reason and such Shares are delivered
by the Book-Entry Transfer Facility, such Shares will be credited to an account
maintained at the Book-Entry Transfer Facility.
8
<PAGE>
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance may be directed to the Information Agent or the Dealer Manager at
their respective addresses or telephone numbers set forth below and requests for
additional copies of the Offer to Purchase, this Letter of Transmittal and the
Notice of Guaranteed Delivery may be directed to the Information Agent, the
Dealer Manager or brokers, dealers, commercial banks and trust companies and
such materials will be furnished at the Purchaser's expense.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser, in whole or in part, at any time or from time to time, in the
Purchaser's reasonable discretion
10. BACKUP OF WITHHOLDING TAX. Each Tendering Stockholder is required,
unless an exemption applies, to provide the Depositary with a correct Taxpayer
Identification Number ("TIN") on Substitute Form W-9, which is provided under
"Important Tax Information" below and to certify that the stockholder is not
subject to backup withholding. Failure to provide the information on the
Substitute Form W-9 may subject the Tendering Stockholder to 31% federal income
tax backup withholding on the payment of the purchase price for the Shares. The
Tendering Stockholder should indicate in the box in Part III of the Substitute
Form W-9 if the Tendering Stockholder has not been issued a TIN and has applied
for a TIN or intends to apply for a TIN in the near future. If the Tendering
Stockholder has indicated in the box in Part III that a TIN has been applied for
and the Depositary is not provided with a TIN by the time of payment, the
Depositary will withhold 31% of all payments of the purchase price, if any, made
thereafter pursuant to the Offer until a TIN is provided by the Depositary.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Company's transfer agent, ChaseMellon Shareholder Services, L.L.C. The holders
will then be instructed as to the procedure to be followed in order to replace
the Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE THEREOF
(TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND ANY
OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Tendering Stockholder whose tendered
Shares are accepted for payment is required to provide the Depositary (as payor)
with such Tendering Stockholder's correct TIN on Substitute Form W-9 below. If
such Tendering Stockholder is an individual, the TIN is his Social Security
number. If the Tendering Stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future, such Tendering
Stockholder should so indicate on the Substitute Form W-9. See Instruction 10.
If the Depositary is not provided with the correct TIN, the Tendering
Stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. Moreover, if the Tendering Stockholder makes a false statement with no
reasonable basis that results in no back-up withholding the Tendering
Stockholder is subject to a $500 civil penalty. Criminal penalties may apply for
willfully falsifying certifications. In addition, payments that are made to such
Tendering Stockholders with respect to Shares purchased pursuant to the Offer
may be subject to backup federal income tax withholding.
Certain Tendering Stockholders (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that Tendering Stockholder must submit a statement, signed
under penalties of perjury, attesting to that individual's exempt status. Forms
for such statements can be obtained from the Depositary. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the Tendering Stockholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a Tendering
Stockholder must provide the Depositary with his correct TIN by completing the
Substitute Form W-9 below, certifying that the TIN provided on Substitute Form
W-9 is correct (or that such Tendering Stockholder is awaiting a TIN) and that
(1) such Tendering Stockholder has not been notified by the Internal Revenue
Service that he is subject to backup withholding as a result of failure to
report all interest or dividends or (2) the Internal Revenue Service has
notified the Tendering Stockholder that he is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Tendering Stockholder is required to give the Depositary the Social
Security number or employer identification number of the record holder of the
Shares tendered hereby. If the Shares are registered in more than one name or
are not in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report. If the Tendering Stockholder has
not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, he or she should write "Applied For" in the space
provided for in the TIN in Part III, and sign and date the Substitute Form W-9.
If "Applied For" is written in Part III and the Depositary is not provided with
a TIN within 60 days, the Depositary will withhold 31% on all payments of the
purchase price made thereafter until a TIN is provided to the Depositary.
10
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT
TENDERING STOCKHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE
FORM W-9 ON REVERSE
____________________________________________________________________________
(SIGNATURE OF TENDERING STOCKHOLDER(S))
Dated: ___________, 1998
(Must be signed by the registered holder(s) exactly as name(s) appear(s)
on the Certificates or on a security position listing or by person(s)
authorized to become registered holder(s) by Certificates and documents
transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, agents, officers of
corporations or others acting in a fiduciary or representative capacity,
please provide the following information. See Instruction 5.)
Name(s) ____________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (full title) ______________________________________________________
(SEE INSTRUCTION 5)
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INDICATE ZIP CODE)
Area Codes and Telephone No.: ( )_________________________________________
(HOME)
__________________________________________________________________________
(BUSINESS)
Taxpayer Identification or Social Security No.: ____________________________
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature(s): ___________________________________________________
Name: ______________________________________________________________________
Name of Firm: ______________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: _______________________________________________
Dated: _______________________________________________________________, 1998
- --------------------------------------------------------------------------------
11
<PAGE>
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
SUBSTITUTE Part I--PLEASE PROVIDE YOUR TIN IN Part III--Social Security Number
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY OR Employer Identification
Department of the Treasury SIGNING AND DATING BELOW Number
Internal Revenue Service (If awaiting TIN write Applied
For)
----------------------------------------------------------------------
Part II--For Payees Exempt Backup Withholding see the enclosed
Payer's Request for Taxpayer Guidelines for Certification of Taxpayer Identification Number on
Identification Number ("TIN") Substitute Form W-9 and complete as instructed therein.
- --------------------------------------------------------------------------------------------------------
CERTIFICATION--Under penalties of perjury, certify that:
(1) The Number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a
number to be issued to me); and
(2) I am not subject to backup withholding either because I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report
all interest or dividends, or the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that
you are subject to backup withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject to backup withholding, you
received another notification from the IRS that you were no longer subject to backup withholding, do
not cross out item (2). (Also see instructions in the enclosed Guidelines.)
NAME -------------------------------------------------------------------------------------------------
(PLEASE PRINT)
SIGNATURE ------------------------------------------------------------- DATE ------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING A TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within sixty (60) days, 31%
of all payments of the Offer Price made to me thereafter will be withheld until
I provide a number.
<TABLE>
<C> <S> <C>
SIGNATURE ------------------------------------------------------------- DATE ------------------------
</TABLE>
12
<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 FIFTH AVENUE
NEW YORK, NEW YORK 10010
CALL COLLECT (212) 929-5500
CALL TOLL-FREE: (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
CHASE SECURITIES INC.
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 270-3348
(CALL COLLECT)
13
<PAGE>
EXHIBIT 99(a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR TENDERING SHARES OF COMMON STOCK
OF
BLESSINGS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, MAY 11, 1998, UNLESS THE OFFER IS EXTENDED.
April 14, 1998
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates representing
the Common Stock, par value $.71 per share (the "Shares"), of Blessings
Corporation, a Delaware corporation, are not immediately available or the
procedures for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach ChaseMellon Shareholder
Services, L.L.C. (the "Depositary") prior to the Expiration Date (as defined in
the Offer to Purchase (as defined below)). This Notice of Guaranteed Delivery
may be delivered by hand or transmitted by facsimile transmission or mailed to
the Depositary. See Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3301 120 Broadway - 13th Floor 85 Challenger Road
South Hackensack, NJ 07606 New York, NY 10271 Mail Drop Reorg. Dept.
Attn: Reorganization Department Attn: Reorganization Department Ridgefield Park, NJ 07660
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(201) 329-8936
Confirm by Telephone to:
(201) 296-4860
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to VA Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Huntsman
Packaging Corporation, a Utah corporation, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated April 14, 1998 (the "Offer
to Purchase"), and in the related Letter of Transmittal (which, together with
the Offer to Purchase and any amendments or supplements thereto, collectively
constitute the "Offer"), receipt of each of which is hereby acknowledged, the
number of Shares indicated below pursuant to the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase.
Name(s) of Record Holder(s)
Number of Shares:
- --------------------------------
-------------------------------------
Certificate Nos. (if available):
- -----------------------
-------------------------------------
- --------------------------------------------------
(PLEASE PRINT)
/ /Check box if Shares will be tendered by book-entry
Address(es):
-------------------------------------
transfer and complete the following:
-------------------------------------
Account Number:
- ---------------------------------
-------------------------------------
Dated:
- --------------------------------------, 1998
(ZIP CODE)
Area Code and Tel. No.:
-----------------------------------------------------------------------
Signature(s):
-------------------------------------
-------------------------------------
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, as Eligible Institution (as such term is defined in Section
3 of the Offer to Purchase), hereby (a) represents that the tender of Shares
effected hereby complies with Rule 14e-4 under the Securities Exchange Act of
1934, as amended, and (b) guarantees to deliver to the Depositary the
certificates representing the Shares tendered hereby, in proper form for
transfer, or a Book-Entry Confirmation (as defined in Section 2 of the Offer to
Purchase) with respect to transfer of such Shares into the Depositary's account
at The Depository Trust Company together with a properly completed and duly
executed Letter of Transmittal (or a manually signed facsimile thereof), with
any required signature guarantees or an Agent's Message (as defined in Section 2
of the Offer to Purchase) in the case of a book-entry delivery of Shares, and
any other documents required by the Letter of Transmittal, all within three
American Stock Exchange trading days after the date hereof. A "trading day" is
any day on which the American Stock Exchange is open for business.
Name of Firm:
- ------------------------------------
-------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------
Name:
-------------------------------------
Address:
- ------------------------------------------
Title:
-------------------------------------
- --------------------------------------------------
Date:
-------------------------------------
(ZIP CODE)
Area Code and Tel. No.:
- ----------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT ONLY TOGETHER WITH YOUR
LETTER OF TRANSMITTAL.
2
<PAGE>
EXHIBIT 99(a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BLESSINGS CORPORATION
AT
$21.00 NET PER SHARE
BY
VA ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
HUNTSMAN PACKAGING CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MAY 11, 1998, UNLESS THE OFFER IS EXTENDED.
April 14, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by VA Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly-owned subsidiary of Huntsman Packaging Corporation, a
Utah corporation ("Parent"), to act as Dealer Manager in connection with the
Purchaser's offer to purchase for cash all of the outstanding shares of Common
Stock, par value $.71 per share (the "Shares"), of Blessings Corporation, a
Delaware corporation (the "Company"), for $21.00 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated April 14, 1998 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, together with the Offer to Purchase and any
amendments or supplements thereto, collectively constitute the "Offer") enclosed
herewith.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares in your name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase dated April 14, 1998.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
3. A letter to stockholders of the Company from Elwood M. Miller,
President & Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to stockholders
of the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if neither of the two procedures for tendering Shares set forth in
the Offer to Purchase can be completed on a timely basis.
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
<PAGE>
7. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, MAY 11, 1998, UNLESS THE OFFER IS
EXTENDED.
Please note the following:
1. The tender price is $21.00 per Share, net to the seller in cash.
2. The Offer is subject to there being validly tendered and not
withdrawn prior to the expiration of the Offer a number of Shares which
represents at least a majority of the number of Shares outstanding on a
fully diluted basis on the date of the purchase and certain other
conditions.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer. However, federal income tax backup
withholding at a rate of 31% may be required, unless an exemption is
provided or unless the required taxpayer identification information is
provided. See Instruction 10 of the Letter of Transmittal.
5. The Board of Directors of the Company (the "Board") has unanimously
approved the Offer and the Merger (as defined in the Offer to Purchase) and
determined that the Offer and the Merger are fair to and in the best
interests of the stockholders of the Company and recommends that the
stockholders of the Company accept the Offer.
6. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) Certificates for such Shares
pursuant to the procedures set forth in Section 3 of the Offer to Purchase
or a timely Book-Entry Confirmation (as defined in the Offer to Purchase)
with respect to such Shares, (b) the Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed, with any
required signature guarantees or an Agent's Message (as defined in the Offer
to Purchase) in connection with a book-entry delivery of Shares, and (c) any
other documents required by the Letter of Transmittal. Accordingly, payment
may not be made to all tendering stockholders at the same time depending
upon when Certificates are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO
BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MAY 11, 1998, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) and any
required signature guarantees or an Agent's Message in connection with a
book-entry transfer and other required documents should be sent to the
Depositary and (ii) Certificates representing the tendered Shares or a timely
Book-Entry Confirmation (as defined in the Offer to Purchase) should be
delivered to the Depositary in accordance with the instructions set forth in the
Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender may be
effected by following the guaranteed delivery procedures specified in Section 3
of the Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Dealer Manager, the Depositary and the
Information Agent as described in the Offer to Purchase) for soliciting tenders
of Shares pursuant to the Offer. The Purchaser will, however, upon request,
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of
2
<PAGE>
the enclosed materials to your clients. The Purchaser will pay or cause to be
paid any transfer taxes payable on the transfer of Shares to it, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
MacKenzie Partners, Inc., the Information Agent for the Offer, at 156 Fifth
Avenue, New York, New York, 10010, telephone number (800) 322-2885, or to Chase
Securities Inc., the Dealer Manager for the Offer, at 270 Park Avenue, New York,
New York 10017, telephone number (212) 270-3348 (Call Collect).
Requests for copies of the enclosed materials may be directed to the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
CHASE SECURITIES INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE COMPANY, THE
DEPOSITARY, THE INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
EXHIBIT 99(a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BLESSINGS CORPORATION
AT
$21.00 NET PER SHARE
BY
VA ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
HUNTSMAN PACKAGING CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, MAY 11, 1998, UNLESS THE OFFER IS EXTENDED.
April 14, 1998
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated April 14,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with the Offer to Purchase and any amendments or supplements thereto,
collectively constitute the "Offer") relating to the offer by VA Acquisition
Corp., a Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of
Huntsman Packaging Corporation, a Utah corporation, to purchase all of the
outstanding shares of Common Stock, par value $.71 per share (the "Shares"), of
Blessings Corporation, a Delaware corporation (the "Company"), at a purchase
price of $21.00 per Share, net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer. Also enclosed is the Letter to
Stockholders of the Company from the President and Chief Executive Officer of
the Company accompanied by the Company's Solicitation/ Recommendation Statement
on Schedule 14D-9. Holders of Shares whose certificates for such Shares (the
"Certificates") are not immediately available or who cannot deliver their
Certificates and all other required documents to ChaseMellon Shareholder
Services, L.L.C. (the "Depositary") or complete the procedures for book-entry
transfer prior to the Expiration Date (as defined in the Offer to Purchase) must
tender their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $21.00 per Share, net to the seller in cash.
2. The Offer is subject to there being validly tendered and not withdrawn
prior to the expiration of the Offer a number of shares which represents at
least a majority of the number of Shares outstanding on a fully diluted basis on
the date of purchase and certain other conditions.
3. The Offer is being made for all of the outstanding Shares.
<PAGE>
4. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by the Purchaser pursuant
to the Offer. However, federal income tax backup withholding at a rate of 31%
may be required, unless an exemption is provided or unless the required taxpayer
identification information is provided. See Instruction 10 of the Letter of
Transmittal.
5. The Board of Directors of the Company has unanimously approved the Offer
and the Merger (as defined in the Offer to Purchase) and determined that the
Offer and the Merger are fair to and in the best interests of the stockholders
of the Company and recommends that the stockholders of the Company accept the
Offer.
6. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only after
timely receipt by the Depositary of (a) Certificates for such Shares pursuant to
the procedures set forth in Section 3 of the Offer to Purchase or a timely
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to
such Shares, (b) the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees or an Agent's Message (as defined in the Offer to Purchase) in
connection with a book-entry delivery of Shares, and (c) any other documents
required by the Letter of Transmittal. Accordingly, payment may not be made to
all tendering stockholders at the same time depending upon when Certificates are
actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS
OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MAY 11, 1998, UNLESS THE OFFER IS EXTENDED.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth below. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise specified below. An
envelope to return your instructions to us is enclosed. YOUR INSTRUCTIONS SHOULD
BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF
PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the Offer or the
acceptance thereof would not be in compliance with the securities, blue sky or
other laws of such jurisdiction. However, the Purchaser may, in its discretion,
take such action as it may deem necessary to make the Offer in any jurisdiction
and extend the Offer to holders of Shares in such jurisdiction.
In those jurisdictions where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer shall be deemed
to be made on behalf of the Purchaser by Chase Securities Inc. or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
BLESSINGS CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated April 14, 1998 (the "Offer to Purchase"), and the related
Letter of Transmittal (which together with the Offer to Purchase (and any
amendments or supplements thereto), collectively constitute the "Offer"), in
connection with the Offer by VA Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly-owned subsidiary of Huntsman Packaging Corporation, a
Utah corporation, to purchase all outstanding shares of Common Stock, par value
$.71 per share (the "Shares"), of Blessings Corporation, a Delaware corporation,
at a purchase price of $21.00 per Share, net to seller in cash, upon the terms
and subject to the conditions set forth in the Offer.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
<TABLE>
<S> <C>
Number of Shares to be Tendered:(1) SIGN HERE
Shares
Signature(s)
(Print Name(s))
(Print Address(es))
Date: ----------------, 1998 (Area Code and Telephone Number(s))
(Taxpayer Identification or
Social Security Number(s))
</TABLE>
- ------------------------
(1) Unless otherwise indicated, it will be assumed that all shares held by us
for your account are to be tendered.
<PAGE>
EXHIBIT 99(a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER --
Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
------------------------------------------------------
GIVE THE SOCIAL
SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, any one of the
individuals (1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person
(1)
4. Custodian account of a The minor (2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the minor
(1)
6. Account in name of The ward, minor or
guardian or committee incompetent person (3)
for a designated ward,
minor or incompetent
person
7. a. The usual revocable The grantor-trustee (1)
savings trust account
(grantor is also
trustee)
b. So-called trust The actual owner (1)
account that is not a
legal or valid trust
under state law
8. Sole proprietorship The owner (4)
account
<CAPTION>
------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION NUMBER
FOR THIS TYPE OF ACCOUNT: OF--
------------------------------------------------------
<S> <C> <C>
9. A valid trust, estate The legal entity. (Do
or pension trust not furnish the
identification number
of the personal
representative or
trustee unless the
legal entity itself is
not designated int he
account title. (5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
13. Association, club or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of
Agriculture in the name
of a public entity
(such as a State or
local government,
school district or
prison) that receives
agricultural program
payments
</TABLE>
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's Social Security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section
501(a) of the Internal Revenue Code of 1986, as amended (the Code), or an
individual retirement plan.
- The United States or any agency or instrumentality
thereof.
- A State, the District of Columbia, a possession of the
United States or any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a
foreign government or any agency or instrumentality thereof.
- An international organization or any agency or
instrumentality thereof.
- A registered dealer in securities or commodities
registered in the United States or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section
584(a) of the Code.
- An exempt charitable remainder trust or a nonexempt
trust described in section 4947(a)(1) of the Code.
- An entity registered at all times under the Investment
Company Act of 1940, as amended.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding
under section 1441 of the Code.
- Payments to partnerships not engaged in a trade or
business in the United States and which have at least one nonresident
partner.
- Payments of patronage dividends where the amount
received is not paid in money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by
individuals. Note: You may be subject to backup withholding if this interest is
$600 or more and is paid in the course of the payer's trade or business
and you have not provided your correct taxpayer identification number to
the payer.
- Payments of tax-exempt interest (including exempt-
interest dividends under section 852 of the Code).
- Payments described in section 6049(b)(5) of the Code to
non-resident aliens.
- Payments on tax-free covenant bonds under section
1451 of the Code.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9
ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE
SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER
IDENTIFICATION NUMBER ON PART III OF THE FORM, WRITE EXEMPT ON THE FACE OF THE
FORM AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045,
6049, 6050A and 6050N of the Code and their regulations.
PRIVACY ACT NOTICE. -- Section 6109 of the Code requires most recipients of
dividends interest or other payments to give taxpayer identification numbers to
payers who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
a tax return. Payers must generally withhold 31% of taxable interest, dividends
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated April
14, 1998 and the related Letter of Transmittal and is being made to all holders
of Shares. The Offer is not being made to (nor will tenders be accepted from or
on behalf of) holders of Shares in any jurisdiction in which the Offer or the
acceptance thereof would not be in compliance with the securities, blue sky or
other laws of such jurisdiction. However, the Purchaser may, in its discretion,
take such action as it may deem necessary to make the Offer in any jurisdiction
and extend the Offer to holders of Shares in such jurisdiction. In those
jurisdictions where the securities laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by Chase Securities Inc. (the "Dealer Manager") or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Blessings Corporation
at
$21.00 Net Per Share
by
VA Acquisition Corp.
a wholly-owned subsidiary of
Huntsman Packaging Corporation
VA Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Huntsman Packaging Corporation, a Utah corporation
("Parent"), hereby offers to purchase all of the outstanding shares of Common
Stock, par value $.71 per share (the "Common Stock" or "Shares"), of Blessings
Corporation, a Delaware corporation (the "Company"), at a purchase price of
$21.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
April 14, 1998 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, MAY 11, 1998, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which represents at least a majority of the number of Shares outstanding
on a fully diluted basis on the date of purchase, (2) any waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (and the
regulations thereunder), and the Mexican Federal Law of Economic Competition,
applicable to the purchase of Shares pursuant to the Offer having expired or
having been terminated prior to the expiration of the Offer, and (3) the
satisfaction of certain other terms and conditions described in the Offer to
Purchase.
The Offer is being made pursuant to the Agreement and Plan of Merger dated as of
April 7, 1998 (the "Merger Agreement") among Parent, the Purchaser and the
Company pursuant to which, following the purchase of Shares by the Purchaser
pursuant to the Offer and the satisfaction or waiver of certain conditions, the
Purchaser will be merged with and into the Company (the "Merger"). In the
Merger, each outstanding Share (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 Delaware law) will be converted into the
right to receive $21.00, or any higher price per Share paid pursuant to the
Offer, without interest thereon, in cash and the Company will become a
wholly-owned subsidiary of Parent.
The Board of Directors of the Company has unanimously approved the Offer and the
Merger and determined that the Offer and the Merger are fair to and in the best
interests of the stockholders of the Company and recommends that the Company's
stockholders accept the Offer.
Concurrently with the execution of the Merger Agreement, Parent and the
Purchaser entered into a Tender Agreement and Irrevocable Proxy dated as of
April 7, 1998 (the "Tender Agreement") with Williamson-Dickie Manufacturing
Company and certain members of senior management of the Company (collectively,
the "Stockholders") owning, in the aggregate, 5,925,072 Shares, or approximately
57.3% of the Shares outstanding on March 31, 1998 on a fully-diluted basis.
Pursuant to the Tender Agreement, the Stockholders have agreed, among other
things, to validly tender and sell pursuant to the Offer and not withdraw all
Shares which are beneficially owned by them, provided that the Offer price is
not less than $21.00, and to irrevocably appoint the Purchaser as the attorney
and proxy of each Stockholder 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, subject to certain limitations
and restrictions.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased), Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") of the Purchaser's
acceptance for payment of such Shares pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares so accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payments from the Purchaser and transmitting such
payments to tendering stockholders. Under no circumstances will interest on the
purchase price for Shares be paid by the Purchaser, regardless of any extension
of the Offer or delay in making such payment. In all cases, payment for Shares
tendered and accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (1) certificates representing Shares ("Share
Certificates"), or timely confirmation of a book-entry transfer of such Shares,
into the Depositary's account at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (2) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined in Section 2 of the Offer to Purchase) in
connection with a book-entry transfer, and (3) all other documents required by
the Letter of Transmittal.
Subject to the terms of the Merger Agreement and the Tender Agreement and the
applicable rules of the Securities and Exchange Commission, the Purchaser
expressly reserves the right, in its sole discretion, at any time and from time
to time, and regardless of whether or not any of the events set forth in Section
14 of the Offer to Purchase shall have occurred or shall have been determined by
the Purchaser to have occurred, (i) to extend the period of time during which
the Offer is open, and thereby delay acceptancee for payment of, and the payment
for, any Shares, by giving oral or written notice of such extension to the
Depositary and (ii) to amend the Offer in any other respect by giving oral or
written notice of such amendment to the Depositary. The Purchaser shall not have
any obligation to pay interest on the purchase price for tendered Shares whether
or not the Purchaser exercises such rights. Any such extension will be followed
as promptly as practicable by public announcement thereof, such announcement to
be made no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date.
The term "Expiration Date" means 12:00 Midnight, New York City time, on Monday,
May 11, 1998, unless and until the Purchaser, in its sole discretion and subject
to the terms of the Merger Agreement, shall have extended the period during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by the Purchaser,
shall expire.
Except as otherwise provided in Section 4 of the Offer to Purchase, tenders of
Shares made pursuant to the Offer are irrevocable, except that Shares tendered
pursuant to the Offer may be withdrawn at any time on or prior to the Expiration
Date and, unless theretofore accepted for payment and paid for by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after June 12, 1998. In
order for a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. Any
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If certificates for Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in Section 3 of the
Offer to Purchase) unless such Shares have been tendered for the account of any
Eligible Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and must
otherwise comply with the procedures of the Book-Entry Transfer Facility, in
which case a notice of withdrawal will be effective if delivered to the
Depositary by any method of delivery described in the second sentence of this
paragraph. All questions as to the form and validity (including time of receipt)
of any notice of withdrawal will be determined by the Purchaser, in its
reasonable ddiscretion, whose determination will be final and binding.
The information required to be disclosed by Paragraph (e)(1)(vii) of Rule 14d-6
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided the Purchaser its lists of stockholders and security
position listings for the purpose of disseminating the Offer to holders of
Shares. This Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed by the Purchaser to record holders of Shares,
and will be furnished by the Purchaser to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain important
information which should be read before any decision is made with respect to the
Offer.
Questions and requests for assistance may be directed to the Dealer Manager or
the Information Agent at their respective addresses and telephone numbers as set
forth below. The Purchaser will not pay any fees or commissions to any broker or
dealer or any other person (other than the Dealer Manager and the Information
Agent) for soliciting tenders of Shares pursuant to the Offer. Additional copies
of the Offer to Purchase, the Letter of Transmittal and all other related
materials may be obtained from the Information Agent, the Dealer Manager or from
brokers, dealers, commercial banks and trust companies and will be furnished
promptly at the Purchaser's expense.
The Information Agent for the Offer is:
Mackenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
(212) 270-3348 (Call Collect)
April 14, 1998
<PAGE>
EXHIBIT 99(a)(8)
FOR IMMEDIATE RELEASE CONTACTS:
April 8, 1998 HUNTSMAN PACKAGING CORPORATION
Scott K. Sorensen
Executive Vice President and Chief Financial
Officer
801-532-5200
BLESSINGS CORPORATION
James P. Luke
Executive Vice President, Secretary and Chief
Financial Officer
757-820-1307
HUNTSMAN PACKAGING CORPORATION AND BLESSINGS
CORPORATION ENTER INTO DEFINITIVE MERGER AGREEMENT
SALT LAKE CITY, UT AND NEWPORT NEWS, VA -- Huntsman Packaging Corporation and
Blessings Corporation (AMX: BCO) announced today that they have entered into a
definitive merger agreement. The agreement calls for Huntsman to acquire all
issued and outstanding shares of Blessings. Huntsman and Blessings expect to
complete the transaction in the middle of May.
Under the merger agreement, VA Acquisition Corp., a wholly-owned subsidiary of
Huntsman, will promptly commence a cash tender offer for all of the outstanding
shares of Blessings common stock for $21.00 per share. Any shares not purchased
in the tender offer will be acquired for the same price in cash in a second-step
merger. Blessings has approximately 10.3 million fully diluted shares
outstanding.
Blessing's largest shareholder, Williamson-Dickie Manufacturing Company,
along with certain directors, which hold in the aggregate approximately 58.5
percent of the total outstanding shares of Blessings, have agreed to tender
their shares. Additionally, the Boards of Directors of both companies have
given approval to the acquisition and the Board of Blessings recommends that
Blessings stockholders accept Huntsman's cash tender offer.
Commenting on the transaction, Richard P. Durham, President and Chief Executive
Officer of Huntsman, stated, "Blessings Corporation has a great reputation for
quality and product innovation in our industry and we are excited to make it a
part of Huntsman Packaging Corporation. The acquisition significantly increases
our capacity for personal care and medical products, and gives us an extremely
strong position in the rapidly-growing Mexican and Latin American markets."
<PAGE>
Mr. Durham commented, "With the completion of this acquisition, we will have
more than doubled the size of Huntsman Packaging in the last 18 months. We are
committed to being the premier supplier of value-added films in the industry."
Consummation of the acquisition is contingent upon the tender of a majority of
Blessings outstanding shares, the expiration or termination of any applicable
waiting periods under the federal Hart-Scott-Rodino Antitrust Improvements Act,
and other customary conditions. Huntsman has obtained a commitment letter from
The Chase Manhattan Bank and Chase Securities Inc. to provide the funding
necessary for the acquisition.
Blessing's annual meeting of shareholders scheduled May 19, 1998 has been
postponed indefinitely.
Blessings Corporation's operating businesses, Edison Plastics, Nacional de
Envases Plasticos, S.A. de C.V. (NEPSA) and Edison Converting, are leading
producers and converters of polyethylene (PE) and polypropylene (PP) films for
the personal care, medical and packaging industries. Blessings and its
operating companies have approximately 1,250 employees at five production
facilities in the United States and Mexico. It had 1997 revenues of
approximately $175 million.
Edison Plastics, with manufacturing facilities in Newport News, VA,
McAlester, OK and Washington, GA, manufactures thin and ultra-thin gauge
multi-layer cast embossed and extruded film products. Principal end-use
markets include infant diapers, feminine care products, adult incontinence
products, and medical and surgical products.
NEPSA has two manufacturing facilities in Mexico City. It is the leading
Mexican producer and converter of PE and PP films, and the technical leader
in high-speed eight-color film printing. It produces films for the infant
diaper and feminine care markets, and supplies point-of-purchase bags for
those consumer products.
Edison Converting is a full service producer of PE and PP converted films,
printed roll stock and bags. Its principal end-use markets include personal
hygiene and health care.
Huntsman Packaging Corporation is a world-class manufacturer of value-added
polyethylene and PVC plastic films and flexible packaging. One of North
America's largest film and flexible packaging manufacturers, Huntsman
Packaging annually produces over 500 million pounds of film and flexible
packaging for food packaging, medical and pharmaceutical applications,
household goods, garden supplies, pet food, cosmetics, retail merchandise,
and agricultural industrial and institutional applications. It had 1997
revenues of approximately $500 million.
2
<PAGE>
EXHIBIT 99(a)(9)
FOR IMMEDIATE RELEASE Contacts:
HUNTSMAN PACKAGING CORPORATION INFORMATION AGENT:
Scott K. Sorenson Mackenzie Partners, Inc.
Executive Vice President and (212) 929-5500
Chief Financial Officer BANKS AND BROKERS:
(801) 532-5200 (212) 929-5500
ALL OTHERS:
1-800-322-2885
HUNTSMAN PACKAGING CORPORATION COMMENCES
CASH TENDER OFFER FOR BLESSINGS CORPORATION
Salt Lake City, UT, April 14, 1998 -- Huntsman Packaging Corporation
announced today that VA Acquisition Corp., its wholly-owned subsidiary, has
commenced a cash tender offer for all outstanding shares of common stock of
Blessings Corporation (AMEX:BCO) at $21.00 per share, net to the seller in
cash.
The offer is being made pursuant to the previously announced merger
agreement between Huntsman Packaging Corporation, VA Acquisition Corp. and
Blessings Corporation. The offer is conditioned upon, among other things,
the tender of a majority of the shares outstanding on a fully diluted basis
and the expiration or termination of any applicable waiting periods under the
federal Hart-Scott-Rodino Antitrust Improvements Act and the Mexican Federal
Law of Economic Competition. As previously announced, Blessings' largest
shareholder, Williamson-Dickie Manufacturing Company, along with certain
Blessings' directors, which hold in the aggregate approximately 57.3% of the
shares outstanding on a fully-diluted basis, have agreed to tender their
shares into the offer.
The offer and withdrawal rights are scheduled to expire at midnight, New
York City time, on Monday, May 11, 1998. Chase Securities Inc. is acting as
the Dealer Manager for the offer and Mackenzie Partners, Inc. is serving as
the Information Agent for the offer.
Huntsman Packaging Corporation is a world-class manufacturer of
value-added polyethylene and PVC plastic films and flexible packaging. One
of North America's largest film and flexible packaging manufacturers,
Huntsman Packaging annually produces over 500 million pounds of film and
flexible packaging for food packaging, medical and pharmaceutical
applications, household goods, garden supplies, pet food, cosmetics, retail
merchandise, and agricultural, industrial and institutional applications. It
had 1997 revenues of approximately $500 million.
<PAGE>
EXHIBIT 99(b)(1)
EXECUTION COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of
September 30, 1997
among
HUNTSMAN PACKAGING CORPORATION,
as Borrower
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
---------------------------
CHASE SECURITIES INC.,
as Arranger
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
2
[6700-578]
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms 1
SECTION 1.02. Classification of Loans and Borrowings 30
SECTION 1.03. Terms Generally 30
SECTION 1.04. Accounting Terms; GAAP; Treatment of
Unrestricted Subsidiaries 31
SECTION 1.05. Certain Interim Financial Calculations 32
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments 33
SECTION 2.02. Loans and Borrowings 33
SECTION 2.03. Requests for Borrowings 34
SECTION 2.04. Swingline Loans 35
SECTION 2.05. Letters of Credit 37
SECTION 2.06. Funding of Borrowings 43
SECTION 2.07. Interest Elections 44
SECTION 2.08. Termination and Reduction of Commitments 45
SECTION 2.09. Repayment of Loans; Evidence of Debt 47
SECTION 2.10. Amortization of Term Loans 48
SECTION 2.11. Prepayment of Loans 49
SECTION 2.12. Fees 52
SECTION 2.13. Interest 54
SECTION 2.14. Alternate Rate of Interest 55
SECTION 2.15. Increased Costs 55
<PAGE>
3
SECTION 2.16. Break Funding Payments 57
SECTION 2.17. Taxes 58
SECTION 2.18. Payments Generally; Pro Rata Treatment;
Sharing of Setoffs 59
SECTION 2.19. Mitigation Obligations; Replacement of Lenders 61
SECTION 2.20. Extension of Revolving Maturity Date 62
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers 63
SECTION 3.02. Authorization; Enforceability 63
SECTION 3.03. Governmental Approvals; No Conflicts 63
SECTION 3.04. Financial Condition; No Material Adverse Change 64
SECTION 3.05. Properties 65
SECTION 3.06. Litigation and Environmental Matters 65
SECTION 3.07. Compliance with Laws and Agreements 66
SECTION 3.08. Investment and Holding Company Status 66
SECTION 3.09. Taxes 66
SECTION 3.10. ERISA 66
SECTION 3.11. Disclosure 67
SECTION 3.12. Subsidiaries 67
SECTION 3.13. Insurance 67
SECTION 3.14. Labor Matters 68
SECTION 3.15. Solvency 68
SECTION 3.16. Security Documents 68
SECTION 3.17. Federal Reserve Regulations 69
SECTION 3.18. Existing Intercompany Indebtedness 70
SECTION 3.19. Agreements and Business Status as of Effective Date 70
<PAGE>
4
ARTICLE IV
CONDITIONS
SECTION 4.01. Effective Date 70
SECTION 4.02. Each Credit Event 76
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. Financial Statements and Other Information 77
SECTION 5.02. Notices of Material Events 79
SECTION 5.03. Information Regarding Collateral 80
SECTION 5.04. Existence; Conduct of Business 80
SECTION 5.05. Payment of Obligations 80
SECTION 5.06. Maintenance of Properties 81
SECTION 5.07. Insurance 81
SECTION 5.08. Casualty and Condemnation 82
SECTION 5.09. Books and Records; Inspection and Audit Rights 82
SECTION 5.10. Compliance with Laws 83
SECTION 5.11. Use of Proceeds and Letters of Credit 83
SECTION 5.12. Additional Subsidiaries 83
SECTION 5.13. Further Assurances 84
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. Indebtedness 85
SECTION 6.02. Certain Equity Securities 87
SECTION 6.03. Liens 87
SECTION 6.04. Fundamental Changes 89
<PAGE>
5
SECTION 6.05. Investments, Loans, Advances, Guarantees and Acquisitions 89
SECTION 6.06. Asset Sales 92
SECTION 6.07. Sale and Lease-Back Transactions 93
SECTION 6.08. Hedging Agreements 93
SECTION 6.09. Restricted Payments; Certain Payments of Indebtedness 93
SECTION 6.10. Transactions with Affiliates 94
SECTION 6.11. Restrictive Agreements 94
SECTION 6.12. Amendment of Material Documents 95
SECTION 6.13. Capital Expenditures 95
SECTION 6.14. Leverage Ratio 96
SECTION 6.15. Interest Coverage Ratio 96
SECTION 6.16. Minimum Net Worth 96
SECTION 6.17. Designated Senior Debt 97
ARTICLE VII
EVENTS OF DEFAULT 97
ARTICLE VIII
THE ADMINISTRATIVE AGENT 100
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices 103
SECTION 9.02. Waivers; Amendments 104
SECTION 9.03. Expenses; Indemnity; Damage Waiver 106
SECTION 9.04. Successors and Assigns 108
SECTION 9.05. Survival 111
SECTION 9.06. Counterparts; Integration; Effectiveness 112
SECTION 9.07. Severability 112
<PAGE>
6
SECTION 9.08. Right of Setoff 112
SECTION 9.09. Governing Law; Jurisdiction; Consent
to Service of Process 113
SECTION 9.10. WAIVER OF JURY TRIAL 114
SECTION 9.11. Headings 114
SECTION 9.12. Confidentiality 114
SECTION 9.13. Interest Rate Limitation 115
</TABLE>
<TABLE>
<CAPTION>
SCHEDULES:
<S> <C> <C>
Schedule 1.01(a) -- Mortgaged Properties
Schedule 2.01 -- Commitments
Schedule 3.05 -- Owned or Leased Property
Schedule 3.12 -- Subsidiaries
Schedule 3.13 -- Insurance
Schedule 3.16(a) -- Actions to Pledge Stock of Foreign Subsidiaries
Schedule 3.16(d) -- Mortgage Filing Offices
Schedule 3.19 -- Affiliate Agreements
Schedule 5.07 -- Insurance Levels
Schedule 6.01 -- Existing Indebtedness
Schedule 6.03 -- Existing Liens
Schedule 6.05 -- Existing Investments
Schedule 6.10 -- Affiliate Transactions
Schedule 6.11 -- Existing Restrictions
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS:
<S> <C> <C>
Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Forms of Opinion of Borrower's Counsel
Exhibit B-2 -- Form of Opinion of Borrower's Utah Counsel
Exhibit B-3 -- Form of Opinion of Local Counsel
Exhibit B-4 -- Form of Opinion of Foreign Counsel
<PAGE>
7
Exhibit C -- Form of Guarantee Agreement
Exhibit D -- Form of Indemnity, Subrogation and Contribution
Agreement
Exhibit E -- Form of Pledge Agreement
Exhibit F -- Form of Security Agreement
CREDIT AGREEMENT dated as of September 30,
1997, among HUNTSMAN PACKAGING CORPORATION, a Utah
corporation, the LENDERS party hereto, and THE
CHASE MANHATTAN BANK, as Administrative Agent.
</TABLE>
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"ACQUISITION AGREEMENT" means the agreement or agreements entered into in
connection with the CT Film Acquisition.
"ADJUSTED CONSOLIDATED NET WORTH" means, as of any date, the capital stock
and additional paid-in capital of the Borrower plus retained earnings (or minus
accumulated deficit) of the Borrower, plus Excluded Charges, all determined as
of such date on a consolidated basis in accordance with GAAP (except that such
determination
<PAGE>
8
shall be made without taking into account Unrestricted Subsidiaries).
"ADJUSTED LIBO RATE" means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"ADMINISTRATIVE AGENT" means The Chase Manhattan Bank, in its capacity as
administrative agent for the Lenders hereunder.
"ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"AFFILIATE" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. The
Borrower acknowledges that Richard Durham is an Affiliate of the Borrower. Each
of Jon M. Huntsman and Huntsman (and their respective Affiliates) shall be
deemed to be an Affiliate of the Borrower for purposes of Section 6.10.
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"APPLICABLE PERCENTAGE" means, with respect to any Revolving Lender, the
percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
<PAGE>
9
"APPLICABLE RATE" means, for any day with respect to any ABR Loan or
Eurodollar Loan that is a Revolving Loan or a Term Loan, or with respect to the
commitment fees payable hereunder, as the case may be, the applicable rate per
annum set forth below under the caption "ABR Spread", "Eurodollar Spread" or
"Commitment Fee Rate", as the case may be, based upon the Leverage Ratio as of
the most recent determination date; PROVIDED that until the delivery to the
Administrative Agent, pursuant to Section 5.01(b), of the Borrower's
consolidated financial statements for the Borrower's first full fiscal quarter
ending after the Effective Date, the "Applicable Rate" shall be the applicable
rate per annum set forth below in Category 1:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
LEVERAGE RATIO ABR SPREAD EURODOLLAR SPREAD COMMITMENT FEE RATE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CATEGORY 1
Equal to or greater than 4.00 to 1.00 0.75% 2.00% 0.500%
- ----------------------------------------------------------------------------------------------------
CATEGORY 2
Less than 4.00 to 1.00 but greater than 3.50
to 1.00 0.50% 1.75% 0.400%
- ----------------------------------------------------------------------------------------------------
CATEGORY 3
Less than or equal to 3.50 to 1.00 but greater
than 3.00 to 1.00 0.25% 1.50% 0.375%
- ----------------------------------------------------------------------------------------------------
CATEGORY 4
Less than or equal to 3.00 to 1.00 but greater
than 2.50 to 1.00 0.00% 1.25% 0.350%
- ----------------------------------------------------------------------------------------------------
CATEGORY 4
Less than or equal to 2.50 to 1.00 0.00% 1.00% 0.300%
- ----------------------------------------------------------------------------------------------------
</TABLE>
For purposes of the foregoing, (a) the Leverage Ratio shall be determined
as of the end of each fiscal quarter of the Borrower's fiscal year based upon
the Borrower's consolidated financial statements delivered pursuant to Section
5.01(a) or (b) and (b) each change in the Applicable Rate resulting from a
change in the Leverage Ratio shall be effective during the period commencing on
and including the third day (such day, the "Applicable Rate Determination Date")
after the date of delivery to the Administrative Agent of such consolidated
financial statements indicating such change and ending on the date immediately
preceding the effective date of the next such change; PROVIDED that the Leverage
Ratio shall be deemed to be in Category 1 (i) at any time that an Event of
Default has occurred and is continuing or (ii) if the Borrower fails to deliver
the consolidated financial statements required to be delivered by it
<PAGE>
10
pursuant to Section 5.01(a) or (b), during the period from the expiration of the
time for delivery thereof until such consolidated financial statements are
delivered.
"ASSESSMENT RATE" means, for any day, the annual assessment rate in effect
on such day that is payable by a member of the Bank Insurance Fund classified as
"well-capitalized" and within supervisory subgroup "B" (or a comparable
successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation for insurance
by such Corporation of time deposits made in dollars at the offices of such
member in the United States; PROVIDED that if, as a result of any change in any
law, rule or regulation, it is no longer possible to determine the Assessment
Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall
be determined by the Administrative Agent to be representative of the cost of
such insurance to the Lenders.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent and the
Borrower.
"BASE CD RATE" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"BOARD" means the Board of Governors of the Federal Reserve System of the
United States of America.
"BORROWER" means Huntsman Packaging Corporation, a Utah corporation.
"BORROWER AMOUNT" means, at any date, the sum of:
(a) the aggregate amount of Excess Cash Flow for each fiscal year of
the Borrower completed prior to such date for which financial statements
have been delivered pursuant to Section 5.01 (commencing with the fiscal
year ending December 31, 1998), less the
<PAGE>
11
sum of (i) all prepayments of Term Borrowings required to be made pursuant
to Section 2.11(c) and (ii) all reductions of Revolving Commitments
required to be made pursuant to Section 2.08(d) in respect of such Excess
Cash Flow; plus
(b) the aggregate Net Proceeds received by the Borrower after the
Effective Date and prior to such date in respect of Prepayment Events
described in clause (c) of the definition of "Prepayment Event", less the
sum of (i) all prepayments of Term Borrowings required to be made pursuant
to clause (ii) of Section 2.11(b) in respect of such Net Proceeds, (ii) all
reductions of Revolving Commitments required to be made pursuant to
Section 2.08(d) in respect of such Net Proceeds and (iii) any portion of
such Net Proceeds reserved for a Permitted Acquisition as provided in
clause (ii) of Section 2.11(e); minus
(c) the sum of all utilizations of the Borrower Amount pursuant to any
provisions of this Agreement permitting utilization of the Borrower Amount.
Any provisions of this Agreement that permit an action to be taken by
utilizing the Borrower Amount shall be construed to permit such action only to
the extent that the Borrower Amount is a positive amount at that time.
"BORROWING" means (a) Loans of the same Class and Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect, or (b) a Swingline Loan.
"BORROWING REQUEST" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; PROVIDED that, when used in connection with a Eurodollar Loan,
the term "BUSINESS DAY" shall also exclude any day on which banks generally are
not open for dealings in dollar deposits in the London interbank market. For
purposes of this Agreement "Pioneer Day" as recognized in the State of Utah
shall not be a Business Day.
<PAGE>
12
"CAPITAL EXPENDITURES" means, for any period, without duplication, (a) the
additions to property, plant and equipment and other capital expenditures of the
Borrower and its Restricted Subsidiaries that are (or would be) set forth in a
consolidated statement of cash flows of the Borrower and its Restricted
Subsidiaries for such period prepared in accordance with GAAP and (b) Capital
Lease Obligations incurred by the Borrower and its Restricted Subsidiaries
during such period.
"CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"CASH INTEREST EXPENSE" means, for any period, Consolidated Interest
Expense for such period excluding any portion thereof in respect of interest not
required to be paid in cash during such period or within one year thereafter.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq.
"CHANGE IN CONTROL" means, at any time, (a) prior to an IPO, the failure by
the Control Group to collectively own and control at least a sufficient amount
of the outstanding voting capital stock of the Borrower to elect at least a
majority of the Board of Directors of the Borrower; (b) after an IPO, the
acquisition of beneficial ownership, directly or indirectly, by any Person or
group (within the meaning of the Securities Exchange Act of 1934 and the rules
of the Securities and Exchange Commission thereunder as in effect on the date
hereof) other than the Control Group, of shares representing more than 35% of
the aggregate ordinary voting power represented by the issued and outstanding
capital stock of the Borrower; (c) occupation of a majority of the seats (other
than vacant seats) on the board of directors of the Borrower by Persons who were
neither (i) nominated
<PAGE>
13
by members of the Control Group or the board of directors of the Borrower nor
(ii) appointed by directors so nominated; or (d) the acquisition of direct or
indirect Control of the Borrower by any Person or group other than the Control
Group.
"CHANGE IN LAW" means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender or the Issuing Bank
(or, for purposes of Section 2.15(b), by any lending office of such Lender or by
such Lender's or the Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"CLASS", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term
Loans or Swingline Loans and, when used in reference to any Commitment, refers
to whether such Commitment is a Revolving Commitment or Term Loan Commitment.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" means any and all "Collateral", as defined in any applicable
Security Document.
"COLLATERAL AGENT" means The Chase Manhattan Bank, in its capacity as
collateral agent for the Secured Parties under the Security Documents.
"COMMITMENT" means a Revolving Commitment, Term Loan Commitment, or any
combination thereof (as the context requires).
"CONSOLIDATED EBITDA" means, for any period, Consolidated Net Income for
such period, plus, without duplication and to the extent deducted from revenues
in determining Consolidated Net Income, the sum of (a) the aggregate amount of
Consolidated Interest Expense for such period, (b) the aggregate amount of
letter of credit
<PAGE>
14
fees paid during such period, (c) the aggregate amount of income tax expense for
such period, (d) all amounts attributable to depreciation and amortization for
such period, (e) all extraordinary charges and losses during such period and any
Excluded Charges during such period, (f) for the period ended December 31, 1997,
$9.5 million, (g) for the period ended March 31, 1998, $7.0 million, (h) for the
period ended June 30, 1998, $4.5 million and (i) for the period ended
September 30, 1998, $2.0 million, and minus, without duplication and to the
extent added to revenues in determining Consolidated Net Income for such period,
all extraordinary gains during such period, all as determined on a consolidated
basis with respect to the Borrower and the Restricted Subsidiaries in accordance
with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the interest
expense, both expensed and capitalized (including the interest component in
respect of Capital Lease Obligations), accrued or paid by the Borrower and the
Restricted Subsidiaries during such period (net of payments made or received
under interest rate protection agreements), determined on a consolidated basis
in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, net income or loss of the
Borrower and its Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, provided that there shall be
excluded (a) the income of any Unconsolidated Subsidiary and any Person in which
any other Person (other than the Borrower or any of the Restricted Subsidiaries
or any director holding qualifying shares in compliance with applicable law or
any other third party holding a de minimus number of shares in order to comply
with other similar requirements) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to the Borrower or
any of its Restricted Subsidiaries by such Person during such period, and
(b) the income (or loss) of any Person accrued prior to the date it becomes a
Restricted Subsidiary or is merged into or consolidated with the Borrower or any
of its Restricted Subsidiaries or the date that Person's assets are acquired by
the Borrower or any of its Restricted Subsidiaries.
<PAGE>
15
"CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"CONTROLLING" and "CONTROLLED" have meanings correlative thereto.
"CONTROL GROUP" means Jon M. Huntsman, his spouse, direct descendants and
their spouses, immediate family, any entities that are Controlled by any of the
foregoing individuals and/or by a trust of the type described hereafter, and/or
any trusts solely for the benefit of any of the foregoing.
"CT FILM ACQUISITION" means the acquisition by the Borrower from Huntsman
Polymers Corporation (formerly known as Rexene Corporation) of all or
substantially all the assets comprising Huntsman Polymers Corporation's CT Film
Division.
"DEFAULT" means any event or condition that constitutes an Event of Default
or that upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
"DOLLARS" or "$" refers to lawful money of the United States of America.
"EFFECTIVE DATE" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"ENVIRONMENTAL LAWS" means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by or with any Governmental Authority, relating in
any way to the environment, preservation or reclamation of natural resources,
handling, treatment, storage, disposal, Release or threatened Release of any
Hazardous Material or to health and safety matters.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise
(including, but not limited to, any liability for damages, natural resource
damage, costs of environmental remediation, administrative oversight
<PAGE>
16
costs, fines, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under Section
414 of the Code.
"ERISA EVENT" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
<PAGE>
17
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"EURODOLLAR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
"EVENT OF DEFAULT" has the meaning assigned to such term in Article VII.
"EXCESS CASH FLOW" means, for any period, the sum (without duplication) of:
(a) Consolidated Net Income for such period, adjusted to exclude any
gains or losses attributable to Prepayment Events; PLUS
(b) depreciation, amortization and other non-cash charges or losses
deducted in determining such Consolidated Net Income for such period; PLUS
(c) the sum of (i) the amount, if any, by which Net Working Capital
decreased during such period plus (ii) the amount, if any, by which the
consolidated deferred revenues of the Borrower and its consolidated
Restricted Subsidiaries increased during such period plus (iii) the
aggregate principal amount of Capital Lease Obligations and other
Indebtedness incurred during such period to finance Capital Expenditures
and the investments referred to in clause (e) below, to the extent that
mandatory principal payments in respect of such Indebtedness would not be
excluded from clause (f) below when made; MINUS
(d) the sum of (i) any non-cash gains included in determining such
Consolidated Net Income for such period plus (ii) the amount, if any, by
which Net Working Capital increased during such period plus (iii) the
amount, if any, by which the consolidated deferred revenues of the Borrower
and its consolidated Restricted Subsidiaries decreased during such period;
MINUS
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18
(e) the sum of (i) Capital Expenditures for such period, (ii) cash
consideration paid in respect of Permitted Acquisitions during such period,
including cash generated by the issuance of Indebtedness, and
(iii) investments made in cash, including cash generated by the issuance of
Indebtedness, pursuant to clause (h) of Section 6.05 during such period;
PROVIDED that amounts shall not be deducted pursuant to this clause (e) in
determining Excess Cash Flow to the extent that such Capital Expenditures,
Permitted Acquisitions or investments are made (A) by utilizing the
Borrower Amount, (B) by utilizing Net Proceeds of an event that otherwise
would be a "Prepayment Event" as provided in the proviso to the definition
of "Prepayment Event" or (C) in reliance upon sub-clause (ii) of
Section 2.11(e); minus
(f) the aggregate principal amount of Indebtedness repaid or prepaid
by the Borrower and its consolidated Restricted Subsidiaries during such
period, excluding (i) Indebtedness in respect of Revolving Loans and
Letters of Credit, (ii) Term Loans prepaid pursuant to Section 2.11(b) or
(c), (iii) repayments or prepayments of Indebtedness financed by incurring
other Indebtedness, to the extent that mandatory principal payments in
respect of such other Indebtedness would, pursuant to this clause (f), be
deducted in determining Excess Cash Flow when made, (iv) Indebtedness
referred to in clauses (iii), (iv) and (ix) of Section 6.01 and
(v) Indebtedness referred to in clauses (v), (vi) and (viii) of
Section 6.01, to the extent but only to the extent that such Indebtedness
was incurred by utilizing the Borrower Amount.
"EXCLUDED CHARGES" means (a) the non-recurring charges to be incurred in
respect of the restructurings, plant closings or similar actions expected to be
taken in connection with the Borrower's facilities in Scunthorpe, U.K. and
Birmingham, Alabama and the CT Film Acquisition, and (b) any other such
non-recurring charges incurred in respect of any restructurings, plant closings
or similar actions during the eighteen-month period commencing on
<PAGE>
19
the Effective Date, provided that the cash portion of charges referred to in
this clause (b) shall be limited to $8,000,000.
"EXCLUDED TAXES" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.19(b)), any withholding tax that is imposed on amounts
payable hereunder to such Foreign Lender at the time such Foreign Lender becomes
a party to this Agreement (or designates a new lending office) or is
attributable to such Foreign Lender's failure to comply with Section 2.17(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding
tax pursuant to Section 2.17(a).
"EXISTING INTERCOMPANY INDEBTEDNESS" means all Indebtedness owed by the
Borrower and its Subsidiaries to Huntsman and its subsidiaries (other than the
Borrower and its Subsidiaries), together with accrued interest thereon.
"EXISTING LETTERS OF CREDIT" means the following letters of credit entered
into by the Borrower and its Subsidiaries and outstanding as of the Effective
Date: (i) the Irrevocable Standby Letter of Credit dated July 30, 1996 issued by
U.S. Bank of Utah in the amount of $378,000 to Huntsman United Films Corporation
on behalf of Old National Trust Company and (ii) the Irrevocable Standby Letter
of Credit dated December 16, 1996 issued by U.S. Bank of Utah in the amount of
<PAGE>
20
$5,250,000 to Huntsman Packaging Corporation on behalf of Fleet National Bank.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FINANCIAL OFFICER" means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.
"FINANCING TRANSACTIONS" means (i) the repayment by the Borrower of the
Existing Intercompany Indebtedness, (ii) the issuance by the Borrower of the
Senior Subordinated Notes, and (iii) the execution, delivery and performance by
each Loan Party of the Loan Documents to which it is to be a party, the
borrowing of Loans, the use of the proceeds thereof and the issuance of Letters
of Credit hereunder.
"FOREIGN ASSETS" means the assets of or shares or other ownership interests
in the Foreign Subsidiaries.
"FOREIGN LENDER" means any Lender that is organized under the laws of a
jurisdiction other than the United States of America, each State thereof and the
District of Columbia.
"FOREIGN SUBSIDIARY" means any Subsidiary that is organized under the laws
of a jurisdiction other than the United States of America or any State thereof
or the District of Columbia.
"GAAP" means, subject to Section 1.04, generally accepted accounting
principles in the United States of America.
<PAGE>
21
"GOVERNMENTAL AUTHORITY" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"GUARANTEE" of or by any Person (the "GUARANTOR") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; PROVIDED that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business.
"GUARANTEE AGREEMENT" means the Guarantee Agreement, substantially in the
form of Exhibit C, made by the Subsidiary Loan Parties in favor of the
Administrative Agent for the benefit of the Secured Parties.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to
<PAGE>
22
any Environmental Law, including any material listed as a hazardous substance
under Section 101(14) of CERCLA.
"HEDGING AGREEMENT" means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
"HUNTSMAN" mean Huntsman Corporation, a Utah corporation.
"IMMATERIAL SUBSIDIARIES" mean, at any date, Restricted Subsidiaries
affected by one or more events described in clause (h), (i), (j) or (k) of
Article VII that (a) have (in the aggregate) consolidated assets representing
less than 5% of the consolidated assets of the Borrower and its Restricted
Subsidiaries as of such date, determined in accordance with GAAP, and (b) had
(in the aggregate) consolidated revenues and consolidated net income, in each
case for the period of four consecutive fiscal quarters of the Borrower most
recently ended as of such date for which financial statements have been
delivered pursuant to Section 5.01, representing less than 5% of the revenues
and consolidated net income, respectively, of the Borrower and its Restricted
Subsidiaries for such period, determined in accordance with GAAP; PROVIDED that
all Restricted Subsidiaries affected by events described in such clauses of
Article VII shall be consolidated for purposes of determining compliance with
clauses (a) and (b) above.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (d) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding accounts payable incurred in the ordinary course of business that are
not overdue by more than 60 days, unless the payment thereof is being contested
in good faith), (e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing
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23
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (f) all Guarantees by such Person of Indebtedness of others,
(g) all Capital Lease Obligations of such Person, (h) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty and (i) all obligations, contingent or
otherwise, of such Person in respect of bankers' acceptances. The Indebtedness
of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor. Notwithstanding
the foregoing, "Indebtedness" shall not include (i) deferred taxes or
(ii) unsecured indebtedness of the Borrower or any Subsidiary to finance
insurance premiums in a principal amount not in excess of the casualty and other
insurance premiums to be paid by the Borrower or any Restricted Subsidiary for a
three-year period beginning on the date of any incurrence of such indebtedness.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" means the Indemnity,
Subrogation and Contribution Agreement, substantially in the form of Exhibit D,
among the Borrower, the Subsidiary Loan Parties and the Administrative Agent.
"INFORMATION MEMORANDUM" means the Confidential Information Memorandum
dated July 1997 relating to the Borrower and the Transactions.
"INTEREST ELECTION REQUEST" means a request by the Borrower to convert or
continue a Revolving Borrowing or Term Borrowing in accordance with
Section 2.07.
"INTEREST PAYMENT DATE" means (a) with respect to any ABR Loan (other than
a Swingline Loan), the last day of each March, June, September and December, (b)
with respect to any Eurodollar Loan, the last day of the
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24
Interest Period applicable to the Borrowing of which such Loan is a part and, in
the case of a Eurodollar Borrowing with an Interest Period of more than three
months' duration, each day prior to the last day of such Interest Period that
occurs at intervals of three months' duration after the first day of such
Interest Period, and (c) with respect to any Swingline Loan, the day that such
Loan is required to be repaid.
"INTEREST PERIOD" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; PROVIDED, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.
"IPO" means the issuance by the Borrower of shares of its common stock to
the public pursuant to a bona fide underwritten public offering.
"ISSUING BANK" means The Chase Manhattan Bank, in its capacity as the
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.05(i) and such other financial institutions as may become
Issuing Banks as provided in Section 2.05(i). The Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by Affiliates
of the Issuing Bank, subject to the consent of the Borrower which shall not be
unreasonably withheld, in which case the term "Issuing Bank" shall include any
such Affiliate with respect to
<PAGE>
25
Letters of Credit issued by such Affiliate. In the event that there is more
than one Issuing Bank at any time, references herein and in the other Loan
Documents to the Issuing Bank shall be deemed to refer to the Issuing Bank in
respect of the applicable Letter of Credit or to all Issuing Banks, as the
context requires. Notwithstanding the foregoing, the U.S. Bank of Utah shall be
deemed to be an Issuing Bank with respect to the Existing Letters of Credit but
shall not be obligated to issue any additional Letters of Credit hereunder.
"LC AVAILABILITY PERIOD" means the period from and including the Effective
Date to but excluding the earlier of (a) the date that is five Business Days
prior to the Revolving Maturity Date and (b) the date of termination of the
Revolving Commitments.
"LC DISBURSEMENT" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
"LC EXPOSURE" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.
"LENDERS" means the Persons listed on Schedule 2.01 and any other Person
that shall have become a party hereto pursuant to an Assignment and Acceptance,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lender.
"LETTER OF CREDIT" means any letter of credit issued pursuant to this
Agreement. Each Existing Letter of Credit shall be deemed to constitute a
Letter of Credit issued hereunder on the Effective Date for all purposes of the
Loan Documents.
"LEVERAGE RATIO" means, on any date, the ratio of (a) Total Debt as of such
date to (b) Consolidated EBITDA for the period of four consecutive fiscal
quarters of the
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26
Borrower most recently ended as of such date, all determined on a consolidated
basis in accordance with GAAP.
"LIBO RATE" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO RATE" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"LIEN" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
"LOAN DOCUMENTS" means this Agreement, the Guarantee Agreement, the
Indemnity, Subrogation and Contribution Agreement and the Security Documents.
"LOAN PARTIES" means the Borrower and the Subsidiary Loan Parties.
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27
"LOANS" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"MARGIN STOCK" shall have the meaning assigned to such term in
Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and the Restricted Subsidiaries taken as a whole, (b) the ability
of any Loan Party to perform any of its obligations under any Loan Document or
(c) the rights of or benefits available to the Lenders under any Loan Document.
"MATERIAL INDEBTEDNESS" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Borrower and its Restricted Subsidiaries in an
aggregate principal amount exceeding $5,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of the Borrower
or any Restricted Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that the Borrower or such Restricted Subsidiary would be required to pay if such
Hedging Agreement were terminated at such time.
"MOODY'S" means Moody's Investors Service, Inc.
"MORTGAGE" means a mortgage, deed of trust, assignment of leases and rents,
leasehold mortgage or other security document granting a Lien on any Mortgaged
Property to secure the Obligations. Each Mortgage shall be satisfactory in
form and substance to the Collateral Agent.
"MORTGAGED PROPERTY" means, initially, each parcel of real property and the
improvements thereto owned by a Loan Party and identified on Schedule 1.01(a),
and includes each other parcel of real property and improvements thereto with
respect to which a Mortgage is granted pursuant to Section 5.12 or 5.13.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
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28
"NET PROCEEDS" means, with respect to any event (a) the cash proceeds
received by the Borrower and the Restricted Subsidiaries in respect of such
event including (i) any cash received in respect of any non-cash proceeds, but
only as and when received, (ii) in the case of a casualty, insurance proceeds,
and (iii) in the case of a condemnation or similar event, condemnation awards
and similar payments, net of (b) the sum of (i) all reasonable fees and
out-of-pocket expenses paid by the Borrower and the Restricted Subsidiaries to
third parties (other than to the Borrower or a Subsidiary) in connection with
such event, (ii) in the case of a sale, transfer or other disposition of an
asset (including pursuant to a sale and leaseback transaction or a casualty or
other insured damage or condemnation or similar proceeding), the amount of all
payments required to be made by the Borrower and the Restricted Subsidiaries as
a result of such event to repay Indebtedness (other than Loans) secured by such
asset or otherwise subject to mandatory prepayment as a result of such event,
and (iii) the amount of all taxes paid (or reasonably estimated to be payable)
by the Borrower and the Restricted Subsidiaries, and the amount of any reserves
established by the Borrower and the Restricted Subsidiaries to fund contingent
liabilities reasonably estimated to be payable, in each case during the year
that such event occurred or the next succeeding year and that are directly
attributable to such event (as determined reasonably and in good faith by the
chief financial officer of the Borrower).
"NET WORKING CAPITAL" means, at any date, (a) the consolidated current
assets of the Borrower and its consolidated Restricted Subsidiaries as of such
date (excluding cash and Permitted Investments) minus (b) the consolidated
current liabilities of the Borrower and its consolidated Restricted Subsidiaries
as of such date (excluding current liabilities in respect of Indebtedness). Net
Working Capital at any date may be a positive or negative number. Net Working
Capital increases when it becomes more positive or less negative and decreases
when it becomes less positive or more negative.
"OBLIGATIONS" has the meaning assigned to such term in the Security
Agreement.
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29
"OTHER TAXES" means any and all current or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"PERFECTION CERTIFICATE" means a certificate in the form of Annex 1 to the
Security Agreement or any other form approved by the Collateral Agent.
"PERMITTED ACQUISITION" means any acquisition (other than the CT Film
Acquisition) by the Borrower or a Restricted Subsidiary of the Borrower of all
or substantially all the assets of, or all the shares of capital stock of or
other equity interests in, a Person or division or line of business of a Person
if, immediately after giving effect thereto, (a) no Default has occurred and is
continuing or would result therefrom, (b) all transactions related thereto are
consummated in accordance with applicable laws, (c) each Subsidiary formed for
the purpose of or resulting from such acquisition shall be a Restricted
Subsidiary and all the capital stock of each such Subsidiary shall be owned
directly by the Borrower or a Restricted Subsidiary of the Borrower and all
actions required to be taken with respect to such acquired or newly formed
Subsidiary under Sections 5.12 and 5.13 have been taken, (d) the Borrower and
its Restricted Subsidiaries are in compliance, on a pro forma basis after giving
effect to such acquisition, with the covenants contained in Sections 6.14, 6.15
and 6.16 recomputed as at the last day of the most recently ended fiscal quarter
of the Borrower for which financial statements are available, as if such
acquisition (and any related incurrence or repayment of Indebtedness, with any
new Indebtedness being deemed to be amortized over the applicable testing period
in accordance with its terms, and assuming that any Revolving Loans borrowed in
connection with such acquisition are repaid with excess cash balances when
available) had occurred on the first day of each relevant period for testing
such compliance and (e) the Borrower has delivered to the Administrative
<PAGE>
30
Agent an officers' certificate to the effect set forth in clauses (a), (b), (c)
and (d) above, together with all relevant financial information for the Person
or assets to be acquired. For purposes of determining pro forma compliance with
the covenants referred to in clause (d) above and for purposes of Section 1.05
as provided therein, the Borrower may give effect to synergistic benefits
anticipated to be realized in connection with the proposed acquisition to the
extent (but only to the extent) that the Borrower would be permitted to give
effect to such benefits in pro forma financial statements to be filed with the
SEC and prepared in accordance with Article 11 of Regulation S-X under the
Securities Exchange Act of 1934, as amended, and the applicable interpretations
of the SEC, in each case as in effect on the date of this Agreement.
"PERMITTED ENCUMBRANCES" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, processors',
landlords', repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not overdue
by more than 30 days or are being contested in compliance with Section
5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII; and
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31
(f) Liens disclosed on title policies delivered to the Administrative Agent
prior to the execution of this Agreement in respect of any Mortgaged Property
and easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business that
do not secure any monetary obligations and do not materially detract from the
value of the affected property or interfere with the ordinary conduct of
business of the Borrower or any Subsidiary;
PROVIDED that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"PERMITTED INVESTMENTS" means (i) a marketable obligation, maturing within
two years after issuance thereof, issued or guaranteed by the United States of
America or an instrumentality or agency thereof, (ii) a certificate of deposit
or banker's acceptance, maturing within one year after issuance thereof, issued
by any Lender, or a national or state bank or trust company or a European,
Canadian or Japanese bank in each case having capital, surplus and undivided
profits of at least $100,000,000 and whose long-term unsecured debt has a rating
of "A" or better by S&P or A2 or better by Moody's or the equivalent rating by
any other nationally recognized rating agency (provided that the aggregate face
amount of all investments in certificates of deposit or banker's acceptances
issued by the principal offices of or branches of such European or Japanese
banks located outside the United States shall not at an time exceed 33-1/3% of
all investments described in this definition), (iii) open market commercial
paper, maturing within 270 days after issuance thereof, which has a rating of A1
or better by S&P or P1 or better by Moody's, or the equivalent rating by any
other nationally recognized rating agency, (iv) repurchase agreements and
reverse repurchase agreements with a term not in excess of one year with any
financial institution which has been elected a primary government securities
dealer by the Federal Reserve Board or whose securities are rated AA-or better
by S&P or Aa3 or better by Moody's or the equivalent rating by any other
nationally recognized rating agency relating to marketable direct obligations
issued or unconditionally guaranteed by the United States
<PAGE>
32
of America or any agency or instrumentality thereof and backed by the full faith
and credit of the United States of America, (v) "Money Market" preferred stock
maturing within six months after issuance thereof or municipal bonds issued by a
corporation organized under the laws of any state of the United States, which
has a rating of "A" or better by S&P or Moody's or the equivalent rating by any
other nationally recognized rating agency and (vi) tax exempt floating rate
option tender bonds backed by letters of credit issued by a national or state
bank whose long-term unsecured debt has a rating of AA or better by S&P or Aa2
or better by Moody's or the equivalent rating by any other nationally recognized
rating agency.
"PERSON" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"PLAN" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA, Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"PLEDGE AGREEMENT" means the Pledge Agreement, substantially in the form of
Exhibit E, among the Borrower, the Subsidiaries party thereto and the Collateral
Agent for the benefit of the Secured Parties.
"PREPAYMENT EVENT" means:
(a) any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of the Borrower or
any Restricted Subsidiary, other than (i) dispositions described in clauses
(a), (b), (c), (d), (e) and (h) of Section 6.06 and (ii) other dispositions
resulting in aggregate Net Proceeds not exceeding $1,000,000 during any
fiscal year of the Borrower; or
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33
(b) any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any property
or asset of the Borrower or any Restricted Subsidiary, other than such
events resulting in aggregate Net Proceeds not exceeding $1,000,000 during
any fiscal year of the Borrower; or
(c) the issuance by the Borrower or any Restricted Subsidiary of any
equity securities, or the receipt by the Borrower or any Restricted
Subsidiary of any capital contribution, other than (i) any such issuance of
equity securities to, or receipt of any such capital contribution from, the
Borrower or a Restricted Subsidiary and (ii) the issuance by the Borrower
of equity securities to officers and directors of the Borrower and its
Restricted Subsidiaries resulting in aggregate Net Proceeds not exceeding
$1,000,000 during any fiscal year of the Borrower; or
(d) the incurrence by the Borrower or any Restricted Subsidiary of any
Indebtedness, other than Indebtedness permitted by Section 6.01;
PROVIDED that, with respect to any event described in clause (a) or (b) above,
if the Borrower shall deliver a certificate of a Financial Officer to the
Administrative Agent at the time of such event (i) setting forth the Borrower's
or a Restricted Subsidiary's intent to use the Net Proceeds of such event to
repair the assets that are the subject of such event, or to use the Net Proceeds
to acquire other assets to be used in a line of business permitted under
Section 6.04(b), in each case within 360 days of receipt of such Net Proceeds,
or, in the case of Net Proceeds resulting from the disposition of Foreign
Assets, to finance a Permitted Acquisition in the United States or Canada within
540 days of receipt of such Net Proceeds and (ii) certifying that no Default has
occurred and is continuing, then such event shall not constitute a Prepayment
Event except to the extent the Net Proceeds therefrom are not so used at the end
of such 360-day or 540-day period, as applicable, at which time such event shall
be deemed a Prepayment Event with Net Proceeds equal to the Net Proceeds so
remaining unused; PROVIDED FURTHER that the provisions of the foregoing
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34
exception allowing Net Proceeds to be used to finance Permitted Acquisitions in
Canada shall be subject to the requirement that all Subsidiaries resulting from
any such Permitted Acquisitions must be treated as Subsidiary Loan Parties for
purposes of this Agreement.
"PRIME RATE" means the rate of interest per annum publicly announced from
time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"REGISTER" has the meaning set forth in Section 9.04.
"REGULATION G" shall mean Regulation G of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"REGULATION U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"REGULATION X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"RELEASE" has the meaning set forth in Section 101(22) of CERCLA.
"REQUIRED LENDERS" means, at any time, Lenders having Revolving Exposures,
Term Loans and unused Commitments representing more than 50% of the sum of the
total Revolving Exposures, outstanding Term Loans and unused Commitments at such
time.
"RESTRICTED PAYMENT" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any shares of any class of
capital stock of the Borrower or any Restricted
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35
Subsidiary, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancelation or termination of any such
shares of capital stock of the Borrower or any Restricted Subsidiary or any
option, warrant or other right to acquire any such shares of capital stock of
the Borrower or any Restricted Subsidiary.
"RESTRICTED SUBSIDIARY" means any Subsidiary that is not an Unrestricted
Subsidiary.
"REVOLVING AVAILABILITY PERIOD" means the period from and including the
Effective Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.
"REVOLVING COMMITMENT" means, with respect to each Lender, the commitment,
if any, of such Lender to make Revolving Loans and to acquire participations in
Letters of Credit and Swingline Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender's Revolving Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders' Revolving Commitments is $150,000,000.
"REVOLVING EXPOSURE" means, with respect to any Lender at any time, the sum
of the outstanding principal amount of such Lender's Revolving Loans and its LC
Exposure and Swingline Exposure at such time.
"REVOLVING LENDER" means a Lender with a Revolving Commitment or, if the
Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"REVOLVING LOAN" has the meaning set forth in Section 2.01.
"REVOLVING MATURITY DATE" means September 30, 2004.
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36
"S&P" means Standard & Poor's.
"SEC" means the Securities and Exchange Commission.
"SECURED PARTIES" shall have the meaning assigned to such term in the
Security Agreement.
"SECURITY AGREEMENT" means the Security Agreement, substantially in the
form of Exhibit F, among the Borrower, the Subsidiary Loan Parties and the
Collateral Agent for the benefit of the Secured Parties.
"SECURITY DOCUMENTS" means the Security Agreement, the Pledge Agreement,
the Mortgages and each other security agreement or other instrument or document
executed and delivered pursuant to Section 5.12 or 5.13 to secure any of the
Obligations.
"SENIOR SUBORDINATED NOTE DOCUMENTS" means the Senior Subordinated Notes,
the indenture under which the Senior Subordinated Notes are issued and all other
documents evidencing, guaranteeing or otherwise governing the terms of the
Senior Subordinated Notes.
"SENIOR SUBORDINATED NOTES" means (i) the senior subordinated notes in an
aggregate principal amount not less than $100,000,000 and not more than
$125,000,000 issued by the Borrower in a Rule 144A or other private placement
(the "Initial Notes") and (ii) any senior subordinated notes with substantially
identical terms to the Initial Notes which are issued in exchange for the
Initial Notes following the issuance of the Initial Notes as contemplated by the
Senior Subordinated Note Documents.
"SPLIT-OFF" means the distribution of all the issued and outstanding
capital stock of the Borrower to Richard Durham, the Christena Karen H. Durham
Trust and Jon M. Huntsman in exchange for some or all of the capital stock of
Huntsman owned by such Persons.
"SPLIT-OFF DOCUMENTS" means all agreements and documents providing for or
to be entered into in connection with the Split-Off.
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37
"STATUTORY RESERVE RATE" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"SUBSIDIARY" means, with respect to any Person (the "PARENT") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"SUBSIDIARY" means any subsidiary of the Borrower.
"SUBSIDIARY LOAN PARTY" means any Restricted Subsidiary; PROVIDED that a
Foreign Subsidiary shall not
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be a Subsidiary Loan Party if the Borrower would suffer adverse tax consequences
if such Foreign Subsidiary were to be a Subsidiary Loan Party.
"SWINGLINE EXPOSURE" means, at any time, the aggregate principal amount of
all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.
"SWINGLINE LENDER" means The Chase Manhattan Bank, in its capacity as
lender of Swingline Loans hereunder.
"SWINGLINE LOAN" has the meaning set forth in Section 2.04.
"TAXES" means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"TERM COMMITMENT" means, with respect to each Lender, the commitment, if
any, of such Lender to make a Term Loan hereunder on the Effective Date,
expressed as an amount representing the maximum principal amount of the Term
Loan to be made by such Lender hereunder, as such commitment may be reduced
pursuant to Section 2.08. The initial aggregate amount of the Lenders' Term
Commitments is $100,000,000. The initial amount of each Lender's Term
Commitment is set forth on Schedule 2.01.
"TERM LOAN" has the meaning set forth in Section 2.01.
"TERM LOAN LENDER" means a Lender with a Term Commitment or an outstanding
Term Loan.
"TERM LOAN MATURITY DATE" means September 30, 2005.
"THREE-MONTH SECONDARY CD RATE" means, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day is not a Business Day, the next preceding Business Day) by
the Board through the public information telephone line of the Federal Reserve
Bank of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical
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39
Release H.15(519) during the week following such day) or, if such rate is not so
reported on such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately 10:00 a.m.,
New York City time, on such day (or, if such day is not a Business Day, on the
next preceding Business Day) by the Administrative Agent from three negotiable
certificate of deposit dealers of recognized standing selected by it.
"TOTAL DEBT" means, as of any date of determination, without duplication,
the aggregate principal amount of Indebtedness of the Borrower and the
Restricted Subsidiaries outstanding as of such date, determined on a
consolidated basis in accordance with GAAP (other than the Indebtedness of the
type referred to in clause (h) of the definition of the term "Indebtedness",
except to the extent of any unreimbursed drawings thereunder).
"TRANSACTION COSTS" means the fees and expenses incurred by, or required to
be reimbursed or paid by, the Borrower and its Subsidiaries in connection in the
Transactions.
"TRANSACTIONS" means the Split-Off and the Financing Transactions.
"TYPE", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
"UNRESTRICTED SUBSIDIARY" means (a) any Subsidiary organized after the date
of this Agreement for the purpose of acquiring the stock or assets of another
Person or for start-up ventures or activities and designated as an Unrestricted
Subsidiary by the Borrower by notice to the Administrative Agent at or prior to
the time of its organization and (b) any Subsidiary of any Unrestricted
Subsidiary. By notice to the Administrative Agent, the Borrower may declare an
Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED that (i) no
Default has occurred and is continuing or would result from such declaration and
(ii) the representations
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and warranties of the Borrower herein would be true and correct on and as of the
date of such declaration (after giving effect to such declaration). The
Borrower may not declare a Restricted Subsidiary to be an Unrestricted
Subsidiary.
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary of which securities (except
for directors' qualifying shares or other de minimus shares) or other ownership
interests representing 100% of the equity are at the time owned, directly or
indirectly, by the Borrower.
"WITHDRAWAL LIABILITY" means liability of the Borrower or any ERISA
Affiliate to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS. For purposes of
this Agreement, Loans may be classified and referred to by Class (E.G., a
"Revolving Loan") or by Type (E.G., a "Eurodollar Loan") or by Class and Type
(E.G., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (E.G., a "Revolving Borrowing") or by Type (E.G., a
"Eurodollar Borrowing") or by Class and Type (E.G., a "Eurodollar Revolving
Borrowing").
SECTION 1.03. TERMS GENERALLY. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
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41
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.04. ACCOUNTING TERMS; GAAP; TREATMENT OF UNRESTRICTED
SUBSIDIARIES. (a) Except as otherwise expressly provided herein, all terms of
an accounting or financial nature shall be construed in accordance with GAAP, as
in effect from time to time; PROVIDED that, if the Borrower notifies the
Administrative Agent that the Borrower requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or in the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.
(b) Except as otherwise expressly provided herein, all accounting and
financial calculations and determinations hereunder shall be made without
consolidating the accounts of Unrestricted Subsidiaries with those of the
Borrower or any Restricted Subsidiary, notwithstanding that such treatment is
inconsistent with GAAP.
SECTION 1.05. CERTAIN INTERIM FINANCIAL CALCULATIONS. Prior to
September 30, 1998, solely for purposes of determining compliance with
Sections 6.14 and 6.15 and for purposes of determining the Leverage Ratio,
Consolidated Net Income for the period of four consecutive fiscal quarters ended
(a) December 31, 1997,
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42
shall be deemed to be equal to the product of (i) Consolidated Net Income for
the fiscal quarter ended December 31, 1997, multiplied by (ii) four,
(b) March 31, 1998, shall be deemed to be equal to the product of
(i) Consolidated Net Income for the two consecutive fiscal quarters ended
March 31, 1998, multiplied by (ii) two and (c) June 30, 1998, shall be deemed to
be equal to the product of (i) Consolidated Net Income for the three consecutive
fiscal quarters ended June 30, 1998, multiplied by (ii) four-thirds. Related
calculations for Cash Interest Expense for the same periods shall be determined
in the same manner.
If a Permitted Acquisition occurs, then prior to the end of the period of
four consecutive fiscal quarters commencing with the fiscal quarter during which
such Permitted Acquisition occurs (each such quarter hereinafter referred to as
an "Acquisition Fiscal Quarter"), solely for purposes of determining compliance
with Sections 6.14 and 6.15 and for purposes of determining the Leverage Ratio,
Consolidated Net Income for the trailing four fiscal quarters, calculated at the
end of each of the Acquisition Fiscal Quarters, shall equal the sum of
(a) Consolidated EBITDA for the trailing four fiscal quarters and (b) with
respect to the first Acquisition Fiscal Quarter, Acquisition EBITDA multiplied
by seven-eighths; (ii) with respect to the second Acquisition Fiscal Quarter,
Acquisition EBITDA multiplied by five-eighths; (iii) with respect to the third
Acquisition Fiscal Quarter, Acquisition EBITDA, multiplied by three-eighths; and
(iv) with respect to the fourth Acquisition Fiscal Quarter, Adjusted EBITDA
multiplied by one-eighth.
For purposes of the immediately preceding paragraph, "Acquisition EBITDA"
means, the sum of (i) the consolidated EBITDA of the entity or business
associated with the Permitted Acquisition for the four fiscal quarters
immediately preceding the date of effectiveness of the Permitted Acquisition,
calculated on the same basis as required in the definition of "Consolidated
EBITDA" as if calculated with respect to the Borrower but without giving effect
to clauses (f), (g) (h) and (i) and clause (e) to the extent of Excluded
Charges, and (ii) any synergistic benefits permitted to be realized
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43
pursuant to the last sentence of the definition of "Permitted Acquisition".
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions set forth
herein, each Lender agrees (a) to make a loan (a "TERM LOAN") to the Borrower on
the Effective Date in the principal amount of its Term Commitment and (b) to
make loans ("REVOLVING LOANS") to the Borrower from time to time during the
Revolving Availability Period in an aggregate principal amount that will not
result in such Lender's Revolving Exposure exceeding such Lender's Revolving
Commitment (after giving effect to the application of any proceeds being applied
contemporaneously with the advance of such Revolving Loans). Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Revolving Loans. Amounts repaid in
respect of Term Loans may not be reborrowed.
SECTION 2.02. LOANS AND BORROWINGS. (a) Each Loan (other than a
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder; PROVIDED that the Commitments of the Lenders are
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.
(b) Subject to Section 2.14, each Revolving Borrowing and Term Borrowing
shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith. Each Swingline Loan shall be an ABR Loan. Each
Lender at its option may make any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; PROVIDED that any
exercise of such option shall not affect the obligation of the Borrower to repay
such Loan
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44
in accordance with the terms of this Agreement and shall not result in any
increased costs under Section 2.15 or any obligation by the Borrower to make any
payment under Section 2.17 in excess of the amounts, if any, that such Lender
would be entitled to claim under Section 2.15 or 2.17, as applicable, without
giving effect to such change in lending office.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $500,000 and not less than $1,000,000; PROVIDED that
an ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Revolving Commitments or that is equal to the
amount required to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.05(e). Each Swingline Loan shall be in an amount that
is an integral multiple of $10,000 and not less than $50,000. Borrowings of
more than one Type and Class may be outstanding at the same time; PROVIDED that
there shall not at any time be more than a total of 8 Eurodollar Borrowings
outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Maturity Date or Term Loan Maturity Date, as applicable.
SECTION 2.03. REQUESTS FOR BORROWINGS. To request a Revolving Borrowing
or Term Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
12:00 noon, New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
1:00 p.m., New York City time, one Business Day before the date of the proposed
Borrowing. Each such telephonic Borrowing Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Borrowing Request in a form approved by the Administrative
Agent and signed by
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45
the Borrower. Each such telephonic and written Borrowing Request shall specify
the following information in compliance with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving Borrowing
or a Term Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) subject to Section 2.02, whether such Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period"; and
(vi) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.06.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall
be deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. SWINGLINE LOANS. (a) Subject to the terms and conditions
set forth herein, the Swingline Lender agrees to make loans ("SWINGLINE LOANS")
to the Borrower from time to time during the Revolving Availability Period, in
an aggregate principal amount at any time outstanding that will not result in
(i) the aggregate principal amount of outstanding Swingline Loans exceeding
$5,000,000 or (ii) the sum of the total Revolving Exposures exceeding the total
Revolving
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46
Commitments; PROVIDED that the Swingline Lender shall not be required to make a
Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Swingline Loans.
(b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 1:00 p.m., New York City time, on the day of a proposed Swingline
Loan. Each such notice shall be irrevocable and shall specify the requested
date (which shall be a Business Day) and amount of the requested Swingline Loan.
The Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower. The Swingline Lender shall make each
Swingline Loan available to the Borrower by means of a credit to the general
deposit account of the Borrower with the Swingline Lender (or, in the case of a
Swingline Loan made to finance the reimbursement of an LC Disbursement as
provided in Section 2.05(e), by remittance to the Issuing Bank) by 2:00 p.m.,
New York City time, on the requested date of such Swingline Loan.
(c) The Swingline Lender may by written notice given to the Administrative
Agent not later than 10:00 a.m., New York City time, on any Business Day require
the Revolving Lenders to acquire participations on such Business Day in all or a
portion of the Swingline Loans outstanding. Such notice shall specify the
aggregate amount of Swingline Loans in which Revolving Lenders will participate.
Promptly upon receipt of such notice, the Administrative Agent will give notice
thereof to each Revolving Lender, specifying in such notice such Lender's
Applicable Percentage of such Swingline Loan or Loans. Each Revolving Lender
hereby absolutely and unconditionally agrees, upon receipt of notice as provided
above, to pay to the Administrative Agent, for the account of the Swingline
Lender, such Lender's Applicable Percentage of such Swingline Loan or Loans.
Each Revolving Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Loans pursuant to this paragraph is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or
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47
reduction or termination of the Commitments, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever. Each
Revolving Lender shall comply with its obligation under this paragraph by making
a wire transfer to the Administrative Agent for the benefit of the Swingline
Lender of immediately available funds, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, MUTATIS MUTANDIS, to the payment obligations of the Revolving Lenders),
and the Administrative Agent shall promptly pay to the Swingline Lender the
amounts so received by it from the Revolving Lenders. The Administrative Agent
shall notify the Borrower of any participations in any Swingline Loan acquired
pursuant to this paragraph, and thereafter payments in respect of such Swingline
Loan shall be made to the Administrative Agent and not to the Swingline Lender.
Any amounts received by the Swingline Lender from the Borrower (or other party
on behalf of the Borrower) in respect of a Swingline Loan after receipt by the
Swingline Lender of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear. The
purchase of participations in a Swingline Loan pursuant to this paragraph shall
not relieve the Borrower of any default in the payment thereof.
SECTION 2.05. LETTERS OF CREDIT. (a) GENERAL. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the LC Availability Period. In the event of any inconsistency between
the terms and conditions of this Agreement and the terms and conditions of any
form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.
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48
(b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN CONDITIONS.
To request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuing Bank, the Borrower also shall submit a
letter of credit application on the Issuing Bank's standard form in connection
with any request for a Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure shall not exceed $20,000,000 and (ii) the total
Revolving Exposures shall not exceed the total Revolving Commitments.
(c) EXPIRATION DATE. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.
(d) PARTICIPATIONS. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such
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49
Lender's Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) REIMBURSEMENT. If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 12:00 noon, New York City time, on the date that such
LC Disbursement is made, if the Borrower shall have received notice of such
LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 12:00 noon, New York City time, on (i) the Business
Day that the Borrower receives such notice, if such notice is received prior to
10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; PROVIDED that,
if the Borrower does not otherwise elect by notice to the Administrative Agent
to make such payment, the Borrower shall be deemed to have requested in
accordance with Section 2.03 (but without regard to the minimum borrowing
amounts specified in Section 2.02) that such LC Disbursement be financed with an
ABR Revolving Borrowing in an amount equal to such LC Disbursement, the
Administrative Agent shall notify the Revolving Lenders
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thereof, the Revolving Lenders shall (subject to the conditions to borrowing
herein) advance their respective ABR Revolving Loans (which shall be applied to
reimburse such LC Disbursement) and, to the extent such ABR Revolving Loans are
so advanced and applied, the Borrower's obligation to make such payment shall be
discharged and replaced by the resulting ABR Revolving Loans. If and to the
extent that the Borrower's obligation to make such payment is not fully
discharged and replaced by ABR Revolving Loans as aforesaid (whether as a result
of the failure to satisfy any condition to borrowing or otherwise) and if the
Borrower otherwise fails to make such payment when due, the Administrative Agent
shall notify each Revolving Lender of the applicable LC Disbursement, the
payment then due from the Borrower in respect thereof and such Lender's
Applicable Percentage thereof. Promptly following receipt of such notice, each
Revolving Lender shall pay to the Administrative Agent its Applicable Percentage
of the payment then due from the Borrower, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, MUTATIS MUTANDIS, to the payment obligations of the Revolving Lenders),
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from the Revolving Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Revolving Lenders have made payments pursuant to
this paragraph to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Revolving
Lender pursuant to this paragraph to reimburse the Issuing Bank for any
LC Disbursement (other than the funding of ABR Revolving Loans as contemplated
above) shall not constitute a Loan and shall not relieve the Borrower of its
obligation to reimburse such LC Disbursement.
(f) OBLIGATIONS ABSOLUTE. The Borrower's obligation to reimburse
LC Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
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51
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder.
Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of
their Related Parties, shall have any liability or responsibility by reason of
or in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; PROVIDED that nothing in this Section 2.05 shall be construed to
excuse the Issuing Bank from liability to the Borrower to the extent of any
direct damages (as opposed to consequential damages, claims in respect of which
are hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by the Issuing Bank's failure to
exercise care when determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof. The parties hereto
expressly agree that, in the absence of gross negligence or wilful misconduct on
the part of the Issuing Bank, the Issuing Bank shall be deemed to have exercised
care in each such determination. In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to
documents presented that appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank may, in its sole
discretion,
<PAGE>
52
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.
(g) DISBURSEMENT PROCEDURES. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an
LC Disbursement thereunder; PROVIDED that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.
(h) INTERIM INTEREST. If the Issuing Bank shall make any LC Disbursement,
then, unless the Borrower shall reimburse such LC Disbursement in full on the
date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that the Borrower reimburses such LC Disbursement, at
the rate per annum then applicable to ABR Revolving Loans; PROVIDED that, if the
Borrower fails to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, then Section 2.13(c) shall apply. Interest
accrued pursuant to this paragraph shall be for the account of the Issuing Bank,
except that interest accrued on and after the date of payment by any Revolving
Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank
shall be for the account of such Lender to the extent of such payment.
(i) REPLACEMENT OF THE ISSUING BANK; ADDITIONAL ISSUING BANKS. The
Issuing Bank may be replaced at any time by written agreement among the
Borrower, the Administrative Agent, the replaced Issuing Bank and the successor
Issuing Bank. One or more Lenders may be appointed as additional Issuing Banks
by written agreement among the Borrower, the Administrative Agent (whose consent
will not be unreasonably withheld) and the
<PAGE>
53
Lender that is to be so appointed. The Administrative Agent shall notify the
Lenders of any such replacement of the Issuing Bank or any such additional
Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.12(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of the Issuing Bank under this Agreement with respect to Letters
of Credit to be issued thereafter and (ii) references herein to the term
"Issuing Bank" shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the replacement of an Issuing Bank hereunder, the
replaced Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of an Issuing Bank under this Agreement with respect
to Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit. If at any time there is more
than one Issuing Bank hereunder, the Borrower may, in its discretion, select
which Issuing Bank is to issue any particular Letter of Credit.
(j) CASH COLLATERALIZATION. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to 105% of the LC Exposure as of
such date plus any accrued and unpaid interest thereon; PROVIDED that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (h) or (i) of Article VII. Each
such deposit shall be held by the Administrative Agent as collateral for the
payment and performance of the obligations of the Borrower under this
<PAGE>
54
Agreement. The Administrative Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and sole discretion of the Administrative Agent and at the
Borrower's risk and expense, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. Moneys
in such account shall be applied by the Administrative Agent to reimburse the
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such time or,
if the maturity of the Loans has been accelerated (but subject to the consent of
Revolving Lenders with LC Exposure representing greater than 50% of the total
LC Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or waived.
SECTION 2.06. FUNDING OF BORROWINGS. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; PROVIDED that Swingline Loans shall be made as provided
in Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request;
PROVIDED that ABR Revolving Loans made to finance the reimbursement of an
LC Disbursement as provided in Section 2.05(e) shall be remitted by the
Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date
<PAGE>
55
of any Borrowing that such Lender will not make available to the Administrative
Agent such Lender's share of such Borrowing, the Administrative Agent may assume
that such Lender has made such share available on such date in accordance with
paragraph (a) of this Section and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event, if a Lender
has not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to
the Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.
SECTION 2.07. INTEREST ELECTIONS. (a) Each Revolving Borrowing and Term
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section. The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing. This Section shall not apply
to Swingline Borrowings, which may not be converted or continued.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the
<PAGE>
56
Borrower were requesting a Revolving Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Interest Election Request in a form approved by the Administrative Agent and
signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02 and paragraph (f) of
this Section:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
<PAGE>
57
(e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
(f) A Borrowing of any Class may not be converted to or continued as a
Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal amount of outstanding Eurodollar Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date plus
the aggregate principal amount of outstanding ABR Borrowings of such Class would
be less than the aggregate principal amount of Loans of such Class required to
be repaid on such scheduled repayment date.
SECTION 2.08. TERMINATION AND REDUCTION OF COMMITMENTS. (a) Unless
previously terminated, (i) the Term Commitments shall terminate at 5:00 p.m.,
New York City time, on the Effective Date and (ii) the Revolving Commitments
shall terminate on the Revolving Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce,
the Revolving Commitments; PROVIDED that (i) each reduction of the Revolving
Commitments shall be in an amount that is an integral multiple of $1,000,000 and
not less than $5,000,000 and (ii) the Borrower shall not terminate or reduce the
Revolving Commitments if, after giving effect to any concurrent prepayment of
the Revolving Loans in accordance with
<PAGE>
58
Section 2.11, the sum of the Revolving Exposures would exceed the total
Revolving Commitments.
(c) If the estimated Net Proceeds from the issuance of the Senior
Subordinated Notes exceeds $100,000,000, then the Term Commitments shall be
reduced (effective prior to the open of business on the Effective Date) by an
amount equal to such excess. For purposes hereof, if the aggregate principal
amount of the Senior Subordinated Notes issued or to be issued on or prior to
the Effective Date exceeds $100,000,000, then the Borrower shall deliver to the
Administrative Agent, prior to the Effective Date, a certificate of a Financial
Officer setting forth a calculation of the estimated Net Proceeds therefrom
(rounded to the nearest $1,000,000) and the reduction of the Term Commitments
pursuant to this paragraph shall be made based upon such certificate.
(d) If any prepayment of a Term Borrowing would be required pursuant to
Section 2.11(b) or (c) at a time when there are not any Term Borrowings
outstanding, then the Revolving Commitments shall be reduced at such time in an
amount equal to the prepayment that would be required if Term Borrowings were
outstanding at such time.
(e) The Borrower shall notify the Administrative Agent of any election or
requirement to terminate or reduce the Commitments under paragraph (b) or (d) of
this Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election or requirement and the
effective date thereof. Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
notice delivered by the Borrower pursuant to this Section shall be irrevocable;
PROVIDED that a notice of termination of the Revolving Commitments delivered by
the Borrower under paragraph (b) of this Section may state that such notice is
conditioned upon the effectiveness of other borrowings, in which case such
notice may be revoked by the Borrower (by notice to the Administrative Agent on
or prior to the specified effective date) if such condition is not satisfied.
Any termination or reduction of the Commitments of any Class shall be permanent.
Each reduction of the Commitments of any Class shall be made ratably among the
Lenders in
<PAGE>
59
accordance with their respective Commitments of such Class.
SECTION 2.09. REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Revolving Loan
of such Lender on the Revolving Maturity Date, (ii) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each Term
Loan of such Lender as provided in Section 2.10 and (iii) to the Administrative
Agent for the account of the Swingline Lender the then unpaid principal amount
of each Swingline Loan on the earlier of the Revolving Maturity Date and the
first date after such Swingline Loan is made that is the last day of a calendar
month and is at least two Business Days after such Swingline Loan is made;
PROVIDED that on each date that a Revolving Borrowing is made, the Borrower
shall repay all Swingline Loans then outstanding.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b)
or (c) of this Section shall be PRIMA FACIE evidence of the existence and
amounts of the obligations recorded therein; PROVIDED that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
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60
(e) Any Lender may request that Loans of any Class made by it be evidenced
by a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.10. AMORTIZATION OF TERM LOANS. (a) Subject to adjustment
pursuant to paragraph (d) of this Section, the Borrower shall repay Term
Borrowings on each date set forth below in the aggregate principal amount set
forth opposite such date:
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
December 30, 1998 $1,250,000
March 31, 1999 1,250,000
June 30, 1999 1,250,000
September 30, 1999 1,250,000
December 30, 1999 1,875,000
March 31, 2000 1,875,000
June 30, 2000 1,875,000
September 30, 2000 1,875,000
December 30, 2000 2,500,000
March 31, 2001 2,500,000
June 30, 2001 2,500,000
September 30, 2001 2,500,000
December 30, 2001 4,375,000
March 31, 2002 4,375,000
June 30, 2002 4,375,000
September 30, 2002 4,375,000
December 30, 2002 4,375,000
March 31, 2003 4,375,000
June 30, 2003 4,375,000
September 30, 2003 4,375,000
December 30, 2003 4,375,000
March 31, 2004 4,375,000
June 30, 2004 4,375,000
<PAGE>
61
September 30, 2004 4,375,000
December 30, 2004 6,250,000
March 31, 2005 6,250,000
June 30, 2005 6,250,000
September 30, 2005 6,250,000
</TABLE>
(c) To the extent not previously paid, all Term Loans shall be due and
payable on the Term Loan Maturity Date.
(d) If the initial aggregate amount of the Lenders' Term Commitments
exceeds the aggregate principal amount of Term Loans that are made on the
Effective Date, then the scheduled repayments of Term Borrowings to be made
pursuant to this Section shall be reduced by an aggregate amount equal to such
excess in the chronological order in which such repayments are scheduled to
become due. Any prepayment of a Term Borrowing shall be applied to reduce the
subsequent scheduled repayments of the Term Borrowings to be made pursuant to
this Section ratably; PROVIDED that any prepayment made pursuant to
Section 2.11(a) shall be applied, first, to reduce the next four scheduled
repayments of the Term Borrowings to be made pursuant to this Section (other
than those that have been reduced to zero by operation of this paragraph) unless
and until such next four scheduled repayments have been eliminated as a result
of reductions hereunder and, second, to reduce the remaining scheduled
repayments of the Term Borrowings to be made pursuant to this Section ratably.
(e) Prior to any repayment of any Term Borrowings hereunder, the Borrower
shall select the Borrowing or Borrowings to be repaid and shall notify the
Administrative Agent by telephone (confirmed by telecopy) of such selection not
later than 11:00 a.m., New York City time, three Business Days before the
scheduled date of such repayment; PROVIDED that each repayment of Term
Borrowings shall be applied to repay any outstanding ABR Term Borrowings before
any other Borrowings. Each repayment of a Borrowing shall be applied ratably to
the Loans included in the repaid Borrowing. Repayments of Term Borrowings shall
be accompanied by accrued interest on the amount repaid.
<PAGE>
62
SECTION 2.11. PREPAYMENT OF LOANS. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section.
(b) Subject to the provisions of Sections 2.11(e) and 5.08, in the
event and on each occasion that any Net Proceeds are received by or on behalf of
the Borrower or any Subsidiary in respect of any Prepayment Event, the Borrower
shall, within two Business Days after such Net Proceeds are received, prepay
Term Borrowings in an aggregate amount equal to (i) in the case of a Prepayment
Event described in clause (a), (b) or (d) of the definition of "Prepayment
Event", the entire amount of such Net Proceeds, and (ii) in the case of a
Prepayment Event described in clause (c) of the definition of "Prepayment
Event", 50% of such Net Proceeds.
(c) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 1998, the Borrower shall prepay Term
Borrowings in an aggregate amount equal to 50% of Excess Cash Flow for such
fiscal year; PROVIDED that prepayments shall be required pursuant to this
paragraph (c) only until the outstanding principal amount of Term Loans is
reduced to an amount equal to or less than 50% of the aggregate principal amount
of Term Loans borrowed on the Effective Date. Each prepayment pursuant to this
paragraph shall be made on or before the date that is three Business Days after
the date on which financial statements are delivered pursuant to Section 5.01
with respect to the fiscal year for which Excess Cash Flow is being calculated
(and in any event within 90 days after the end of such fiscal year).
(d) If at any time the sum of the total Revolving Exposures exceeds
the total Revolving Commitments, the Borrowers shall immediately prepay
Revolving Borrowings and Swingline Loans to the extent necessary to eliminate
such excess. If any such excess remains after all Revolving Borrowings and
Swingline Loans are prepaid, the Borrower shall deposit cash collateral pursuant
to Section 2.05(j) in an amount equal to such remaining excess.
<PAGE>
63
(e) Notwithstanding the foregoing provisions of Section 2.11(b):
(i) in the case of a Prepayment Event described in clause (a) or (b)
of the definition of "Prepayment Event", the Borrower may, in lieu of
prepaying Term Borrowings, prepay Revolving Borrowings (without reducing
Revolving Commitments), or, in the case of a Prepayment Event described in
clause (a) of the definition of "Prepayment Event" consisting of a
disposition by a Foreign Subsidiary, the Borrower may, in lieu of prepaying
Term Borrowings, permit such Foreign Subsidiary to retain the Net Proceeds
of such disposition; PROVIDED that (A) the Borrower notifies the
Administrative Agent that it is exercising such option, specifying the
Prepayment Event and the amount of the prepayment, at or prior to the time
that the prepayment is required, (B) the Borrower is in compliance with
Sections 6.14, 6.15 and 6.16 before and after giving effect to such
Prepayment Event and (C) the aggregate principal amount of Revolving
Borrowings prepaid in lieu of Term Borrowings and Net Proceeds retained by
Foreign Subsidiaries pursuant to this clause (i) shall not exceed
$50,000,000 (on a cumulative basis) during the term of this Agreement;
(ii) in the case of a Prepayment Event described in clause (c) of the
definition of "Prepayment Event", the Borrower may, at its option, notify
the Administrative Agent that the Borrower intends to utilize all or a
specified portion of the Net Proceeds of such Prepayment Event to finance a
Permitted Acquisition to be consummated within 270 days after such
Prepayment Event, in which case the Borrower shall not be required to
prepay Term Borrowings pursuant to Section 2.11(b) to the extent of the Net
Proceeds so specified; PROVIDED that (A) the Borrower delivers such notice,
specifying the Prepayment Event and describing the anticipated Permitted
Acquisition in reasonable detail, at or prior to the time of such
Prepayment Event, (B) no Default has occurred and is continuing at the time
of such
<PAGE>
64
Prepayment Event and (C) to the extent such Net Proceeds are not applied to
finance such Permitted Acquisition within the 270-day period after such
Prepayment Event, the Borrower shall prepay Term Borrowings (at the earlier
of (1) expiration of such period, (2) the date of abandonment of such
Permitted Acquisition or (3) the date of consummation of such Permitted
Acquisition) in an amount equal to such Net Proceeds that are not so
applied; and
(iii) in the case of a Prepayment Event described in clause (c) of the
definition of "Prepayment Event", if, as of the end of the most recent
fiscal quarter for which financial statements have been delivered to the
Administrative Agent pursuant to clause (a) or (b) of Section 5.01 prior to
such Prepayment Event, the Leverage Ratio was less than 2.00 to 1.00, then
no prepayment pursuant to Section 2.11(b) shall be required in respect of
such Prepayment Event.
(f) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
paragraph (g) of this Section; PROVIDED that each prepayment of Borrowings of
any Class shall be applied to prepay ABR Borrowings of such Class before any
other Borrowings of such Class.
(g) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan, not later than 12:00 noon, New York City time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and, in the case of a mandatory
<PAGE>
65
prepayment, a reasonably detailed calculation of the amount of such prepayment;
PROVIDED that, if a notice of optional prepayment is given in connection with a
conditional notice of termination of the Revolving Commitments as contemplated
by Section 2.08, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.08. Promptly following
receipt of any such notice (other than a notice relating solely to Swingline
Loans), the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount such
that the remaining amount of such Borrowing not so prepaid would be permitted in
the case of an advance of a Borrowing of the same Type as provided in Section
2.02, except as necessary to apply fully the required amount of a mandatory
prepayment. Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.13.
SECTION 2.12. FEES. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Lender a commitment fee,
which shall accrue at the Applicable Rate on the average daily unused amount of
the Revolving Commitment of such Lender during the period from and including the
Effective Date to but excluding the date on which such Commitment terminates.
Accrued commitment fees shall be payable in arrears on the last day of March,
June, September and December of each year and on the date on which the Revolving
Commitments terminate, commencing on the first such date to occur after the date
hereof. All commitment fees shall be computed on the basis of a year of 360
days and shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). For purposes of computing commitment
fees with respect to Revolving Commitments, a Revolving Commitment of a Lender
shall be deemed to be used to the extent of the outstanding Revolving Loans and
LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be
disregarded for such purpose).
(b) The Borrower agrees to pay (i) to the Administrative Agent for
the account of each Revolving Lender a participation fee with respect to its
<PAGE>
66
participations in Letters of Credit, which shall accrue at the same Applicable
Rate as interest on Eurodollar Revolving Loans on the average daily amount of
such Lender's LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender's
Revolving Commitment terminates and the date on which such Lender ceases to have
any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue
at the rate or rates per annum separately agreed upon between the Borrower and
the Issuing Bank on the average daily amount of the LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the period
from and including the Effective Date to but excluding the later of the date of
termination of the Revolving Commitments and the date on which there ceases to
be any LC Exposure, as well as the Issuing Bank's standard fees with respect to
the issuance, amendment, renewal or extension of any Letter of Credit or
processing of drawings thereunder. Participation fees and fronting fees accrued
through and including the last day of March, June, September and December of
each year shall be payable on the third Business Day following such last day,
commencing on the first such date to occur after the Effective Date; PROVIDED
that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within
10 days after demand. All participation fees and fronting fees shall be
computed on the basis of a year of 365 days (or 366 days in a leap year) and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
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commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
SECTION 2.13. INTEREST. (a) The Loans comprising each ABR Borrowing
(including each Swingline Loan) shall bear interest at the Alternate Base Rate
plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Revolving Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; PROVIDED that (A) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand, (B) in the
event of any repayment or prepayment of any Loan (other than a prepayment of an
ABR Revolving Loan prior to the end of the Revolving Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (C) in the event of any conversion
of any Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
(e) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times
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when the Alternate Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO
Rate shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error.
SECTION 2.14. ALTERNATE RATE OF INTEREST. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.15. INCREASED COSTS. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any
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such reserve requirement reflected in the Adjusted LIBO Rate) or the
Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans
made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or the Issuing Bank's capital or on the capital of
such Lender's or the Issuing Bank's holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit held
by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's or the Issuing Bank's policies and the policies
of such Lender's or the Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, following receipt by the Borrower of the
certificate referred to in clause (c) below, such additional amount or amounts
as will compensate such Lender or the Issuing Bank or such Lender's or the
Issuing Bank's holding company for any such reduction suffered.
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(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; PROVIDED
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 180 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; PROVIDED FURTHER that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.16. BREAK FUNDING PAYMENTS. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Eurodollar Revolving Loan or Eurodollar Term Loan on the
date specified in any notice delivered pursuant hereto (regardless of whether
such notice may be revoked under Section 2.11(g) and is revoked in accordance
therewith), or (d) the assignment of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto as a result of a request by the
Borrower pursuant to Section 2.19, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. Such loss, cost or expense to any Lender
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shall be deemed to include an amount reasonably determined by such Lender to be
the excess, if any, of (i) the amount of interest that would have accrued on the
principal amount of such Loan had such event not occurred, at the Adjusted LIBO
Rate that would have been applicable to such Loan, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of
interest that would accrue on such principal amount for such period at the
interest rate that such Lender would bid were it to bid, at the commencement of
such period, for dollar deposits of a comparable amount and period from other
banks in the Eurodollar market. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
SECTION 2.17. TAXES. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; PROVIDED that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each Lender and
the Issuing Bank,
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72
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender
or the Issuing Bank, as the case may be, on or with respect to any payment by or
on account of any obligation of the Borrower hereunder or under any other Loan
Document (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender or the
Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a
Lender or the Issuing Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate.
SECTION 2.18. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF
SETOFFS. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or
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73
otherwise) prior to 12:00 noon, New York City time, on the date when due, in
immediately available funds, without setoff or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue,
New York, New York, except payments to be made directly to the Issuing Bank or
Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons
entitled thereto and payments pursuant to other Loan Documents shall be made to
the Persons specified therein. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment under
any Loan Document shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments under each Loan Document shall be made
in dollars.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, unreimbursed
LC Disbursements, interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, towards payment of
principal and unreimbursed LC Disbursements then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans, Term Loans or participations in
LC Disbursements or Swingline Loans resulting in such Lender receiving payment
of a greater proportion of the
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aggregate amount of its Revolving Loans, Term Loans and participations in
LC Disbursements and Swingline Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the
Revolving Loans, Term Loans and participations in LC Disbursements and Swingline
Loans of other Lenders to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective Revolving Loans,
Term Loans and participations in LC Disbursements and Swingline Loans; PROVIDED
that (i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this paragraph shall not be
construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Loans or participations in LC Disbursements to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the
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Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.01(b), 2.04(c), 2.05(d) or (e), 2.06(b), 2.18(d) or
9.03(c), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.
SECTION 2.19. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.
(a) If any Lender requests compensation under Section 2.15, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and
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the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); PROVIDED that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Commitment is being assigned, the Issuing Bank and Swingline
Lender), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and participations in LC Disbursements and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and
(iii) in the case of any such assignment resulting from a claim for compensation
under Section 2.15 or payments required to be made pursuant to Section 2.17,
such assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
SECTION 2.20. EXTENSION OF REVOLVING MATURITY DATE. (a) The
Borrower may, by notice to the Administrative Agent and the Revolving Lenders
given not less than 30 and not more than 60 days prior to the Revolving Maturity
Date, request that the Revolving Lenders extend the Revolving Maturity Date for
an additional one year period. Each Revolving Lender shall, by notice to the
Borrower and the Administrative Agent given not later than the 10th Business Day
after the date of receipt of the Borrower's notice, advise the Borrower whether
or not such Lender agrees to such extension (and any Lender that does not so
advise the Borrower on or before such day shall be deemed to have advised the
Borrower that it will not agree to such extension). The approval of any such
extension shall be at the sole discretion of each Revolving Lender.
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(b) If (and only if) all Revolving Lenders shall have agreed to
extend the Revolving Maturity Date as provided in paragraph (a) above, then the
Revolving Maturity Date shall be extended to September 30, 2005.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. Each of the Borrower and its
Restricted Subsidiaries is duly organized, validly existing and, where
applicable, in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.
SECTION 3.02. AUTHORIZATION; ENFORCEABILITY. The Transactions to be
entered into by each Loan Party are within such Loan Party's corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by the
Borrower and constitutes, and each other Loan Document to which any Loan Party
is to be a party, when executed and delivered by such Loan Party, will
constitute, a legal, valid and binding obligation of the Borrower or such Loan
Party (as the case may be), enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except
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such as have been obtained or made and are in full force and effect and except
filings necessary to perfect Liens created under the Loan Documents, (b) will
not violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of its Restricted Subsidiaries
or any order of any Governmental Authority, (c) will not violate or result in a
default under any material indenture, agreement or other instrument binding upon
the Borrower or any of its Restricted Subsidiaries or its assets, or give rise
to a right thereunder to require any payment to be made by the Borrower or any
of its Restricted Subsidiaries, and (d) will not result in the creation or
imposition of any Lien on any asset of the Borrower or any of its Restricted
Subsidiaries, except Liens created under the Loan Documents.
SECTION 3.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a)
The Borrower has heretofore furnished to the Lenders its consolidated balance
sheet and statements of income, stockholders' equity and cash flows (i) as of
and for the fiscal year ended December 31, 1996, reported on by Deloitte &
Touche LLP, independent public accountants, and (ii) as of and for the fiscal
quarter and the portion of the fiscal year ended June 30, 1997, certified by its
chief financial officer. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash
flows of the Borrower and its consolidated Subsidiaries, as of such dates and
for such periods in accordance with GAAP, subject to year-end audit adjustments
and the absence of footnotes in the case of the statements referred to in clause
(ii) above.
(b) The Borrower has heretofore furnished to the Lenders its pro
forma consolidated balance sheet as of June 30, 1997, prepared giving effect to
the Transactions as if the Transactions had occurred on such date. Such pro
forma consolidated balance sheet (i) has been prepared in good faith based on
the same assumptions used to prepare the pro forma financial statements included
in the Information Memorandum (which assumptions are believed by the Borrower to
be reasonable), (ii) is based on the best information available to the Borrower
after due inquiry, (iii) accurately reflects all adjustments necessary to give
effect to the Transactions
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and (iv) presents fairly, in all material respects, the pro forma financial
position of the Borrower and its consolidated Subsidiaries as of June 30, 1997,
as if the Transactions had occurred on such date.
(c) The Borrower has heretofore furnished to the Lenders the
consolidated balance sheet and statements of income, stockholders' equity and
cash flows of Huntsman Polymer Corporation's CT Film Division as of and for the
fiscal year ended December 31, 1996, included in the report of Deloitte & Touche
LLP, independent public accountants. Such financial statements present fairly,
in all material respects, the financial position and results of operations and
cash flows of the CT Film Division, as of such date and for such period in
accordance with GAAP.
(d) Since December 31, 1996, there has been no material adverse
change in the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Restricted Subsidiaries, taken as a whole
(with the CT Film Acquisition being deemed to have occurred on December 31,
1996, for the purposes of this representation).
SECTION 3.05. PROPERTIES. (a) Each of the Borrower and its
Restricted Subsidiaries has good title to, or valid leasehold interests in, all
its real and personal property material to its business (including its Mortgaged
Properties), except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each of the Borrower and its Restricted Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to the business of the Borrower and its
Restricted Subsidiaries, taken as a whole, and the use thereof by the Borrower
and its Restricted Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
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(c) Schedule 3.05 sets forth the address of each real property that
is owned or leased by the Borrower or any of its Subsidiaries as of the
Effective Date after giving effect to the Transactions.
(d) As of the Effective Date, neither the Borrower nor any of its
Subsidiaries has received notice of, or has knowledge of, any pending or
contemplated condemnation proceeding affecting any Mortgaged Property or any
sale or disposition thereof in lieu of condemnation. Neither any Mortgaged
Property nor any interest therein is subject to any right of first refusal,
option or other contractual right to purchase such Mortgaged Property or
interest therein.
SECTION 3.06. LITIGATION AND ENVIRONMENTAL MATTERS. (a) There are
no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (ii) that involve any of
the Loan Documents or the Transactions (other than the Split-Off).
(b) Except with respect to any matters that, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability or (iii) has received notice of
any claim with respect to any Environmental Liability.
SECTION 3.07. COMPLIANCE WITH LAWS AND AGREEMENTS. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material
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Adverse Effect. No Default has occurred and is continuing.
SECTION 3.08. INVESTMENT AND HOLDING COMPANY STATUS. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. TAXES. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $12,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $12,000,000 the fair
market value of the assets of all such underfunded Plans.
SECTION 3.11. DISCLOSURE. The Borrower has disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to which the
Borrower or any of its Subsidiaries is subject, and all other matters
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known to any of them, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other written information furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished), when made or
delivered, contained any material misstatement of fact or omitted to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.
SECTION 3.12. SUBSIDIARIES. Schedule 3.12 sets forth the name of,
and the ownership interest of the Borrower in, each Subsidiary of the Borrower
and identifies each Subsidiary that is a Subsidiary Loan Party, in each case as
of the Effective Date.
SECTION 3.13. INSURANCE. Schedule 3.13 sets forth a description of
all insurance maintained by or on behalf of the Borrower and its Subsidiaries as
of the Effective Date. As of the Effective Date, all premiums that are due and
payable in respect of such insurance have been paid.
SECTION 3.14. LABOR MATTERS. As of the Effective Date, there are no
strikes, lockouts or slowdowns against the Borrower or any Subsidiary pending
or, to the knowledge of the Borrower, threatened. All payments due from the
Borrower or any Restricted Subsidiary, or for which any claim may be made
against the Borrower or any Restricted Subsidiary, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the Borrower or such Restricted
Subsidiary. The consummation of the Transactions will not give rise to any
right of termination or right of renegotiation on the part of any union under
any collective bargaining
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agreement to which the Borrower or any Subsidiary is bound.
SECTION 3.15. SOLVENCY. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) each Loan Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) each Loan Party will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.
SECTION 3.16. SECURITY DOCUMENTS. (a) The Pledge Agreement is
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when such Collateral is
delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
interest of the pledgor thereunder in such Collateral, in each case prior and
superior in right to any other Person; PROVIDED that the actions specified in
Schedule 3.16(a) are required to be taken in connection with the pledge of
capital stock of Foreign Subsidiaries.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices
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specified on Schedule 6 to the Perfection Certificate, the Security Agreement
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the grantors thereunder in such Collateral (other than the
Intellectual Property (as defined in the Security Agreement)), in each case
prior and superior in right to any other Person, other than with respect to
Liens expressly permitted by Section 6.03.
(c) When the Security Agreement (or a summary thereof) is filed in
the United States Patent and Trademark Office and the United States Copyright
Office, the Security Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Intellectual Property (as defined in the Security Agreement) in which a security
interest may be perfected by filing, recording or registering a security
agreement, financing statement or analogous document in the United States Patent
and Trademark Office or the United States Copyright Office, as applicable, in
each case prior and superior in right to any other Person (it being understood
that subsequent recordings in the United States Patent and Trademark Office and
the United States Copyright Office may be necessary to perfect a lien on
registered trademarks, trademark applications and copyrights acquired by the
Loan Parties after the date hereof).
(d) The Mortgages are effective to create, subject to the exceptions
listed in each title insurance policy covering such Mortgage, in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable Lien on all of the Loan Parties' right, title and interest in
and to the Mortgaged Properties thereunder and the proceeds thereof, and when
the Mortgages are filed in the offices specified on Schedule 3.16(d), the
Mortgages shall constitute a Lien on, and security interest in, all right, title
and interest of the Loan Parties in such Mortgaged Properties and the proceeds
thereof, in each case prior and superior in right to any other Person, other
than with respect to the rights of Persons pursuant to Liens expressly permitted
by Section 6.03.
SECTION 3.17. FEDERAL RESERVE REGULATIONS. (a) Neither the Borrower
nor any of the Subsidiaries is engaged principally, or as one of its important
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85
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will
be used, whether directly or indirectly, and whether immediately, incidentally
or ultimately, for any purpose that entails a violation of the provisions of the
Regulations of the Board, including Regulation G, U or X.
SECTION 3.18. EXISTING INTERCOMPANY INDEBTEDNESS. As of June 30,
1997, there was $198,300,000 of the Existing Intercompany Indebtedness
(including accrued and unpaid interest as of such date). During the period from
June 30, 1997, to and including the Effective Date, the Existing Intercompany
Indebtedness has increased and decreased only as a result of borrowings,
repayments and accrual of interest, in each case in the ordinary course of
business and in accordance with past practice.
SECTION 3.19. AGREEMENTS AND BUSINESS STATUS AS OF EFFECTIVE DATE.
(a) During the period from the date of the most recent financial statements
referred to in Section 3.04(a) to and including the Effective Date, (i) the
business of the Borrower and its Subsidiaries has been conducted in the ordinary
course in accordance with past practice and (ii) the Borrower and its
Subsidiaries have not engaged in any transaction (other than the Split-Off) that
would have violated Section 6.10 if this Agreement had been in effect during
such period.
(b) Schedule 3.19 identifies each agreement or other document to
which the Borrower or any Subsidiary is a party or by which it is bound as of
the Effective Date that will remain in effect after the Effective Date (i) that
relates to the Split-Off or (ii) to which any Person (other than the Borrower or
a Subsidiary of the Borrower) that is an Affiliate of the Borrower is a party.
True and correct copies of all such agreements and documents have been delivered
to the Lenders.
ARTICLE IV
CONDITIONS
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86
SECTION 4.01. EFFECTIVE DATE. The obligations of the Lenders to make
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart
of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of each of (i) Skadden, Arps, Slate, Meagher & Flom
LLP, counsel for the Borrower, substantially in the form of Exhibit B-1,
(ii) Van Cott, Bagley, Cornwall & McCarthy, Utah counsel for the Borrower,
substantially in the form of Exhibit B-2, (iii) local counsel in each
jurisdiction where a Mortgaged Property is located, substantially in the
form of Exhibit B-3 with such changes as are approved by the Administrative
Agent, and (iv) local counsel in Canada and the United Kingdom,
substantially in the form of Exhibit B-4 with such changes as are approved
by the Administrative Agent and, in the case of each such opinion required
by this paragraph, covering such other matters relating to the Loan
Parties, the Loan Documents or the Transactions as the Administrative Agent
shall reasonably request. The Borrower hereby requests such counsel to
deliver such opinions.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of each
Loan Party, the authorization of the Transactions and any other legal
matters
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87
relating to the Loan Parties, the Loan Documents or the Transactions, all
in form and substance satisfactory to the Administrative Agent and its
counsel.
(d) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by any Loan Party hereunder or under any
other Loan Document.
(f) The Collateral Agent shall have received counterparts of the
Pledge Agreement signed on behalf of the Borrower and each Subsidiary Loan
Party, together with stock certificates representing all the outstanding
shares of capital stock of each Subsidiary owned by or on behalf of any
Loan Party as of the Effective Date after giving effect to the Transactions
(except that such delivery of stock certificates representing shares of
common stock of a Foreign Subsidiary that is not a Subsidiary Loan Party
may be limited to 65% of the outstanding shares of common stock of such
Foreign Subsidiary), promissory notes evidencing all intercompany
Indebtedness owed to any Loan Party by the Borrower or any Subsidiary as of
the Effective Date after giving effect to the Transactions and stock powers
and instruments of transfer, endorsed in blank, with respect to such stock
certificates and promissory notes. The Collateral Agent shall have
received evidence that all actions specified in Schedule 3.16(a) shall have
been taken.
(g) The Collateral Agent shall have received counterparts of the
Security Agreement signed on
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behalf of the Borrower and each Subsidiary Loan Party, together with the
following:
(i) all documents and instruments, including Uniform Commercial
Code financing statements, required by law or reasonably requested by
the Administrative Agent to be filed, registered or recorded to create
or perfect the Liens intended to be created under the Security
Agreement; and
(ii) a completed Perfection Certificate dated the Effective Date
and signed by an executive officer or Financial Officer of the
Borrower, together with all attachments contemplated thereby,
including the results of a search of the Uniform Commercial Code (or
equivalent) filings made with respect to the Loan Parties in the
jurisdictions contemplated by the Perfection Certificate and copies of
the financing statements (or similar documents) disclosed by such
search and evidence reasonably satisfactory to the Administrative
Agent that the Liens indicated by such financing statements (or
similar documents) are permitted by Section 6.03 or have been
released.
(h) The Collateral Agent shall have received (i) counterparts of a
Mortgage with respect to each Mortgaged Property signed on behalf of the
record owner of such Mortgaged Property, (ii) a policy or policies of title
insurance issued by a nationally recognized title insurance company,
insuring the Lien of each such Mortgage as a valid first Lien on the
Mortgaged Property described therein, free of any other Liens except as
permitted by Section 6.03, in form and substance reasonably acceptable to
the Collateral Agent, together with such endorsements, coinsurance and
reinsurance as the Collateral Agent or the Required Lenders may reasonably
request, (iii) copies of all existing surveys and such other information
and documents with respect to the Mortgaged Properties as shall be
necessary for the aforesaid title insurance policies to be issued without a
survey exception
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and (iv) such other customary documentation with respect to the Mortgaged
Properties as the Administrative Agent may reasonably require.
(i) The Administrative Agent shall have received (i) counterparts of
the Guarantee Agreement signed on behalf of each Subsidiary Loan Party and
(ii) counterparts of the Indemnity, Subrogation and Contribution Agreement
signed on behalf of the Borrower and each Subsidiary Loan Party.
(j) The Administrative Agent shall have received evidence
satisfactory to it that the insurance required by Section 5.07 is in
effect.
(k) All actions related to the Split-Off (other than consummating the
Split-Off), to the extent completed at such time, shall have been completed
on terms consistent in all material respects with the information,
including pro forma financial statements and projections, furnished to the
Lenders prior to the date of this Agreement.
(l) The CT Film Acquisition and the transactions related thereto
shall have been consummated for aggregate consideration consisting of
$70,000,000 in cash and other consideration satisfactory to the Lenders,
and otherwise on terms consistent in all material respects with the
information, including pro forma financial statements and projections,
furnished to the Lenders prior to the date of this Agreement. The Lenders
shall have received copies of the CT Film Acquisition Agreement prior to
the Effective Date and shall be reasonably satisfied with the terms
thereof.
(m) The Lenders shall have received (i) audited consolidated balance
sheets and related statements of income, stockholders' equity and cash
flows of the Borrower for the 1995 and 1996 fiscal years and (ii) unaudited
consolidated balance sheets and related statements of income, stockholders'
equity and cash flows of the Borrower for (A) the 1997 fiscal quarters
preceding the
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Effective Date for which financial statements are available and (B) each
fiscal month after the most recent 1997 fiscal quarter for which financial
statements were received by the Lenders as described above and ended 30
days before the Effective Date.
(n) The Lenders shall be reasonably satisfied in all respects with
the tax position and the contingent tax and other liabilities of, and with
any tax sharing agreements involving, the Borrower and its Subsidiaries
after giving effect to the Transactions and the other transactions
contemplated hereby, and with the plans of the Borrower with respect
thereto.
(o) The Lenders shall have received appraisals, satisfactory in form
and substance to the Administrative Agent (which may include copies of
recent existing appraisals), from appraisers satisfactory to the
Administrative Agent, of the material real property, personal property and
other assets of the Borrower and its Subsidiaries.
(p) The Lenders shall have received (i) copies of all existing
environmental reports prepared with respect to the Mortgaged Property and
any Environmental Liabilities that may be attributable to such properties
or operations thereon and (ii) such other materials and reviews relating to
the Borrower's compliance with Environmental Laws and actual or potential
Environmental Liabilities as shall be reasonably specified by the
Administrative Agent, all of which shall be satisfactory to the
Administrative Agent.
(q) There shall be no litigation or administrative proceeding that
would reasonably be expected to have a Material Adverse Effect, or a
material adverse effect on the ability of the parties to consummate the
Transactions or the other transactions contemplated hereby (other than the
Split-off).
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(r) The Administrative Agent shall be satisfied with the arrangements
for the retention of existing management of the Borrower.
(s) The Senior Subordinated Notes shall have been issued on terms and
conditions (including but not limited to terms and conditions relating to
the interest rate, fees, amortization, maturity, subordination, covenants,
events of default and remedies) satisfactory to the Lenders in all
respects, the Lenders shall have received copies of the Senior Subordinated
Note Documents, which shall be satisfactory in form and substance to the
Lenders, and the Borrower shall have received gross cash proceeds of not
less than $100,000,000 from the issuance of the Senior Subordinated Notes.
(t) The Lenders shall be reasonably satisfied with (i) the Split-off
Documents and any waivers or amendments thereto, (ii) the capitalization,
structure and equity ownership of the Borrower and the Subsidiaries after
giving effect to the Transactions, to the extent inconsistent with that set
forth in the Information Memorandum and (iii) all legal, tax and accounting
matters relating to the Transactions.
(u) The Lenders shall be reasonably satisfied with the sufficiency of
amounts available under this Agreement to meet the ongoing working capital
requirements of the Borrower and the Subsidiaries following consummation of
the Transactions.
(v) All consents and approvals required to be obtained from any
Governmental Authority or other Person in connection with the Transactions
(other than the Split-Off) shall have been obtained, all applicable waiting
periods and appeal periods shall have expired, in each case without the
imposition of any burdensome conditions and there shall be no action by any
Governmental Authority, actual or threatened, that has a reasonable
likelihood of restraining, preventing or imposing burdensome conditions on
the Transactions or the other transactions contemplated hereby (other than
the Split-Off). The Administrative Agent shall have
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received copies of the Split-off Documents and any certificates, opinions
and other documents delivered thereunder, certified by a Financial Officer
as complete and correct.
(w) The Lenders shall have received a pro forma consolidated balance
sheet of the Borrower as of the Effective Date, reflecting all adjustments
to give effect to the Transactions (including the Split-Off), and such pro
forma consolidated balance sheet shall be in form and substance reasonably
satisfactory to the Lenders. As of the Effective Date, after giving effect
to the Financing Transactions, neither the Borrower nor any of its
Subsidiaries shall have outstanding any shares of preferred stock or any
Indebtedness, other than (i) Indebtedness incurred under the Loan Documents
and the Senior Subordinated Notes and (ii) Indebtedness set forth on
Schedule 6.01. The Lenders shall be satisfied with the terms and
conditions of all Indebtedness set forth on Schedule 6.01. The aggregate
amount of Transaction Costs (including underwriting discounts and
commissions in respect of the Senior Subordinated Notes) shall not exceed
$8,000,000.
(x) The Administrative Agent shall have received a solvency
certificate, in form and substance reasonably satisfactory to the Lenders,
executed by a senior financial officer of the Borrower, with respect to the
solvency of the Loan Parties on a consolidated basis after giving effect to
the Financing Transactions.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time,
on October 31, 1997 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
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SECTION 4.02. EACH CREDIT EVENT. The obligation of each Lender to
make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:
(a) The representations and warranties of each Loan Party set forth
in the Loan Documents shall be true and correct on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of
such Letter of Credit, as applicable.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lenders that:
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the Borrower,
its audited consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows
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as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on
by Deloitte & Touche LLP or other independent public accountants of
recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to
the scope of such audit other than as to Unrestricted Subsidiaries) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, its consolidated balance
sheet and related statements of operations, stockholders' equity and cash
flows as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form
the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations with respect to compliance with Sections 6.13, 6.14,
6.15 and 6.16, (iii) setting forth a reasonably detailed calculation of the
Borrower Amount, (iv) stating whether any change in GAAP or
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in the application thereof has occurred since the date of the Borrower's
audited financial statements referred to in Section 3.04 and, if any such
change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate and (v) if any Unrestricted
Subsidiary exists (or existed at any time during the period covered by such
financial statements), attaching consolidating balance sheets and income
statements as of the same dates and covering the same periods, certified as
true, correct and complete;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any Default
(which certificate may be limited to the extent required by accounting
rules or guidelines);
(e) at least 30 days prior to the commencement of each fiscal year of
the Borrower, a detailed consolidated budget for such fiscal year
(including a projected consolidated balance sheet and related statements of
projected operations and cash flow as of the end of and for such fiscal
year) and, promptly when available, any significant revisions of such
budget;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Borrower or any Subsidiary with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, as the case may
be; and
(g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Lender may reasonably request.
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SECTION 5.02. NOTICES OF MATERIAL EVENTS. The Borrower will furnish
to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, would
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, would reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate
amount exceeding $5,000,000; and
(d) any other development that results in, or would reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. INFORMATION REGARDING COLLATERAL. The Borrower will
furnish to the Administrative Agent prompt written notice of any change (i) in
any Loan Party's corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in any Loan Party's identity or corporate structure or (iv) in any Loan
Party's Federal Taxpayer Identification Number. The Borrower agrees not to
effect or permit any change
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referred to in the preceding sentence unless all filings have been made under
the Uniform Commercial Code or otherwise that are required in order for the
Administrative Agent to continue at all times following such change to have a
valid, legal and perfected security interest in all the Collateral; PROVIDED
that the Administrative Agent shall take any action reasonably requested by the
Borrower to maintain a valid, legal and perfected security interest in all the
Collateral.
SECTION 5.04. EXISTENCE; CONDUCT OF BUSINESS. The Borrower will, and
will cause each of its Restricted Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of the business
of the Borrower and its Restricted Subsidiaries, taken as a whole; PROVIDED that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.04.
SECTION 5.05. PAYMENT OF OBLIGATIONS. The Borrower will, and will
cause each of its Subsidiaries to, pay its Indebtedness and other obligations,
including Tax liabilities, before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate procedures or proceedings, (b) the Borrower or such
Subsidiary has set aside on its books adequate reserves with respect thereto in
accordance with GAAP, (c) such contest effectively suspends collection of the
contested obligation and the enforcement of any Lien securing such obligation
and (d) the failure to make payment pending such contest would not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.06. MAINTENANCE OF PROPERTIES. The Borrower will, and will
cause each of its Restricted Subsidiaries to, keep and maintain all property
material to the conduct of the business of the Borrower and its Restricted
Subsidiaries taken as a whole in good working order and condition, ordinary wear
and tear excepted.
SECTION 5.07. INSURANCE. The Borrower will, and will cause each of
its Restricted Subsidiaries to,
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maintain, with financially sound and reputable insurers, insurance with respect
to its material properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons. Such insurance shall be maintained with
financially sound and reputable insurers, except that a portion of such
insurance program (not to exceed that which is customary in the case of
companies engaged in the same or similar business or having similar properties
similarly situated) may be effected through self-insurance, provided adequate
reserves therefor, in accordance with GAAP, are maintained. All insurance
policies or certificates (or certified copies thereof) with respect to such
insurance (A) shall be endorsed to the Collateral Agent's reasonable
satisfaction for the benefit of the Lenders (including, without limitation, by
naming the Collateral Agent as loss payee or additional insured, as
appropriate); and (B) shall state that such insurance policy shall not be
canceled or revised without thirty days' prior to written notice thereof by the
insurer to the Administrative Agent and (iii) furnish to the Administrative
Agent, on the Effective Date and on the date of delivery of each annual
financial statement, full information as to the insurance carried. At any time
that insurance at levels described in Schedule 5.07 is not being maintained by
or on behalf of the Borrower of any of its Restricted Subsidiaries, the Borrower
will notify the Lenders in writing within two Business Days thereof and, if
thereafter notified by the Administrative Agent or the Required Lenders to do
so, the Borrower or any such Restricted Subsidiary, as the case may be, shall
obtain insurance at such levels at least equal to those set forth on
Schedule 5.07.
SECTION 5.08. CASUALTY AND CONDEMNATION. (a) The Borrower will
furnish to the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to any portion of any Collateral or the
commencement of any action or proceeding for the taking of any Collateral or any
part thereof or interest therein under power of eminent domain or by
condemnation or similar proceeding, where the aggregate fair market value of the
Collateral so affected
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in connection with casualty events or condemnations is, in the aggregate, at
least $2,500,000.
(b) If any event described in paragraph (a) of this Section results
in Net Proceeds (whether in the form of insurance proceeds, condemnation award
or otherwise), the Collateral Agent is authorized to collect such Net Proceeds
and, if received by the Borrower or any Subsidiary, such Net Proceeds shall be
paid over to the Collateral Agent; PROVIDED that (i) if the aggregate Net
Proceeds in respect of such event (other than proceeds of business interruption
insurance) are less than $5,000,000, such Net Proceeds shall be paid over to the
Borrower unless a Default has occurred and is continuing, and (ii) all proceeds
of business interruption insurance shall be paid over to the Borrower unless a
Default has occurred and is continuing. All such Net Proceeds retained by or
paid over to the Collateral Agent shall be held by the Collateral Agent and
released from time to time to pay the costs of repairing, restoring or replacing
the affected property in accordance with the terms of the applicable Security
Document, subject to the provisions of the applicable Security Document
regarding application of such Net Proceeds during a Default.
(c) If any Net Proceeds retained by or paid over to the Collateral
Agent as provided above continue to be held by the Collateral Agent on the date
that is 365 days after the receipt of such Net Proceeds, then such Net Proceeds
shall be applied to prepay Term Borrowings as provided in Section 2.11(b),
subject to Section 2.11(e).
SECTION 5.09. BOOKS AND RECORDS; INSPECTION AND AUDIT RIGHTS. The
Borrower will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made in all
material respects of all dealings and transactions in relation to its business
and activities. The Borrower will, and will cause each of its Subsidiaries to,
permit any representatives designated by the Administrative Agent or any Lender,
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants (and the
Borrower shall be
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provided the opportunity to participate in any such discussions with such
independent accountants), all at such reasonable times and as often as
reasonably requested.
SECTION 5.10. COMPLIANCE WITH LAWS. The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.11. USE OF PROCEEDS AND LETTERS OF CREDIT. The proceeds of
the Term Loans, together with a portion of the net proceeds of the Senior
Subordinated Notes, will be used solely to (a) repay in full the principal
amount of, and all accrued interest with respect to, the Existing Intercompany
Indebtedness and (b) pay a portion of the Transaction Costs. The proceeds of
the Revolving Loans and Swingline Loans will be used solely for (a) general
corporate purposes, (b) in an amount not to exceed $70,000,000, to finance the
CT Film Acquisition and to pay related transaction costs and (c) to pay a
portion of the Transaction Costs. No part of the proceeds of any Loan will be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board, including Regulations G, U and X.
Letters of Credit will be issued only for general corporate purposes.
SECTION 5.12. ADDITIONAL SUBSIDIARIES. If any additional Subsidiary
is formed or acquired after the Effective Date, the Borrower will notify the
Administrative Agent and the Lenders thereof and (a) if such Subsidiary is a
Subsidiary Loan Party, the Borrower will cause such Subsidiary to become a party
to the Guarantee Agreement, the Indemnity, Subrogation and Contribution
Agreement and each applicable Security Document in the manner provided therein
within three Business Days after such Subsidiary is formed or acquired and
promptly take such actions to create and perfect Liens on such Subsidiary's
assets to secure the Obligations as the Administrative Agent or the Required
Lenders shall reasonably request and (b) if such Subsidiary is a Restricted
Subsidiary and any shares of
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capital stock or Indebtedness of such Subsidiary are owned by or on behalf of
any Loan Party, the Borrower will cause such shares and promissory notes
evidencing such Indebtedness to be pledged pursuant to the Pledge Agreement
within three Business Days after such Subsidiary is formed or acquired (except
that, if such Subsidiary is a Foreign Subsidiary and is not a Subsidiary Loan
Party, shares of common stock of such Subsidiary that are owned by or on behalf
of the Borrower or a Subsidiary Loan Party and that are to be pledged pursuant
to the Pledge Agreement may be limited to 65% of the outstanding shares of
common stock of such Subsidiary).
SECTION 5.13. FURTHER ASSURANCES. (a) The Borrower will, and will
cause each Subsidiary Loan Party to, execute any and all further documents,
financing statements, agreements and instruments, and take all such further
actions (including the filing and recording of financing statements, fixture
filings, mortgages, deeds of trust and other documents), that may be required
under any applicable law, or which the Administrative Agent or the Required
Lenders may reasonably request, to effectuate the transactions contemplated by
the Loan Documents or to grant, preserve, protect or perfect the Liens created
or intended to be created by the Security Documents or the validity or priority
of any such Lien, all at the expense of the Loan Parties. The Borrower also
agrees to provide to the Administrative Agent, from time to time upon request,
evidence reasonably satisfactory to the Administrative Agent as to the
perfection and priority of the Liens created or intended to be created by the
Security Documents.
(b) If any material assets (including any real property or
improvements thereto or any interest therein) are acquired by the Borrower or
any Subsidiary Loan Party after the Effective Date (other than assets
constituting Collateral under the Security Agreement that become subject to the
Lien of the Security Agreement upon acquisition thereof), the Borrower will
notify the Administrative Agent and the Lenders thereof, and, if requested by
the Administrative Agent or the Required Lenders, the Borrower will cause such
assets to be subjected to a Lien securing the Obligations and will take, and
cause the Subsidiary Loan Parties to take, such
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actions as shall be necessary or reasonably requested by the Administrative
Agent to grant and perfect such Liens, including actions described in paragraph
(a) of this Section, all at the expense of the Loan Parties, PROVIDED that the
following property shall not be covered by this Section 5.13(b):
(i) intellectual property a security interest in which would require filings or
recordations under laws other than the laws of the United States or any
jurisdiction thereof, (ii) owned real estate or leasehold interests with an
aggregate fair market value of less than $2,500,000, and (iii) other tangible
personal property with an aggregate fair market value of less than $2,500,000.
(c) Within 60 days after the Effective Date, the Administrative Agent
shall have received counterparts of a Mortgage with respect to the Mortgaged
Properties located in Chippewa Falls, Wisconsin and Harrington, Delaware signed
on behalf of the record owner of such Mortgaged Property and all other documents
required by Section 4.01(b)(iii) and clauses (ii), (iii) and (iv) of
Section 4.10(h).
(d) Within 60 days of the Effective Date, the Administrative Agent
shall have received an as-built survey of each Mortgaged Property, in form and
substance satisfactory to the Administrative Agent and endorsements to the title
policies required by Section 4.01(h) or 5.13(c), as applicable, providing
survey, access, ALTA 9, contiguity and tax lot coverage.
ARTICLE VI
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the Lenders
that:
SECTION 6.01. INDEBTEDNESS. The Borrower will not, and will not
permit any Restricted Subsidiary to,
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create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof;
(iii) Indebtedness of the Borrower to any Restricted Subsidiary and of
any Restricted Subsidiary to the Borrower or any other Restricted
Subsidiary; PROVIDED that Indebtedness of any Restricted Subsidiary that is
not a Loan Party to the Borrower or any Subsidiary Loan Party shall be
subject to Section 6.05;
(iv) Guarantees by the Borrower of Indebtedness of any Restricted
Subsidiary, joint venture or Unrestricted Subsidiary and by any Restricted
Subsidiary of Indebtedness of the Borrower, any other Restricted
Subsidiary, any joint venture or any Unrestricted Subsidiary; PROVIDED that
(i) Guarantees by the Borrower or any Subsidiary Loan Party of Indebtedness
of any Restricted Subsidiary that is not a Loan Party, and Guarantees by
the Borrower or any Restricted Subsidiary of Indebtedness of a joint
venture or an Unrestricted Subsidiary, in each case shall be subject to
Section 6.05 and (ii) any Guarantee of the Senior Subordinated Notes by a
Restricted Subsidiary shall be subordinated on the same terms as the Senior
Subordinated Notes, shall be given only by a Restricted Subsidiary that is
a Subsidiary Loan Party;
(v) Indebtedness of the Borrower or any Restricted Subsidiary incurred
to finance the acquisition, construction or improvement of any fixed or
capital assets, including Capital Lease Obligations and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by
a Lien on any such assets prior to
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the acquisition thereof, including Capital Lease Obligations incurred
pursuant to transactions permitted by Section 6.07, and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof or result in an earlier maturity date
or decreased weighted average life thereof; PROVIDED that (A) such
Indebtedness is incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvement and (B) the aggregate
principal amount of Indebtedness permitted by this clause (v) and
clause (vi) below shall not exceed $15,000,000 at any time outstanding;
(vi) Indebtedness of any Person that becomes a Restricted Subsidiary
after the date hereof (other than pursuant to the CT Film Acquisition);
PROVIDED that (A) such Indebtedness exists at the time such Person becomes
a Restricted Subsidiary and is not created in contemplation of or in
connection with such Person becoming a Restricted Subsidiary and (B) the
aggregate principal amount of Indebtedness permitted by this clause (vi)
and clause (v) above shall not exceed $15,000,000 at any time outstanding;
(vii) the Senior Subordinated Notes in an aggregate principal amount
not exceeding the principal amount thereof issued on or prior to the
Effective Date;
(viii) unsecured Indebtedness representing the deferred purchase price
for Permitted Acquisitions; PROVIDED that (a) no Restricted Subsidiary
shall be liable (pursuant to a Guarantee or otherwise) for any such
Indebtedness incurred in connection with any Permitted Acquisition other
than any Restricted Subsidiary resulting from such Permitted Acquisition
(b) any financial covenants relating to such Indebtedness shall be no more
restrictive to the Borrower and its Subsidiaries than, and the other
material terms with respect to such Indebtedness shall be no more
restrictive to the Borrower and its Restricted Subsidiaries, taken as a
whole, than, the equivalent such covenants and
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105
terms contained in this Agreement and (c) the aggregate principal amount of
Indebtedness permitted by this clause (ix) shall not exceed $10,000,000 at
any time outstanding; and
(ix) other Indebtedness (including borrowings under overdraft
facilities) in an aggregate principal amount not exceeding $10,000,000 at
any time outstanding; PROVIDED that (a) the aggregate principal amount of
Indebtedness of the Borrower's Restricted Subsidiaries permitted by this
clause (x) shall not exceed $5,000,000 at any time outstanding and (b) all
such Indebtedness shall be unsecured, except that overdraft facilities may
be secured to the extent permitted by clause (f) of Section 6.03.
SECTION 6.02. CERTAIN EQUITY SECURITIES. The Borrower will not, nor
will it permit any Restricted Subsidiary to, issue any preferred stock or be or
become liable in respect of any obligation (contingent or otherwise) to
purchase, redeem, retire, acquire or make any other payment in respect of any
shares of capital stock of the Borrower or any Restricted Subsidiary or any
option, warrant or other right to acquire any such shares of capital stock,
except for actions otherwise permitted under Section 6.09. Notwithstanding the
foregoing, the Borrower may issue preferred stock that is not subject to any
mandatory right of redemption or any right to require the purchase thereof prior
to September 30, 2006, and any Restricted Subsidiary may issue preferred stock
to the Borrower or to any other Restricted Subsidiary.
SECTION 6.03. LIENS. The Borrower will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect of
any thereof, except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of the Borrower or any
Restricted Subsidiary existing on
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106
the date hereof and set forth in Schedule 6.03; PROVIDED that (i) such Lien
shall not apply to any other property or asset of the Borrower or any
Restricted Subsidiary and (ii) such Lien shall secure only those
obligations that it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;
(d) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date
hereof prior to the time such Person becomes a Subsidiary; PROVIDED that
(i) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary , as the case may be,
(ii) such Lien shall not apply to any other property or assets of the
Borrower or any Restricted Subsidiary and (iii) such Lien shall secure only
those obligations that it secures on the date of such acquisition or the
date such Person becomes a Subsidiary, as the case may be and extensions,
renewals and replacements thereof that do not increase the outstanding
principal amount thereof;
(e) Liens on fixed or capital assets acquired, constructed or improved
by the Borrower or any Restricted Subsidiary; PROVIDED that (i) such Liens
secure Indebtedness permitted by clause (v) of Section 6.01, (ii) such
Liens and the Indebtedness secured thereby are incurred prior to or within
90 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 100% of
the cost of acquiring, constructing or improving such fixed or capital
assets and (iv) such security interests shall not apply to any other
property or assets of the Borrower or any Restricted Subsidiary other than
property directly related to such fixed or capital assets and of a type
customarily covered by such Liens, except that such security interests may
not apply to any accounts receivable or inventory; and
<PAGE>
(f) Liens securing Indebtedness under (i) the Borrower's domestic
overdraft facilities in an amount not exceeding $5,000,000 and (ii) foreign
overdraft facilities of Foreign Subsidiaries in an amount not exceeding
$5,000,000; PROVIDED that Liens permitted by clause (ii) shall apply only
to properties and assets of Foreign Subsidiaries.
SECTION 6.04. FUNDAMENTAL CHANGES. (a) The Borrower will not and
will not permit any Restricted Subsidiary to, merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with it,
or liquidate or dissolve, except that, if at the time thereof and immediately
after giving effect thereto no Default shall have occurred and be continuing
(i) any Restricted Subsidiary may merge into the Borrower in a transaction in
which the Borrower is the surviving corporation, (ii) any Restricted Subsidiary
may merge into any Subsidiary Loan Party in a transaction in which the surviving
entity is a Subsidiary Loan Party, (iii) any Restricted Subsidiary that is not a
Loan Party may merge into any Restricted Subsidiary that is not a Loan Party and
(iv) any Restricted Subsidiary may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and is not materially disadvantageous to the Lenders;
PROVIDED that any such merger involving a Person that is not a Wholly Owned
Subsidiary immediately prior to such merger shall not be permitted unless also
permitted by Section 6.05.
(b) The Borrower will not, and will not permit any of its Restricted
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.
SECTION 6.05. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS. The Borrower will not, and will not permit any of its Restricted
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a Wholly Owned Subsidiary prior to such merger) any
capital stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the
<PAGE>
foregoing) of, make or permit to exist any loans or advances to, Guarantee any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) any assets of any other Person constituting a business
unit, except:
(a) Permitted Investments;
(b) investments existing on the date hereof and set forth on Schedule
6.05, to the extent such investments would not be permitted under any other
clause of this Section;
(c) investments by the Borrower and its Restricted Subsidiaries in the
capital stock of their respective Restricted Subsidiaries; PROVIDED that
any such shares of capital stock shall be pledged pursuant to the Pledge
Agreement (subject to the limitations applicable to common stock of a
Foreign Subsidiary that is not a Subsidiary Loan Party, referred to in
Section 5.12) and the amount of such investments by the Borrower in
Restricted Subsidiaries that are not Loan Parties, plus the amount of all
loans and advances referred to in clause (d) below that are made by Loan
Parties to Restricted Subsidiaries that are not Loan Parties, plus the
amount of Indebtedness referred to in clause (e) below of Restricted
Subsidiaries that are not Loan Parties that is Guaranteed by any Loan
Party, shall not exceed $10,000,000 in the aggregate at any time
outstanding;
(d) loans or advances made by the Borrower to any Restricted
Subsidiary and made by any Restricted Subsidiary to the Borrower or any
other Restricted Subsidiary; PROVIDED that any such loans and advances made
by a Loan Party shall be evidenced by a promissory note pledged pursuant to
the Pledge Agreement and the amount of all such loans and advances by Loan
Parties to Subsidiaries that are not Loan Parties shall not exceed the
limitations set forth in clause (c) above;
(e) Guarantees constituting Indebtedness permitted by Section 6.01;
PROVIDED that (i) the
<PAGE>
amount of Indebtedness of Restricted Subsidiaries that are not Loan Parties
that is Guaranteed by any Loan Party shall not exceed $5,000,000 in the
aggregate at any time outstanding and (ii) the amount of Indebtedness of
joint ventures and Unrestricted Subsidiaries that is Guaranteed by the
Borrower or any Restricted Subsidiary shall be subject to the limitations
of clause (h) below;
(f) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(g) Permitted Acquisitions; PROVIDED that (i) the consideration for
each Permitted Acquisition shall consist solely of cash, shares of common
stock of the Borrower, the assumption of Indebtedness of the acquired
Person or encumbering the acquired assets, Indebtedness referred to in
clause (viii) of Section 6.01 or a combination thereof and (ii) at the time
of and after giving effect to the consummation of any Permitted Acquisition
the sum of the unused Revolving Commitments and the Borrower's and
Restricted Subsidiaries' Permitted Investments and cash balances shall not
be less than $20,000,000;
(h) investments in joint ventures and Unrestricted Subsidiaries in an
aggregate amount, on a cumulative basis during the term of this Agreement,
not exceeding the sum of (i) $5,000,000, plus (ii) the aggregate amount of
dividends, interest, principal payments and returns of capital received
from time to time during the term of this Agreement by the Borrower and its
Restricted Subsidiaries in respect of investments made under this
clause (h), plus (iii) the unutilized portion of the Borrower Amount as of
the date of investment, PROVIDED that (A) the aggregate amount invested in
joint ventures and in Unrestricted Subsidiaries during the term of this
Agreement (excluding amounts invested in reliance upon clause (ii) above)
shall not at any time exceed $10,000,000, (B) if an Unrestricted Subsidiary
is
<PAGE>
declared to be a Restricted Subsidiary, compliance with the foregoing
limitations shall thereafter be determined as though such Subsidiary had
never been an Unrestricted Subsidiary and (C) for purposes of determining
compliance with the foregoing limitations, any Guarantee by the Borrower or
any Restricted Subsidiary of Indebtedness or other monetary obligations of
a joint venture or Unrestricted Subsidiary shall be deemed to constitute an
investment therein in an amount equal to the Indebtedness or other monetary
obligations so Guaranteed;
(i) other loans, advances and investments not in excess of $5,000,000
outstanding at any time; and
(j) notes or other evidence of Indebtedness acquired as consideration
in connection with a sale, transfer, lease or other disposition of any
asset by the Borrower or any of the Restricted Subsidiaries.
SECTION 6.06. ASSET SALES. The Borrower will not, and will not
permit any of its Restricted Subsidiaries to, sell, transfer, lease or otherwise
dispose of any asset, including any capital stock, nor will the Borrower permit
any of it Restricted Subsidiaries to issue any additional shares of its capital
stock or other ownership interest in such Restricted Subsidiary, except:
(a) sales of inventory, used or surplus equipment and Permitted
Investments in the ordinary course of business;
(b) sales, transfers and dispositions to the Borrower or a Restricted
Subsidiary; PROVIDED that any such sales, transfers or dispositions
involving a Restricted Subsidiary that is not a Loan Party shall be made in
compliance with Section 6.10;
(c) leases and licenses entered into in the ordinary course of
business;
<PAGE>
(d) sales in connection with sale-leasebacks permitted under
Section 6.07;
(e) sales of investments referred to in clauses (a), (b) and (h) of
Section 6.05;
(f) sales, transfers and dispositions of assets (other than capital
stock of a Subsidiary) that are not permitted by any other clause of this
Section; PROVIDED that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in reliance upon this clause (f) shall
not, in the aggregate, exceed $30,000,000 during the term of this
Agreement; and
(g) sales, transfers and dispositions of Foreign Assets; and
(h) transfers and dispositions constituting investments permitted
under Section 6.05;
PROVIDED that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by clause (b) above) shall be made for fair
value and for at least 80% cash consideration (except that those permitted by
clause (a) above shall be made on terms that are customary in the ordinary
course).
SECTION 6.07. SALE AND LEASE-BACK TRANSACTIONS. The Borrower will
not, and will not permit any Restricted Subsidiary to, enter into any
arrangement, directly or indirectly, with any Person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred, except for any such sale of
fixed or capital assets that is consummated within 90 days after the date the
Borrower or such Restricted Subsidiary acquires or finishes construction of such
fixed or capital asset.
SECTION 6.08. HEDGING AGREEMENTS. The Borrower will not, and will
not permit any of its Restricted Subsidiaries to, enter into any Hedging
Agreement, other than Hedging Agreements entered into in
<PAGE>
the ordinary course of business to hedge or mitigate risks to which the Borrower
or any Restricted Subsidiary is or expects to be exposed in the conduct of its
business or the management of its liabilities.
SECTION 6.09. RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS.
(a) The Borrower will not, and will not permit any Restricted Subsidiary to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, except (i) Wholly Owned Subsidiaries may declare and pay dividends with
respect to their capital stock and Restricted Subsidiaries that are not Wholly
Owned Subsidiaries may declare and pay dividends ratably with respect to their
capital stock, (ii) the Borrower may make Restricted Payments, not exceeding
$2,000,000 during any fiscal year, pursuant to and in accordance with stock
option plans or other benefit plans for management or employees of the Borrower
and its Restricted Subsidiaries, and (iii) the Borrower may, subject to
Section 6.02, make dividends consisting solely of shares of its capital stock.
(b) The Borrower will not, and will not permit any Subsidiary to,
make or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash, securities or other property) of or in respect of
principal of or interest on any Senior Subordinated Note, or any payment or
other distribution (whether in cash, securities or other property), including
any sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancelation or termination of any Senior Subordinated
Note, except payment of regularly scheduled interest payments as and when due in
respect of the Senior Subordinated Notes.
SECTION 6.10. TRANSACTIONS WITH AFFILIATES. The Borrower will not,
and will not permit any Restricted Subsidiary to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates (including any Subsidiary), except (a) transactions in the
ordinary course of business that are at prices and on terms and conditions not
less favorable to the Borrower or such Restricted Subsidiary than could be
obtained on
<PAGE>
an arm's-length basis from unrelated third parties, (b) transactions between or
among the Borrower and the Subsidiary Loan Parties not involving any other
Affiliate, (c) any Restricted Payment permitted by Section 6.09, and
(d) transactions expressly contemplated by Schedule 6.10.
SECTION 6.11. RESTRICTIVE AGREEMENTS. The Borrower will not and will
not permit any Restricted Subsidiary to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of the Borrower or any
Restricted Subsidiary to create, incur or permit to exist any Lien upon any of
its property or assets, or (b) the ability of any Restricted Subsidiary to pay
dividends or other distributions with respect to any shares of its capital stock
or to make or repay loans or advances to the Borrower or any other Restricted
Subsidiary or to Guarantee Indebtedness of the Borrower or any other Restricted
Subsidiary; PROVIDED that (i) the foregoing shall not apply to restrictions and
conditions imposed by law or by any Loan Document, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof identified on
Schedule 6.11 (but shall apply to any extension, renewal, amendment or
modification expanding the scope of, any such restriction or condition), (iii)
the foregoing shall not apply to customary restrictions and conditions contained
in agreements relating to the sale of a Subsidiary or assets pending such sale,
provided such restrictions and conditions apply only to the Subsidiary or assets
that are to be sold and such sale is permitted hereunder, (iv) clause (a) of the
foregoing shall not apply to restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness, (v) clause (a) of the foregoing shall not apply to customary
provisions in contracts restricting the assignment thereof and (vi) the
foregoing shall not apply to restrictions imposed by any agreement relating to
Indebtedness of a Foreign Subsidiary that applies only to such Foreign
Subsidiary and its assets.
<PAGE>
SECTION 6.12. AMENDMENT OF MATERIAL DOCUMENTS. The Borrower will
not, and will not permit any Subsidiary to, amend, modify or waive any of its
rights under (a) its certificate of incorporation, by-laws or other
organizational documents (other than amendments and modifications that are not
adverse to the interests of the Lenders and do not impair the exercise of
remedies under any Security Document), (b) the Senior Subordinated Notes or any
Senior Subordinated Note Document, (c) any Split-Off Document (other than
amendments and modifications made after the Split-Off that are not materially
adverse to the interests of the Lenders) or (d) any agreement or document
identified on Schedule 3.19 or relating to any transaction referred to on
Schedule 6.10; PROVIDED that the Borrower or any Subsidiary may amend, modify or
waive any of its rights under any agreement or document referred to in
clause (d) above if such amendment, modification or waiver (i) is on terms no
less favorable to the Borrower and its Subsidiaries than would be obtained on an
arm's length basis from unrelated third parties and (ii) could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 6.13. CAPITAL EXPENDITURES. The Borrower will not make, and
will not permit its Restricted Subsidiaries to make, Capital Expenditures other
than Capital Expenditures made by the Borrower and its Restricted Subsidiaries
in any fiscal year of the Borrower in an amount greater than (a) $30,000,000
plus, for each fiscal year following the Effective Date (commencing with the
1998 fiscal year), an amount equal to the excess, if any, of $30,000,000 over
the aggregate amount of Capital Expenditures made in the immediately preceding
fiscal year (including, with respect to 1997, those capital expenditures of
Huntsman Polymers Corporation's CT Film Division that would qualify as "Capital
Expenditures" under this Agreement if made by the Borrower and its Restricted
Subsidiaries), plus (b) amounts available from time to time to be invested in
joint ventures and Unrestricted Subsidiaries under clause (h) of Section 6.05;
PROVIDED that, to the extent that Capital Expenditures are made in reliance upon
clause (b) above, amounts available to be invested in joint ventures and
Unrestricted Subsidiaries under clause (h) of Section 6.02 shall be deemed
utilized
<PAGE>
thereunder for purposes of determining compliance therewith.
SECTION 6.14. LEVERAGE RATIO. The Borrower will not permit the
Leverage Ratio as of any date during any period set forth below (inclusive of
the specified first and last day of such period) to be in excess of the ratio
set forth below opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Effective Date-September 30, 1998 6.00 to 1.00
October 1, 1998-March 31, 1999 5.50 to 1.00
April 1, 1999-September 30, 1999 5.00 to 1.00
October 1, 1999-September 30, 2000 4.50 to 1.00
October 1, 2000-September 30, 2001 4.00 to 1.00
October 1, 2001-and thereafter 3.50 to 1.00
</TABLE>
SECTION 6.15. INTEREST COVERAGE RATIO. The Borrower will not permit
the ratio of Consolidated EBITDA to Cash Interest Expense for any period of four
consecutive fiscal quarters ending during any period set forth below (inclusive
of the specified first and last day of such period) to be less than the ratio
set forth below opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
December 31, 1997-September 30, 1998 1.50 to 1.00
October 1, 1998-March 31, 1999 1.75 to 1.00
April 1, 1999-September 30, 1999 2.00 to 1.00
October 1, 1999-September 30, 2000 2.25 to 1.00
October 1, 2000-September 30, 2001 2.50 to 1.00
October 1, 2001-September 30, 2002 2.75 to 1.00
October 1, 2002-and thereafter 3.00 to 1.00
</TABLE>
SECTION 6.16. MINIMUM NET WORTH. The Borrower will not permit its
Adjusted Consolidated Net Worth at the end of any fiscal quarter to be less than
the sum of (a) $60,400,000 plus (b) 50% of consolidated net income of the
Borrower and its consolidated Restricted Subsidiaries for each fiscal quarter of
the Borrower ending after the Effective Date and on or prior to such date for
which such consolidated net income is positive plus (c) 50% of the amount by
which Adjusted Consolidated
<PAGE>
Net Worth shall have been increased during the period from the Effective Date to
such date as a result of the issuance by the Borrower of additional shares of
its capital stock or any capital contribution to the Borrower.
SECTION 6.17. DESIGNATED SENIOR DEBT. The Borrower shall not
designate any Indebtedness (other than indebtedness under the Loan Documents) as
"Designated Senior Debt" for purposes of and as defined in the Senior
Subordinated Note Documents.
ARTICLE VII
EVENTS OF DEFAULT
If any of the following events ("EVENTS OF DEFAULT") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and
as the same shall become due and payable, and such failure shall continue
unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary in or in connection with any Loan
Document or any amendment or modification thereof or waiver thereunder, or
in any report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have
<PAGE>
been incorrect when made or deemed made in any material respect;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.04 (with respect to the
existence of the Borrower) or 5.11 or in Article VI;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof from
the Administrative Agent to the Borrower (which notice will be given at the
request of any Lender);
(f) the Borrower or any Restricted Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall become due
and payable and following the expiration of any applicable grace period;
(g) any event or condition occurs that results in any Material
indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice) the holder or holders of
any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its
scheduled maturity; PROVIDED that this clause (g) shall not apply to
secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Borrower or any Restricted Subsidiary (other than
Immaterial Subsidiaries) or its debts, or of a substantial part of its
assets,
<PAGE>
under any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Restricted Subsidiary (other than Immaterial
Subsidiaries) or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for 60 days or
an order or decree approving or ordering any of the foregoing shall be
entered;
(i) the Borrower or any Restricted Subsidiary (other than Immaterial
Subsidiaries) shall (i) voluntarily commence any proceeding or file any
petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar
law now or hereafter in effect, (ii) consent to the institution of, or fail
to contest in a timely and appropriate manner, any proceeding or petition
described in clause (h) of this Article, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Restricted Subsidiary (other than
Immaterial Subsidiaries) or for a substantial part of its assets, (iv) file
an answer admitting the material allegations of a petition filed against it
in any proceeding described in clause (h) of this Article, (v) make a
general assignment for the benefit of creditors or (vi) take any action for
the purpose of effecting any of the foregoing;
(j) the Borrower or any Restricted Subsidiary (other than Immaterial
Subsidiaries) shall become unable, admit in writing its inability or fail
generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000 (net of amounts covered by insurance as to
which the insurer has not denied liability) shall be rendered against the
Borrower, any Restricted Subsidiary (other than Immaterial Subsidiaries) or
any combination thereof and the
<PAGE>
same shall remain undischarged for a period of 30 consecutive days during
which execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to attach or levy upon any assets of
the Borrower or any Restricted Subsidiary (other than Immaterial
Subsidiaries) to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the
Borrower and its Subsidiaries in an aggregate amount exceeding
(i) $2,500,000 in any year or (ii) $5,000,000 for all periods;
(m) any Lien purported to be created under any Security Document shall
cease to be, or shall be asserted by any Loan Party not to be, a valid and
perfected Lien on any Collateral, with the priority required by the
applicable Security Document, except (i) as a result of the sale or other
disposition of the applicable Collateral in a transaction permitted under
the Loan Documents, (ii) as a result of (x) the Collateral Agent's failure
to take any action reasonably requested by the Borrower in order to
maintain a valid and perfected Lien on any Collateral or (y) any action
taken by the Collateral Agent to release any Lien on any Collateral or
(iii) Liens on Collateral with an aggregate fair market value not exceeding
$1,000,000; or
(n) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared
<PAGE>
to be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and all fees and other obligations of
the Borrower accrued hereunder, shall become due and payable immediately,
without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower; and in case of any event with
respect to the Borrower described in clause (h) or (i) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties,
<PAGE>
regardless of whether a Default has occurred and is continuing, (b) the
Administrative Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and (c) except as expressly set forth in the Loan
Documents, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to the
Borrower or any of its Subsidiaries that is communicated to or obtained by the
bank serving as Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken
by it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or wilful misconduct. The Administrative Agent shall not be deemed
not to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with any Loan Document, (ii) the contents of any certificate, report
or other document delivered thereunder or in connection therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article IV or elsewhere in any Loan Document, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by
<PAGE>
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon. The
Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor the
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Bank and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent that
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall he discharged from its duties
and obligations hereunder. The fees payable by the Borrower to a
<PAGE>
123
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After the Administrative Agent's resignation hereunder, the provisions of this
Article and Section 9.03 shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.
The provisions of this Article shall apply to the Collateral Agent as
though named herein as the Administrative Agent.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 500 Huntsman Way, Salt Lake City
84108, Attention of Richard P. Durham (Telecopy No. (801) 584-5783), with a
copy to Ronald G. Moffitt (Telecopy No. (801) 584-5783);
<PAGE>
124
(b) if to the Administrative Agent or the Collateral Agent, to The
Chase Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan
Plaza, 8th Floor, New York, New York 10081, Attention of Janet Belden
(Telecopy No. (212) 552-5658), with a copy to The Chase Manhattan Bank,
270 Park Avenue, New York 10017, Attention of Robert Sacks (Telecopy
No. (212) 270-1355);
(c) if to the Issuing Bank, to The Chase Manhattan Bank, Loan and
Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New
York 10081, Attention of Janet Belden (Telecopy No. (212) 552-5658) with a
copy to The Chase Manhattan Bank, 270 Park Avenue, New York, New York
10017, Attention of Robert Sacks (Telecopy No. (212) 270-1355);
(d) if to the Swingline Lender, to The Chase Manhattan Bank, Loan and
Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York,
New York 10081, Attention of Janet Belden (Telecopy No. (212) 552-5658)
with a copy to The Chase Manhattan Bank, 270 Park Avenue, New York,
New York 10017, Attention of Robert Sacks (Telecopy No. (212) 270-1355);
and
(e) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. WAIVERS; AMENDMENTS. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or
<PAGE>
125
the exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Issuing Bank and the Lenders hereunder and under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality
of the foregoing, the making of a Loan or issuance or a Letter of Credit shall
not be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent or Collateral Agent, as applicable,
and the Loan Party or Loan Parties that are parties thereto, in each case
with the consent of the Required Lenders; PROVIDED that no such agreement
shall (i) increase the Commitment of any Lender without the written consent
of such Lender, (ii) reduce the principal amount of any Loan or LC
Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount
of any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the
written consent of each Lender affected thereby, (iv) change Section 2.18(b)
or (c) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender, (v) change any of the
provisions of this Section or the definition of the term "Required Lenders"
or any other provision of any Loan
<PAGE>
126
Document specifying the number or percentage of Lenders (or Lenders of any
Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender of such Class, as the case may be), (vi) release any
Subsidiary Loan Party from its Guarantee under the Guarantee Agreement (except
as expressly provided in the Guarantee Agreement), or limit its liability in
respect of such Guarantee, without the written consent of each Lender,
(vii) release all or any substantial part of the Collateral from the Liens of
the Security Documents (except as expressly provided therein), without the
written consent of each Lender or (viii) change any provisions of any Loan
Document in a manner that by its terms adversely affects the rights in respect
of payments due to Lenders holding Loans of any Class differently than those
holding Loans of any other Class, without the written consent of Lenders holding
a majority in interest of the outstanding Loans and unused Commitments of each
affected Class; PROVIDED FURTHER that (A) no such agreement shall amend, modify
or otherwise affect the rights or duties of the Administrative Agent, the
Collateral Agent, the Issuing Bank or the Swingline Lender without the prior
written consent of the Administrative Agent, the Collateral Agent, the Issuing
Bank or the Swingline Lender, as the case may be, and (B) any waiver, amendment
or modification of this Agreement that by its terms affects the rights or duties
under this Agreement of the Revolving Lenders (but not the Term Loan Lenders) or
the Term Loan Lenders (but not the Revolving Lenders) may be effected by an
agreement or agreements in writing entered into by the Borrower and the
percentage in interest of the affected Class of Lenders that would be required
to consent thereto under this Section if such Class of Lenders were the only
Class of Lenders hereunder at the time.
SECTION 9.03. EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Collateral Agent and their respective Affiliates,
including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent and the Collateral Agent, in connection with the
syndication of the credit facilities provided for herein, the
<PAGE>
127
preparation and administration of the Loan Documents or any amendments,
modifications or waivers of the provisions thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses incurred
by the Administrative Agent, the Collateral Agent, the Issuing Bank or any
Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights in connection with
the Loan Documents, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
(b) The Borrower shall indemnify the Administrative Agent, the
Collateral Agent, the Issuing Bank and each Lender, and each Related Party of
any of the foregoing Persons (each such Person being called an "INDEMNITEE")
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of any Loan Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Loan Documents of
their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit
or the use of the proceeds therefrom (including any refusal by the Issuing Bank
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any Mortgaged Property or any other property
currently or formerly owned or operated by the Borrower or any of its
Subsidiaries, or any Environmental Liability related in
<PAGE>
128
any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; PROVIDED that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee or any Affiliate of such
Indemnitee (or of any officer, director, employee, advisor or agent of such
Indemnitee or any such Indemnitee's Affiliates).
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent, the Collateral Agent, the Issuing
Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each
Lender severally agrees to pay to the Administrative Agent, the Collateral
Agent, the Issuing Bank or the Swingline Lender, as the case may be, such
Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
PROVIDED that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent, the Collateral Agent, the Issuing Bank or the
Swingline Lender in its capacity as such. For purposes hereof, a Lender's "pro
rata share" shall be determined based upon its share of the sum of the total
Revolving Exposures, outstanding Term Loans and unused Commitments at the time.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and each hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement or any agreement or instrument contemplated hereby,
the Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
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SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Administrative Agent, the Collateral
Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans at the time owing to it); PROVIDED that
(i) except in the case of an assignment to a Lender or an Affiliate of a Lender,
each of the Borrower and the Administrative Agent (and, in the case of an
assignment of all or a portion of a Revolving Commitment or any Lender's
obligations in respect of its LC Exposure or Swingline Exposure, the Issuing
Bank and the Swingline Lender) must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld), (ii) except in
the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender's Commitment
or Loans, the amount of the Commitment or Loans of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $5,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement, except that this
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130
clause (iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender's rights and obligations in
respect of one Class of Commitments or Loans, (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500, and
(v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent and the Borrower an Administrative Questionnaire; and
PROVIDED FURTHER that any consent of the Borrower otherwise required under this
paragraph shall not be required if an Event of Default under clause (h) or (i)
of Article VII has occurred and is continuing. Subject to acceptance and
recording thereof pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one its offices in The City of New York a copy
of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "REGISTER"). The entries in
the Register shall be
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131
conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the
Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, the Issuing Bank or the Swingline Lender, sell
participations to one or more banks or other entities (a "PARTICIPANT") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
PROVIDED that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower, the
Administrative Agent, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce the Loan Documents and to approve
any amendment, modification or waiver of any provision of the Loan Documents;
PROVIDED that such agreement or instrument may provide that such Lender will
not, without the consent of the Participant, agree to any
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132
amendment, modification or waiver described in the first proviso to
Section 9.02(b) that affects such Participant. Subject to paragraph (f) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.18(c) as though it were a
Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.15 or 2.17 than the applicable Lender would have been
entitled to receive with respect to the Loans or Commitments with respect to
which such participation has been sold to such Participant, unless the sale of
the participation to such Participant is made with the Borrower's prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall
not be entitled to the benefits of Section 2.17 unless the Borrower is notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 2.17(e) as though it were a
Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; PROVIDED that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. SURVIVAL. All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution
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133
and delivery of the Loan Documents and the making of any Loans and issuance of
any Letters of Credit, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and
Article VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 9.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Document and any separate letter agreements with respect to fees
payable to the Administrative Agent or the Issuing Bank constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating to
the subject matter hereof. Except as provided in Section 4.01, this Agreement
shall become effective when it shall have been executed by the Administrative
Agent and when the Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.
<PAGE>
134
SECTION 9.07. SEVERABILITY. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
that such Lender may have.
SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to any
Loan Document, or for recognition or enforcement of any judgment, and each of
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the
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135
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement or
any other Loan Document shall affect any right that the Administrative Agent,
the Collateral Agent, the Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or any other Loan Document
against the Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
<PAGE>
136
SECTION 9.11. HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. CONFIDENTIALITY. Each of the Administrative Agent, the
Collateral Agent, the Issuing Bank and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the consent of
the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, the Collateral Agent, the Issuing Bank or
any Lender on a nonconfidential basis from a source other than the Borrower.
For the purposes of this Section, "INFORMATION" means all information received
from the Borrower relating to the Borrower or its business, other than any such
information that is available to the Administrative Agent, the Collateral Agent,
the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by
the Borrower. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such
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137
Information as such Person would accord to its own confidential information.
SECTION 9.13. INTEREST RATE LIMITATION. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts that are treated as interest
on such Loan under applicable law (collectively the "CHARGES"), shall exceed the
maximum lawful rate (the "MAXIMUM RATE") that may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
HUNTSMAN PACKAGING CORPORATION,
by /s/ Richard P. Durham
-----------------------
Name: Richard P. Durham
Title: President and Chief
Executive Officer
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138
THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent,
by /s/ Robert Anastasio
-----------------------
Name: Robert Anastasio
Title: Vice President
BANK OF MONTREAL,
by /s/ John K. Harele
-----------------------
Name: John K. Harele
Title: Director
THE BANK OF NEW YORK,
by /s/ Lisa Brown
-----------------------
Name: Lisa Brown
Title: Vice President
THE BANK OF NOVA SCOTIA,
by /s/ A.S. Norsworthy
-----------------------
Name: A.S. Norsworthy
Title: Sr. Team Leader --
Loan Operations
BANK OF TOKYO MITSUBISHI TRUST
COMPANY,
by /s/ David C. McLaughlin
-------------------------
Name: David C. McLaughlin
Title: Vice President
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139
BANK ONE, UTAH, N.A.,
by /s/ Stephen A. Cazier
-------------------------
Name: Stephen A. Cazier
Title: Vice President
BANQUE PARIBAS,
by /s/ Matthew C. Bishop
-----------------------
Name: Matthew C. Bishop
Title: Associate
by /s/ Lynne A. Luedara
-----------------------
Name: Lynne A. Luedara
Title: Director
BHF-BANK AKTIENGESELLSCHAFT,
by /s/ Anthony Heyman
-----------------------
Name: Anthony Heyman
Title: Assistant Treasurer
by /s/ John Symes
-----------------------
Name: John Symes
Title: Assistant Vice President
CIBC INC.,
by /s/ Timothy E. Doyle
-----------------------
Name: Timothy E. Doyle
Title: Managing Director
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140
CREDIT LYONNAIS LOS ANGELES BRANCH,
by /s/ Dianne M. Scott
-----------------------
Name: Dianne M. Scott
Title: Vice President and
Manager
DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH,
by /s/ John W. Sweeney
-----------------------
Name: John W. Sweeney
Title: Assistant Vice
President
by /s/ Brigitte Sacin
-----------------------
Name: Brigitte Sacin
Title: Assistant Treasurer
THE FIRST NATIONAL BANK OF CHICAGO,
by /s/ Albert G. Sterhac
-----------------------
Name: Albert G. Sterhac
Title: Vice President
THE FUJI BANK, LIMITED, LOS ANGELES
AGENCY,
by /s/ Masahito Fukada
-----------------------
Name: Masahito Fukada
Title: Joint General Manager
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141
HIBERNIA NATIONAL BANK,
by /s/ Trudy W. Nelson
-----------------------
Name: Trudy W. Nelson
Title: Vice President
KEYBANK NATIONAL ASSOCIATION,
by /s/ J.T. Taylor
-----------------------
Name: J.T. Taylor
Title: Assistant Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY,
by /s/ T. Morgan Edwards, II
-------------------------
Name: T. Morgan Edwards, II
Title: Deputy General Manager
by /s/ Bryan Read
-----------------------
Name: Bryan Read
Title: Vice President
MELLON BANK, N.A.
by /s/ John K. Walsh
-----------------------
Name: John K. Walsh
Title: Vice President
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142
THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES AGENCY,
by /s/ Yasushi Satomi
-----------------------
Name: Yasushi Satomi
Title: Senior Vice President
NATEXIS BANQUE-BFCE,
by /s/ Iain A. Whyte
-----------------------
Name: Iain A. Whyte
Title: Vice President
by /s/ Daniel Touffo
-----------------------
Name: Daniel Touffo
Title: First VP and Regional
Manager
NATIONAL CITY BANK,
by /s/ Robert C. Rowe
-----------------------
Name: Robert C. Rowe
Title: Vice President
<PAGE>
143
NATIONSBANK OF TEXAS, N.A.,
by /s/ Frank Johnson
-----------------------
Name: Frank Johnson
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION,
by /s/ David J. Egan
-----------------------
Name: David J. Egan
Title: Senior Vice President
THE SUMITOMO BANK, LIMITED,
by /s/ Goro Hirai
-----------------------
Name: Goro Hirai
Title: Joint Central Manager
C.S. BANK NATIONAL ASSOCIATION,
by /s/ Danielle Lower
-----------------------
Name: Danielle Lower
Title: Vice President
<PAGE>
EXHIBIT 99(b)(2)
April 7, 1998
Huntsman Packaging Corporation
500 Huntsman Way
Salt Lake City, UT 84108
Attention: Mr. Richard P. Durham
President and Chief Executive Officer
HUNTSMAN PACKAGING CORPORATION
$285,000,000 ADDITIONAL FACILITIES
COMMITMENT LETTER
Ladies and Gentlemen:
You have advised The Chase Manhattan Bank ("Chase") and Chase
Securities Inc. ("CSI") that Huntsman Packaging Corporation, a Utah corporation
(the "Borrower"), intends to offer to acquire (the "Acquisition") Blessings
Corporation, a Delaware corporation (the "Target"), for cash consideration not
exceeding $215,000,000 (excluding existing indebtedness of the Target to be
refinanced) and, in connection therewith, the Borrower desires to amend and
restate its existing Credit Agreement dated as of September 30, 1997 (the
"Credit Agreement"), among the Borrower, the lenders party thereto and Chase, as
Administrative Agent, in order to permit the Acquisition and to obtain
additional credit facilities thereunder (the "Additional Facilities" and,
together with the existing credit facilities under the Credit Agreement, the
"Facilities"), as described in the Summary of Principal Terms and Conditions
attached hereto as Exhibit A (the "Term Sheet"), the proceeds of which will be
used to finance the consideration payable in connection with the Acquisition, to
refinance certain existing indebtedness of the Target and to pay related fees
and expenses. The amendment and restatement of the Credit Agreement
contemplated hereby (the "Restatement"), the Acquisition and
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2
the refinancing of existing indebtedness of the Target are collectively referred
to herein as the "Transactions". Capitalized terms used and not otherwise
defined herein are used as defined in the Credit Agreement.
In connection with the foregoing, CSI is pleased to advise you of its
agreement to act as arranger for the Additional Facilities and Chase is pleased
to advise you of its commitment to provide the entire principal amount of the
Additional Facilities and to serve as administrative agent in respect thereof,
in each case upon the terms and subject to the conditions set forth or referred
to in this Commitment Letter and in the Term Sheet. In addition, you have
requested that Chase agree, and Chase hereby agrees, that, in the event that the
Restatement is not approved by the Lenders required for approval under the
Credit Agreement, Chase will enter into (or arrange for other assignees to enter
into) Assignment and Acceptances with those Lenders that are not willing to
approve the Restatement (the "Departing Lenders"), pursuant to which the
Commitments and Loans of the Departing Lenders (the "Assigned Interests") are
assigned to and assumed by Chase or one or more other assignees willing to
approve the Restatement, upon the terms and subject to the conditions set forth
or referred to in this Commitment Letter and in the Term Sheet.
It is agreed that Chase will continue to act as the sole and exclusive
administrative agent and collateral agent for all the credit facilities under
the Credit Agreement (including the Additional Facilities), and that CSI will
act as the sole and exclusive advisor and arranger for the Additional
Facilities, and that each will, in such capacity, perform the duties and
exercise the authority customarily associated with such roles. It is further
agreed that no additional agents, co-agents or arrangers will be appointed and
no Lender will receive compensation outside the terms contained herein and in
the Fee Letter referred to below in order to obtain its commitment to
participate in the Additional Facilities or to approve the Restatement (or, if
applicable, to accept any Assigned Interest) in each case unless you and we
mutually agree.
Chase reserves the right, prior to or after the execution of
definitive documentation for the Restatement, to syndicate all or a portion of
its commitment in respect of the Additional Facilities (and, if applicable, the
<PAGE>
3
Assigned Interests) to one or more financial institutions reasonably
satisfactory to CSI, Chase and you. CSI intends to commence syndication efforts
promptly upon the execution of this Commitment Letter, and you agree actively to
assist Chase and CSI in achieving a syndication that is satisfactory to Chase
and CSI. This will be accomplished by a variety of means, including (a) direct
contact during the syndication (at times mutually agreed upon) between the
senior officers, representatives and advisors of the Borrower (and senior
officers of the Target), on the one hand, and existing and prospective Lenders,
on the other hand, and (b) the hosting, with CSI, of a meeting of existing and
prospective Lenders. Such assistance also shall include your using your
reasonable best efforts to have CSI's syndication efforts benefit materially
from your lending relationships. Chase's commitment hereunder will be reduced
by the amount of any commitments to provide a portion of the Additional
Facilities received from other prospective Lenders prior to the execution of
definitive documentation for the Restatement.
CSI will, in consultation with you, manage all aspects of the
syndication, including selection of existing or prospective Lenders,
determination of when CSI will approach existing and potential Lenders, any
naming rights and the final allocations of the commitments in respect of the
Additional Facilities (and, if applicable, the Assigned Interests) among
existing and prospective Lenders. To assist CSI in its syndication efforts, you
agree (a) promptly to provide, and to cause your affiliates and advisors to
provide, CSI upon request with all financial and other information with respect
to the Borrower, the Target, the Transactions and any other transactions
contemplated hereby deemed reasonably necessary by CSI to complete successfully
any syndication, including but not limited to financial projections (the
"Projections") relating to the foregoing, and (b) to assist, and to cause your
affiliates and advisors to assist, CSI in the preparation of a Confidential
Information Memorandum and other marketing materials to be used in connection
with the arrangement and syndication of the Additional Facilities (and, if
applicable, the Assigned Interests).
The commitment and agreements of Chase hereunder and the agreement of
CSI to provide the services described herein are subject to the condition that
(a) all information (other than the Projections) concerning the Borrower, the
<PAGE>
4
Target and the Transactions and the other transactions contemplated hereby
(the "Information") that has been or will be made available to Chase or CSI
by you or any of your representatives in connection with the transactions
contemplated hereby, when taken as a whole, is or will be complete and
correct in all material respects and does not or will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained therein not materially misleading in
light of the circumstances under which such statements are made and (b) the
Projections that have been or will be made available to Chase or CSI by you
or any of your representatives in connection with the transactions
contemplated hereby have been and will be prepared in good faith based upon
assumptions believed by you to be reasonable. You agree to supplement the
Information and the Projections from time to time until the closing of the
Restatement to correct any material misstatement in or material omission from
the Information or if the assumptions underlying the Projections are not
believed by you to be reasonable. In arranging the Restatement, including
the syndication of the Additional Facilities (and, if applicable, the
Assigned Interests), CSI and Chase will use and rely primarily on the
Information and the Projections without independent verification thereof.
As consideration for Chase's commitment and Chase's and CSI's
agreements hereunder, you agree to pay to Chase the fees set forth in the Term
Sheet and in the Fee Letter dated the date hereof and delivered herewith (the
"Fee Letter"). Once paid, such fees shall not be refundable under any
circumstances.
Chase's commitment and Chase's and CSI's agreements hereunder are
subject to (a) our satisfaction with the terms and conditions of the Acquisition
and the other Transactions (including, without limitation, all agreements and
arrangements relating thereto), (b) the absence of any materially adverse
information, event, circumstance or other matter relating to the Borrower, the
Target or the Transactions becoming known to Chase after the date of this
Commitment Letter that was not disclosed to Chase prior to the date of this
Commitment Letter, (c) there not having occurred any material adverse change
since December 31, 1997, in the business, assets, results of operations,
condition (financial or otherwise) or prospects of or relating to the Borrower,
the Target and their
<PAGE>
5
respective subsidiaries, taken as a whole, (d) there not having occurred and
being continuing any material adverse change in financial, banking or capital
markets that materially and adversely affects the syndication of bank credit
facilities for transactions comparable to those contemplated hereby, (e) our
satisfaction that, prior to and during the syndication of the Additional
Facilities (and, if applicable, the Assigned Interests), there shall be no
competing issues of debt securities or commercial bank facilities of the
Borrower or any of its subsidiaries being offered, placed or arranged and (f)
the other conditions set forth herein and in the Term Sheet.
As indicated in the Term Sheet, Chase's commitment also is subject to
the condition that the Indenture relating to the Borrower's existing Senior
Subordinated Notes be amended to the extent necessary to permit the Additional
Facilities. In the event that such condition is not satisfied, Chase will agree
to eliminate such condition if (i) the Additional Facilities are reduced to an
aggregate principal amount of $235,000,000, (ii) the current stockholders of the
Borrower create a special purpose holding company to own all the outstanding
capital stock of the Borrower and (iii) such holding company incurs $50,000,000
of indebtedness and contributes the proceeds of such indebtedness to the
Borrower as equity, all as contemplated by the Commitment Letter among us dated
March 20, 1998, and the term sheet attached thereto, in each case relating to
Additional Facilities in an aggregate principal amount of $235,000,000 (the
"March 20 Commitment Letter").
It is understood and agreed that Chase and CSI shall be entitled,
after consultation with you, to change the pricing, terms and structure of the
Facilities if Chase and CSI determine that such changes are reasonably necessary
in order to ensure a successful syndication of the Additional Facilities (and,
if applicable, the Assigned Interests); PROVIDED that the total amount of the
Facilities provided to you shall remain unchanged. Chase's commitment and
Chase's and CSI's agreements hereunder are subject to the agreements set forth
in this paragraph.
The terms and conditions of the Additional Facilities are not limited
to those set forth herein and in the Term Sheet. Those matters that are not
covered by the
<PAGE>
6
provisions hereof and of the Term Sheet are subject to the approval and
agreement of Chase, CSI and the Borrower.
In addition, Chase's commitment hereunder is subject to the
negotiation, execution and delivery of definitive documentation with respect to
the Restatement and the Additional Facilities reasonably satisfactory to Chase.
Such documentation shall be based upon and similar to the existing Credit
Agreement and related documentation (except for changes to reflect the terms of
the Additional Facilities and to contemplate the Acquisition) and otherwise
shall be reasonably satisfactory to Chase and its counsel.
You agree (a) to indemnify and hold harmless CSI, Chase and their
respective officers, directors, employees, affiliates, agents and controlling
persons from and against any and all losses, claims, damages, liabilities and
expenses, joint or several, to which any such person may become subject arising
out of or in connection with this Commitment Letter, the Term Sheet, the Fee
Letter, the Transactions, the Additional Facilities, the use of proceeds thereof
or any related transaction or any claim, litigation, investigation or proceeding
relating to any of the foregoing, regardless of whether any of such indemnified
parties is a party thereto, and to reimburse each of such indemnified parties
upon demand for any reasonable legal or other expenses incurred in connection
with investigating or defending any of the foregoing, PROVIDED that the
foregoing indemnity will not, as to any indemnified party, apply to losses,
claims, damages, liabilities or related expenses to the extent they have
resulted from the willful misconduct or gross negligence of such indemnified
party, and (b) to reimburse CSI and Chase on demand for all reasonable
out-of-pocket expenses (including but not limited to expenses of Chase's due
diligence investigation, fees and expenses of consultants engaged in
consultation with you, syndication expenses, travel expenses and fees,
disbursements and other charges of counsel to Chase and CSI), in each case
incurred in connection with the Additional Facilities and the preparation of
this Commitment Letter, the Term Sheet, the Fee Letter, the definitive
documentation for the Restatement and the security arrangements in connection
therewith. No indemnified person shall be liable for any indirect or
consequential damages in connection with its activities related to the
Transactions.
<PAGE>
7
You acknowledge that Chase and CSI may be providing debt financing,
equity capital or other services (including financial advisory services) to
other companies in respect of which you may have conflicting interests. Neither
Chase nor CSI will use confidential information obtained from you by virtue of
the transactions contemplated by this Commitment Letter or its other
relationships with you in connection with the performance by Chase or CSI of
services for other companies, and neither Chase nor CSI will furnish any such
information to other companies. You also acknowledge that neither Chase nor CSI
has any obligation to use in connection with the transactions contemplated by
this Commitment Letter, or to furnish to you, confidential information obtained
by Chase or CSI from other companies.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Fee Letter nor the Term Sheet nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) on a confidential basis, to the Borrower and its
affiliates and its officers, agents and advisors who are directly involved in
the consideration of this matter or (b) as may be compelled in a judicial or
administrative proceeding or as otherwise required by law (in which case you
agree to inform us promptly thereof); PROVIDED that you may disclose this
Commitment Letter and the Term Sheet, and their terms and substance (but not the
Fee Letter or its terms and substance) to the Target after this Commitment
Letter has been accepted by you.
Except as otherwise contemplated herein or as permitted under Section
9.12 of the Credit Agreement, Chase and CSI agree that they will keep and cause
their affiliates to keep as confidential in accordance with customary banking
practices and in accordance with the confidentiality agreement dated January 22,
1998 and executed by the Borrower (the "Existing Confidentiality Agreement"),
all non-public, confidential information of the Borrower and its subsidiaries.
Chase and CSI agree that they will make each prospective syndicate member to
which they deliver any such non-public, confidential information aware of the
confidential nature thereof, including the limitations set forth in the Existing
Confidentiality Agreement.
This Commitment Letter and Chase's commitment and Chase's and CSI's
agreements hereunder shall not be assignable by you without the prior written
consent of Chase
<PAGE>
8
and CSI, and any purported assignment without such consent shall be void. This
Commitment Letter may not be amended or any provision hereof waived or modified
except by an instrument in writing signed by Chase, CSI and you. The Borrower
has the right to terminate Chase's commitment hereunder at any time subject to
the provisions of the fourth sentence of the immediately succeeding paragraph.
This Commitment Letter may be executed in any number of counterparts, each of
which shall be an original and all of which, when taken together, shall
constitute one agreement. Delivery of an executed counterpart of a signature
page of this Commitment Letter by facsimile transmission shall be effective as
delivery of a manually executed counterpart of this Commitment Letter. This
Commitment Letter is intended to be solely for the benefit of the parties hereto
and is not intended to confer any benefits upon, or create any rights in favor
of, any person other than the parties hereto. This Commitment Letter shall be
governed by, and construed in accordance with, the laws of the State of New
York.
Please indicate your acceptance of the terms hereof and of the Term
Sheet and the Fee Letter by returning to us executed counterparts of this
Commitment Letter and the Fee Letter not later than 5:00 p.m., New York City
time, on April 8, 1998. Chase's commitment and Chase's and CSI's agreements
hereunder will expire at such time in the event that Chase has not received such
executed counterparts in accordance with the immediately preceding sentence. In
the event that the Restatement is not effective on or before June 30, 1998, then
this Commitment Letter and Chase's commitment and Chase's and CSI's agreements
hereunder shall automatically terminate unless Chase and CSI shall, in their
discretion, agree to an extension. The compensation, reimbursement and
indemnification provisions contained herein shall remain in full force and
effect regardless of whether definitive documentation shall be executed and
delivered and notwithstanding the termination of this Commitment Letter or
Chase's commitment and Chase's and CSI's agreements hereunder, provided that the
compensation, reimbursement and indemnification provisions contained herein
shall be superseded by the provisions of the definitive financing documentation
upon the effectiveness thereof.
Upon your execution and delivery of this Commitment Letter and the Fee
Letter as provided above, the
<PAGE>
9
March 20 Commitment Letter, and the Fee Letter referred to therein, shall be
superseded and replaced hereby and shall terminate.
<PAGE>
Chase and CSI are pleased to have been given the opportunity to assist
you in connection with the Transactions.
Very truly yours,
THE CHASE MANHATTAN BANK,
by
/s/ ROBERT ANASTASIO
-----------------------
Name: Robert Anastasio
Title: Vice President
CHASE SECURITIES INC.,
by
/s/ MERCEDES TECH
-----------------------
Name: L. Mercedes Tech
Title: Managing Director
Accepted and agreed to as of
the date first above written:
HUNTSMAN PACKAGING CORPORATION,
by
/s/ RONALD G. MOFFITT
---------------------------
Name: Ronald G. Moffitt
Title: Senior Vice President
<PAGE>
EXHIBIT A
CONFIDENTIAL
April 7, 1998
HUNTSMAN PACKAGING CORPORATION
$285,000,000 ADDITIONAL FACILITIES
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS
BORROWER: Huntsman Packaging Corporation, a Utah corporation (the
"Borrower").
TRANSACTIONS: The Borrower intends to offer to acquire (the
"Acquisition") Blessings Corporation, a Delaware
corporation (the "Target"), for cash consideration not
exceeding $215,000,000 in the aggregate (the "Purchase
Price"). It is contemplated that the Acquisition will
be consummated pursuant to (a) a tender offer (the
"Tender Offer") by the Borrower or a wholly-owned
subsidiary thereof for all outstanding shares of the
Target's capital stock, followed by (b) a merger (the
"Merger") of the Target with and into the Borrower
pursuant to which all holders of shares of capital
stock of the Target (other than those acquired pursuant
to the Tender Offer) are entitled to receive cash
consideration for their shares. The Acquisition will
be effected in accordance with a definitive agreement
(the "Acquisition Agreement") to be entered into by the
Borrower, the Target and one or more affiliates
thereof. In connection with the Acquisition, all
existing indebtedness of the Target (the "Target
Indebtedness") will be repaid, subject to limited
exceptions to be agreed upon. The Acquisition, the
repayment of the Target Indebtedness, the Restatement
(as defined below) and all related transactions are
<PAGE>
2
referred to herein collectively as the "Transactions".
SOURCES AND USES: The approximate sources and uses of funds necessary to
consummate the Transactions are set forth on Annex II
attached hereto.
ADMINISTRATIVE AGENT The Chase Manhattan Bank ("Chase") will act as sole and
AND COLLATERAL exclusive administrative agent and collateral agent
AGENT: (collectively, the "Agent") for a syndicate of
financial institutions reasonably satisfactory to Chase
and the Borrower (the "Lenders"), and will perform the
duties customarily associated with such roles.
ARRANGER: Chase Securities Inc. will act as sole and exclusive
advisor and arranger (the "Arranger") for the
Additional Facilities (as defined herein) and will
perform the duties customarily associated with such
roles.
RESTATEMENT OF In connection with the Transactions, the Borrower's
EXISTING CREDIT existing Credit Agreement dated as of September 30,
AGREEMENT: 1997 (the "Existing Credit Agreement"), will be amended
and restated (the "Restatement") in order to permit the
Acquisition and to provide for the Additional
Facilities (as defined below), subject to the terms and
conditions contemplated hereby. The existing term loan
facility (the "Existing Term Loan Facility") and
revolving facility (the "Existing Revolving Facility"
and, together with the Existing Term Loan Facility, the
"Existing Facilities") under the Existing Credit
Agreement will remain in place.
<PAGE>
3
ADDITIONAL In addition to the Existing Facilities, the Restatement
FACILITIES: will provide for:
(A) A Senior Secured Tranche A Term Loan Facility in
an aggregate principal amount of up to
$185,000,000 (the "Tranche A Facility").
(B) A Senior Secured Tranche B Term Loan Facility in
an aggregate principal amount of up to
$100,000,000 (the "Tranche B Facility" and,
together with the Tranche A Facility, the
"Additional Facilities").
The Existing Term Loan Facility, the Tranche A Facility
and the Tranche B Facility are collectively referred to
as the "Term Facilities" and, together with the
Existing Revolving Facility, the "Facilities".
PURPOSE: The proceeds of loans made under the Additional
Facilities will be used by the Borrower to pay the
Purchase Price, to repay Target Indebtedness and to pay
fees and expenses incurred in connection with the
Transactions.
AVAILABILITY: The full amount of the Tranche B Facility must be drawn
in a single drawing on the date (the "Closing Date") on
which the Restatement becomes effective. The full
amount of the Tranche A Facility also must be drawn in
a single drawing on the Closing Date; PROVIDED that, if
the Merger does not occur on the Closing Date, then an
amount of the Tranche A Facility equal to the sum of
(a) the portion of the Purchase Price allocable to the
Target's shares that are not being purchased pursuant
<PAGE>
4
to the Tender Offer and (b) the amount of the Target
Indebtedness to be repaid in connection with the
Transactions that is not required to be repaid prior to
the Merger, shall be available after the Closing Date
(and such portion of the Tranche A Facility shall be
available in a limited number of drawings during a
period to be determined). Amounts borrowed under the
Additional Facilities that are repaid or prepaid may
not be reborrowed.
INTEREST RATES As set forth on Annex I hereto.
AND FEES:
DEFAULT RATE: The applicable interest rate plus 2% per annum shall be
charged on all overdue amounts.
FINAL MATURITY AND (A) The maturity of the Existing Facilities and the
AMORTIZATION: amortization of the Existing Term Loan Facility
will not be changed.
(B) The Tranche A Facility will mature on the same
date as the Existing Term Loan Facility (September
30, 2005) and will amortize on a quarterly basis
to be determined.
(C) The Tranche B Facility will mature on June 30,
2006, and will amortize on a quarterly basis in
nominal amounts during the first seven years and
in amounts to be determined thereafter.
GUARANTEES: All obligations of the Borrower under the Facilities,
under the related security documentation and under any
interest protection or other hedging arrangements
entered into by the Borrower with a Lender (or any
affiliate thereof) (collectively, the "Obligations")
<PAGE>
5
will be unconditionally guaranteed (the "Guarantees")
by each existing and subsequently acquired or organized
domestic (and, to the extent no adverse tax
consequences to the Borrower would result therefrom,
foreign) subsidiary of the Borrower on the same basis
as under the Existing Credit Agreement. The Target and
its subsidiaries will not be required to enter into
Guarantees prior to the Merger but, upon the Merger,
each subsidiary of the Target that meets the
requirements set forth above shall be required to enter
into a Guarantee.
SECURITY: The Obligations will be secured by substantially all
the assets of the Borrower and each existing and
subsequently acquired or organized domestic (and, to
the extent no adverse tax consequences to the Borrower
would result therefrom, foreign) subsidiary of the
Borrower (collectively, the "Collateral") on the same
basis as under the Existing Credit Agreement, including
but not limited to (a) a first-priority pledge of all
capital stock held by the Borrower or any other
domestic (and, subject to the foregoing limitation,
foreign) subsidiary of the Borrower of each existing
and subsequently acquired or organized subsidiary of
the Borrower (which pledge, in the case of any foreign
subsidiary, shall be limited to 65% of the capital
stock of such foreign subsidiary to the extent the
pledge of any greater percentage would result in
adverse tax consequences to the Borrower), including
capital stock of the Target acquired pursuant to the
Tender Offer, and (b) perfected first-priority security
interests in, and mortgages on, substantially all
tangible and intangible assets of the Borrower and each
<PAGE>
6
existing or subsequently acquired or organized domestic
(and, subject to the foregoing limitation, foreign)
subsidiary of the Borrower (including but not limited
to accounts receivable, inventory, equipment,
trademarks, other intellectual property, licensing
agreements, cash and proceeds of the foregoing).
The assets of the Target and its subsidiaries will not
be required to be pledged to secure the Obligations
prior to the Merger but, upon the Merger, the
Obligations will be secured by substantially all the
assets of the Target and the Target's subsidiaries to
the extent required by the preceding paragraph.
All the above-described pledges, security interests and
mortgages shall be created on terms, and pursuant to
documentation, reasonably satisfactory to the Lenders,
and none of the Collateral shall be subject to any
other pledges, security interests or mortgages,
subject to limited exceptions to be agreed upon.
MANDATORY Loans under the Term Facilities shall be prepaid with
PREPAYMENTS: (a) 50% of Excess Cash Flow (as defined in the Existing
Credit Agreement) for each fiscal year, (b) 100% of the
net cash proceeds of all asset sales or other
dispositions of property by the Borrower and its
subsidiaries (including insurance and condemnation
proceeds in excess of an agreed-upon amount but subject
to certain exceptions to be negotiated in the final
documentation); PROVIDED, HOWEVER, that the foreign
subsidiaries of the Borrower may retain the net cash
proceeds of any such asset sales or other dispositions
<PAGE>
7
in an aggregate amount not to exceed $40,000,000,
(c) 100% of the net proceeds of issuances of debt
obligations of the Borrower and its subsidiaries
(subject to exceptions to be agreed upon) and (d) 50%
of the net proceeds of issuances of equity of the
Borrower and its subsidiaries; PROVIDED, HOWEVER, that
if the Borrower issues equity in order to finance a
Permitted Acquisition (to be defined), no amount of
such net proceeds to the extent such net proceeds are
used to finance such Permitted Acquisition will be
required to be applied as a prepayment; PROVIDED,
FURTHER, that if the debt/EBITDA ratio of the Borrower
and its subsidiaries is less than 2.00 to 1.00 as of
the end of the immediately preceding four fiscal
quarters for which financial statements are available,
no amount of net proceeds will be required to be
applied as a prepayment under this clause (d).
Subject to the "Special Application Provisions"
described below, all mandatory prepayments of loans
under the Term Facilities shall be applied pro rata
among the Term Facilities. Within each such Term
Facility, mandatory prepayments will be applied pro
rata to reduce the remaining amortization payments.
When there are no longer outstanding loans under the
Term Facilities, mandatory prepayments will be applied
to permanently reduce commitments under the Revolving
Facility.
SPECIAL APPLICATION Holders of loans under the Tranche B Facility may, so
PROVISIONS: long as loans are outstanding under either of the other
Term Loan Facilities, decline to accept any mandatory
prepayment described above and, under such
<PAGE>
8
circumstances, all amounts that would otherwise be used
to prepay loans under the Tranche B Facility shall be
used to prepay loans under the other Term Facilities
pro rata.
VOLUNTARY Voluntary prepayments of borrowings under the
PREPAYMENTS/ Facilities, and voluntary reductions of the unutilized
REDUCTIONS IN portion of the Revolving Facility commitments, will be
COMMITMENTS: permitted at any time, in minimum principal amounts to
be agreed upon, without premium or penalty, subject to
reimbursement of the Lenders' redeployment costs in the
case of a prepayment of Adjusted LIBOR borrowings other
than on the last day of the relevant interest period.
All voluntary prepayments of Term Facilities must be
made pro rata among the Term Facilities and shall be
applied, first, to reduce the next four scheduled
quarterly payments under the relevant Facility and,
second, pro rata to the remaining amortization payments
under such Facility.
REPRESENTATIONS AND Substantially the same as representations and
WARRANTIES: warranties set forth in the Existing Credit Agreement
and others to be reasonably specified by the Agent.
CONDITIONS PRECEDENT Usual for facilities and transactions of this type,
TO RESTATEMENT AND those specified below and others to be reasonably
INITIAL BORROWING: specified by the Agent, including, without limitation:
delivery of satisfactory legal opinions and financial
information to be agreed upon; first-priority perfected
security interests in the Collateral; execution of the
Guarantees, which shall be in full force and effect;
accuracy of representations and warranties; absence of
defaults, prepayment events or creation of liens under
debt instruments or other agreements as a result of the
<PAGE>
9
transactions contemplated hereby; evidence of
authority; compliance with applicable laws and
regulations (including but not limited to ERISA, margin
regulations and environmental laws); absence of
material adverse change in the business, assets,
results of operations, condition (financial or
otherwise) or prospects of the Borrower, the Target and
their respective subsidiaries, taken as a whole, since
December 31, 1997; payment of fees and expenses;
delivery of borrowing certificates; and obtaining of
satisfactory insurance.
The Indenture relating to the Borrower's existing
Senior Subordinated Notes shall have been amended to
the extent necessary to permit the Additional
Facilities, and such amendment shall be reasonably
satisfactory to the Lenders in form and substance;
PROVIDED that the foregoing condition shall not apply
if the aggregate amount of the Additional Facilities is
reduced to an amount that does not require any
amendment to such Indenture and the balance of the
financing is raised by the incurrence of indebtedness
by a special purpose holding company that will be
formed to hold all the common stock of the Borrower,
all on terms reasonably satisfactory in all material
respects to the Lenders.
The Lenders shall be satisfied with the material terms
of the Acquisition, including the material terms and
conditions of (a) the Tender Offer, (b) the Merger and
(c) the Acquisition Agreement and any other agreements
<PAGE>
10
entered into in connection with the Transactions (it
being agreed that the Lenders are satisfied with the
terms and conditions set forth in the draft of the
Acquisition Agreement delivered to the Administrative
Agent and its counsel on April 5, 1998.
All conditions to the acceptance of shares of the
Target's capital stock pursuant to the Tender Offer
shall have been satisfied (without giving effect to any
material amendment or waiver thereof that has not been
approved by the Lenders) and sufficient shares shall
have been validly tendered and accepted for purchase
pursuant to and in accordance with the Tender Offer to
permit the Borrower to cause the Merger to occur
without the approval of any other shareholders.
Either (a) the Merger shall be consummated on the
Closing Date or (b) there shall not be any further
consent, approval, waiver, condition or other material
impediment to the consummation of the Merger, other
than (i) approval of the Merger by vote of the
stockholders (which shall be within the control of the
Borrower) of the Target at a meeting of stockholders,
(ii) customary filings in the State of Delaware to
effect the Merger and (iii) the other conditions to the
Merger set forth in the Acquisition Agreement.
The Lenders shall be satisfied in all material respects
with the proposed capital structure of the Borrower and
its subsidiaries after consummation of the Transactions
(it being agreed that the Lenders are satisfied as of
the date hereof with the proposed capital structure
<PAGE>
11
described in this Term Sheet, including the estimated
sources and uses on Annex II hereto).
After giving effect to the Transactions and the other
transactions contemplated hereby, the Borrower and its
subsidiaries shall have outstanding no indebtedness or
preferred stock other than (a) the loans and other
extensions of credit under the Facilities, (b) the
Borrower's existing Senior Subordinated Notes and (c)
other limited indebtedness to be agreed upon. The
terms and conditions of any indebtedness of the Target
to remain outstanding after the Closing Date shall be
reasonably satisfactory in all respects to the Lenders.
The Lenders shall have received a pro forma
consolidated balance sheet of the Borrower as of the
Closing Date, after giving effect to the Transactions
and the other transactions contemplated hereby, which
balance sheet shall be in form and substance reasonably
satisfactory to the Lenders.
The Lenders shall be reasonably satisfied in all
respects with the tax position and the contingent tax
and other liabilities of, and with any tax sharing
agreements involving, the Borrower and its subsidiaries
after giving effect to the Transactions and the other
transactions contemplated hereby, and with the plans of
the Borrower with respect thereto (it being understood
that the information disclosed by the Borrower to the
Administrative Agent prior to the date hereof with
respect to the foregoing tax matters shall be deemed
satisfactory).
The consummation of the Transactions and the other
transactions contemplated hereby shall not (a) violate
<PAGE>
12
any applicable law, statute, rule or regulation or
(b) conflict with, or result in a default or event of
default under, any material indenture or other
agreement of the Borrower, the Target or any of their
respective subsidiaries (other than those relating to
Target Indebtedness being repaid on the Closing Date),
and the Agent shall have received one or more legal
opinions to such effect, reasonably satisfactory to the
Agent, from counsel to the Borrower reasonably
satisfactory to the Agent.
All requisite material governmental authorities and
third parties shall have approved or consented to the
Transactions (including the Merger) and the other
transactions contemplated hereby to the extent
required, all applicable appeal periods shall have
expired and there shall be no governmental or judicial
action, actual or threatened, that would restrain,
prevent or impose burdensome conditions on the
Transactions or the other transactions contemplated
hereby.
The Lenders shall have received (a) copies of all
existing environmental reports prepared with respect to
the properties of the Target and its subsidiaries and
any environmental liabilities that may be attributable
to such properties or operations thereon and (b) such
other materials relating to the Target's compliance
with environmental laws and actual or potential
environmental liabilities as shall be reasonably
specified by the Agent, all of which shall be
satisfactory to the Agent (it being understood that the
<PAGE>
13
condition set forth in clause (b) has been satisfied,
PROVIDED that the phase I reports to be delivered to
the Lenders by the Borrower shall not contain any
materially adverse information that has not been
disclosed by the persons preparing such reports
pursuant to or in connection with their discussions
with the Agent's counsel prior to the date hereof).
There shall be no litigation or administrative
proceeding that would have a material adverse effect on
the business, assets, results of operations, condition
(financial or otherwise) or prospects of the Borrower,
the Target and their respective subsidiaries, taken as
a whole, or on the ability of the parties to consummate
the Transactions or the other transactions contemplated
hereby.
CONDITIONS PRECEDENT Accuracy of representations and warranties and absence
TO SUBSEQUENT of defaults. In addition, if the Merger is not
BORROWINGS: consummated on the Closing Date, any subsequent
borrowing under the Tranche A Facility will be subject
to consummation of the Merger in accordance with the
Acquisition Agreement.
AFFIRMATIVE Substantially the same as the affirmative covenants set
COVENANTS: forth in the Existing Credit Agreement and others to be
reasonably specified by the Agent. The Borrower will
agree that, if the Merger is not consummated on the
Closing Date, then the Merger will be consummated
within 90 days thereafter.
NEGATIVE COVENANTS: Substantially the same as the negative covenants set
forth in the Existing Credit Agreement and others to be
reasonably specified by the Agent.
<PAGE>
14
SELECTED FINANCIAL Substantially the same as the financial covenants set
COVENANTS: forth in the Existing Credit Agreement with respect to:
(a) a maximum ratio of debt/EBITDA, (b) a minimum
interest coverage ratio, (c) minimum net worth and
(d) maximum capital expenditures. Covenant levels are
to be determined. Definitions in respect of the
financial covenants shall be substantially the same as
those in the Existing Credit Agreement.
EVENTS OF DEFAULT: Substantially the same as the events of default set
forth in the Existing Credit Agreement and others to be
reasonably specified by the Agent.
VOTING: Amendments and waivers of the restated Credit Agreement
and the other definitive credit documentation will
require the approval of Lenders holding more than 50%
of the aggregate amount of the loans and commitments
under the Facilities, except that the consent of each
Lender affected thereby shall be required with respect
to those matters that require such consent under the
Existing Credit Agreement.
COST AND YIELD Usual for facilities and transactions of this type.
PROTECTION:
ASSIGNMENTS AND The Lenders will be permitted to assign loans and
PARTICIPATIONS: commitments to other financial institutions with the
consent of the Borrower and the Agent, in each case not
to be unreasonably withheld. Each assignment (except
to other Lenders or their affiliates) will be in a
minimum amount of $5,000,000. Assignments will be by
novation and will not be required to be pro rata among
the Facilities.
<PAGE>
15
The Lenders will be permitted to participate loans and
commitments without restriction to other financial
institutions. Voting rights of participants shall be
limited to customary matters.
EXPENSES AND All reasonable out-of-pocket expenses (including,
INDEMNIFICATION: without limitation, expenses incurred in connection
with due diligence) of the Arranger and the Agent
associated with the Restatement, the syndication of the
Facilities and the preparation, execution and delivery,
administration, waiver or modification and enforcement
of the Credit Agreement and the other documentation
contemplated hereby and thereby (including the
reasonable fees, disbursements and other charges of
counsel) are to be paid by the Borrower. In addition,
all reasonable out-of-pocket expenses of the Lenders
for enforcement costs and documentary taxes associated
with the Facilities are to be paid by the Borrower.
The Borrower will indemnify the Arranger, the Agent and
the other Lenders and hold them harmless from and
against all costs, expenses (including reasonable fees,
disbursements and other charges of counsel) and
liabilities of the Arranger, the Agent and the other
Lenders arising out of or relating to any claim or any
litigation or other proceedings (regardless of whether
the Arranger, the Agent or any other Lender is a party
thereto) that relate to the proposed transactions,
including the financing contemplated hereby, the
Transactions or any transactions connected therewith,
provided that none of the Arranger, the Agent or any
<PAGE>
16
other Lender will be indemnified for its gross
negligence or willful misconduct.
GOVERNING LAW AND New York.
FORUM:
COUNSEL TO AGENT AND Cravath, Swaine & Moore.
ARRANGER:
<PAGE>
ANNEX I
INTEREST RATES: The interest rates under the Existing Facilities will remain
the same as under the Existing Credit Agreement.
The interest rates under the Tranche A Facility will be
determined by reference to the pricing grid set forth below
under the caption "Adjustments to Interest Rates", which are
the same as those applicable to the Existing Facilities.
The interest rates under the Tranche B Facility will be
Adjusted LIBOR plus 2.25% or ABR plus 1.00%; PROVIDED that
if the Borrower's ratio set forth below under "Adjustments
to Interest Rates" is less than 4.00 to 1.00, then the
interest rates under the Tranche B Facility will be Adjusted
LIBOR plus 2.00% or ABR plus .75%.
The Borrower may elect interest periods of 1, 2, 3 or 6
months for Adjusted LIBOR borrowings.
Calculation of interest shall be on the basis of actual days
elapsed in a year of 360 days (or 365 or 366 days, as the
case may be, in the case of ABR loans based on the Prime
Rate) and interest shall be payable at the end of each
interest period and, in any event, at least every 3 months.
ABR is the Alternate Base Rate, which is the highest of
Chase's Prime Rate, the Federal Funds Effective Rate plus
1/2 of 1% and the Base CD Rate plus 1%.
Adjusted LIBOR and the Base CD Rate will at all times
include statutory reserves (and, in the case of the Base CD
Rate, FDIC assessment rates).
<PAGE>
2
COMMITMENT FEES: Commitment fees under the Existing Revolving Facility will
remain the same as under the Existing Credit Agreement. If
the entire amount of the Tranche A Facility is not funded on
the Closing Date, commitment fees will accrue on unfunded
commitments thereunder at the rate of 0.50% per annum.
ADJUSTMENTS TO
INTEREST RATES: The interest rates under the Tranche A Facility will be
determined as follows by reference to the Borrower's ratio
of (a) Total Debt (as defined in the Existing Credit
Agreement) as of the date of determination to
(b) Consolidated EBITDA (as defined in the Existing Credit
Agreement) for the period of four consecutive fiscal
quarters ended as of such date of determination, as set
forth below:
<TABLE>
<CAPTION>
Ratio of Debt to EBITDA Adjusted LIBOR plus ABR plus
----------------------- ------------------- --------
<S> <C> <C>
Greater than or equal to 4.00 to 1.00 2.00% .75%
Less than 4.00 to 1.00 1.75% .50%
Less than or equal to 3.50 to 1.00 1.50% .25%
Less than or equal to 3.00 to 1.00 1.25% .0%
Less than or equal to 2.50 to 1.00 1.00% .0%
</TABLE>
The ratio of debt to EBITDA shall be determined as at the last day of each
fiscal quarter; changes in interest rates resulting from changes in such
ratio shall become effective on the first day on which the financial
statements covering the quarter-end date as of which such ratio is computed
are delivered to the Agent.
<PAGE>
ANNEX II
Estimated Sources and Uses of Funds
(in millions of dollars)
For Consolidated Entity
USES OF FUNDS SOURCES OF FUNDS
- ------------- -----------------
Purchase Price $215 Tranche A Facility $185
Repay Target Tranche B Facility 100
Indebtedness 55
Fees and expenses 15
---- ----
Total Uses $285 Total Sources $285
---- ----
---- ----
<PAGE>
EXHIBIT 99(c)(1)
AGREEMENT AND PLAN OF MERGER
AMONG
BLESSINGS CORPORATION
HUNTSMAN PACKAGING CORPORATION
AND
VA ACQUISITION CORP.
DATED AS OF APRIL 7, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1
THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Company Action . . . . . . . . . . . . . . . . . . . . . 3
Section 1.3 Directors. . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2
THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2 Effective Time . . . . . . . . . . . . . . . . . . . . . 6
Section 2.3 Closing of the Merger. . . . . . . . . . . . . . . . . . 6
Section 2.4 Effects of the Merger. . . . . . . . . . . . . . . . . . 6
Section 2.5 Certificate of Incorporation and Bylaws. . . . . . . . . 6
Section 2.6 Directors. . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.7 Officers . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.8 Conversion of Shares.. . . . . . . . . . . . . . . . . . 7
Section 2.9 Appraisal Rights.. . . . . . . . . . . . . . . . . . . . 7
Section 2.10 Exchange of Certificates. . . . . . . . . . . . . . . . 7
Section 2.11 Company Stock Options . . . . . . . . . . . . . . . . . 9
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . 9
Section 3.1 Organization and Qualification; Subsidiaries . . . . . . 10
Section 3.2 Capitalization of the Company and its Subsidiaries . . . 10
Section 3.3 Authority Relative to this Agreement;
Consents and Approvals. . . . . . . . . . . . . . . . 12
Section 3.4 SEC Reports; Financial Statements. . . . . . . . . . . . 12
Section 3.5 Information Supplied . . . . . . . . . . . . . . . . . . 13
Section 3.6 Consents and Approvals; No Violations. . . . . . . . . . 13
Section 3.7 No Default . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.8 No Undisclosed Liabilities; Absence of Changes . . . . . 15
Section 3.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.10 Compliance with Applicable Law. . . . . . . . . . . . . 15
Section 3.11 Employee Plans. . . . . . . . . . . . . . . . . . . . . 16
Section 3.12 Environmental Laws and Regulations. . . . . . . . . . . 17
Section 3.13 Tax Matters . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.14 Affiliate Transactions. . . . . . . . . . . . . . . . . 19
Section 3.15 Labor Matters . . . . . . . . . . . . . . . . . . . . . 19
Section 3.16 Relationships with Customers, Suppliers, Distributors
and Sales Representatives . . . . . . . . . . . . . . 19
i
<PAGE>
Section 3.17 Contracts . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.18 Tangible Property; Real Property and Leases . . . . . . 20
Section 3.19 Trademarks, Patents and Copyrights. . . . . . . . . . . 20
Section 3.20 Brokers . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.21 No Other Representations or Warranties. . . . . . . . . 21
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION. . . . . . . 21
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.2 Authority Relative to this Agreement . . . . . . . . . . 22
Section 4.3 Information Supplied . . . . . . . . . . . . . . . . . . 22
Section 4.4 Consents and Approvals; No Violations. . . . . . . . . . 22
Section 4.5 No Default . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.6 Availability of Financing. . . . . . . . . . . . . . . . 23
Section 4.7 No Prior Activities. . . . . . . . . . . . . . . . . . . 23
Section 4.8 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.9 No Other Representations or Warranties . . . . . . . . . 23
ARTICLE 5
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.1 Conduct of Business of the Company . . . . . . . . . . . 24
Section 5.2 Acquisition Proposals. . . . . . . . . . . . . . . . . . 26
Section 5.3 Access to Information. . . . . . . . . . . . . . . . . . 27
Section 5.4 Shareholders Meeting . . . . . . . . . . . . . . . . . . 27
Section 5.5 Additional Agreements; Reasonable Efforts. . . . . . . . 28
Section 5.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.7 Public Announcements . . . . . . . . . . . . . . . . . . 29
Section 5.8 Indemnification; Directors' and Officers' Insurance. . . 29
Section 5.9 Notification of Certain Matters. . . . . . . . . . . . . 30
Section 5.10 Employee Matters . . . . . . . . . . . . . . . . . . . . 30
Section 5.11 SEC Filings. . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.12 Guarantee of Performance . . . . . . . . . . . . . . . . 31
Section 5.13 Notice of Certain Events . . . . . . . . . . . . . . . . 31
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER. . . . . . . . . . . . . . . 31
Section 6.1 Conditions to Each Party's Obligations to Effect
the Merger. . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER. . . . . . . . . . . . . . . . . . . . 32
Section 7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.2 Effect of Termination. . . . . . . . . . . . . . . . . . 33
Section 7.3 Fees and Expenses. . . . . . . . . . . . . . . . . . . . 34
ii
<PAGE>
Section 7.4 Amendment. . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.5 Extension; Waiver. . . . . . . . . . . . . . . . . . . . 35
ARTICLE 8
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.1 Nonsurvival of Representations and Warranties. . . . . . 35
Section 8.2 Entire Agreement; Assignment . . . . . . . . . . . . . . 36
Section 8.3 Validity . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.5 Governing Law; Jurisdiction. . . . . . . . . . . . . . . 37
Section 8.6 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . 37
Section 8.7 Construction; Interpretation . . . . . . . . . . . . . . 37
Section 8.8 Parties in Interest. . . . . . . . . . . . . . . . . . . 38
Section 8.9 Severability . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.10 Specific Performance. . . . . . . . . . . . . . . . . . 38
Section 8.11 Counterparts. . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of the 7th day of April, 1998
(this "Agreement") is made by and among BLESSINGS CORPORATION, a Delaware
corporation (the "Company"), HUNTSMAN PACKAGING CORPORATION, a Utah corporation
("Parent"), and VA ACQUISITION CORP., a Delaware corporation and a wholly owned
subsidiary of Parent ("Acquisition").
RECITALS
WHEREAS, the Board of Directors of the Company (the "Company Board") has,
in light of and subject to the terms and conditions set forth herein,
unanimously (i) determined that each of the Offer (as defined in the recitals)
and the Merger (as defined in Section 2.1) is fair to, and in the best interests
of, its shareholders and (ii) approved and adopted this Agreement and the
transactions contemplated hereby and resolved to recommend acceptance of the
Offer and approval and adoption of this Agreement by the shareholders of the
Company; and
WHEREAS, in furtherance thereof, it is proposed that, subject to the terms
and conditions set forth herein, Acquisition shall commence a tender offer (the
"Offer") to acquire all of the issued and outstanding shares of Company Common
Stock (as defined in Section 2.8) at a price equal to Twenty-One Dollars
($21.00) per share (such amount, or any greater amount per share paid pursuant
to the Offer, being hereinafter referred to as the "Per Share Amount"), net to
the seller in cash, in accordance with the terms and subject to the conditions
provided herein.
WHEREAS, Parent and Acquisition are unwilling to enter into this Agreement
(and effect the transactions contemplated hereby) unless, contemporaneously with
the execution and delivery hereof, certain beneficial and record holders of
Company Common Stock identified on Exhibit A hereto enter into agreements
(collectively, the "Tender Agreement") providing for certain matters with
respect to their Shares, including the tender of their Shares and certain other
actions relating to the Offer and the other transactions contemplated by this
Agreement, and in order to induce the Parent and Acquisition to enter into this
Agreement, the Board of Directors of the Company has approved the execution and
delivery of the Tender Agreement so that the restrictions on "business
combinations" set forth in Section 203 of the DGCL (as hereafter defined) do not
and will not apply to Parent, Acquisition or affiliates or associates of Parent
as a result of the execution and delivery of the Tender Agreement or the
consummation of the transactions contemplated thereby or by this Agreement, and
such stockholders have executed and delivered the Tender Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual promises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, Parent and
Acquisition hereby agree as follows:
<PAGE>
ARTICLE 1
THE OFFER
SECTION 1.1 THE OFFER.
(a) Provided that this Agreement shall not have been terminated
in accordance with Section 7.1 and none of the events or conditions set forth in
Annex A (the "Offer Conditions") shall have occurred and be existing, as
promptly as practicable, but in no event later than five (5) Business Days after
the public announcement of the execution of this Agreement, Acquisition shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), the Offer for all the issued and
outstanding shares of Company Common Stock, at the Per Share Amount.
Acquisition shall accept for payment all outstanding shares of Company Common
Stock which have been validly tendered and not withdrawn pursuant to the Offer
at the earliest time following the expiration of the Offer that all conditions
to the Offer shall have been satisfied or waived by Acquisition. The obligation
of Acquisition to accept for payment, purchase and pay for shares of Company
Common Stock tendered pursuant to the Offer shall be subject only to the Offer
Conditions, including the condition that a number of shares of Company Common
Stock representing that number of shares of Company Common Stock which would
equal more than fifty percent (50%) of the shares of Company Common Stock then
issued and outstanding on a fully-diluted basis shall have been validly tendered
and not withdrawn prior to the expiration date of the Offer (the "Minimum
Condition"). Acquisition expressly reserves the right to increase the price per
share of Company Common Stock payable in the Offer, to waive any of the
conditions of the Offer or to make any other changes in the terms and conditions
of the Offer (PROVIDED that, unless previously approved by the Company (such
approval to be obtained from the Company Board) in writing, no change may be
made which decreases the Per Share Amount payable in the Offer, which changes
the form of consideration to be paid in the Offer, which reduces the maximum
number of shares of Company Common Stock to be purchased in the Offer, which
imposes conditions to the Offer in addition to the Offer Conditions or which
broadens the scope thereof). The Per Share Amount shall be paid net to the
seller in cash, LESS any required withholding of taxes, upon the terms and
subject to such conditions of the Offer. The Company agrees that no shares of
Company Common Stock held by the Company or any of its subsidiaries will be
tendered in the Offer. "Business Day" means any day other than Saturday, Sunday
or a federal holiday.
(b) Subject to the terms and conditions hereof, the Offer shall
remain open until midnight, New York City time, on the date that is twenty (20)
Business Days after the Offer is commenced (within the meaning of Rule 14d-2
under the Exchange Act); PROVIDED, HOWEVER, that without the consent of the
Company Board, Acquisition may (i) extend the Offer, if at the scheduled
expiration date of the Offer any of the Offer Conditions shall not have been
satisfied or waived for one (1) or more periods (none of which shall exceed ten
(10) Business Days) not to exceed sixty (60) days in the aggregate, until such
time as such conditions are satisfied or waived, (ii) extend the Offer for one
(1) or more periods, not to exceed thirty (30) days, if required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
("SEC") or the staff thereof applicable to the Offer or (iii) extend the Offer
on one (1) occasion for an aggregate period of not more than ten (10) Business
Days beyond the latest expiration date that would otherwise be
2
<PAGE>
permitted under clause (i) or (ii) of this sentence if on such expiration date
there shall not have been tendered that number of shares of Company Common Stock
which would equal more than ninety percent (90%) of the issued and outstanding
shares of Company Common Stock. Acquisition agrees that if all of the Offer
Conditions are not satisfied on any expiration date of the Offer, then, PROVIDED
that all such conditions are then reasonably capable of being satisfied within
ten (10) Business Days, Acquisition shall extend the Offer for a period or
periods of not less than ten (10) days in the aggregate if requested to do so by
the Company; provided that the Company shall be entitled to make only one (1)
such request. Subject to the terms and conditions of the Offer and this
Agreement, Acquisition shall accept for payment, and pay for, all shares of
Company Common Stock validly tendered and not withdrawn pursuant to the Offer
that Acquisition becomes obligated to accept for payment and pay for pursuant to
the Offer, as promptly as practicable after the expiration of the Offer.
(c) CONTEMPORANEOUSLY WITH COMMENCEMENT OF THE OFFER,
Acquisition shall file with the SEC a Tender Offer Statement on Schedule 14D-1
with respect to the Offer which will reflect the existence of this Agreement
(together with any supplements or amendments thereto, collectively the "Offer
Documents"). The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws, including, without limitation,
Rule 14D-1 of the Exchange Act. The information provided and to be provided by
the Company, Parent and Acquisition for use in the Offer Documents shall not, on
the date filed with the SEC and on the date first published or sent or given to
the Company's shareholders, as the case may be, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by Parent or Acquisition with respect to information
supplied by the Company or its Subsidiaries in writing for inclusion in the
Offer Documents. Parent, Acquisition and the Company each agrees to correct
promptly any information provided by it for use in the Offer Documents if and to
the extent that it shall have become false or misleading in any material respect
and Acquisition further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of shares of Company Common Stock, in each case as and to the extent
required by applicable federal securities laws and the securities laws of the
State of Delaware. The Company and its counsel shall be given the opportunity
to review the Offer Documents (including any amendments or supplements thereto)
prior to their filing with the SEC. In addition, Parent and Acquisition agree
to provide the Company and its counsel with any comments, whether written or
oral, that Parent or Acquisition or its counsel receives from time to time from
the SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments or other communications.
SECTION 1.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Company Board, at a meeting duly called and
held, has, subject to the terms and conditions set forth herein, unanimously
(i) determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to, and in the best interests of,
the shareholders of the Company, (ii) approved the execution and delivery of
this
3
<PAGE>
Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, the Offer and the Merger, in all respects, and
that such approval constitutes approval of the Offer, this Agreement and the
Merger for purposes of Section 203 of the Delaware General Corporation Law
("DGCL") and (iii) resolved to recommend that the shareholders of the Company
accept the Offer, tender their shares of Company Common Stock thereunder to
Acquisition and approve and adopt this Agreement and the Merger. The Company
consents to the inclusion of such recommendation and approval in the Offer
Documents. The Company further represents and warrants that Bowles Hollowell
Conner & Co. ("BHC") (the "Financial Advisor") has delivered to the Company
Board its written opinion dated April 7, 1998, that the cash consideration to be
received by the shareholders of the Company pursuant to the Offer and the Merger
is fair from a financial point of view to such shareholders. The Company has
been authorized by the Financial Advisor to permit the inclusion of the fairness
opinion (or a reference thereto) in the Offer Documents and the Schedule 14D-9
(as defined in Section 1.2(b)).
(b) Contemporaneously with the commencement of the Offer as
provided in Section 1.1, the Company hereby agrees to file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 pertaining to the Offer
(together with any amendments or supplements thereto, the "Schedule 14D-9")
containing the recommendations described in Section 1.2(a), and to mail promptly
the Schedule 14D-9 to the shareholders of the Company. The Schedule 14D-9 will
comply in all material respects with the provisions of applicable federal
securities laws (including, without limitation, Rule 14D-9 of the Exchange Act)
and, on the date filed with the SEC and on the date first published, sent or
given to the Company's shareholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Parent or Acquisition in writing for inclusion in the Schedule 14D-9. The
Company, Parent and Acquisition each agrees to correct promptly any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false or misleading in any material respect and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and disseminated to the holders of shares of Company
Common Stock, in each case as and to the extent required by applicable federal
securities laws. Parent shall be given a reasonable opportunity to review the
Schedule 14D-9 (including any amendments or supplements thereto) prior to their
filing with the SEC. In addition, the Company agrees to provide Parent and its
counsel with any comments, whether written or oral, that the Company or its
counsel receives from time to time from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments or other
communications.
(c) In connection with the Offer, the Company will promptly
furnish to Parent and Acquisition mailing labels, security position listings and
any available listing or computer files containing the names and addresses of
the record holders of shares of Company Common Stock as of a recent date and
shall furnish Acquisition with such additional information and assistance
(including, without limitation, updated lists of shareholders, mailing labels
and lists of securities positions) as Acquisition or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of
shares of Company Common Stock. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
4
<PAGE>
and any other documents necessary to consummate the Merger, Parent, Acquisition
and their affiliates, associates, agents and advisors shall use the information
contained in any such labels, listings and files only in connection with the
Offer and the Merger and, if this Agreement shall be terminated, will deliver to
the Company all copies of such information then in their possession.
SECTION 1.3 DIRECTORS.
(a) Promptly upon the purchase by Acquisition of Company Common
Stock pursuant to the Offer, and from time to time thereafter, Parent or
Acquisition 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 Company Board) as will give Parent, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Company
Board equal to the product of (x) the number of directors on the Company Board
(giving effect to any increase in the number of directors pursuant to this
Section 1.3) and (y) the percentage that such number of shares of Company Common
Stock so purchased bears to the aggregate number of shares of Company Common
Stock outstanding (such number being, the "Board Percentage"), and the Company
shall, upon request by Parent, promptly satisfy the Board Percentage by (i)
increasing the size of the Company Board or (ii) using its best efforts to
secure the resignations of such number of directors as is necessary to enable
Purchaser's designees to be elected to the Company Board, and in each case shall
cause Parent's designees promptly to be so elected. At the request of Parent,
the Company shall take, at the Company's expense, all lawful action necessary to
effect any such election. In addition, the Company shall mail to its
stockholders the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder with the Schedule 14D-9. Parent will supply
to the Company in writing and will be solely responsible for any information
with respect to it and its designees, officers, directors and affiliates
required by Section 14(f) of the Exchange Act and Rule 14f-1. Prior to the
Effective Time, Acquisition will not take any action to cause its designees to
constitute a greater number of directors than the Board Percentage.
(b) Following the election or appointment of Parent's designees
pursuant to this Section 1.3 and prior to the Effective Time, any amendment or
termination of this Agreement, extension for the performance or waiver of the
obligations or other acts of Parent or Acquisition or waiver of the Company's
rights hereunder, shall require the concurrence of a majority of directors of
the Company then in office who are directors on the date hereof and who voted to
approve this Agreement.
ARTICLE 2
THE MERGER
SECTION 2.1 THE MERGER. At the Effective Time (as defined below) and upon
the terms and subject to the conditions of this Agreement and in accordance with
the DGCL, Acquisition shall be merged with and into the Company (the "Merger").
Following the Merger, the Company shall continue as the surviving corporation of
the Merger (the "Surviving Corporation") and the separate corporate existence of
Acquisition shall cease and the Surviving Corporation shall be a wholly-owned
subsidiary of Parent. At the option of Parent and provided that such amendment
does not delay the Effective Time, the Merger may be structured so that, and the
parties hereby agree to
5
<PAGE>
amend this Agreement to provide that, the Company shall be merged with and into
Acquisition or another direct or indirect wholly-owned subsidiary of Parent,
with Acquisition or such other subsidiary of Parent continuing as the Surviving
Corporation; PROVIDED, HOWEVER, that the Company shall be deemed not to have
breached any of its representations and warranties herein if and to the extent
such breach would have been attributable to the exercise by Parent of the
foregoing option.
SECTION 2.2 EFFECTIVE TIME. Subject to the terms and conditions set forth
in this Agreement, on the Closing Date (as defined in Section 2.3), the Company
will file a Certificate of Merger (or, if permitted, Acquisition will file a
Certificate of Ownership and Merger) in such form as required by the DGCL with
the Secretary of State of the State of Delaware, and the parties shall take such
other actions and make all other filings as may be required by law to effectuate
the Merger. The Merger shall become effective at the time of such filings or
such later time as is set forth in the Certificate of Merger (the time the
Merger becomes effective being referred to herein as the "Effective Time").
SECTION 2.3 CLOSING OF THE MERGER. The closing of the Merger (the
"Closing") shall take place at a time and on a date to be specified by the
parties, which shall be no later than the fifth (5th) Business Day after
satisfaction (or waiver) of the latest to occur of the conditions precedent set
forth in Article 6 (the "Closing Date"), at the offices of Winston & Strawn, 35
W. Wacker Drive, Chicago, Illinois 60601, unless another time, date or place is
agreed to in writing by the parties.
SECTION 2.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of the Company and Acquisition shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 2.5 CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation of the Company shall be amended in its entirety at the Effective
Time to read as provided in the attached Exhibit B. The Bylaws of Acquisition
in effect at the Effective Time shall be the Bylaws of the Surviving Corporation
until amended in accordance with applicable law.
SECTION 2.6 DIRECTORS. The directors of Acquisition at the Effective Time
shall be the directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation until such director's successor is duly elected or appointed and
qualified.
SECTION 2.7 OFFICERS. The individuals specified by Parent prior to the
Effective Time shall be the initial officers of the Surviving Corporation from
and after the Effective Time, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation until such
officer's successor is duly elected or appointed and qualified.
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SECTION 2.8 CONVERSION OF SHARES.
(a) Except as provided in Section 2.9, at the Effective Time,
each share of common stock, par value $.71 per share, of the Company ("Company
Common Stock") issued and outstanding immediately prior to the Effective Time
(individually a "Share" and, collectively, the "Shares") (other than (i) Shares
held by the Company or any wholly-owned direct or indirect subsidiaries of the
Company, and (ii) Shares held by Parent, Acquisition or any other wholly-owned
direct or indirect subsidiary of Parent), shall, by virtue of the Merger and
without any further action on the part of Parent, Acquisition, the Company or
the holder thereof, be converted into and shall become the right to receive a
cash payment per Share, without interest, equal to the Per Share Amount (the
"Merger Consideration") upon the surrender of the certificate representing such
Share.
(b) At the Effective Time, each issued and outstanding share of
the common stock, par value $.01 per share, of Acquisition shall, by virtue of
the Merger and without any further action on the part of Parent, Acquisition or
the Company or any holder thereof, be converted into one (1) validly issued,
fully-paid and non-assessable share of common stock, par value $.01 per share,
of the Surviving Corporation and shall constitute the only outstanding shares of
capital stock of the Surviving Corporation.
(c) At the Effective Time, each Share held by the Company (as
treasury stock or otherwise) or held by Parent, Acquisition or any wholly-owned
direct or indirect subsidiary of Parent, Acquisition or the Company immediately
prior to the Effective Time shall, by virtue of the Merger and without any
further action on the part of Parent, Acquisition, the Company or the holder
thereof, be canceled, retired and cease to exist, and no consideration shall be
delivered with respect thereto.
SECTION 2.9 APPRAISAL RIGHTS. Notwithstanding any other provision of this
Agreement to the contrary, Shares outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal for such Shares in accordance
with the DGCL shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect or withdraws or otherwise
loses his right to appraisal. If, after the Effective Time, such holder fails
to perfect or withdraws or loses his right to appraisal, such Shares shall be
treated as if they had been converted as of the Effective Time into a right to
receive the Merger Consideration payable in respect of such Shares pursuant to
Section 2.8(a). The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, and Parent shall have the right
to participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
SECTION 2.10 EXCHANGE OF CERTIFICATES.
(a) Chase Mellon Shareholder Services, or another bank or trust
company designated by Parent and reasonably acceptable to the Company, shall act
as the exchange agent (in such capacity, the "Exchange Agent") for the benefit
of the holders of Shares, for the exchange of a certificate or certificates
which, immediately prior to the Effective Time, represented Shares (the
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"Certificates") that were converted into the right to receive the Per Share
Amount pursuant to Section 2.8(a), all in accordance with this Article 2.
Parent will make available to the Exchange Agent from time to time the Merger
Consideration to be paid in respect of the Shares.
(b) As soon as reasonably practicable after the Effective Time,
the Exchange Agent shall mail to each holder of record of Certificates (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for a cash payment of the Merger Consideration pursuant to
Section 2.8(a). Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by Parent
and Acquisition, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor by
check an amount equal to (A) the Per Share Amount, MULTIPLIED BY (B) the number
of Shares represented by such Certificate, which such holder has the right to
receive pursuant to the provisions of this Article 2, and the Certificate so
surrendered shall forthwith be canceled. No interest shall be paid or accrued
on any Merger Consideration upon the surrender of any Certificates. In the
event of a transfer of ownership of Shares which is not registered in the
transfer records of the Company, payment of the proper Merger Consideration may
be paid to a transferee if the Certificate representing such Shares is presented
to the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer or other
taxes required as a result of such payment to a person other than the record
holder of such Shares have been paid. Until surrendered and exchanged as
contemplated by this Section 2.10, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender an amount equal to (A) the Per Share Amount, MULTIPLIED BY (B) the
number of Shares represented by such Certificate, as contemplated by this
Section 2.10.
(c) In the event that any Certificate shall have been lost,
stolen or destroyed, the Exchange Agent shall pay in exchange therefor, upon the
making of an affidavit of that fact by the holder thereof, the proper Merger
Consideration as may be required pursuant to this Section 2.9, PROVIDED,
HOWEVER, that Parent may, in its discretion, require the delivery of a suitable
bond and/or indemnity.
(d) The Merger Consideration paid upon the surrender for
exchange of Shares in accordance with the terms hereof shall be deemed to have
been paid in full satisfaction of all rights pertaining to such Shares, SUBJECT,
HOWEVER, to the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective Time which may
have been declared or made by the Company on such Shares in accordance with the
terms of this Agreement or prior to the date hereof and which remain unpaid at
the Effective Time, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article 2.
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(e) Any portion of the Merger Consideration which remains
undistributed to the shareholders of the Company for one year after the
Effective Time shall be delivered to Parent, upon demand, and any shareholders
of the Company who have not theretofore complied with this Article 2 shall
thereafter look only to Parent for payment of their claim for any Merger
Consideration.
(f) Neither Parent nor the Company shall be liable to any holder
of Shares for any Merger Consideration delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(g) Acquisition shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as Acquisition is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by Acquisition, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares in respect of which such deduction and withholding was made by
Acquisition.
SECTION 2.11 COMPANY STOCK OPTIONS. The Company hereby advises and
confirms that the applicable plans and instruments (collectively, the "Option
Plans") governing all outstanding options to purchase shares of Company Common
Stock (each a "Company Stock Option") provide for the acceleration of the
exercisability of each such option in connection with the transactions
contemplated herein. The Company shall 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 Per Share Amount 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 Per Share Amount 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.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Acquisition that
all of the statements contained in Article 3 are true and correct as of the date
of this Agreement (or if made as of a specified date, as of such date), except
as set forth in the applicable section of the schedule attached to this
Agreement (the "Company Disclosure Schedule") or as specifically set forth in
the Company's SEC Reports (as defined in Section 3.4):
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SECTION 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its businesses as now being
conducted.
(b) The Company has no equity interests in any corporations,
partnerships, limited liability companies, trusts or similar business entities.
Each of the Company's subsidiaries (each a "Subsidiary" and, collectively,
"Subsidiaries") is a corporation or a limited liability company, as the case may
be, duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, except where the failure to be
so organized, existing and in good standing could not have a Material Adverse
Effect (as defined below). When used in this Agreement, the term "Material
Adverse Effect" means any effect, change or event that is or 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.
(c) Each of the Company and its Subsidiaries is duly qualified
or licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have, individually or in the aggregate, a Material Adverse
Effect.
(d) The Company has heretofore delivered to Acquisition or
Parent accurate and complete copies of the Certificate of Incorporation and
Bylaws, as currently in effect, of the Company and each Subsidiary.
SECTION 3.2 CAPITALIZATION OF THE COMPANY AND ITS SUBSIDIARIES.
(a) The authorized capital stock of the Company consists of
Twenty-Five Million (25,000,000) shares of Company Common Stock, of which, as of
March 31, 1998, (i) Ten Million One Hundred Twenty-Six Thousand Eight Hundred
Fifty-Seven (10,126,857) shares of Company Common Stock were issued and
outstanding, and (ii) Two Hundred Fifty-Nine (259) shares of preferred stock,
Ten Dollars ($10.00) par value per share, no shares of which have been issued or
are outstanding. All of the shares of Company Common Stock have been validly
issued and are fully paid, non assessable and free of preemptive rights. As of
the date hereof, Two Hundred Sixteen Thousand Four Hundred Fifty (216,450)
shares of Company Common Stock were reserved for issuance and issuable upon or
otherwise deliverable in connection with the exercise of outstanding Company
Common Stock Options all of which were issued pursuant to the Option Plans (as
herein defined). Since December 31, 1997, no shares of the Company's capital
stock have been issued other than pursuant to Company Stock Options already
issued and outstanding on such date and other than 9,057 shares of Common Stock
issued pursuant to the Company's 1993 Annual Incentive Plan for Key Employees
(the "1993 Annual Incentive Plan") which are outstanding on the
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date hereof. Since December 31, 1997, no stock options have been granted.
Except as set forth above, there are outstanding (i) no shares of capital stock
or other voting securities of the Company, (ii) no securities of the Company or
its Subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities of the Company, (iii) no options, warrants, calls,
subscriptions, or other rights, arrangements, agreements or commitments to
acquire from the Company or its Subsidiaries, and no obligations, arrangements,
agreements or commitments of the Company or its Subsidiaries to issue, any
capital stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of the Company, and (iv) no equity
equivalents, interests in the ownership or earnings of the Company or its
Subsidiaries or other similar rights (collectively, "Company Securities").
There are no outstanding obligations, arrangements, agreements or commitments of
the Company or its Subsidiaries to repurchase, redeem or otherwise acquire any
Company Securities. As of the date hereof, no employees, directors, consultants
and others have exercised the right to purchase shares of Common Stock which
have yet to be issued under the Option Plans.
(b) All of the outstanding capital stock of each Subsidiary has
been validly issued and are fully paid and non-assessable and is owned by the
Company, directly or indirectly, free and clear of any Lien (as hereinafter
defined) or any other limitation or restriction (including any restriction on
the right to vote or sell the same, except as may be provided as a matter of
law). There are no securities of the Company or its Subsidiaries convertible
into or exchangeable for, no options, warrants, calls, subscriptions, or other
rights to acquire from the Company or its Subsidiaries, and no other contract,
agreement, understanding, arrangement or obligation (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of any capital stock
or other interests in, or any other securities of the Company or any Subsidiary.
There are no outstanding obligations, arrangements, agreements or commitments of
the Company or its Subsidiaries to repurchase, redeem or otherwise acquire any
outstanding shares of capital stock or other interests in the Company or any
Subsidiary. To the knowledge of the Company, other than the Tender Agreement,
there are no outstanding proxies with respect to the Company Common Stock and
there are no agreements, arrangements or understandings by or among any persons
which affect or relate to the voting of, or giving of written consents with
respect to, the Company Common Stock. For purposes of this Agreement, "Lien"
means, with respect to any asset (including, without limitation, any security)
any mortgage, lien, claim, pledge, charge, security interest or encumbrance of
any kind in respect of such asset.
(c) The Company Common Stock constitutes the only class of
equity securities of the Company registered or required to be registered under
the Exchange Act.
(d) Without limiting the foregoing, the Company's 1993
Restricted Stock Plan for Non-Employee and Certain Other Directors of Blessings
Corporation (the "1993 Directors Plan"), 1993 Restricted Stock Plan for Key
Employees, the 1993 Annual Incentive Plan, the Key Executive Stock Supplement,
and each other stock purchase plan of the Company or any Subsidiary (each a
"Stock Plan") will have been terminated on or prior to the Effective Time;
provided that all recipients of awards under the Stock Plans outstanding on the
date hereof shall remain entitled to the benefits of such awards, except that on
and after the Effective Time such awards shall entitle such recipients to
receive the cash value of such awards and not Company Common Stock. No
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further awards will be made under any Stock Plan on or after the date hereof.
In lieu of making the awards heretofore intended to be made at the time of the
Company's scheduled annual meeting of stockholders in May of 1998 under the 1993
Directors Plan at the earlier of May 20, 1998 or the Effective Time, the Company
will pay to the participants in such plan (not individually but in the
aggregate) an aggregate amount in cash equal to the Per Share Amount multiplied
by the 5,800 shares of Company Common Stock, in the aggregate, that were to have
been awarded to the participants in such plan at the Company's May 1998 annual
meeting of stockholders, subject to applicable withholding taxes.
SECTION 3.3 AUTHORITY RELATIVE TO THIS AGREEMENT; CONSENTS AND APPROVALS.
(a) The Company has all necessary corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by the Company Board and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby or thereby (other than, with
respect to the Merger if required by the DGCL, the approval and adoption of this
Agreement by the holders of a majority of the then issued and outstanding shares
of Company Common Stock). This Agreement has been duly and validly executed and
delivered by the Company and constitutes a valid, legal and binding agreement of
the Company, enforceable against the Company in accordance with its terms.
(b) The Company Board has duly and validly approved, and taken
all corporate actions required to be taken by the Company Board for the
consummation of, the transactions, including the Offer, the Merger and the
Tender Agreement, contemplated hereby, and resolved to recommend that the
shareholders of the Company approve and adopt this Agreement. The Company
Board, at a meeting duly called and held, has taken all actions necessary under
the DGCL, including approving the transactions contemplated by this Agreement,
to ensure that the restrictions on "business combinations" set forth in Section
203 of the DGCL do not, and will not, apply to the transactions contemplated by
this Agreement, including, without limitation, the Offer, the Merger and the
Tender Agreement.
SECTION 3.4 SEC REPORTS; FINANCIAL STATEMENTS.
(a) The Company has timely filed all required forms, reports,
schedules and registration statements and documents with the SEC since
December 31, 1996 (the "SEC Reports"), each of which has complied in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act") and the Exchange Act (and the rules and
regulations promulgated thereunder), each as in effect on the dates the SEC
Reports were filed. The Company has delivered to Acquisition or Parent, in the
form filed with the SEC (including any amendments thereto), (i) its Annual
Report on Form 10-K for the fiscal years ended December 31, 1996 and 1997,
(ii) all definitive proxy statements relating to the Company's meetings of
shareholders (whether annual or special) held since December 31, 1996 and
(iii) all other SEC Reports filed by the Company with the SEC since December 31,
1996. None of the SEC Reports, including, without limitation, any financial
statements or schedules included or incorporated by
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reference therein, contained, when filed, any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated financial statements and unaudited consolidated interim financial
statements of the Company and its Subsidiaries included in the Annual Report on
Form 10-K referred to in the second sentence of this Section 3.4(a) and the
Company's filings on Form 10-Q for the fiscal quarters ended March 31, 1997, and
June 30, 1997, and September 30, 1997, (a) fairly present, in conformity with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of the Company and its Subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments), (b) contain and reflect all
necessary adjustments and accruals for a fair presentation of the Company's
consolidated financial position and the consolidated results of its operations
for the periods covered by such financial statements, and (c) with respect to
contracts and commitments for the sale of goods or the provision of services by
the Company and its Subsidiaries, contain and reflect adequate reserves for all
reasonably anticipated material losses, returns and allowances and costs in
excess of anticipated receipts.
(b) The Company has delivered to Acquisition or Parent a
complete and correct copy of any amendments or modifications, which have not yet
been filed with the SEC, to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Exchange
Act.
SECTION 3.5 INFORMATION SUPPLIED. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in
(i) the Offer Documents, (ii) any Schedule 13E-3 (as defined in Section 5.5),
(iii) the Proxy Statement (as defined in Section 5.4), (iv) the Schedule 14D-9,
or (v) any other document filed or to be filed with the SEC or any other
Governmental Entity (as defined herein) in connection with the Offer will, at
the respective times that they or any amendments or supplements thereto are
filed with the SEC and are first published or sent or given to holders of
Shares, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
SECTION 3.6 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or "blue sky" laws, the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act") and the Mexican Federal Law of Economic
Competition (the "FLEC") and except for the filing and recordation of a
Certificate of Merger as required by the DGCL, no filing with or notice to, and
no permit, authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency or authority, whether
foreign, federal, state or local (a "Governmental Entity") is necessary for the
execution and delivery by the Company of this Agreement or the consummation by
the Company of the transactions contemplated hereby or thereby, except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings or give such notice would not have a Material Adverse Effect.
Neither the execution, deliver and performance of this Agreement by the
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Company nor the consummation by the Company of the transactions contemplated
hereby or thereby will (a) conflict with or result in any breach of any
provision of the Certificate of Incorporation or Bylaws (or similar governing
documents) of the Company or its Subsidiaries, (b) except as set forth on
Schedule 3.6 of the Disclosure Schedule, result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its Subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound, (c) violate
any order, writ, injunction, ordinance, decree, law, statute, rule, regulation
or injunction binding on or applicable to the Company or any of its Subsidiaries
or any of their respective properties or assets, except in the case of (b) or
(c) for violations, breaches or defaults which would not have a Material Adverse
Effect, or (d) except as set forth on Schedule 3.6 of the Disclosure Schedule,
result in a breach or violation of, a default under, or the triggering of any
payment or other material obligations pursuant to, any of the Company's or a
Subsidiary's existing Employee Plans (as hereinafter defined) or any grant or
award made under any of the foregoing. Except as disclosed on Schedule 3.6 of
the Disclosure Schedule, the transactions contemplated by this Agreement will
not constitute a "change of control" under, require the consent from or the
giving of notice to a third party pursuant to, permit a third party to terminate
or accelerate vesting or repurchase rights or create any other detriment under
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, lease, contract, agreement or other instrument or obligation to which
the Company or any Subsidiary is a party or by which any of them or any of their
properties or assets may be bound, except where the adverse consequences
resulting from such change of control or where the failure to obtain such
consents or provide such notices could not have a Material Adverse Effect;
provided, however, that the foregoing exception will not be applicable to any
(i) note, bond, mortgage, indenture, contract, agreement or other instrument or
obligation relating to (x) indebtedness of the Company or any Subsidiary with an
outstanding principal amount of more than $100,000 or (y) annual revenues to the
Company of more than $150,000 or (ii) employment, compensation, termination or
severance agreement, instrument or obligation of the Company or any Subsidiary.
The total amounts payable to the executives identified in Schedule 3.6 of the
Disclosure Schedule, as a result of the transactions contemplated by this
Agreement and/or any subsequent employment termination (including any cash-out
or acceleration of options and restricted stock and any "gross-up" payments with
respect to any of the foregoing), based on compensation data applicable as of
the date hereof will not exceed the amount set forth on such schedule.
SECTION 3.7 NO DEFAULT. None of the Company or its Subsidiaries are in
default or violation (and no event has occurred which, with notice or the lapse
of time or both, would constitute a default or violation) of any term, condition
or provision of (a) its Certificate of Incorporation or Bylaws (or similar
governing documents), (b) any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is now a party or by which any of them or any of their
respective properties or assets may be bound or (c) any order, writ, injunction,
decree, law, statute, rule, regulation or injunction binding on or applicable to
the Company, its Subsidiaries or any of their respective properties or assets,
except in the case of (b) or (c) for violations, breaches or defaults that would
not have a Material Adverse Effect.
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SECTION 3.8 NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES. As of
December 31, 1997, none of the Company or its Subsidiaries had any liabilities
or obligations of any nature, whether or not accrued, contingent or otherwise,
that would be required by generally accepted accounting principles to be
reflected on a consolidated balance sheet of the Company and its Subsidiaries
(including the notes thereto) or which would have a Material Adverse Effect.
Except as set forth on Schedule 3.8 of the Disclosure Schedule and for the
Agreement of March 23, 1998 with John W. McMackin, the eleven Key Employee
Retention Benefit Agreements, the revised Termination of Employment Policies
described on Schedule 3.8 and the Early Retirement Pension Benefit Incentive
Program described on Schedule 3.8 (copies of which have been provided to
Acquisition or Parent), the revisions of the 1993 Directors Plan described on
Schedule 3.8 and the revisions to the Company's 1993 Annual Incentive Plan
described on Schedule 3.8 (collectively, the "1998 Revisions"), since December
31, 1997, none of the Company or its Subsidiaries have incurred any liabilities
of any nature, whether or not accrued, contingent or otherwise, which would have
a Material Adverse Effect. Since December 31, 1997, there have been no events,
changes or effects with respect to the Company or its Subsidiaries having a
Material Adverse Effect. Except with respect to (a) the 1998 Revisions, (b) the
amendments to the severance packages of Elwood M. Miller, James P. Luke and John
W. McMackin limiting the amounts payable thereunder, and (c) the acquisition by
the Company of the minority interest of its NEPSA subsidiary in Mexico, since
December 31, 1997, the Company and each of its Subsidiaries has conducted its
business in the ordinary course consistent with past practice and there has not
been any event, occurrence or development or state of circumstances or facts as
described in Sections 5.1(a) through 5.1(n).
SECTION 3.9 LITIGATION. There is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries or any of their respective properties or
assets which would have a Material Adverse Effect or would prevent or delay the
consummation of the transactions contemplated by this Agreement. None of the
Company or its Subsidiaries are subject to any outstanding order, writ,
injunction, ordinance, judgment or decree which would have a Material Adverse
Effect or would prevent or delay the consummation of the transactions
contemplated hereby.
SECTION 3.10 COMPLIANCE WITH APPLICABLE LAW. The Company and its
Subsidiaries hold all permits, licenses, variances, exceptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits") except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which would not
have a Material Adverse Effect. The Company and its Subsidiaries are in
compliance with the terms of the Company Permits, except where the failure so to
comply would not have a Material Adverse Effect. The businesses of the Company
and its Subsidiaries are not being conducted in violation of any law, ordinance,
statute, rule or regulation of any Governmental Entity except for violations or
possible violations which would not have a Material Adverse Effect. No
investigation or review by any Governmental Entity with respect to the Company
or its Subsidiaries is pending or, to the best knowledge of the Company,
threatened, nor, to the best knowledge of the Company, has any Governmental
Entity indicated an intention to conduct the same, other than, in each case,
those which the Company reasonably believes will not have a Material Adverse
Effect.
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SECTION 3.11 EMPLOYEE PLANS. Schedule 3.11 contains a complete and
correct list of all agreements, plans and programs relating to the compensation
and benefits of present and former officers, directors and employees (or their
beneficiaries) of the Company, its Subsidiaries and all corporations,
partnerships, trades or businesses under common control with the Company within
the meaning of Section 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended (the "Code") (each an "ERISA Affiliate"), or to which the
Company or any Subsidiary or ERISA Affiliate is or may be required to contribute
(each an "Employee Plan"), including all pension, retirement, bonus, stock
option, severance, termination and other customary Company paid benefits
(medical/major medical, disability, welfare, life insurance, etc.). Without
limiting the generality of the foregoing, the term "Employee Plans" includes all
employee welfare benefit plans within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and all
employee pension benefit plans within the meaning of Section 3(2) of ERISA to
which the Company, a Subsidiary or any ERISA Affiliate contributes or is or may
be required to contribute, or under which any of them has or may have any
current or future liability. On or after the date hereof, neither the Company
nor any Subsidiary or ERISA Affiliate will establish, amend, modify or terminate
any Employee Plan in any manner, except as may be required by this Agreement or
with the written consent of Acquisition.
(a) With respect to each Employee Plan, the Company has made
available to Acquisition a true, correct and complete copy of: (i) all plan
documents and amendments, benefit schedules, trust agreements, insurance
contracts and other funding vehicles; (ii) the most recent Annual Report (Form
5500 Series) and accompanying schedules, if any; (iii) the current summary plan
description, effective summaries of material modification, or employee handbook
or manual; (iv) the most recent annual financial report; (v) the most recent
actuarial report; and (vi) the most recent determination letter from the
Internal Revenue Service ("IRS"), if any.
(b) The Company, each Subsidiary and each ERISA Affiliate have
complied and are now in compliance, in all material respects, with all
provisions of ERISA, the Code and all laws and regulations, including laws and
regulations of any non-U.S. government or agency, applicable to the Employee
Plans. With respect to each Employee Plan that is intended to be a "qualified
plan" within the meaning of Section 401(a) of the Code (a "Qualified Plan"), the
IRS has issued a current favorable determination letter. No claims are pending
against the Employee Plans, the Company, any Subsidiary or any ERISA Affiliate
with respect to the Employee Plans, except for claims for benefit payments in
the ordinary course of business, and no employee, beneficiary, dependent or
governmental agency (including any non-U.S. agency) has threatened any appeal or
litigation regarding any matter with respect to the Employee Plans.
(c) All contributions required to be made to any Employee Plan
by any applicable law or regulation (including laws and regulations of any
non-U.S. government or agency) or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Employee Plan, for any period through the date hereof, have been
fully reflected in the financial statements of the Company included in the SEC
Reports to the extent required under generally accepted accounting principles.
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(d) As to each Employee Plan that is subject to Title IV or
Section 302 of ERISA or Section 412 or 4791 of the Code, there does not now
exist, nor do any circumstances exist that could result in, any liability under
any of those cited sections, and no reportable event has occurred or will occur
(except to the extent the consummation of the Offer or Merger may itself be a
reportable event).
(e) As to each Employee Plan, there does not now exist, nor do
any circumstances exist that could result in, any liability for failure properly
to comply with the continuation coverage requirements of Section 601 ET SEQ. of
ERISA and Section 4980B of the Code, and none of the Employee Plans provides for
post-employment medical benefits, except to the extent required by those
continuation coverage requirements.
(f) No Employee Plan is a multiemployer plan, as defined in
Section 3(37) of ERISA.
SECTION 3.12 ENVIRONMENTAL LAWS AND REGULATIONS.
(a) To the knowledge of the Company and except as set forth on
Schedule 3.12 of the Disclosure Schedule, (i) each of the Company and its
Subsidiaries is in compliance with all applicable foreign, federal, state and
local laws, regulations and permits relating to pollution or protection of human
health or the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata) (collectively,
"Environmental Laws"), except for non-compliance that would not have a Material
Adverse Effect, which compliance includes, but is not limited to, the possession
by the Company and its Subsidiaries of all material permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof, (ii) since July 1, 1995, none
of the Company or its Subsidiaries have received written notice of, or, to the
best knowledge of the Company, are the subject of, any material action, cause of
action, claim, investigation, demand or notice by any person or entity alleging
liability under or non-compliance with any Environmental Law (an "Environmental
Claim") and (iii) to the best knowledge of the Company, there are no
circumstances that are reasonably likely to prevent or interfere with such
material compliance in the future.
(b) Except as set forth on Schedule 3.12, to the knowledge of
the Company, there are no Environmental Claims which would have a Material
Adverse Effect that are pending or, to the best knowledge of the Company,
threatened against the Company or its Subsidiaries or, to the best knowledge of
the Company, against any person or entity whose liability for any Environmental
Claim the Company or any of its Subsidiaries has or may have retained or assumed
either contractually or by operation of law.
(c) Except as set forth on Schedule 3.12 of the Disclosure
Schedule, there are not, and to the best knowledge of the Company, there never
have been, any underground or above ground storage tanks, or any ponds, pits,
lagoons or impoundments containing hazardous substances on any real property
currently or formerly owned or operated by the Company or any Subsidiary.
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(d) Except as set forth on Schedule 3.12 of the Disclosure
Schedule, no hazardous substances have ever been disposed of, buried, spilled,
leaked, discharged, emitted, or released at levels requiring reporting,
investigation, removal, or remediation under any Environmental Law, in, on, from
or under real property currently or formerly owned or operated by the Company or
any Subsidiary, including such real property for which the Company or any
Subsidiary has retained or assumed liability either contractually or by
operation of law.
SECTION 3.13 TAX MATTERS.
(a) The Company and its Subsidiaries have accurately prepared
and duly filed with the appropriate federal, state, local and foreign taxing
authorities all tax returns, information returns and reports required to be
filed with respect to the Company and its Subsidiaries and have paid in full or
made adequate provision for the payment of all Taxes (as defined below).
Neither the Company nor any of its Subsidiaries is delinquent in the payment of
any Taxes. As used herein, the term "Taxes" means all federal, state, local and
foreign taxes, including, without limitation, income, profits, franchise,
employment, transfer, withholding, property, excise, sales and use taxes
(including interest and penalties thereon and additions thereto).
(b) Except as set forth on Schedule 3.13, (i) neither the
Company nor its Subsidiaries (A) have ever been a member of any group of
companies that files a consolidated, combined, or unitary return for federal,
state, local, or foreign Tax purposes (except for any group that has the Company
as its common parent); (B) have ever been a party to a joint venture,
partnership, or other arrangement that could be treated as a partnership for tax
purposes, (C) have ever executed or filed with any taxing authority any
agreement or other document extending or having the effect of extending the
period for assessment, reassessment, or collection for any Taxes or have ever
executed a power of attorney with respect to Taxes that is currently in force;
(D) have any tax audits or other administrative proceedings presently pending
with regard to any Taxes or tax returns; (E) have any issues being asserted
against it by any taxing authority; (F) have ever entered into any agreement
with respect to Taxes that affects any taxable year ending after the closing of
the Offer; (G) have been required to make, or have agreed to or have an
application pending to make, any adjustment by reason of a change in accounting
methods that affects any taxable year after the closing of the Offer; (H) have
any permanent establishment in any foreign country (apart from Mexico) or are
engaged in a trade or business in any foreign country (apart from Mexico); or
(I) are party to any contract, agreement, plan, or arrangement covering any
employee of the Company or any Subsidiary that, individually or collectively,
could give rise to a payment that would not be deductible by reason of either
Section 280G or Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"); and
(ii) No asset of the Company or any Subsidiary is
tax-exempt use property under Code Section 168(h), is required to be treated as
owned by any other person pursuant to the safe harbor lease provisions of former
Code Section 168(f)(8), or been financed (directly or indirectly) from proceeds
of any tax-exempt state of local government obligation described in Code Section
103(a).
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SECTION 3.14 AFFILIATE TRANSACTIONS. Neither the Company nor any of its
Subsidiaries is a party to any transaction (including, without limitation, the
purchase or sale of any property or service) with, or involving the making of
any payment or transfer to, any Affiliate (as defined below) other than the
Company or any of its wholly-owned Subsidiaries. "AFFILIATE" of any person
means any other person directly or indirectly controlling, controlled by or
under common control with such person. A person shall be deemed to control
another person if the controlling person owns 10% or more of any class of voting
securities (or other ownership interest) of the controlled person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled person, whether through ownership of
stock, by contract or otherwise.
SECTION 3.15 LABOR MATTERS. Except as set forth on Schedule 3.15 to the
Disclosure Schedule, no employee of the Company or of any of its Subsidiaries
are represented by any labor union or any collective bargaining organization.
No labor organization or group of employees of the Company or any of its
Subsidiaries has made a pending demand for recognition or certifications, and
there are no representation or certification proceedings or petitions seeking a
representation proceeding presently pending or, to the best knowledge of the
Company, threatened to be brought or filed, with the National Labor Relations
Board or any other labor relations tribunal or authority.
SECTION 3.16 RELATIONSHIPS WITH CUSTOMERS, SUPPLIERS, DISTRIBUTORS AND
SALES REPRESENTATIVES. Except with respect to reduced purchases or order
cancellations by the material customers listed on Schedule 3.16 which have been
disclosed by the Company to Parent, and subject to the last sentence of Section
3.21, neither the Company nor any Subsidiary has received notice that any
customer, supplier, distributor or sales representative intends to cancel,
terminate or otherwise modify its relationship or any contract or agreement with
the Company or any of its Subsidiaries which existed on December 31, 1997 and
which would have a Material Adverse Effect.
SECTION 3.17 CONTRACTS. Schedule 3.17 of the Disclosure Schedule lists
all written or oral contracts, agreements, guarantees, leases (each a
"Contract") to which the Company or any of its Subsidiaries is a party and which
fall within any of the following categories: (i) Contracts not entered into in
the ordinary course of business, (ii) joint venture, partnership and like
agreements, (iii) Contracts containing covenants purporting to limit the ability
of the Company or any of its Subsidiaries to compete in any line of business in
any geographic area or to hire or solicit any individual or group of
individuals, (iv) Contracts which after the Effective Time would have the effect
of limiting the ability of Parent or its subsidiaries (other than the Company
and its Subsidiaries) to complete in any line of business in any geographic area
or to hire any individual or group of individuals, (v) Contracts which contain
minimum purchase conditions or requirements or other terms that restrict or
limit the purchasing relationships of the Company or any of its Subsidiaries,
(vi) Contracts relating to any outstanding commitment for capital expenditures
in excess of $250,000, (viii) indentures, mortgages, promissory notes, loan
agreements, guarantees of amounts in excess of $250,000, letter of credit or
other agreements or instruments of the Company or any of its Subsidiaries or
commitments for the borrowing or the lending of amounts in excess of $250,000 by
the Company or any of its Subsidiaries or providing for the creation of any lien
upon any of the assets of the Company or any of its Subsidiaries and (viii)
Contracts with or for the benefit of any Affiliate of the Company (other than
Subsidiaries). All of the Contracts required to be disclosed by this Section
3.17 are valid and binding obligations of the Company or a Subsidiary
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and the valid and binding obligation of each other party thereto, except such
Contracts which if not so valid and binding would not have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries nor, to the knowledge
of the Company, any other party thereto is in violation of or in default in
respect of, nor has there occurred an event or condition which with the passage
of time or giving of notice (or both) could constitute a default under, any such
Contract except such violations or defaults under such Contracts which would not
have a Material Adverse Effect.
SECTION 3.18 TANGIBLE PROPERTY; REAL PROPERTY AND LEASES.
(a) The Company and each Subsidiary have sufficient title to all
their tangible properties and assets necessary to conduct their respective
businesses as currently conducted or as contemplated to be conducted, with only
such exceptions as, individually or in the aggregate, would not have a Material
Adverse Effect.
(b) Each parcel of real property owned or leased by the Company
or any Subsidiary (i) is owned or leased free and clear of all Liens, other than
(A) Liens for current taxes and assessments not yet past due, (B) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business of the Company or such Subsidiary consistent with past practice, and
(C) all Liens which, individually or in the aggregate, would not have a Material
Adverse Effect, and (ii) no material portion of which is either subject to any
governmental decree or order to be sold or is being condemned, expropriated or
otherwise taken by any Governmental Entity with or without payment of
compensation therefor, nor, to the best knowledge of the Company, has any such
condemnation, expropriation or taking been proposed.
(c) All leases of real property leased for the use or benefit of
the Company or any Subsidiary to which the Company or any Subsidiary is a party
requiring annual rental payments in excess of $100,000 during the period of the
lease and all amendments and modifications thereto are in full force and effect
and have not been otherwise modified or amended, the Company is in possession of
such leased real property, and there exists no default under any such lease by
the Company or any Subsidiary, nor any event which with notice or lapse of time
or both would constitute a default thereunder by the Company or any Subsidiary,
except as, individually or in the aggregate, would not have a Material Adverse
Effect.
SECTION 3.19 TRADEMARKS, PATENTS AND COPYRIGHTS. The Company and the
Subsidiaries own or possess adequate licenses or other valid rights to use all
patents, trademarks, trade names, trade dress, copyrights, service marks, trade
secrets, applications for trademarks and for service marks, mask works, know-how
and other proprietary rights and information used or held for use in connection
with the business of the Company and the Subsidiaries as currently conducted or
as contemplated to be conducted and the Company is unaware of any assertion or
claim challenging the validity of any of the foregoing, which, individually or
in the aggregate, could have a Material Adverse Effect. The conduct of the
business of the Company and the Subsidiaries as currently conducted and as
contemplated to be conducted did not, does not and will not infringe in any way
with any patent, license, trademark, trade dress, trade name, service mark, mask
work or copyright of any third party that, individually or in the aggregate,
could have a Material Adverse Effect. There are no infringements of any
proprietary rights owned by or licensed by or to the Company or any
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Subsidiary which, individually or in the aggregate, could have a Material
Adverse Effect. Neither the Company nor any Subsidiary has licensed or
otherwise authorized the use by any third party of any proprietary information
on terms or in a manner which, individually or in the aggregate, could have a
Material Adverse Effect.
SECTION 3.20 BROKERS. No broker, finder, financial advisor or investment
banker other than BHC is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement.
The aggregate Merger Fees (as defined herein) owed or which will be owing by the
Company and its Subsidiaries in connection with the Offer, the Merger and the
other transactions contemplated by this Agreement will not exceed $3,500,000.
"Merger Fees" means all fees and expenses paid since March 1, 1998 or payable by
or on behalf of the Company or any of its Subsidiaries to all attorneys,
accountants, investment bankers, financial advisors and other experts and
advisors incident to the negotiation, preparation, execution and consummation of
this Agreement and the transactions contemplated hereby.
SECTION 3.21 NO OTHER REPRESENTATIONS OR WARRANTIES. No representations
or warranties have been made by or on behalf of the Company or any of its
Subsidiaries in connection with the Merger and the transactions contemplated by
this Agreement other than those expressly set forth in this Agreement. Without
limiting the generality of the foregoing, no representations or warranties are
being made with respect to financial projections or the future financial
performance of the Company, its Subsidiaries or their respective businesses.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the Company that all
of the statements contained in Article 4 are true and correct as of the date of
this Agreement (or if made as of a specified date, as of such date):
SECTION 4.1 ORGANIZATION.
(a) Each of Parent and Acquisition is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation and has all requisite power and authority to own,
lease and operate its properties and to carry on its businesses as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not have a Parent Material
Adverse Effect (as defined below). When used in connection with Parent or
Acquisition, the term "Parent Material Adverse Effect" means any effect, change
or event that is or is reasonably likely to be materially adverse to the
business, assets, prospects, results of operations or condition (financial or
otherwise) of Parent and its subsidiaries, taken as a whole.
(b) Parent has heretofore delivered to the Company accurate and
complete copies of the Articles of Incorporation or Certificate of Incorporation
and Bylaws, as applicable, as currently in effect, of Parent and Acquisition.
Each of Parent and its subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property is owned,
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leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not
have a Parent Material Adverse Effect.
SECTION 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by Parent and Acquisition and by Parent as the sole shareholder of
Acquisition, and no other corporate proceedings on the part of Parent or
Acquisition are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby or thereby, except that the approval of
Parent's shareholders of this Agreement and the Merger and the transactions
contemplated hereby and thereby may be required. This Agreement has been duly
and validly executed and delivered by each of Parent and Acquisition and
constitutes a valid, legal and binding agreement of each of Parent and
Acquisition, enforceable against each of Parent and Acquisition in accordance
with its terms.
SECTION 4.3 INFORMATION SUPPLIED. None of the information supplied or to
be supplied by Parent or Acquisition for inclusion or incorporation by reference
in (i) the Offer Documents, (ii) any Schedule 13E-3, (iii) the Schedule 14D-9,
(iv) the Proxy Statement or (v) any other documents filed or to be filed with
the SEC or any other Governmental Entity in connection with the Offer will, at
the respective times that they or any amendments or supplements thereto are
filed with the SEC and are first published or sent or given to holders of
Shares, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
SECTION 4.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming the truth and
accuracy of the Company's representations and warranties contained in Section
3.6, except for filings, permits, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the Securities Act, the
Exchange Act, state securities or "blue sky" laws, the HSR Act and the filing of
a Certificate of Merger as required by the DGCL, no filing with or notice to,
and no permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery by Parent or Acquisition of this
Agreement or the consummation by Parent or Acquisition of the transactions
contemplated hereby or thereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a Parent Material Adverse Effect. Neither the execution,
delivery and performance of this Agreement by Parent or Acquisition nor the
consummation by Parent or Acquisition of the transactions contemplated hereby or
thereby will (a) conflict with or result in any breach of any provision of the
respective certificate or Articles/Certificate of Incorporation or Bylaws (or
similar governing documents of Parent or Acquisition, (b) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Parent or Acquisition is a party or by
which any of them or any of their respective
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properties or assets may be bound or (c) violate any order, writ, injunction,
decree, law, statute, rule, ordinance regulation or injunction binding on or
applicable to Parent or Acquisition or any of their respective properties or
assets, except in the case of (b) or (c) for violations, breaches or defaults
which would not have a Parent Material Adverse Effect or on the ability of
Parent or Acquisition to consummate the Offer or the Merger.
SECTION 4.5 NO DEFAULT. Neither Parent or Acquisition are in default or
violation (and no event has occurred which, with notice or the lapse of time or
both, would constitute a default or violation) of any term, condition or
provision of (a) its certificate or Articles/Certificate of Incorporation or
Bylaws (or similar governing documents), (b) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Parent or Acquisition is now a party or by which any of them or any of
their respective properties or assets may be bound or (c) any order, writ,
injunction, decree, law, statute, rule or regulation applicable to Parent,
Acquisition or any of their respective properties or assets, except in the case
of (b) or (c) for violations, breaches or defaults that would not have a Parent
Material Adverse Effect.
SECTION 4.6 AVAILABILITY OF FINANCING. Parent and Acquisition have
received financing commitments from The Chase Manhattan Bank and Chase
Securities, Inc. (the "Commitments") and will have the necessary funds to
purchase all of the shares of the Company Common Stock in the Offer and the
Merger and to pay any and all of the costs and expenses incurred and to be
incurred by Parent and Acquisition in connection with the transactions
contemplated by the Agreement. Parent hereby guaranties the payment and the
performance by Acquisition of its obligations under the Agreement.
SECTION 4.7 NO PRIOR ACTIVITIES. Except for obligations incurred in
connection with its incorporation or organization, the making of the Offer or
the negotiation and consummation of this Agreement and the transactions
contemplated hereby, Acquisition has neither incurred any obligation or
liability nor engaged in any business or activity of any type or kind whatsoever
nor entered into any agreement or arrangement with any person or entity.
SECTION 4.8 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Parent or Acquisition.
SECTION 4.9 NO OTHER REPRESENTATIONS OR WARRANTIES. No representations or
warranties are made by or on behalf of Parent or Acquisition in connection with
the transactions contemplated by this Agreement other than those expressly set
forth in this Agreement. Without limiting the generality of the foregoing, no
representations or warranties are being made with respect to financial
projections or the future financial performance of Parent, Acquisition or their
businesses.
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ARTICLE 5
COVENANTS
SECTION 5.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by
this Agreement, during the period from the date hereof to the Effective Time,
the Company and its Subsidiaries (i) shall not conduct their operations
otherwise than in the ordinary course of business consistent with past practice
and (ii) shall use their commercially reasonable efforts to preserve the
business organization of the Company and each Subsidiary. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement, prior to the Effective Time, the Company will not, without the prior
written consent of Parent or Acquisition, and will not permit any of its
Subsidiaries to:
(a) amend its Certificate of Incorporation or Bylaws (or other
similar governing instrument);
(b) amend or modify (except as contemplated herein) 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 (whether through the issuance or
granting of options, warrants, commitment, subscriptions, rights to purchase or
otherwise) 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 issuance or sale of shares of Company Common Stock pursuant to
the exercise of Company Stock Options issued and outstanding on the date hereof;
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, or redeem or otherwise acquire any Company Securities 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 Schedule 5.1 of
the Disclosure Schedule, assume, guarantee, endorse or otherwise become liable
or responsible for (whether directly, contingently or otherwise) 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 One Million Dollars ($1,000,000.00) in the
aggregate;
(e) except as described in Section 3.8 herein or as contemplated
by this 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,
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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 as of the date hereof (including, without limitation,
the granting of stock appreciation rights or performance units);
(f) except with the consent of Parent or Acquisition, 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 Acquisition; or (iii) enter into or amend any contract, agreement,
commitment or arrangement providing for the taking of any action that would be
prohibited hereunder;
(i) make any tax election or settle or compromise any material
income tax liability;
(j) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
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; or
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(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 Sections 5.1(a) through 5.1(m) or any action which would
make any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect as of the date when made.
SECTION 5.2 ACQUISITION PROPOSALS.
(a) The Company agrees that neither it nor any of its
Subsidiaries nor any of the officers, directors, employees, agents or
representatives of it or its Subsidiaries (collectively, the "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 Agreement;
provided, however, that nothing contained in this Agreement shall prevent the
Company or its board of directors 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 Section 5.2 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 Board of
Directors of the Company 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 shareholders from a financial point of view than the
transaction contemplated by this 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 from, 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.
(b) At any time after 48 hours following notification to Parent
of the Company's intent to do so (which notification shall include the identity
of the bidder and the
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material terms and conditions of the proposal) and if the Company has otherwise
complied with the terms of this Section 5.2, the Board of Directors may withdraw
or modify its approval or recommendation of the Offer, terminate the 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.
(c) 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 heretofore executed a confidentiality agreement in
connection with its consideration of any Acquisition Proposal to return all
confidential information heretofore furnished to such Person by or on behalf of
it or any of its Subsidiaries.
SECTION 5.3 ACCESS TO INFORMATION.
(a) Between the date hereof and the Effective Time, the Company
will provide and will cause its Subsidiaries and each of their respective
officers, directors, employees, agents and representatives to provide to Parent
and Acquisition and their authorized representatives full access to all
employees, plants, offices, warehouses and other facilities and to all books and
records of the Company and its Subsidiaries, will permit Parent and Acquisition
to make such inspections as Parent and Acquisition may reasonably require and
will cause the Company's officers and those of its Subsidiaries to furnish
Parent and Acquisition with such financial and operating data and other
information with respect to the business, operations and properties of the
Company and its Subsidiaries as Parent or Acquisition may from time to time
reasonably request.
(b) Each of Parent and Acquisition will hold and will cause its
consultants and advisors to hold in confidence all documents and information
concerning the Company and its Subsidiaries furnished to Parent or Acquisition
in connection with the transactions contemplated by this Agreement pursuant to
the terms of that certain Confidentiality Agreement entered into between the
Company and Parent dated January 22, 1998; provided, that upon consummation of
the Offer, the parties agree that such Confidentiality Agreement will terminate.
SECTION 5.4 SHAREHOLDERS MEETING.
(a) If a vote of the Company's shareholders is required by law,
the Company will, as promptly as practicable following the acceptance for
payment of Shares by Acquisition 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 this Agreement. In connection
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with such shareholders meeting, the Company will prepare and file with the SEC 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 Board that shareholders of the Company vote in favor of the approval
and adoption of this Agreement and the written opinion of the Financial Advisor
referred to in Section 1.2(a) that the cash consideration to be received by the
shareholders of the Company pursuant to the Merger is fair to such shareholders
from a financial point of view. The Company shall use all reasonable efforts to
have the Proxy Statement cleared by the SEC 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 this Agreement and will pay all expenses incidental thereto.
Notwithstanding the foregoing, if Parent, Acquisition and/or any other
subsidiary of Parent shall acquire at least ninety percent (90%) of the issued
and outstanding shares of Company Common Stock 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 the DGCL.
(b) Parent and Acquisition agree to cause all shares of Company
Common Stock purchased pursuant to the Offer and all other shares of Company
Common Stock owned by Parent, Acquisition or any subsidiary of Parent to be
voted in favor of the Merger.
SECTION 5.5 ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the
terms and conditions herein provided, each of the Company, Parent and
Acquisition shall, and the Company shall cause its Subsidiaries to use all
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
(a) cooperation in the preparation and filing of the Offer Documents, the
Schedule 14D-9, any Schedule 13E-3 required by the Exchange Act (the "Schedule
13E-3"), the Proxy Statement and any filings that may be required under the HSR
Act and the FLEC and any amendments thereto; (b) the taking of all action
reasonably necessary, proper or advisable to consummate the financing
contemplated by the Commitments, to secure any necessary consents under existing
debt obligations of the Company and its Subsidiaries or to amend the notes,
indentures or agreements relating thereto to the extent required by such notes,
indentures or agreements or redeem or repurchase such debt obligations;
(c) contesting any legal proceeding relating to the Offer or the Merger and
(d) the execution of any additional instruments necessary to consummate the
transactions contemplated hereby. Subject to the terms and conditions of this
Agreement, Parent and Acquisition agree to use all reasonable efforts to cause
the Effective Time to occur as soon as reasonably practicable after the
shareholder vote with respect to the Merger. In case at any time after the
Effective Time any further action is necessary to carry out the purposes of this
Agreement, the parties shall use their best efforts to cause the appropriate
officers and directors to take all such necessary action.
SECTION 5.6 CONSENTS. Parent, Acquisition and the Company each will, and
the Company will cause each of its Subsidiaries to, use all commercially
reasonable efforts to obtain consents or
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waivers of all third parties and Governmental Entities necessary, proper or
advisable for the consummation of the transactions contemplated by this
Agreement.
SECTION 5.7 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
Parent, Acquisition and the Company and its Subsidiaries, as the case may be,
will consult with one another before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated by
this Agreement, including, without limitation, the Offer or the Merger, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law or by
obligations pursuant to any listing agreement with the New York Stock Exchange,
Inc., AMEX, or the Nasdaq Stock Market, as determined in good faith by Parent,
Acquisition or the Company, as the case may be.
SECTION 5.8 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) Parent and Acquisition 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 other similar governing instruments) or
otherwise in effect as of the date hereof 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 (6) years following the
Effective Time. To the maximum extent permitted by the DGCL, such
indemnification shall be mandatory rather than permissive and the Surviving
Corporation shall advance expenses as incurred to the fullest extent permitted
under applicable law in connection with such indemnification (subject to the
Surviving Corporation's receipt of an undertaking (if required by law) by the
indemnified party to return such advanced expenses to the Surviving Corporation
if it is determined by a final, non-appealable order of a court of competent
jurisdiction that such indemnified party is not entitled to retain such advanced
expenses).
(b) Parent shall cause the Surviving Corporation to maintain in
effect for not less than six (6) 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
(6) 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 hereof (which the Company
represents to have been $80,000).
(c) In the event the Company or its successor (i) is
consolidated with or merges into another person and is not the continuing or
surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
other person in a single transaction or a series of related transactions, then
in each such case Parent shall make or cause to be made proper provision so that
the successor or transferee of the Company shall comply in all material respects
with the terms of this Section 5.8.
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(d) The provisions of this Section 5.8 are intended to be for
the benefit of, and shall be enforceable by, each of the directors, officers,
employees and agents of the Company and its Subsidiaries, their heirs and their
representatives.
SECTION 5.9 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent and Acquisition, and Parent and Acquisition shall give
prompt notice to the Company, of (a) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty of the notifying party contained in this Agreement to
be untrue or inaccurate in any material respect as if made at any time from the
date hereof to the Effective Time and (b) any material failure of the notifying
party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery
of any notice pursuant to this Section 5.9 shall not cure any such breach or
non-compliance or limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
SECTION 5.10 EMPLOYEE MATTERS.
(a) Employees of the Company and its Subsidiaries shall be
treated after the Merger no less favorably under Parent ERISA Plans than other
similarly situated employees of Parent and its subsidiaries.
(b) For a period of one (1) year following the Merger, Parent
shall and shall cause its subsidiaries to maintain, with respect to their
employees who had been employed by the Company or any of its Subsidiaries prior
to the Effective Time and who remain employed following the Effective Time
("Transferred Employees") employee benefits (as defined for purposes of
Section 3(3) of ERISA), other than stock option plans, which are substantially
comparable in the aggregate to such employee benefits provided by the Company
and its Subsidiaries immediately prior to the Merger. Parent shall and shall
cause its subsidiaries (i) to maintain with respect to the Transferred
Employees, for a period of one (1) year following the Merger, base salary or
regular hourly wage rates at not less than the amount or rate applicable to such
employees immediately prior to the Merger and (ii) continue the Company's
severance program through December 31, 1998.
(c) To the extent they participate under such plans, Parent and
its subsidiaries shall credit employees of the Company and its Subsidiaries for
purposes of determining eligibility to participate or vesting under Parent ERISA
Plans with their service prior to the Merger with the Company and its
Subsidiaries to the same extent such service was counted under similar benefit
plans of the Company prior to the Merger.
(d) Nothing contained herein shall be construed as requiring
Parent or the Surviving Corporation to continue any specific plans or to
continue the employment of any specific person, except Elwood M. Miller, who
shall be guaranteed employment at his current salary and cash bonus levels
through July 1, 1998.
SECTION 5.11 SEC FILINGS. Each of Parent and the Company shall promptly
provide the other party (or its counsel) with copies of all filings made by the
other party or any of its subsidiaries with
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the SEC or any other state or federal Governmental Entity in connection with
this Agreement and the transactions contemplated hereby.
SECTION 5.12 GUARANTEE OF PERFORMANCE. Parent hereby guarantees the
payment and performance by Acquisition of its obligations under this Agreement
and the indemnification and other obligations of the Surviving Corporation
provided for in Section 5.8.
SECTION 5.13 NOTICE OF CERTAIN EVENTS. The Company shall promptly notify
Acquisition, and Acquisition shall promptly notify the Company, of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental
Entity in connection with the transactions contemplated by this Agreement; and
(c) with respect only to the Company and its Subsidiaries, any
actions, suits, claims, investigations or proceedings commenced or, to the best
of its knowledge, threatened which, if pending on the date of this Agreement,
would have been required to have been disclosed pursuant to Section 3.9 or which
relate to the consummation of the transactions contemplated by this Agreement or
which could result in a Material Adverse Effect.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) if required by law in order to effect the Merger, this
Agreement shall have been approved and adopted by the requisite vote of the
shareholders of the Company;
(b) no applicable statute, rule, regulation, judgment, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits, restrains,
enjoins or restricts the consummation of the Merger or has the effect of making
the purchase of the Shares illegal;
(c) any waiting period applicable to the Merger and the other
transactions described in the recitals to this Agreement under the HSR Act shall
have terminated or expired, and any other governmental or regulatory notices or
approvals required with respect to the transactions contemplated hereby shall
have been either filed or received; and
(d) Acquisition shall have purchased the Shares pursuant to the
Offer.
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ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1 TERMINATION. This Agreement may be terminated and the Offer
and the Merger may be abandoned at any time prior to the Effective Time:
(a) by mutual written consent of Parent, Acquisition and the
Company;
(b) by Parent or Acquisition 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 Acquisition if (A) due to an occurrence or
circumstance which would result in a failure to satisfy any of the Offer
Conditions (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, Acquisition may not terminate the Offer prior to such
expiration date, Acquisition shall have (i) terminated the Offer or (ii) failed
to pay for shares of Company Common Stock pursuant to the Offer (but only
following the expiration of the 10-day extension contemplated by the proviso to
the last sentence of Section 1.1(b)) or (B) the Offer shall not have been
consummated on or before July 31, 1998; PROVIDED, HOWEVER, that the right to
terminate this Agreement pursuant to this clause (c) shall not be available to
Parent or Acquisition if (X) either of them has breached in any material respect
its obligations under this Agreement in any manner that shall have proximately
contributed to the failure referenced in this clause (c) or (Y) during any
extension of the Offer made pursuant to Section 1.1(b)(iii) of this Agreement;
(d) by the Company (i) if Acquisition shall have failed to
commence the Offer pursuant to Section 1.1 of this Agreement, or (ii) 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 this 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 Acquisition set forth in this Agreement, or if
any representation or warranty of Parent or Acquisition 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 Acquisition of any of their respective covenants or agreements
hereunder or materially adversely affecting (or materially delaying) the
consummation of the Offer (including the payment for Shares), and Parent or
Acquisition, as the case may be, has not cured such breach prior to the earlier
of (A) ten (10) days following notice by the Company thereof and (B) two (2)
Business Days prior to
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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 this Agreement in any manner that shall have proximately
contributed to the breaches referenced in this clause (e) or (iii) pursuant to
Section 5.2(b); or
(f) by Parent or Acquisition prior to the purchase of shares of
Company Common Stock pursuant to the Offer if (i) the Company Board or any
committee thereof (A) withdraws or modifies in a manner adverse to Parent or
Acquisition 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 Acquisition 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
(as defined below), (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 (as defined below) acquiring less than ten percent (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 ten percent (10%) to twenty percent
(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
Manufacturing Company permitted by Section 4(a)(i) of the Tender Agreement);
(iii) there shall have been a breach of any representation or warranty on the
part of the Company set forth in this 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 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 hereunder having a Material Adverse Effect 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 a breach of
Section 5.2 or the first sentence of 1.2(b)), the Company has not cured such
breach prior to the earlier of (A) ten (10) days following notice by Parent or
Acquisition thereof and (B) two (2) Business Days prior to the date on which the
Offer expires, PROVIDED that, with respect to clauses (iii) and (iv) above,
neither Parent nor Acquisition has breached in any material respect any of their
respective obligations under this Agreement in any manner that shall have
proximately contributed to the breaches referenced in this clause (f);
SECTION 7.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party or its affiliates, directors, officers or shareholders, other than the
provisions of this Section 7.2 and Sections 5.3(b) and 7.3. Nothing contained
in this Section 7.2 shall relieve any party from liability for any breach of
this Agreement.
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SECTION 7.3 FEES AND EXPENSES.
(a) In the event that this Agreement shall have been terminated
pursuant to:
(i) Section 7.1(e)(iii) or Section 7.1(c) as a result
or the failure to satisfy any of the conditions set forth in paragraphs (c)
or (e) of Annex A;
(ii) Section 7.1(f)(i) or (ii) (other than (f)(ii)(Z));
or
(iii) Sections 7.1(f)(iii) or (iv) as a result of a
willful breach of any representation, warranty, covenant or agreement of
the Company and, within twelve (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 hereof and prior to such termination;
the Company shall pay to Parent in the case of (i) and (ii) not later than two
Business Days after termination of this Agreement and in the case of (iii), 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, Acquisition
or any affiliate thereof (a "Third Party"); (ii) the acquisition by a Third
Party of thirty percent (30%) of the total assets of the Company and its
Subsidiaries, taken as a whole; or (iii) the acquisition by a Third Party of
thirty percent (30%) or more of the outstanding Shares (excluding an acquisition
of Shares by a wholly-owned subsidiary of the Williamson-Dickie Manufacturing
Company permitted by Section 4(a)(i) of the Tender Agreement).
(b) Upon the termination of this Agreement prior to the purchase
of Shares by Acquisition pursuant to the Offer pursuant to Section 7.1(f)
(unless such termination is also covered by Section 7.3(a)) or 7.1(e)(iii), the
Company shall reimburse Parent, Acquisition and their affiliates (not later than
ten (10) Business Days after submission of statements therefor) for all actual
documented out-of-pocket fees and expenses, not to exceed Five Hundred Thousand
Dollars ($500,000.00), 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 this Agreement (including, without limitation,
filing fees, printing and mailing costs, fees payable to investment bankers,
counsel to any of the foregoing and accountants). If Parent or Acquisition
shall have submitted a request for reimbursement hereunder, Parent will provide
the Company in due course with invoices or other reasonable evidence of such
expenses upon request. The Company shall in any event pay
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the amount requested (not to exceed Five Hundred Thousand Dollars ($500,000.00))
within ten (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. Nothing in this Section 7.3(c) shall relieve any party from any
liability for breach of this Agreement.
(c) Upon the termination of this Agreement pursuant to
Sections 7.1(d)(i), (e)(i) or (e)(ii), Parent shall reimburse the Company and
its affiliates (not later than ten (10) Business Days after submission of
statements therefor) for all actual documented out-of-pocket fees and expenses,
not to exceed Five Hundred Thousand Dollars ($500,000.00), 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 this Agreement
(including, without limitation, filing fees, printing and mailing costs, fees
payable to investment bankers, counsel to any of the foregoing and accountants).
If the Company shall have submitted a request for reimbursement hereunder, 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 Five Hundred Thousand Dollars ($500,000.00))
within ten (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. Nothing in this Section 7.3(c) shall relieve any party from any
liability for breach of this Agreement.
(d) Except as specifically provided in this Section 7.3, each
party shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
SECTION 7.4 AMENDMENT. Subject to Section 1.3(b), this Agreement may be
amended by action taken by the Company, Parent and Acquisition 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.
This Agreement may not be amended except by an instrument in writing signed on
behalf of the parties.
SECTION 7.5 EXTENSION; WAIVER. At any time prior to the Effective Time,
each party may (a) extend the time for the performance of any of the obligations
or other acts of the other party or parties, (b) waive any inaccuracies in the
representations and warranties of the other parties contained herein or in any
document, certificate or writing delivered pursuant hereto or (c) waive
compliance by the other parties with any of the agreements or conditions
contained herein. Any agreement on the part of any party to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to assert any of its rights
hereunder shall not constitute a waiver of such rights.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement.
35
<PAGE>
SECTION 8.2 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (a) constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof and (b)
without the consent of the parties shall not be assigned by operation of law or
otherwise; PROVIDED, HOWEVER, that Acquisition may assign any or all of its
rights and obligations under this Agreement to any wholly owned subsidiary of
Parent, but no such assignment shall relieve Acquisition of its obligations
hereunder if such assignee does not perform such obligations; provided further,
that the obligation of any party hereto under Section 5.8 shall not be assigned
without the consent of the person whom such obligations are for the benefit of.
SECTION 8.3 VALIDITY. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby and,
to such end, the provisions of this Agreement are agreed to be severable.
SECTION 8.4 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested), to the other party as follows:
IF TO PARENT OR ACQUISITION:
Huntsman Packaging Corporation
500 Huntsman Way
Salt Lake City, UT 84108
Attention: Richard P. Durham, President and Chief Executive
Officer Ronald G. Moffitt, General Counsel
WITH A COPY TO:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: John L. MacCarthy
IF TO THE COMPANY:
Blessings Corporation
200 Enterprise Drive
Newport News, Virginia 23603
Attention: Elwood M. Miller, President and CEO
36
<PAGE>
WITH A COPY TO:
Patten, Wornom & Watkins, L.C.
12350 Jefferson Avenue, Suite 360
Newport News, Virginia 23602
Attention: Joseph H. Latchum, Jr., Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 8.5 GOVERNING LAW; JURISDICTION.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of law thereof.
(b) In addition, each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any federal court located in the
State of Delaware or any Delaware state court in the event any dispute arises
out of this Agreement or any of the transactions contemplated hereby, and
consent to service of process by notice as provided in this Agreement,
(b) agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a federal or state court sitting in
the State of Delaware.
SECTION 8.6 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY OR DISPUTE THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER,
(iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS OF THIS SECTION 8.6.
SECTION 8.7 CONSTRUCTION; INTERPRETATION. The headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement. Article, section, exhibit,
schedule, annex, party, preamble and recital references are to this Agreement
unless otherwise stated. No party, or its respective counsel, shall be deemed
the drafter of this Agreement for purposes of construing the provisions hereof,
and all provisions of this
37
<PAGE>
Agreement shall be construed according to their fair meaning and not strictly
for or against any party.
SECTION 8.8 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party and its successors and permitted
assigns and, except as provided in Section 8.2, nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 8.9 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
SECTION 8.10 SPECIFIC PERFORMANCE. The parties acknowledge that
irreparable damage would result if this Agreement were not specifically
enforced, and they therefore consent that the rights and obligations of the
parties under this Agreement may be enforced by a decree of specific performance
issued by a court of competent jurisdiction. Such remedy shall, however, not be
exclusive and shall be in addition to any other remedies, including arbitration,
which any party may have under this Agreement or otherwise.
SECTION 8.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
38
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
BLESSINGS CORPORATION,
a Delaware corporation
By: /S/ ELWOOD M. MILLER
-------------------------------------------
Name: Elwood M. Miller
Title: President and Chief Executive Officer
HUNTSMAN PACKAGING CORPORATION,
a Utah corporation
By: /S/ RICHARD P. DURHAM
-------------------------------------------
Name: Richard P. Durham
Title: President and Chief Executive Officer
VA ACQUISITION CORP.,
a Delaware corporation
By: /S/ RICHARD P. DURHAM
-------------------------------------------
Name: Richard P. Durham
Title: President and Chief Executive Officer
<PAGE>
ANNEX A
THE CAPITALIZED TERMS USED HEREIN HAVE THE MEANINGS SET FORTH IN THE
AGREEMENT AND PLAN OF MERGER TO WHICH THIS ANNEX A IS ATTACHED.
Notwithstanding any other provisions of the Offer, Acquisition shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC or the Exchange Act (including Rule 14e-1(c) thereof),
pay for, and may delay the acceptance for payment of, or the payment for, any
Shares (and, if required pursuant to Section 1.1(b) of the Agreement, shall
extend the Offer for a period of at least ten (10) days and may otherwise,
subject to the terms of the Agreement, amend, extend, or terminate the Offer) if
(i) immediately prior to the expiration of the Offer (as extended in accordance
with the Offer), the Minimum Condition shall not have been satisfied, (ii) any
applicable waiting period under the HSR Act shall not have expired or been
terminated, (iii) any applicable waiting period under the FLEC shall not have
expired or been terminated without objection from the Mexican Federal
Competition Commission or (iv) at any time prior to the acceptance for payment
of Shares, Acquisition makes a good faith determination that any of the
following conditions exist:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction (whether permanent or temporary)
promulgated, enacted, entered, enforced or deemed applicable to the Offer, or
any other action shall have been taken, by any Governmental Entity, other than
the routine application to the Offer or the Merger of waiting periods under the
HSR Act, that (i) directly or indirectly prohibits, materially delays, or makes
illegal the acceptance for payment of, or the payment for, some or all of the
Shares or otherwise prohibits consummation of the Offer or the Merger; (ii)
directly or indirectly prohibits, materially delays, or imposes material
limitations on the ability of Acquisition to acquire or hold or to exercise
effectively all rights of ownership of the Shares, including, without
limitation, the right to vote any Shares purchased by Acquisition on all matters
properly presented to the shareholders of the Company, or effectively to control
in any material respect the business, assets or operations of the Company, its
Subsidiaries, Acquisition or any of their respective affiliates; or (iii)
otherwise has a Material Adverse Effect; or
(b) (i) the representation and warranties of the Company as set forth
in the Agreement (when read without any exception or qualification as to
knowledge, materiality or Material Adverse Effect) shall not be true and correct
as of the date of the Agreement and as of consummation of the Offer as though
made on or as of such date, but only if the respects in which the
representations and warranties made by the Company are inaccurate would in the
aggregate have a Material Adverse Effect or would materially increase the amount
paid to the Company's stockholders in the Offer and the Merger; (ii) the Company
shall have breached or failed to comply in any material respect with any of its
obligations, covenants or agreements under the Agreement; or (iii) any change or
event shall have occurred that has a Material Adverse Effect; or
(c) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Parent, Acquisition, or any of
their affiliates or any group of which any of them is a member, shall have
entered into a definitive agreement or an agreement
A-1
<PAGE>
in principle with the Company or any Subsidiary with respect to an Acquisition
Proposal or the Company Board (or any committee thereof) shall have adopted a
resolution approving any of the foregoing; or
(d) the Company, Parent and Acquisition shall have reached an
agreement that the Offer or the Agreement be terminated, or the Agreement shall
have been terminated in accordance with its terms; or
(e) the Company Board (or any committee thereof) shall have withdrawn
or modified (including by amendment of the Schedule 14D-9) in a manner adverse
to Parent or Acquisition its approval or recommendation of the Offer, this
Agreement or the Merger or shall have recommended another Acquisition Proposal,
or shall have adopted any resolution to effect any of the foregoing which, in
the good faith judgment of Acquisition in any such case, and regardless of the
circumstances (including any action or omission by Acquisition) giving rise to
any such condition, makes it inadvisable to proceed with such acceptance for
payment; or
(f) there shall have occurred (i) any general suspension of, or
limitation on prices for trading in securities on the American Stock Exchange,
any national securities exchange or on the Nasdaq National Market System for a
period in excess of 24 hours (excluding suspension or limit resulting solely
from physical damage or interference with such exchanges not related to market
conditions), (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) a commencement of a
war, armed hostilities or other national or international crisis directly
involving the United States (other than an action involving United Nations'
personnel or support of United Nations' personnel), (iv) a change in the general
financial, bank or capital markets which materially and adversely affects the
ability of financial institutions in the United States to extend credit or
syndicate loans or (v) in the case of any of the foregoing clauses (i) through
(iv) existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof.
The foregoing conditions are for the benefit of Parent and Acquisition and
may be asserted by Parent or Acquisition regardless of the circumstances giving
rise to any such conditions and may be waived by Parent or Acquisition in whole
or in part at any time and from time to time in its reasonable discretion, in
each case, subject to the terms of the Agreement. The failure by Parent or
Acquisition at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
A-2
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
Stockholder Shares
- ----------- ----------
<S> <C>
Williamson-Dickie 5,496,096
Leonard Birnbaum 79,238
Michael C. Carlson 10,000
Wayne A. Durboraw 13,147
Joseph J. Harkins 12,134
James P. Luke 69,490
John W. McMackin 24,542
Elwood M. Miller 87,812
Manuel G. Villareal 120,613
Robert E. Weber 12,000
---------
---------
Total ....................... 5,925,072
</TABLE>
<PAGE>
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
[__________________]
A DELAWARE CORPORATION
FIRST. The name of the corporation is [________________],
(hereinafter, the "CORPORATION").
SECOND. The address of the Corporation's registered office in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle, State of Delaware 19801. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD. The nature of the business of or purpose to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware (the "GENERAL CORPORATION LAW").
FOURTH. The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares of common stock, par
value $.01 per share.
FIFTH. The Board of Directors shall have concurrent power with the
stockholders to make, alter, amend or repeal the By-Laws of the Corporation.
Election of directors need not be by written ballot unless the By-Laws so
provide.
SIXTH: The names and places of residence of the incorporators are as
follows:
Names: Residence:
------ ----------
L.E. Grey Wilmington, Delaware
L.H. Herman Wilmington, Delaware
S.M. Brown Wilmington, Delaware
SEVENTH. a) No director shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, except that a director shall be liable to the extent
provided by applicable law (i) for breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) pursuant to Section 174 of the Delaware General Corporation Law or (iv)
for any transaction from which the director derived an improper personal
benefit. No amendment to or repeal of the provisions of Article SEVENTH shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.
b) The Corporation shall have the power to indemnify any and all of
its officers or directors, or former officers or directors, or any person who
may serve or has served at its request as an officer or director of another
corporation in which it owns shares of capital stock, to the full extent and in
the manner permitted by applicable law. Such indemnification shall not be
exclusive
<PAGE>
of any other rights to which those indemnified may be entitled under any by-law,
agreement, vote of stockholders, or disinterested directors, or otherwise.
EIGHTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed herein and by the General Corporation Law,
and all rights conferred upon stockholders herein are granted subject to this
reservation.
Exhibit B-2
<PAGE>
EXHIBIT 99(c)(2)
TENDER AGREEMENT AND IRREVOCABLE PROXY
TENDER AGREEMENT AND IRREVOCABLE PROXY ("Agreement") dated as of April 7,
1998 among HUNTSMAN PACKAGING CORPORATION, a Utah corporation ("Parent"), VA
ACQUISITION CORPORATION, a Delaware corporation (the "Purchaser"), and the
persons listed on SCHEDULE 1 hereto (each a "Stockholder", and, collectively,
the "Stockholders").
WHEREAS, Parent, the Purchaser and Blessings Corporation, a Delaware
corporation (the "Company"), propose to enter into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement") providing for the making
of a cash tender offer (the "Offer") by the Purchaser for shares of Common
Stock, par value $0.71 per share, of the Company (the "Company Common Stock"),
and the merger of the Company with and into the Purchaser (the "Merger");
WHEREAS, the Stockholders own in the aggregate 5,925,072 shares (as such
shares may be adjusted by conversion, dividend, stock split, recapitalization,
exchange, merger or similar transaction, the "Shares") of Company Common Stock;
and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and the Purchaser have requested that the Stockholders agree
to tender the shares, as set forth herein;
NOW, THEREFORE, to induce Parent and the Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements herein
contained, the parties agree as follows:
1. TENDER OF SHARES. (a) Each Stockholder hereby agrees to validly
tender and sell, (and not withdraw), 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 Section 1.1(a) of the Merger Agreement, the number of
Shares set forth opposite such Stockholder's name on Schedule I hereto (the
"Existing Shares"), and (ii) any shares of Company Common Stock acquired by such
Stockholder after the date hereof and prior to the termination of this 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 (each Stockholder 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 price per Share
pursuant to the Offer shall be no less than the Per Share Price, as that term is
defined in the Merger Agreement. Each Stockholder hereby acknowledges and
agrees that Parent's and the Purchaser's obligation to accept for payment and
pay for shares of Company Common Stock in the Offer, including the Shares owned
by such Stockholder, is subject to the terms and conditions of the Offer.
<PAGE>
(b) Each Stockholder hereby agrees to permit Parent, the Purchaser and the
Company to publish and disclose in the documents relating to the Offer and the
Merger (including all documents, schedules and proxy statements filed with the
Securities and Exchange Commission) its, his or her identity and ownership of
Shares and the nature of its, his or her commitments, arrangements and
understandings under this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. Each of the
Stockholders, with respect to itself only, hereby severally represents and
warrants to Parent and the Purchaser as follows:
(a) AUTHORITY. Each such Stockholder has all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by such
Stockholder and the consummation by such Stockholder of the transactions
contemplated hereby have been duly authorized by all necessary action on
the part of such Stockholder. This Agreement has been duly executed and
delivered by such Stockholder and constitutes a valid and binding
obligation of such Stockholder, enforceable in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, and other
similar laws affecting the enforcement of creditors' right generally and
except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time or both) under any provision of any trust 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. 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, is required by or with
respect to such Stockholder in connection with the execution and delivery
of this Agreement or the consummation by such Stockholder of the
transactions contemplated hereby.
(b) THE SHARES. Such Stockholder has, and the transfer by such
Stockholder of its, his or her Shares hereunder will pass to the Purchaser,
good and marketable title to the number of Existing Shares set forth
opposite such Stockholder's name in SCHEDULE I hereto, free and clear of
any claims, liens, encumbrances and security interests whatsoever. Such
Stockholder owns of record no shares of Company Common Stock other than the
Existing Shares. Except pursuant to this Agreement, the Existing Shares
are not subject to any voting trust agreement or other contract, agreement,
arrangement, commitment or understanding
2
<PAGE>
restricting or otherwise relating to the voting, dividend rights or
disposition of the Existing Shares. Such Stockholder has sole power with
respect to the matters set forth in this Agreement with respect to all of
the Existing Shares set forth opposite such Stockholder's name on Schedule
I hereto, with no limitations, qualifications or restrictions on such
rights, subject to applicable securities laws and the terms of this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Parent
and the Purchaser hereby represent and warrant to each Stockholder as follows:
AUTHORITY. Each of Parent and the Purchaser has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Parent and the Purchaser and the consummation
by Parent and the Purchaser of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
Parent and the Purchaser. This Agreement has been duly executed and
delivered by Parent and the Purchaser and constitutes a valid and binding
obligation of Parent and the Purchaser enforceable in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally
and except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated
hereby and thereby and compliance with the terms hereof will not, conflict
with, or result in any violation of, or default (with or without notice or
lapse of time or both) under any provision of any trust 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
the Parent or Purchaser or to the property or assets of the Parent or
Purchaser. 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, is required by or with respect to the Parent or Purchaser in
connection with the execution and delivery of this Agreement or, except as
set forth in the Merger Agreement, the consummation by the Parent or
Purchaser of the transactions contemplated hereby.
4. COVENANTS OF THE STOCKHOLDERS.
(a) Each Stockholder severally agrees 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 its
Shares to a charitable organization, provided that such charitable
organization agrees to be bound by the terms and provisions of this
Agreement
3
<PAGE>
applicable to such Stockholder and (y) the Williamson-Dickie Manufacturing
Company ("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 this 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 this 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 this Agreement; or
(iii) solicit, facilitate, initiate, encourage or take any
other action to facilitate (including by way of furnishing
information) any Acquisition Proposal (as defined in the Merger
Agreement), the acquisition of any shares of Company 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 Section 5.2 of the Merger Agreement.
(b) 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 Section 4(a)(iii).
(c) 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.
5. IRREVOCABLE PROXY. Each Stockholder hereby 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 (whether annual or special and whether or not an
adjourned or postponed meeting) or consent in lieu of any such meeting or
otherwise, to vote such Shares as set forth in Section 4(c) hereof; PROVIDED,
that in any such vote or other action pursuant to such proxy, the Purchaser
shall not have the right (and such proxy shall not confer the right) to vote to
reduce the Per Share Price or the Merger Consideration (as defined in the Merger
Agreement) 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 this proxy shall
irrevocably cease to be in effect at any time that (x) the Offer shall have
expired or terminated without any shares of Company Common Stock being purchased
thereunder in
4
<PAGE>
violation of the terms of the Offer, (y) the Purchaser shall be in violation of
the terms of this Agreement or (z) the Merger Agreement shall have been
terminated in accordance with its terms. THIS PROXY AND POWER OF ATTORNEY IS
IRREVOCABLE AND COUPLED WITH AN INTEREST. Each Stockholder hereby revokes,
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 heretofore appointed or granted, and no subsequent
proxy or power of attorney (except in furtherance of such Stockholder's
obligations under Section 4(c) hereof) 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 this Agreement remains in effect. Each
Stockholder shall forward to the Purchaser any proxy cards that such Stockholder
receives with respect to the Offer or the Merger Agreement.
6. NO BROKERS. Each of the Stockholders, Parent and the Purchaser
represents, as to itself and its affiliates, that no agent, broker, investment
banker or other firm or person is or will be entitled to any broker's or
finder's fees or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement and respectively agrees to
indemnify and hold the others harmless from and against any and all claims,
liabilities or obligations with respect to any such fees, commissions or
expenses asserted by any person on the basis of any act or statement alleged to
have occurred or been made by such party or its affiliates.
7. SURVIVAL OF REPRESENTATIONS. All representations, warranties and
agreements made by the parties to this Agreement shall survive the purchase of
Shares pursuant to the Offer notwithstanding any investigation at any time made
by or on behalf of any party hereto.
8. FURTHER ASSURANCES. If the Purchaser purchases Shares pursuant to the
Offer, each Stockholder will execute and deliver, or cause to be executed and
delivered, such additional or further transfers, assignments, endorsements,
consents and other instruments as the Purchaser may reasonably request for the
purpose of effectively carrying out the transactions contemplated by this
Agreement, including the transfer of the Shares to the Purchaser and the release
of any and all claims, liens, encumbrances and security interests with respect
thereto.
9. ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties without the
prior written consent of the other parties, except that (i) the Purchaser may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly-owned
subsidiary of Parent and (ii) a stockholder may assign its rights, interests and
obligations to the extent permitted by Section 4(a)(i) in connection with a
transfer of Shares permitted by Section 4(a)(i). This Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and permitted assigns.
10. GUARANTEE OF PERFORMANCE. Parent hereby guarantees the payment and
performance by the Purchaser of its obligations under this Agreement.
5
<PAGE>
11. GENERAL PROVISIONS.
(a) SPECIFIC PERFORMANCE. The parties hereto acknowledge that
damages would be an inadequate remedy for any breach of the provisions of
this Agreement and agree that the obligations of the parties hereunder
shall be specifically enforceable.
(b) EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense.
(c) AMENDMENTS. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto to which such
amendment applies.
(d) NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by
reputable overnight courier or mailed by registered or certified mail
(return receipt requested) or sent by confirmed telecopy to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(i) if to Parent or the Purchaser, to
Huntsman Packaging Corporation
500 Huntsman Way
Salt Lake City, Utah 84108
Attention: Ronald G. Moffitt
Telecopier No.: 801/584-5783
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: John L. MacCarthy
Telecopier No.: 312/558-5700
(ii) if to the Stockholders, to the addresses set forth opposite
their names on SCHEDULE 1 hereto.
(e) INTERPRETATION. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit to
this Agreement unless otherwise indicated. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Wherever the words
"include", "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation".
6
<PAGE>
(f) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
(g) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
(h) GOVERNING LAW; JURISDICTION
(i) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of law thereof.
(ii) In addition, each of the parties hereto (A) consents to
submit itself to the personal jurisdiction of any federal court located in
the State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement or any of the transactions contemplated
hereby, and consents to service of process by notice as provided in this
Agreement, (B) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such
court and (C) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other
than a federal or state court sitting in the State of Delaware.
(i) TERMINATION. The obligations of the parties hereunder shall
terminate upon the termination of the Merger Agreement in accordance with
its terms.
(j) WAIVER OF APPRAISAL RIGHTS. To the extent applicable, each
Stockholder hereby waives 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 hereof with such changes which do
not adversely affect such Stockholder.
[signature page follows]
7
<PAGE>
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholders have signed
or caused their respective officers thereunto duly authorized, to sign this
Agreement, all as of the date first written above.
HUNTSMAN PACKAGING CORPORATION
By: /s/ Richard P. Dunham
------------------------------------------
Name: Richard P. Dunham
Title: President and Chief Executive Officer
VA ACQUISITION CORPORATION
By: /s/ Richard P. Dunham
------------------------------------------
Name: Richard P. Dunham
Title: President and Chief Executive Officer
WILLIAMSON-DICKIE MANUFACTURING
COMPANY
By /s/ Philip C. Williamson
------------------------------------------
Name: Philip C. Williamson
Title: Chairman President and CEO
/s/ Leonard Birnbaum
---------------------------------------------
Leonard Birnbaum
/s/ Michael C. Carlson
---------------------------------------------
Michael C. Carlson
/s/ Wayne A. Durboraw
---------------------------------------------
Wayne A. Durboraw
/s/ Joseph J. Harkins
---------------------------------------------
Joseph J. Harkins
/s/ James P. Luke
---------------------------------------------
James P. Luke
/s/ John W. McMackin
---------------------------------------------
John W. McMackin
/s/ Elwood M. Miller
---------------------------------------------
Elwood M. Miller
/s/ Manuel G. Villareal
---------------------------------------------
Manuel G. Villareal
/s/ Robert E. Weber
---------------------------------------------
Robert E. Weber
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
STOCKHOLDER SHARES
------------- ---------
<S> <C>
Williamson-Dickie Manufacturing Company 5,496,096
319 Lipscomb Street
Fort Worth, Texas 71602
Leonard Birnbaum 79,238
c/o Blessings Corporation
200 Enterprise Drive
Newport News, Virginia 23603
Michael C. Carlson 10,000
c/o Blessings Corporation
200 Enterprise Drive
Newport News, Virginia 23603
Wayne A. Durboraw 13,147
c/o Blessings Corporation
200 Enterprise Drive
Newport News, Virginia 23603
Joseph J. Harkins 12,134
c/o Blessings Corporation
200 Enterprise Drive
Newport News, Virginia 23603
James P. Luke 69,490
c/o Blessings Corporation
200 Enterprise Drive
Newport News, Virginia 23603
John W. McMackin 24,542
c/o Blessings Corporation
200 Enterprise Drive
Newport News, Virginia 23603
Elwood M. Miller 87,812
c/o Blessings Corporation
200 Enterprise Drive
Newport News, Virginia 23603
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STOCKHOLDER SHARES
----------- --------
<S> <C>
Manuel G. Villareal 120,613
c/o Blessings Corporation
200 Enterprise Drive
Newport News, Virginia 23603
Robert E. Weber 12,000
c/o Blessings Corporation
200 Enterprise Drive
Newport News, Virginia 23603
-----------
Total 5,925,072
</TABLE>
2
<PAGE>
EXHIBIT 99(c)(3)
CONFIDENTIALITY AGREEMENT
Bowles Hollowell Conner & Co.
227 West Trade Street, Suite 2400
Charlotte, North Carolina 28202
Ladies and Gentlemen:
You have advised us that you are acting on behalf of Blessings
Corporation (together with its subsidiaries, "Blessings" or the "Company") in
its consideration of a possible sale, and you have agreed to discuss with us the
possible purchase of Blessings. As a condition to such discussions, you have
required that we agree to keep strictly confidential all information conveyed to
us regarding this matter.
This letter will confirm our agreement with you and Blessings to retain
in strict confidence all information (whether oral or written) conveyed to us
by Blessings, its agents, or you regarding the Company ("Confidential
Information"), unless such information (i) is or hereafter becomes publicly
available, (ii) was known to us, without any direct or indirect obligation of
confidentiality, prior to your disclosure, (iii) is or becomes available to
us on a nonconfidential basis from a source other than you, Blessings or its
agents, provided that, to our knowledge, such other source is not bound by a
confidentiality agreement with you or Blessings, or (iv) is independently
developed or created by us without use of Confidential Information. We will
use such Confidential Information only in connection with our consideration
of whether to purchase Blessings and will not otherwise use it in our
business or disclose it to others, except that we shall have the right to
communicate the Confidential Information to such of our directors, officers,
employees, legal, accounting, and financial advisors and potential financing
sources (including, without limitation, potential sources of equity
financing) who need to have knowledge thereof, provided that each such person
is informed that such information is strictly confidential and subject to
this agreement and agrees not to disclose or use such information except as
provided herein. We hereby agree to be jointly and severally responsible for
any breach of this agreement by our officers, directors, advisors and/or
employees or any of our representatives. In the event that we become legally
compelled by deposition, subpoena, or other court or governmental action to
disclose any of the Confidential Information covered by this agreement, we
shall provide Blessings with prompt prior written notice to that effect, and
we will cooperate reasonably with Blessings if it seeks to obtain a
protective order concerning such confidential information.
We agree not to initiate contact, or engage in discussion, with any
employee, customer, or supplier of Blessings without the express prior
consent of you or the Company with regard to this transaction, provided,
however, contact with customers or suppliers for the ordinary course of
business shall not be within the scope of this agreement. Unless we purchase
Blessings, we agree not to solicit for employment any employees of Blessings
whom we learn of or come in contact with in the course of our review of the
Company in connection with the possible purchase of Blessings, without the
written consent of the Company, for a period of two years from the date of
this letter. You and Blessings agree that the foregoing restrictions shall
not apply to (i) any solicitation by us directed
<PAGE>
CONFIDENTIALITY AGREEMENT
Page 2
to the general public, whether or not the individuals responding to such
solicitation were also employees introduced to us in the course of our review
of Blessings and (ii) our employment of Blessings employees not involving an
initial solicitation by us.
Until the earlier of eighteen months from the date of this letter or the
consummation of a sale of Blessings as contemplated by this letter, we will not
(and will insure that our officers, directors, advisors, and employees will not)
without the prior written approval of the Board of Directors of the Company, (i)
acquire or agree to acquire to make any proposal to acquire directly or
indirectly any securities or property of the Company, or (ii) otherwise act
alone or in concert with others to seek to control or influence the management,
Board of Directors, or policies of the Company.
We acknowledge that neither Blessings nor any of its directors, officers,
employees, stockholders, or agents makes any representation or warranty, express
or implied, as to the accuracy or completeness of such information and that
neither Blessings nor any of its directors, officers, employees, stockholders,
or agents shall have any liability to us as a result of our use of such
information.
We agree that unless and until a definitive agreement between the Company
and us with respect to the acquisition of the Company has been executed and
delivered, neither we nor the Company shall have any legal obligation of any
kind whatsoever with respect to the purchase and sale of the Company by virtue
of this agreement or by virtue of any other written or oral expression with
respect to such transaction. The term "definitive agreement" does not include
an executed letter of intent or other preliminary written agreement. Neither
this provision or any other provision of this agreement can be waived or amended
except by written consent of the Company and us, which consent shall
specifically refer to the provision to be waived or amended.
We also agree that without the prior consent of Blessings, we and our
officers, directors, advisors, and employees will not disclose to any other
person that we have received such information, that we are in discussions or
negotiations with you and Blessings as to a possible purchase of Blessings or
that the Stockholders are contemplating a possible sale of Blessings.
We will advise all of our directors, officers, employees and other
representatives who are informed of the matters which are the subject of this
letter that U.S. securities laws prohibit any person who has material, nonpublic
information concerning an issuer of publicly held securities from purchasing or
selling such securities.
We acknowledge that Blessings reserves the right to reject any or all
offers to acquire the Company. We further acknowledge that the Company reserves
the right to discontinue discussions at any time and to conduct the process for
the sale of the Company as in its sole discretion it shall determine (including,
without limitation, negotiating with any prospective purchasers, and entering
into a definitive agreement without prior notice to us or any other person or to
change any procedures relating to such sale without notice to us or any other
person). We shall have no claim against the Company or any of its directors,
officer, representatives, affiliates, or agents arising out
<PAGE>
CONFIDENTIALITY AGREEMENT
Page 3
of or relating to the sale of the Company other than as against them as named
parties to a definitive agreement and only in accordance with the express terms
and conditions thereof.
In the event that we do not purchase Blessings, we agree upon Blessings'
request (i) to return to you all financial and other written Confidential
Information provided to us by Blessings, its agents, or you relating to
Blessings, and (ii) to destroy and certify that we have destroyed any
memoranda, notes, or other writings prepared by us or our representatives
based on such Confidential Information, together with all copies of such
information in our possession or under our control to which we have access.
We agree that neither Blessings nor Bowles Hollowell Conner & Co. shall be
obligated to pay any fees on our behalf to any brokers, finders, or other
parties claiming to represent us in this transaction. Without limiting the
generality of the nondisclosure agreements contained herein above, it is
further understood that we are strictly prohibited by this agreement from
acting as a broker or an agent using any of the confidential information
provided to us.
We acknowledge that unauthorized disclosure of such information would cause
substantial and irreparable damage to the business and competitive position of
the Company, and we agree that the Company shall be entitled to injunctive
relief in the event of any breach or threatened breach of terms of this letter
agreement in addition to such other remedies as may be available at law or
equity. The parties hereto acknowledge that any action or proceeding arising
out of or relating to this letter agreement shall be determined by the United
States District Court for the Eastern District of Virginia and this agreement
shall be interpreted and construed in its entirety in accordance with the laws
of the State of Delaware.
Name: /s/ Richard P. Durham
-----------------------
Richard P. Durham
Title: President and Chief Executive Officer
Company: Huntsman Packaging Corporation
Date: January 22, 1998
<PAGE>
EXHIBIT 99(c)(4)
[HUNTSMAN PACKAGING LETTERHEAD]
March 20, 1998
Board of Directors
Blessings Corporation
Bowles Hollowell Conner & Co.
227 West Trade Street
Charlotte, North Carolina 28202
Ladies and Gentlemen:
Huntsman Packaging Corporation ("Huntsman Packaging") is pleased to
submit the following proposal to acquire all of the outstanding common stock of
Blessings Corporation ("Blessings"). Huntsman Packaging proposes to acquire
Blessings for twenty-one dollars ($21.00) in cash (the "Offer Price") per share
of Common Stock of Blessings (the "Shares") on the terms set forth in our
mark-up of the Agreement and Plan of Merger. Our mark-up of the Agreement and
Plan of Merger is enclosed (as marked up, the "Merger Agreement").
The Merger Agreement contemplates that Huntsman Packaging will
commence a tender offer for the Shares at the Office Price as promptly as
practicable after the execution of the Merger Agreement and will follow the
tender offer with a merger in which holders of Shares other than Huntsman
Packaging will receive the Offer Price in cash.
The tender offer is conditioned upon the tender of a majority of the
Shares on a fully-diluted basis, upon receipt of financing under the commitment
letter that we have obtained from The Chase Manhattan Bank and Chase Securities
Inc. (collectively, "Chase") (the "Commitment Letters") and upon other customary
conditions as set forth in Annex I to the Merger Agreement. The Commitment
Letters provide us with a fully underwritten commitment pursuant to which Chase
has agreed to provide all financing necessary to consummate the proposed tender
offer and merger. A copy of the Commitment letters is enclosed, and Chase is
available to discuss the terms and nature of their fully underwritten
commitment.
Our proposal also requires that the Williamson Dickie Manufacturing
Company and each officer or director owning in excess of 10,000 Shares enter
into a stock option agreement pursuant to which such stockholders grant
Huntsman Packaging an option to purchase their Shares, agree to tender the
Shares held by them in the tender offer and agree to vote in favor of the
merger and against any competing transaction. A draft of the stock option
agreement is enclosed.
<PAGE>
Prior to executing the Merger Agreement, we also need to have a
satisfactory meeting with Kimberly-Clark and to complete our due diligence
review of Blessings. As you are aware, we have not been allowed to conduct our
environmental due diligence. We need to be allowed to conduct such due
diligence and be satisfied with the results. In addition we need to complete
our review of employee benefit matters and be granted access to your Washington,
Georgia facility. Finally we need to review Blessing audited financial
statements for the year ended December 31, 1997, and related filings to be made
with the Securities and Exchange Commission, and financial statements and tax
returns for your Mexican operations.
Our proposal shall remain in effect until 5:00 p.m. Eastern Standard
Time on Friday March 27, 1998. Our Board of Directors has approved this
proposal, and we hope to be able to complete the acquisition of Blessings on the
terms set forth herein.
This proposal is being made with the understanding that, except as
required by law, neither Blessings nor its officers, advisors or other
representatives will disclose the existence of this proposal or any of its terms
without the prior consent of Huntsman Packaging. Further, Huntsman Packaging
shall be under no legal obligation with respect to the proposed transaction
until a definitive Merger Agreement and related documents have been executed and
delivered. Please contact the undersigned at 801-584-5916 with any questions
concerning our proposal. Questions on the Commitment Letter should be directed
to Ruth Dreessen at Chase (713-216-8853). Legal questions should be directed to
Ronald G. Moffitt (801-584-5947) and John MacCarthy at Winston & Strawn
(312-558-5876).
We look forward to your prompt response to our proposal.
Sincerely,
/s/ Richard P. Durham
-------------------------------
Richard P. Durham
<PAGE>
EXHIBIT 99(c)(5)
[HUNTSMAN PACKAGING LETTERHEAD]
March 29, 1998
Board of Directors
Blessings Corporation
Bowles Hollowell Conner & Co.
227 West Trade Street
Charlotte, North Carolina 28202
Ladies and Gentlemen:
In connection with the proposal (the "Original Proposal") by Huntsman
Packaging Corporation ("Huntsman Packaging") to acquire all of the outstanding
stock of Blessings Corporation ("Blessings"), pursuant to the terms and
conditions set forth in that certain letter dated March 20, 1998 from Huntsman
Packaging to you (the "Original Letter"), Huntsman Packaging does hereby agree
that the Original Proposal shall remain in effect until 11:59 p.m., Eastern
Daylight Time, April 5, 1998 (the "Expiration Time"), subject to the following
conditions:
(i) the Original Proposal, as extended hereby, is subject to the terms
and conditions set forth in the Original Letter;
(ii) prior the Expiration Time, neither Blessings nor any of its
subsidiaries nor any of the officers, directors, employees, agents or
representatives of Blessings or its subsidiaries shall, directly or indirectly,
(A) 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, purchase of
equity securities or a substantial portion of its assets or similar transaction
(collectively, "Acquisition Transactions") involving Blessings or any of its
subsidiaries or (B) have any discussions or negotiations with, or provide any
non-public information to, any person or entity relating to an Acquisition
Transaction, other than with Huntsman Packaging or its officers, directors,
employees, agents or representatives; and
(iii) Blessings and its subsidiaries and the officers, directors,
employees, agents and representatives thereof will immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
person or entity (other than Huntsman Packaging) relating to an Acquisition
Transaction.
Our proposal contained in this letter shall remain in effect until
12:00 noon Mountain Standard Time Monday, March 30.
<PAGE>
Board of Directors
Blessings Corporation
March 29, 1998
Page 2
IN WITNESS WHEREOF, this letter is executed and delivered as of the
date first set forth above.
HUNTSMAN PACKAGING CORPORATION
By: /s/ Ronald G. Moffitt
---------------------------
Name: Ronald G. Moffitt
Title: Senior Vice President and General Counsel
Acknowledged, Accepted and Agreed to
this 30th day of March, 1998
BLESSINGS CORPORATION
By: /s/ Elwood M. Miller
---------------------------
Name: Elwood M. Miller
Title: President and Chief Executive Officer
<PAGE>
EXHIBIT 99(c)(6)
[HUNTSMAN PACKAGING LETTERHEAD]
April 5, 1998
Board of Directors
Blessings Corporation
Bowles Hollowell Conner & Co.
227 West Trade Street
Charlotte, North Carolina 28202
Ladies and Gentlemen:
Reference is made to that certain letter dated March 29, 1998 (the
"First Extension Letter"), extending the Original Proposal by Huntsman Packaging
Corporation ("Huntsman Packaging") to acquire all of the outstanding stock of
Blessings Corporation ("Blessings"), pursuant to the terms and conditions set
forth in that certain letter dated March 20, 1998 from Huntsman Packaging to you
(the "Original Letter"). As a result of the progress we have made toward the
execution of a definitive merger agreement and associated documents, Huntsman
Packaging does hereby agree that the Original Proposal shall remain in effect
until 11:59 p.m., Eastern Daylight Time, April 11, 1998 (the "Expiration Date").
Such extension is subject to each of the conditions set forth in the First
Extension Letter.
Our proposal contained in this letter shall remain in effect until
10:00 a.m. Mountain Daylight Time Monday, April 6, 1998.
IN WITNESS WHEREOF, this letter is executed and delivered as of the
date first set forth above.
HUNTSMAN PACKAGING CORPORATION
By: /s/ Ronald G. Moffitt
---------------------------
Name: Ronald G. Moffitt
Title: Senior Vice President and General Counsel
Acknowledged, Accepted and Agreed to
this 6th day of April, 1998.
BLESSINGS CORPORATION
By: /s/ John W. McMackin
---------------------------
Name: John W. McMackin
Title: Chairman of the Board
