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EXHIBIT 99.(A)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Benjamin Moore & Co.
at
$37.82 Net Per Share
by
B Acquisition, Inc.
a Wholly Owned Subsidiary of
Berkshire Hathaway Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, DECEMBER 15, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF NOVEMBER 8, 2000 (THE "MERGER AGREEMENT"), BY AND AMONG BERKSHIRE
HATHAWAY INC., B ACQUISITION, INC., A WHOLLY OWNED SUBSIDIARY OF BERKSHIRE
HATHAWAY, AND BENJAMIN MOORE & CO. (THE "COMPANY"). THE BOARD OF DIRECTORS OF
THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER
DESCRIBED HEREIN, ARE FAIR TO AND IN THE BEST INTERESTS OF THE SHAREHOLDERS OF
THE COMPANY, HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, AND HAS UNANIMOUSLY RECOMMENDED THAT
SHAREHOLDERS ACCEPT THE OFFER, APPROVE THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY AND TENDER THEIR SHARES PURSUANT TO
THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED, AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN),
THAT NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $3.33 1/3 PER SHARE, OF THE
COMPANY WHICH (TOGETHER WITH ANY SHARES OWNED BY BERKSHIRE HATHAWAY,
B ACQUISITION, INC. OR THEIR AFFILIATES) CONSTITUTES TWO-THIRDS OF THE SHARES
OF COMMON STOCK OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE
ACCEPTED FOR PAYMENT (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO
OTHER TERMS AND CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. THE OFFER IS
NOT SUBJECT TO A FINANCING CONDITION.
ALL SHAREHOLDERS OF RECORD ON NOVEMBER 20, 2000, WHO ARE ENTITLED TO RECEIVE
THE EXTRA FOURTH QUARTER CASH DIVIDEND OF $.120 PER SHARE DECLARED BY THE
COMPANY ON NOVEMBER 8, 2000, AND PAYABLE ON DECEMBER 4, 2000, WILL RECEIVE
SUCH DIVIDEND REGARDLESS OF WHETHER THEY TENDER THEIR SHARES IN THE OFFER.
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IMPORTANT
Any shareholder desiring to tender all or any portion of his shares of
Common Stock (the "Shares") 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 Letter of Transmittal or such
facsimile with such shareholder's certificate(s) for the tendered Shares and
any other required documents to the Depositary, (2) follow the procedure for
book-entry transfer of Shares set forth in Section 3 of this Offer to
Purchase, or (3) request such shareholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such shareholder.
Shareholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee are urged to contact such
broker, dealer, commercial bank, trust company or other nominee if they desire
to tender such Shares.
A shareholder who desires to tender Shares and whose certificates for such
Shares are not immediately available, or who cannot comply with the procedure
for book-entry transfer on a timely basis, may tender such Shares by following
the procedures for guaranteed delivery set forth in Section 3 of this Offer to
Purchase.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase
and the Letter of Transmittal may be directed to the Information Agent or to
brokers, dealers, commercial banks or trust companies.
----------------
November 17, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
SUMMARY TERM SHEET....................................................... 4
INTRODUCTION............................................................. 8
THE TENDER OFFER......................................................... 11
1. Terms of the Offer.................................................. 11
2. Acceptance for Payment and Payment for Shares....................... 12
3. Procedure for Tendering Shares...................................... 13
4. Withdrawal Rights................................................... 16
5. Certain Federal Income Tax Consequences of the Offer and the
Merger.............................................................. 16
6. Price Range of Shares; Dividends.................................... 17
7. Effect of the Offer on Market for the Shares, Stock Quotation, and
Exchange Act Registration........................................... 18
8. Certain Information Concerning the Company.......................... 18
9. Certain Information Concerning Purchaser and Parent................. 19
10. Source and Amount of Funds.......................................... 20
11. Background of the Offer; Contacts with the Company; the Merger
Agreement and Shareholders Agreement................................ 20
12. Purpose of the Offer and the Merger; Plans for the Company After the
Offer and the Merger; Shareholder Approval and Appraisal Rights..... 33
13. Dividends and Distributions......................................... 34
14. Conditions of the Offer............................................. 35
15. Certain Legal Matters and Regulatory Approvals...................... 36
16. Fees and Expenses................................................... 38
17. Miscellaneous....................................................... 39
</TABLE>
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SUMMARY TERM SHEET
B Acquisition, Inc. is offering to purchase all of the outstanding common
stock of Benjamin Moore & Co. for $37.82 per share in cash. The following are
some of the questions you, as a shareholder of Benjamin Moore & Co., might
have and answers to those questions. We urge you to read carefully the
remainder of this Offer to Purchase and the Letter of Transmittal because the
information in this summary term sheet is not complete. Additional important
information is contained in the remainder of this Offer to Purchase and the
Letter of Transmittal.
Who is offering to buy my securities?
Our name is B Acquisition, Inc. We are a New Jersey corporation formed for
the purpose of making a tender offer for all of the common stock of Benjamin
Moore & Co. and have carried on no activities other than in connection with
the merger agreement among us, Berkshire Hathaway Inc. and Benjamin Moore &
Co. We are a wholly owned subsidiary of Berkshire Hathaway Inc., a Delaware
corporation. Berkshire Hathaway Inc. is a holding company engaged through
subsidiaries in a number of diverse businesses, the most important of which is
property and casualty insurance and reinsurance offered on both a direct and
reinsurance basis through insurance subsidiaries. See the "Introduction" to
this Offer to Purchase and Section 9 "Certain Information Concerning Purchaser
and Parent."
What are the classes and amounts of securities sought in the offer?
We are seeking to purchase all of the outstanding shares of common stock of
Benjamin Moore & Co. See the "Introduction" to this Offer to Purchase and
Section 1 "Terms of the Offer."
How much are you offering to pay? What is the form of payment? Will I have to
pay any fees or commissions?
We are offering to pay you $37.82 per share, in cash, subject to federal
income tax withholding requirements. If you are the record owner of your
shares and you tender your shares to us in the offer, you will not have to pay
brokerage fees or similar expenses. If you own your shares through a broker or
other nominee, and your broker or nominee tenders your shares on your behalf,
your broker or nominee may charge you a fee for doing so. You should consult
your broker or nominee to determine whether any charges will apply. See the
"Introduction" to this Offer to Purchase and Section 3 "Procedure for
Tendering Shares."
Do you have the financial resources to make payment?
Yes. Berkshire Hathaway Inc., our parent company, has available cash
resources that are many times larger than needed to complete the offer and the
merger. Berkshire will provide us with sufficient funds to purchase all shares
validly tendered and not withdrawn in the offer and to provide funding for the
merger, which is expected to follow the successful completion of the offer in
accordance with the terms and conditions of the merger agreement. The offer is
not conditioned on any financing arrangements. See Section 10 "Source and
Amount of Funds."
Is your financial condition relevant to my decision to tender in the offer?
We do not think our financial condition is relevant to your decision whether
to tender in the offer because the form of payment consists solely of cash,
which we have available, because the offer is not subject to any financing
condition, and because the offer is for all outstanding shares. See Section 10
"Source and Amount of Funds."
How long do I have to decide whether to tender in the offer?
You will have until 12:00 midnight, New York City time, on Friday, December
15, 2000, to tender your shares in the offer, unless we decide to extend the
offer or provide for a subsequent offering period. If you cannot
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deliver everything that is required in order to make a valid tender by that
time, you may be able to use a guaranteed delivery procedure, which is
described later in this Offer to Purchase. See Section 1 "Terms of the Offer"
and Section 3 "Procedures for Tendering Shares."
Can the offer be extended and under what circumstances?
Subject to the terms of the merger agreement, we can extend the offer. We
have agreed in the merger agreement that:
. We may extend the offer for up to an additional 30 business days if any
condition to the offer is not met.
. We may also extend the offer for up to 5 business days if, on the
expiration date of the offer, at least 75% but not more than 90% of the
common stock has been tendered. In order to extend the offer in this way,
we must first waive the satisfaction of any conditions to the offer.
For more details on our ability to extend the offer, see Section 1 "Terms of
the Offer."
How will I be notified if the offer is extended?
If we extend the offer, we will inform EquiServe Trust Company, N.A. (the
depositary for the offer) of that fact and will make a public announcement of
the extension not later than 9:00 a.m., New York City time, on the next
business day after the day on which the offer was previously scheduled to
expire.
Will there be a subsequent offering period?
Following satisfaction of all the conditions to the offer and the acceptance
of and payment for all the shares tendered during the offering period, we may
elect to provide a subsequent offering period. This would allow us to accept
additional shares that were not tendered prior to the expiration date. During
a subsequent offering period, you will not be able to withdraw any of the
shares that you have already tendered (because such shares will have already
been accepted for payment by us), nor any of the shares that you tender during
such subsequent offering period. If we elect to provide a subsequent offering
period, we will announce it in a manner reasonably calculated to inform you
sufficiently in advance of the day on which the offer was previously scheduled
to expire. See Section 1 "Terms of the Offer."
What are the most significant conditions to the offer?
We are not obligated to purchase any shares that are validly tendered:
. unless the number of shares validly tendered and not withdrawn before the
expiration date of the offer represents at least two-thirds of the then
outstanding shares on a fully diluted basis. We call this condition the
"Minimum Condition."
. if, among other things, the applicable waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
Canadian Competition Act have not expired or been terminated.
The offer is also subject to other conditions. We can waive all of the
conditions to the offer in our sole discretion, other than the Minimum
Condition. See Section 1 "Terms of the Offer" and Section 14 "Conditions of
the Offer."
How do I tender my shares?
To tender shares, you must deliver the certificates representing your
shares, together with a completed letter of transmittal and any other
documents required by the letter of transmittal, to EquiServe Trust Company,
N.A., the depositary for the offer, not later than the time the tender offer
expires. If your shares are held in street name (i.e., through a broker,
dealer or other nominee), the shares can be tendered by your nominee through
The
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Depository Trust Company. If you are unable to deliver any required document
or instrument to the depositary by the expiration of the tender offer, you may
gain some extra time by having a broker, a bank or other fiduciary that is an
eligible institution guarantee that the missing items will be received by the
depositary within three New York Stock Exchange and Nasdaq Stock Market
trading days. For the tender to be valid, however, they must receive the
missing items within that three trading day period. See Section 3 "Procedures
for Tendering Shares."
Until what time may I withdraw previously tendered shares?
You may withdraw shares at any time until the offer has expired, and if we
have not accepted your shares for payment by January 15, 2001, you may
withdraw them at any time after that date until we accept your shares for
payment. If we choose to provide for a subsequent offering period, you will
not have withdrawal rights during the subsequent offering period. See Section
1 "Terms of the Offer" and Section 4 "Withdrawal Rights."
How do I withdraw previously tendered shares?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. See Section 4 "Withdrawal
Rights."
What does the board of directors of Benjamin Moore & Co. think of the offer?
We are making the offer pursuant to the merger agreement among us, Berkshire
Hathaway Inc. and Benjamin Moore & Co. The board of directors of Benjamin
Moore & Co. has unanimously determined that the merger agreement and the
transactions contemplated thereby, including the offer and the merger, are
fair to and in the best interests of the shareholders of Benjamin Moore & Co.
The board of directors has also unanimously approved the merger agreement and
the transactions contemplated thereby and recommended that the shareholders of
Benjamin Moore & Co. accept the offer, approve the merger agreement and the
transactions contemplated thereby and tender their shares pursuant to the
offer. See the "Introduction" to this Offer to Purchase.
Have any shareholders agreed to tender their shares?
Yes. All of the directors of Benjamin Moore & Co., as well as many of the
trusts for which they serve as trustees, have agreed to tender all of their
shares of Benjamin Moore & Co. common stock, representing approximately 17.8%
of the outstanding common stock of Benjamin Moore & Co. on a fully diluted
basis. These directors and trusts have also agreed to vote in favor of the
merger and against any competing acquisition proposal. See the "Introduction"
to this Offer to Purchase.
If two-thirds of the shares are tendered and accepted for payment, will
Benjamin Moore & Co. continue as a public company?
No. Following the purchase of shares in the offer, we expect to consummate
the merger. If the merger takes place, Benjamin Moore & Co. no longer will be
publicly owned. Even if for some reason the merger does not take place, if we
purchase all of the tendered shares, there may be so few remaining
shareholders and publicly held shares that brokers and dealers may stop making
markets in Benjamin Moore & Co. common stock, and as a result, Benjamin Moore
& Co. common stock could become ineligible for continued quotation on the Over
The Counter Bulletin Board. In addition, you should be aware that there may
not be a public trading market of any kind for Benjamin Moore & Co. common
stock, and Benjamin Moore & Co. may cease making filings with the Securities
and Exchange Commission or otherwise cease being required to comply with the
SEC rules relating to publicly held companies. See Section 7 "Effect of Offer
on Market for the Shares, Stock Quotation, and Exchange Act Registration."
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Will the tender offer be followed by a merger if all shares of Benjamin Moore
& Co. are not tendered in the offer?
If we accept for payment and pay for at least two-thirds of the shares of
Benjamin Moore & Co. on a fully diluted basis, we will be merged with and into
Benjamin Moore & Co. If that merger takes place, Berkshire Hathaway Inc. will
own all of the shares of Benjamin Moore & Co., and all other persons who were
shareholders of Benjamin Moore & Co. immediately prior to the merger will
receive $37.82 per share in cash (or any higher price per share that is paid
in the offer). See the "Introduction" to this Offer to Purchase.
If I decide not to tender, how will the offer affect my shares?
If the merger described above takes place, shareholders not tendering in the
offer will receive the same amount of cash per share that they would have
received had they tendered their shares in the offer. Therefore, if the merger
takes place, the only difference to you between tendering your shares and not
tendering your shares is that you will be paid earlier if you tender your
shares. If the merger does not take place, however, the number of shareholders
and the number of shares of Benjamin Moore & Co. that are still in the hands
of the public may be so small that there may no longer be an active public
trading market (or, possibly, there may not be any public trading market) for
the Benjamin Moore & Co. common stock. Also, as described above, Benjamin
Moore & Co. may cease making filings with the Securities and Exchange
Commission or otherwise cease being required to comply with the SEC rules
relating to publicly held companies. See the "Introduction" to this Offer to
Purchase and Section 7 "Effect of Offer on Market for Shares, Stock Quotation,
and Exchange Act Registration."
There are no appraisal or dissenters' rights in connection with the offer or
the merger. Because the shareholders of Benjamin Moore & Co. will receive cash
for their shares, they are not entitled to any appraisal or dissenter's rights
under New Jersey law. See Section 12, "Purpose of the Offer and the Merger;
Plans for the Company; Shareholder Approval and Appraisal Rights."
What is the market value of my shares as of a recent date?
On November 8, 2000, the last trading day before we announced the signing of
the merger agreement, the last sale price of Benjamin Moore & Co. common stock
displayed on the OTC Bulletin Board was $25.00 per share. On November 9, 2000,
the day after we announced the offer, the last sale price of Benjamin Moore &
Co. common stock displayed on the OTC Bulletin Board was $37.63 per share. We
encourage you to obtain a recent quotation for shares of Benjamin Moore & Co.
common stock in deciding whether to tender your shares. See Section 6 "Price
Range of Shares; Dividends."
What are certain United States federal income tax consequences of tendering
shares?
The receipt of cash for shares pursuant to the tender offer or the merger
will be a taxable transaction for United States federal income tax purposes
and possibly for state, local and foreign income tax purposes as well. In
general, a shareholder who sells shares pursuant to the tender offer or
receives cash in exchange for shares pursuant to the merger will recognize
gain or loss for United States federal income tax purposes equal to the
difference, if any, between the amount of cash received and the shareholder's
adjusted tax basis in the shares sold pursuant to the tender offer or
exchanged for cash pursuant to the merger. See Section 5 "Certain Federal
Income Tax Consequences of the Offer and the Merger."
To whom may I speak if I have questions about the tender offer?
You may call the information agent for the offer, Georgeson Shareholder
Communications Inc., at (800) 223-2064 (toll free). See the back cover of this
Offer to Purchase.
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To the Holders of Common Stock of
BENJAMIN MOORE & CO.:
INTRODUCTION
B Acquisition, Inc., a New Jersey corporation (the "Purchaser") and wholly
owned subsidiary of Berkshire Hathaway Inc., a Delaware corporation
("Parent"), hereby offers to purchase all of the outstanding shares (the
"Shares") of Common Stock, par value $3.33 1/3 per share (the "Common Stock"),
of Benjamin Moore & Co., a New Jersey corporation (the "Company"), at a price
of $37.82 per Share, without interest thereon, net to the seller in cash (the
"Offer Price"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which together, as
amended and supplemented from time to time, constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of November 8, 2000, among the Company, Parent
and Purchaser. The Merger Agreement provides that, among other things, as soon
as practicable after the purchase of Shares pursuant to the Offer and the
satisfaction or, if permissible, waiver of the conditions set forth in the
Merger Agreement, including the purchase of Shares pursuant to the Offer
(sometimes referred to herein as the "consummation" of the Offer) and the
approval of the Merger Agreement by the shareholders (if required by
applicable law) in accordance with the relevant provisions of the New Jersey
Business Corporation Act (the "New Jersey Act"), Purchaser will be merged with
and into the Company. Following consummation of the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation") and will
be a direct wholly owned subsidiary of Parent. The purpose of the Offer and
the Merger is to facilitate the acquisition of all of the Shares for cash and
thereby enable Parent to own 100% of the Shares. At the effective time of the
Merger (the "Effective Time"), each Share issued and outstanding immediately
prior to the Effective Time held by the shareholders will be canceled and
converted automatically into the right to receive $37.82 in cash, or, in the
event any higher price is paid in the Offer, such higher price (the "Merger
Consideration"), without interest. The Merger Agreement is more fully
described in "Section 11--Background of the Offer; Contacts with the Company;
the Merger Agreement and Shareholders Agreement."
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER (COLLECTIVELY THE "TRANSACTIONS"), ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS, HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, AND HAS
UNANIMOUSLY RECOMMENDED THAT THE SHAREHOLDERS ACCEPT THE OFFER AND APPROVE THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
BECAUSE SHAREHOLDERS WILL RECEIVE CASH FOR THEIR SHARES, UNDER THE NEW
JERSEY ACT, SHAREHOLDERS ARE NOT ENTITLED TO APPRAISAL OR DISSENTERS' RIGHTS
IN CONNECTION WITH THE OFFER OR THE MERGER. SEE "SECTION 12--PURPOSE OF THE
OFFER AND THE MERGER; PLANS FOR THE COMPANY; SHAREHOLDER APPROVAL AND
APPRAISAL RIGHTS."
The Company has advised Parent that J.P. Morgan Securities Inc. has
delivered to the Company its written opinion, dated November 8, 2000, that as
of that date, the consideration proposed to be paid to the shareholders
pursuant to the Offer and the Merger was fair to such holders from a financial
point of view. The full text of the written opinion of J.P. Morgan is
contained in the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9") filed with the Securities and Exchange Commission
(the "SEC") in connection with the Offer, a copy of which is being furnished
to the shareholders concurrently with this Offer to Purchase.
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Simultaneously with entering into the Merger Agreement, Parent and Purchaser
also entered into a Shareholders Agreement with all of the Company's directors
and with many of the trusts for which they serve as trustees, dated as of
November 8, 2000 (the "Shareholders Agreement"), pursuant to which the
directors and such trusts (a) agreed to tender all Shares owned by them (which
equal approximately 17.8% of the outstanding Shares on a fully diluted basis)
in the Offer, (b) granted Parent and Purchaser an option, exercisable under
certain limited circumstances, to purchase all Shares owned by them at the
price per share paid in the Offer, and (c) agreed to vote all of their Shares
in favor of the Merger Agreement and the Merger and against any Acquisition
Proposal or Superior Proposal (as those terms are defined below). See "Section
11--Background of the Offer; Contacts with the Company; the Merger Agreement
and Shareholders Agreement."
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED, AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN),
THAT NUMBER OF SHARES OF COMMON STOCK WHICH (TOGETHER WITH ANY SHARES OWNED BY
PARENT, PURCHASER OR THEIR AFFILIATES) CONSTITUTES TWO-THIRDS OF THE SHARES OF
COMMON STOCK OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE
ACCEPTED FOR PAYMENT (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO
OTHER TERMS AND CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE, AS DESCRIBED
IN "SECTION 14--CONDITIONS OF THE OFFER."
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including (if required by the New Jersey Act) the approval
of the Merger Agreement by the shareholders. Because the Company was
incorporated prior to 1969, and because the Company's Restated Certificate of
Incorporation does not provide for a lower voting requirement, such
shareholder approval (if required by the New Jersey Act) would require the
affirmative vote of two-thirds of the votes cast by the holders of Shares
entitled to vote thereon. If the Minimum Condition is satisfied and as a
result of the purchase of Shares by Purchaser pursuant to the Offer, Purchaser
and its affiliates own at least two-thirds of the then outstanding Shares,
Purchaser will be able to effect the Merger without the affirmative vote of
any other shareholder.
If Purchaser acquires, pursuant to the Offer, at least 90% of the then
outstanding Shares, under the New Jersey Act, Purchaser's board of directors
will be able to adopt a plan of merger to effect the Merger without a vote of
shareholders, pursuant to Section 14A:10-5.1 of the New Jersey Act (a "Short-
Form Merger"). If Purchaser does not acquire at least 90% of the then issued
and outstanding Shares pursuant to the Offer, a vote of the shareholders will
be required under the New Jersey Act to effect the Merger, and a significantly
longer period of time will be required to effect the Merger. Parent, Purchaser
and the Company have agreed to take all necessary and appropriate action to
cause the Merger to become effective as promptly as practicable after the
consummation of the Offer.
Purchaser may, without the consent of the Company, (a) extend the Offer for
up to an additional 30 business days if any condition to the Offer is not
satisfied or waived and (b) if, on the expiration date of the Offer, the
Shares validly tendered and not withdrawn pursuant to the Offer equal at least
75% of the outstanding Shares but less than 90% of the outstanding Shares on a
fully diluted basis, extend the Offer on one occasion for up to 5 business
days, notwithstanding that all the conditions to the Offer have been satisfied
so long as Purchaser irrevocably waives the satisfaction of any of the
conditions to the Offer (other than the Minimum Condition and the first
condition set forth in "Section 14--Conditions of the Offer," which pertains
to any laws, judgments or other legal impediments that would prohibit the
consummation of the Offer) that subsequently may not be satisfied during any
such extension of the Offer. If the only unsatisfied condition on the
expiration date of the Offer is the failure of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), to have expired or been terminated, then Purchaser must extend the
Offer until 5 business days after such expiration or termination of the
waiting period. In addition, the Offer may be extended to the extent required
by the SEC without the consent of the Company and may be extended otherwise in
accordance with the Merger Agreement.
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Pursuant to the rules of the Securities and Exchange Commission, Purchaser
may, subject to certain conditions, include a subsequent offering period
following expiration of the Offer. One of these conditions is that Purchaser
must accept and promptly pay for all Shares tendered during the initial
offering period. In addition, Purchaser must immediately accept and promptly
pay for all Shares as they are tendered during the subsequent offering period.
If one is included, a subsequent offering period is not an extension of the
Offer. It is an additional period of time in which shareholders may tender
Shares not tendered during the Offer. During a subsequent offering period,
shareholders will not be able to withdraw any of the Shares that they have
already tendered, nor any of the Shares that they tender during the subsequent
offering period. Purchaser does not currently intend to include a subsequent
offering period, although it reserves the right to do so in its sole
discretion.
According to the Company, as of November 8, 2000, there were 26,469,381
Shares and 1,288,906 options for Shares issued and outstanding, held by
approximately 1,732 holders of record. Based thereon, the Minimum Condition
will be satisfied if at least 18,505,525 Shares are tendered in the Offer and
not withdrawn prior to the close of the Offer, or at least 13,562,342 Shares
in addition to the Shares tendered pursuant to the Shareholders Agreement.
Based on such number of issued and outstanding Shares and options for Shares,
and assuming all such options are exercised, Purchaser would be able to effect
a Short-Form Merger if 24,982,459 Shares (including Shares tendered pursuant
to the Shareholders Agreement) are validly tendered in the Offer and not
withdrawn prior to the close of the Offer.
Shareholders who tender Shares directly to the Depositary (as defined below)
will not be obligated to pay brokerage fees or commissions or, subject to
Instruction 6 of the Letter of Transmittal, stock transfer taxes, if any, with
respect to the purchase of Shares by Purchaser pursuant to the Offer.
Shareholders who hold their Shares through a broker, bank or nominee should
consult such institution as to whether it charges any service fees. Any
tendering shareholder or other payee who fails to complete and sign the
Substitute Form W-9 included in the Letter of Transmittal may be subject to
required backup federal income tax withholding of 31% of the gross proceeds
payable to such shareholder or other payee pursuant to the Offer. Purchaser
will pay all charges and expenses of EquiServe Trust Company, N.A., as
Depositary (the "Depositary") and Georgeson Shareholder Communications Inc.,
as Information Agent (the "Information Agent"), in connection with the Offer.
See "Section 16--Fees and Expenses."
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 TENDER OFFER
1. Terms of the Offer. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), Purchaser will accept for payment,
and pay for, all Shares validly tendered on or prior to the Expiration Date
(as herein defined) and not withdrawn as permitted by Section 4 hereof. The
term "Expiration Date" means 12:00 midnight, New York City time, on Friday,
December 15, 2000, unless and until Purchaser, in accordance with the terms of
the Merger Agreement, extends the period for which the Offer is open, in which
event the term "Expiration Date" will mean the latest time and date on which
the Offer, as so extended, expires.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Merger Agreement), at any time and from
time to time, to extend for any reason the period of time during which the
Offer is open and to delay acceptance for payment of, and payment for, any
Shares, including as a result of the occurrence of any of the events specified
in Section 14 hereof, by giving oral or written notice of such extension to
the Depositary and by making a public announcement thereof, as described
below. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer, subject to the right of a
tendering shareholder to withdraw his Shares. See "Section 4--Withdrawal
Rights."
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment, or subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), pay for, and may delay the
acceptance for payment of or, subject to the restriction referred to above,
the payment for, any Shares tendered pursuant to the Offer, and may extend,
terminate or amend the Offer, if (i) immediately prior to the expiration of
the Offer, the Minimum Condition shall not have been satisfied, (ii) any
applicable waiting period under the HSR Act or the Canadian Competition Act
(as herein defined) shall not have expired or been terminated prior to the
expiration of the offer, or (iii) at any time prior to the expiration of the
Offer any of the conditions referred to in Section 14 shall exist. Purchaser's
exercise of its judgment as to the waiver of any material condition is subject
to the rules and regulations of the SEC, which may require that the Offer
remain open for 5 business days if Purchaser exercises its judgment so as to
waive a material condition of the Offer.
The Merger Agreement provides that Purchaser shall not (i) waive the Minimum
Condition (except under circumstances whereby the "Option," as defined in the
Shareholders Agreement, is or, upon expiration of the Offer, will be,
exercisable in accordance with its terms, provided that such Option is
exercised by Parent or Purchaser as soon as practicable after it becomes so
exercisable and, upon such exercise, the Minimum Condition will be satisfied),
(ii) decrease the price per Share payable pursuant to the Offer or the maximum
number of Shares sought, (iii) impose conditions to the Offer in addition to
those set forth in Annex A to the Merger Agreement, (iv) extend the Offer,
except as otherwise provided in the Merger Agreement, (v) change the form of
consideration payable in the Offer, or (vi) make any other changes in the
terms and conditions of the Offer that would be adverse to the Company or the
shareholders.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, extend the Offer for up to an additional 30 business days if any
condition to the Offer is not satisfied or waived. Purchaser may also, without
the consent of the Company, extend the Offer for any period required by any
rule, regulation or interpretation of the SEC or its staff. If, on the
expiration date of the Offer, the Shares validly tendered and not withdrawn
pursuant to the Offer equal at least 75% of the outstanding Shares but less
than 90% of the outstanding Shares on a fully diluted basis, Purchaser may,
without the consent of the Company, extend the Offer on one occasion for up to
5 business days notwithstanding that all the conditions to the Offer have been
satisfied so long as Purchaser irrevocably waives the satisfaction of any of
the conditions to the Offer (other than the Minimum Condition and the first
condition contained in Section 14 of this Offer to Purchase, which pertains to
laws, judgments and other legal impediments to the Offer or the Merger) that
subsequently may not be satisfied during any such extension of the Offer. In
lieu of or in addition to an extension of the Offer, Rule 14d-11 under the
Exchange Act allows for a subsequent offering period, under certain
conditions. Purchaser does not currently intend to include a subsequent
offering period in the Offer, although it reserves the right to do so in its
sole
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discretion. In addition, the Offer Price may be increased and the Offer may be
extended to the extent required by law or the SEC in connection with such
increase in each case without the consent of the Company.
Any such extension, delay, termination, waiver or amendment of the Offer
will be followed as promptly as practicable by public announcement thereof,
such announcement, in the case of an extension to be issued no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. An election by Purchaser to provide a subsequent
offering period will be announced publicly in a manner reasonably calculated
to inform shareholders sufficiently in advance of the Expiration Date. Subject
to applicable law (including Rules 14d-4(d), 14d-6(b), 14d-6(c) and 14e-1
under the Exchange Act, which require that material changes be promptly
disseminated to shareholders in a manner reasonably designed to inform them of
such change) and without limiting the manner in which Purchaser may choose to
make any public announcement, Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcements other than by
issuing a press release or other announcement.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by
Rules 14d-4(d), 14d-6(b), 14d-6(c) and 14e-1 under the Exchange Act. Subject
to the terms of the Merger Agreement, if, prior to the Expiration Date,
Purchaser should increase the consideration being offered in the Offer, such
increase in the consideration being offered will be applicable to all
shareholders whose Shares are accepted for payment pursuant to the Offer and,
if at the time notice of any increase in the consideration being offered is
first published, sent or given to holders of such Shares, the Offer is
scheduled to expire at any time earlier than the period ending on the tenth
business day from and including the date that such notice is first so
published, sent or given, the Offer will be extended at least until the
expiration of such ten business-day period. For purposes of the Offer, a
"business day" means any day other than Saturday, Sunday or a federal holiday,
and shall consist of the time period from 12:01 a.m. through 12:00 midnight
New York City time.
The Company has provided Purchaser with mailing labels containing the names
and addresses of all record holders of Shares and with security position
listings of Shares held in stock depositories, together with all other
available listings and computer files containing names, addresses and security
position listings of record holders and beneficial owners of Shares. Using
these labels and lists, this Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares, will be furnished, for
subsequent transmittal to beneficial owners of Shares, to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on these lists, and may be mailed directly to
beneficial owners.
2. Acceptance for Payment and Payment for Shares. Upon the terms and subject
to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment),
Purchaser will accept for payment, and will pay for, all Shares validly
tendered prior to the Expiration Date and not properly withdrawn, promptly
after the later to occur of (1) the Expiration Date and (2) the satisfaction
or waiver of the conditions set forth in "Section 14--Conditions to the
Offer." Subject to applicable rules of the SEC, Purchaser expressly reserves
the right to delay acceptance for payment of, or payment for, Shares in order
to comply, in whole or in part, with any applicable law (any such delay shall
be effected in compliance with Rule 14e-1(c) under the Exchange Act, which
requires Purchaser to pay the consideration offered or to return Shares
deposited by or on behalf of shareholders promptly after the termination or
withdrawal of 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 (a)
the certificates representing tendered Shares (the "Certificates") or timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to Section 3, (b) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, or
an Agent's Message (as defined in Section 3) in connection with a book-entry
transfer, and (c) any other documents required by the Letter of Transmittal.
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<PAGE>
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn if,
as and when Purchaser gives oral or written notice to the Depositary of
Purchaser's acceptance for payment of such Shares pursuant to the Offer.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for the tendering shareholders for the purposes of receiving payments
from Purchaser and transmitting such payments to the tendering shareholders
whose Shares have been accepted for payment. Under no circumstances will
interest be paid on the purchase price to be paid by Purchaser for the
tendered Shares, regardless of any delay in making such payment.
If any tendering Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer or if stock certificates (the
"Certificates") are submitted evidencing more Shares than are tendered or
accepted for payment, Certificates for such unpurchased Shares will be
returned, without expense to the tendering shareholder (or, in the case of
Shares tendered by book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility pursuant to the procedures set forth in Section
3, such Shares will be credited to an account maintained with such Book-Entry
Transfer Facility), as promptly as practicable following expiration or
termination of the Offer. Purchaser reserves the right to assign, in whole or
from time to time in part, to Parent or to any direct or indirect subsidiary
of Parent the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such assignment will not relieve Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
3. Procedure for Tendering Shares.
Valid Tender of Shares. In order for a holder of Shares validly to tender
Shares pursuant to the Offer, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions of
the Letter of Transmittal, together with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message in lieu of the
Letter of Transmittal), and any other documents required by the Letter of
Transmittal, must be received by the Depositary prior to the Expiration Date
at one of its addresses set forth on the back cover of this Offer to Purchase.
In addition, either the Certificates evidencing tendered Shares must be
received by the Depositary at such address or such Shares must be tendered
pursuant to the procedures for book-entry transfer described below (and a
Book-Entry Confirmation of such delivery received by the Depositary, including
an Agent's Message if the tendering shareholder has not delivered a Letter of
Transmittal) prior to the Expiration Date. As an alternative, the tendering
shareholder may comply with the guaranteed delivery procedures set forth
below. The term "Agent's Message" means a message, transmitted by the Book-
Entry Transfer Facility to, and received by, the Depositary and forming a part
of a Book-Entry Confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares which are the subject of
such Book-Entry Confirmation, that such participant has received and agrees to
be bound by the terms of the Letter of Transmittal and that Purchaser may
enforce such agreement against the participant.
THE METHOD OF DELIVERY OF CERTIFICATES, 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 SHAREHOLDER, AND
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT THE SHAREHOLDER USE PROPERLY
INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Delivery. The Depositary will establish accounts 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 the Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedure for
such transfer. Although delivery of
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<PAGE>
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, together with any required signature guarantees, or an Agent's
Message in lieu of the Letter of Transmittal, and any other required
documents, must, in any case, be received by the Depositary prior to the
Expiration Date at one or more of its addresses set forth on the back cover of
this Offer to Purchase, or the tendering shareholder must comply with the
guaranteed delivery procedure described below. Delivery of documents to the
Book-Entry Transfer Facility does not constitute delivery to the Depositary.
Signature Guarantees. Signatures on a Letter of Transmittal need not be
guaranteed (a) if the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this section, includes any participant in any of
the Book-Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares and such registered
holder has not completed either the box titled "Special Payment Instructions"
or the box titled "Special Delivery Instructions" on the Letter of Transmittal
or (b) if such Shares are tendered for the account of an Eligible Institution.
See Instructions 1 and 5 of the Letter of Transmittal. Otherwise, all
signatures on a Letter of Transmittal must be guaranteed by a firm which is a
bank, broker, dealer, credit union, savings association or other entity that
is a member in good standing of the Securities Transfer Agents Medallion
Program, or by any other "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing being
referred to as an "Eligible Institution"). If a Certificate is registered in
the name of a person other than the signer of the Letter of Transmittal, or if
payment is to be made or Certificates for Shares not tendered or not accepted
for payment are to be returned to a person other than the registered holder of
the Certificates surrendered, then the tendered Certificates must be endorsed
or accompanied by appropriate 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. See Instructions 1 and 5 of the Letter
of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Certificates evidencing such Shares are not
immediately available or time will not permit all required documents to reach
the Depositary prior to the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, such Shares may nevertheless
be tendered if all of the following conditions are satisfied:
(a) the tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser herewith,
is received by the Depositary as provided below prior to the
Expiration Date; and
(c) the Certificates (or a Book-Entry Confirmation) representing all
tendered Shares, in proper form for transfer 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 New York Stock Exchange and the Nasdaq Stock
Market are open for business.
Any Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram, telex or facsimile transmission to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
the Notice of Guaranteed Delivery made available by Purchaser.
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 (a)
Certificates for (or a timely Book-Entry Confirmation, if available, with
respect to) such Shares, (b) 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 (c) any
other documents required by the Letter of Transmittal. Accordingly, tendering
shareholders may be
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<PAGE>
paid at different times depending upon when certificates for Shares or Book-
Entry Confirmations with respect to the Shares are actually received by the
Depositary. Under no circumstances will interest be paid on the purchase price
to be paid by Purchaser for the tendered Shares, regardless of any extension
of the Offer or any delay in making such payment.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser, in its sole discretion,
whose determination shall be final and binding on all parties. Purchaser
reserves the absolute right to reject any and all tenders of Shares determined
by it not to be in proper form or the acceptance for payment of which, or
payment for, such Shares may, in the opinion of Purchaser's counsel, be
unlawful. Purchaser also reserves the absolute right, in its sole discretion,
to waive, to the extent permitted by applicable law and the Merger Agreement,
any of the conditions of the Offer or any defect or irregularity in the tender
of any Shares of any particular shareholder, whether or not similar defects or
irregularities are waived in the case of other shareholders. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities relating thereto have been cured or waived. None of Purchaser,
Parent, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in
tenders or will incur any liability for failure to give any such notification.
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and instructions thereto) will be final and binding.
Other Requirements. By executing a Letter of Transmittal as set forth above,
a tendering shareholder irrevocably appoints designees of Purchaser as such
shareholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent of such shareholder's
rights with respect to the Shares tendered by such shareholder and accepted
for payment by Purchaser (and with respect to all other Shares or other
securities issued or issuable in respect of such Shares) on or after the date
of this Offer to Purchase. All such proxies will be considered coupled with an
interest in the tendered Shares. This appointment is effective if, when, and
only to the extent that Purchaser accepts such Shares for payment pursuant to
the Offer. Upon such acceptance for payment, all prior proxies given by such
shareholder will be revoked, and no subsequent proxies may be given nor any
subsequent written consent executed by such shareholder (and, if given, will
not be deemed effective) with respect thereto. Purchaser's designees will,
with respect to the Shares for which the appointment is effective, be
empowered to exercise all voting and other rights of such shareholder as they,
in their sole discretion, may deem proper at any annual, special or adjourned
meeting of the shareholders, by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares.
The foregoing proxies are effective only upon acceptance for payment of
Shares pursuant to the Offer. The Offer does not constitute a solicitation of
proxies, absent a purchase of Shares, for any meeting of the shareholders,
which will be made only pursuant to separate proxy solicitation materials
complying with the Exchange Act.
Purchaser's acceptance for payment of the Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering shareholder and Purchaser upon the terms and subject to the
conditions of the Offer.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT TO
CERTAIN SHAREHOLDERS OF THE OFFER PRICE, EACH SHAREHOLDER MUST PROVIDE THE
DEPOSITARY WITH SUCH SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND
CERTIFY THAT SUCH SHAREHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX
WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF
TRANSMITTAL. IF BACKUP WITHHOLDING APPLIES WITH RESPECT TO A SHAREHOLDER, THE
DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO SUCH
SHAREHOLDER. SEE INSTRUCTION 10 OF THE LETTER OF TRANSMITTAL.
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4. Withdrawal Rights. Tenders of Shares made pursuant to the Offer are
irrevocable except that such Shares may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after January 15,
2001. If Purchaser extends the Offer, is delayed in its acceptance for payment
of Shares, or is unable to accept Shares for payment pursuant to the Offer for
any reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
shareholders are entitled to withdrawal rights as set forth in this Section 4,
subject to Rule 14e-1(c) under the Exchange Act. Any such delay will be by an
extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name
of the registered holder of such Shares, if different from that of the person
who tendered such Shares. If Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then prior to
the physical release of such Certificates, the serial numbers shown on the
particular Certificates to be withdrawn must be submitted to the Depositary,
and the signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution, unless such Shares have been tendered for the account of
an Eligible Institution. If Shares have been tendered pursuant to the
procedures for book-entry transfer as set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the Book-
Entry Transfer Facility to be credited with the withdrawn Shares.
All questions as to the form and validity (including, without limitation,
time of receipt) of notices of withdrawal will be determined by Purchaser, in
its sole discretion, whose determination shall be final and binding. None of
Parent, Purchaser, the Depositary, the Information Agent, or any other person
will be under any duty to give notification of any defects or irregularities
in any notice of withdrawal or incur any liability for failure to give such
notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3. If Purchaser elects to provide a subsequent
offering period pursuant to Rule 14d-11 under the Exchange Act, shareholders
will not have withdrawal rights during such subsequent offering period.
5. Certain Federal Income Tax Consequences of the Offer and the Merger. The
following is a general summary of certain U.S. federal income tax consequences
of the Offer and the Merger relevant to a beneficial holder of Shares whose
Shares are tendered and accepted for payment pursuant to the Offer or whose
Shares are converted to cash in the Merger (a "Holder"). The discussion is
based on the Internal Revenue Code of 1986, as amended (the "Code"),
regulations issued thereunder, judicial decisions and administrative rulings,
all of which are subject to change, possibly with retroactive effect. This
discussion does not discuss all aspects of U.S. federal income taxation which
may be important to particular Holders in light of their individual investment
circumstances, such as Holders who do not hold the Shares as "capital assets"
within the meaning of Section 1221 of the Code, Holders who acquired their
Shares through the exercise of options or otherwise as compensation, or
Holders subject to special tax rules (e.g., financial institutions, broker-
dealers, insurance companies, and tax-exempt organizations). In addition, this
discussion does not address state, local or foreign tax consequences. HOLDERS
OF SHARES ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE SPECIFIC U.S.
FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE
OFFER AND THE MERGER.
The receipt of cash for Shares pursuant to the Offer or in the Merger will
be a taxable transaction for federal income tax purposes and may also be a
taxable transaction under applicable state, local or foreign tax laws. In
general, a Holder will recognize gain or loss for federal income tax purposes
equal to the difference between the amount of cash received in exchange for
the Shares and such Holder's adjusted tax basis in such Shares.
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Assuming the Shares constitute capital assets in the hands of the Holder, such
gain or loss will be capital gain or loss. If, at the time of the Offer or the
Merger, the Shares then exchanged have been held for more than one year, such
gain or loss will be a long-term capital gain or loss. Under current law,
long-term capital gains of individuals generally are taxed at lower rates than
items of ordinary income.
A Holder (other than certain exempt Holders including, among others, all
corporations and certain foreign individuals and entities) that tenders Shares
may be subject to a 31% backup withholding unless the Holder provides its
taxpayer identification number, or unless an exemption applies. If backup
withholding applies to a Holder, the Depositary is required to withhold 31%
from payments to such Holder. Backup withholding is not an additional tax.
Rather, the amount of the backup withholding can be credited against the
federal income tax liability of the person subject to the backup withholding,
provided that the required information is given to the Internal Revenue
Service. If backup withholding results in an overpayment of tax, a refund can
be obtained by the Holder upon filing a federal income tax return.
6. Price Range of Shares; Dividends. Price quotations, last-sale prices and
volume information about the Company's Common Stock are displayed on the Over
The Counter Bulletin Board (the "OTC Bulletin Board"). The following table
sets forth, for the calendar quarters indicated, the high and low closing
sales prices for the Company's Common Stock as displayed on the OTC Bulletin
Board:
<TABLE>
<CAPTION>
Calendar Year High Low
------------- ------ ------
<S> <C> <C>
1998:
First Quarter.................................................. $33.67 $28.42
Second Quarter................................................. $33.83 $29.67
Third Quarter.................................................. $37.92 $33.50
Fourth Quarter................................................. $37.92 $29.17
1999:
First Quarter.................................................. $32.00 $28.83
Second Quarter................................................. $32.33 $30.17
Third Quarter.................................................. $34.88 $31.17
Fourth Quarter................................................. $36.63 $34.13
2000:
First Quarter.................................................. $36.38 $24.50
Second Quarter................................................. $29.50 $24.13
Third Quarter.................................................. $26.69 $22.00
Fourth Quarter (through November 8, 2000)...................... $25.50 $18.88
</TABLE>
According to the Company's 10-K, the Company declared a quarterly cash
divided of $.150 per Share in each quarter of fiscal year 1998, and an extra
dividend of $.150 per Share in the fourth quarter of fiscal year 1998. Also
according to the Company's 10-K, the Company declared a cash dividend of $.167
per Share in the first, second and third quarters of fiscal year 1999, and it
declared two dividends, each for $.170 per Share, in the fourth quarter of
fiscal year 1999. The Company also declared a quarterly cash dividend of $.190
per Share in the first quarter of fiscal year 2000, and a quarterly cash
dividend of $.210 per Share in each of the second, third and fourth quarters
of fiscal year 2000. According to the Company's 8-K filed on November 9, 2000,
the Company also declared an extra fourth quarter dividend of $.120 per Share
payable on December 4, 2000, to shareholders of record on November 20, 2000.
Pursuant to the Merger Agreement, the Company has agreed that, without the
prior written consent of Parent, it will not declare, set aside or pay any
dividend or other distribution on any shares of capital stock of the Company,
other than (i) regular cash dividends on the Shares declared and paid
quarterly in amounts not to exceed $.210 per Share and at all time consistent
with past practices, and (ii) the extra cash dividend of $.120 per Share for
the fourth quarter of fiscal 2000, which has already been declared, as
described above.
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On November 8, 2000, the last full trading day prior to the public
announcement of the terms of the Offer and the Merger, the closing price
displayed on the OTC Bulletin Board was $25.00 per Share. On November 16,
2000, the last full trading day prior to the commencement of the Offer, the
closing price displayed on the OTC Bulletin Board was $37.85. As of
November 16, 2000, there were approximately 1,728 shareholders of record.
Shareholders are urged to obtain a current market quotation for the Shares.
7. Effect of the Offer on Market for the Shares, Stock Quotation, and
Exchange Act Registration.
Market for Shares. Despite the absence of an established public trading
market for the Shares, limited trading of the Company's Common Stock has
occurred on the OTC Bulletin Board. The purchase of Shares by Purchaser
pursuant to the Offer will reduce the number of Shares that might otherwise
trade publicly and will reduce the number of holders of Shares, which is
likely to adversely affect the liquidity and could adversely affect the market
value of the remaining Shares held by the shareholders.
Stock Quotation. The Shares, like all securities being quoted on the OTC
Bulletin Board, must be "sponsored" by a participating broker-dealer that
registers the security for quotation. Once registered, the security is
considered eligible for quotation. If a security has eligible status, it means
at least one broker-dealer has received clearance to quote the security on the
OTC Bulletin Board within the last 30 days. Eligible securities that meet
certain frequency-of-quotation requirements will be considered "active" and
can be quoted by any broker-dealer participating in the OTC Bulletin Board
system. Once a security is no longer active, however, it must again be
sponsored by a broker-dealer in order to be quoted.
As of November 8, 2000, the last trading day before the announcement of the
Offer and the Merger, Benjamin Moore & Co. Common Stock was considered
"active" and was eligible for quotation on the OTC Bulletin Board. Because,
however, there is no established trading market for the Company's Common
Stock, if the Shares become ineligible for quotation on the OTC Bulletin Board
because broker-dealers stop making markets in the Shares, it may become
difficult to obtain quotations for the Shares, and the public market for the
Shares may be adversely impacted. The extent of the public market for the
Shares and the availability of such quotations also depends upon the possible
termination of registration of the Shares under the Exchange Act and other
factors. Purchaser cannot predict whether these factors would have an adverse
effect on the market price for or marketability of the Shares or whether they
would cause future market prices to be greater or less than the Merger
Consideration.
Exchange Act Regulation. The Shares are currently registered under the
Exchange Act. Such registration may be terminated by the Company upon
application to the SEC if there are fewer than 300 record holders. The
termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company
to its shareholders and to the SEC and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
shareholders' meetings and the related requirement of furnishing an annual
report to shareholders, and the requirements of Rule 13e-3 under the Exchange
Act with respect to "going- private" transactions, no longer applicable to the
Shares. In addition, "affiliates" of the Company and persons holding
"restricted securities" of the Company may be deprived of the ability to
dispose of such securities pursuant to Rule 144 under the Securities Act of
1933, as amended. Purchaser currently intends to seek to cause the Company to
terminate the registration of Shares under the Exchange Act as soon after the
consummation of the Merger as the requirements for termination of registration
are met.
8. Certain Information Concerning the Company. The information concerning
the Company contained in this Offer to Purchase has been taken from or is
based upon publicly available documents and records on file with the SEC and
other public sources. Neither Parent nor Purchaser assumes any responsibility
for the accuracy or completeness of the information concerning the Company
contained herein or in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Parent or Purchaser.
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General. The Company is a New Jersey corporation with its principal
executive offices located at 51 Chestnut Ridge Road, Montvale, New Jersey
07645. The Company is a formulator, manufacturer and retailer of a broad range
of architectural and industrial paints, stains and coatings, available
principally in the United States and Canada. The Company has three reportable
segments that include U.S. Manufacturing, U.S. Retail and Canadian
Manufacturing. The Company's business groups within these three segments are
Trade Sales Coatings, Retail, and Production Finishes Coatings. Both Trade
Sales Coatings and Production Finishes Coatings are manufactured in the U.S.
and Canada.
Trade Sales Coatings consist of a broad line of coatings that include water-
thinnable and solvent-thinnable general purpose coatings (paints, stains and
clear finishes) for general use in the decoration and preservation of building
interiors and exteriors. Production Finishes Coatings are produced to conform
to the specific requirements of manufacturers who utilize such coatings in the
process of manufacturing such things as flexible packages, beverage and food
containers, tanks, roof decking, coils, furniture and shelving, window blinds
and flatwood products.
The Company owns and manages several multiple-outlet dealership and stand-
alone stores in various parts of the U.S. As of December 31, 1999, there were
73 Company-owned stores positioned in the market as independent dealers that
offer a broad array of products including Benjamin Moore brand and other
competitor coatings, wallcoverings, window treatments and sundries. The
Company's retail business serves two main markets: do-it-yourself consumers
and contractors.
The Company substantially relies on independent dealers for distribution of
its architecture products which provide the majority of the Company's revenue
and profits. This network consists of more than 3,700 retailers with more than
4,700 storefronts in the U.S. and Canada.
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is obligated to file reports and
other information with the SEC relating to its business, financial condition
and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities, any material
interests of such persons in transactions with the Company and other matters
is required to be disclosed in proxy statements distributed to shareholders
and filed with the SEC. Such reports, proxy statements and other information
should be available for inspection at the public reference room at the SEC's
office at 450 Fifth Street, N.W., Washington, D.C. 20549, and also should be
available for inspection and copying at the regional offices of the SEC
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Information regarding the public reference facilities may be obtained from the
SEC by telephoning 1-800-SEC-0330. Copies may be obtained, by mail, upon
payment of the SEC's customary charges, by writing to its Public Reference
Section at 450 Fifth Street, N.W., Washington, D.C. 20549 and can be accessed
electronically on the SEC's website at http://www.sec.gov.
9. Certain Information Concerning Purchaser and Parent. Purchaser is a New
Jersey corporation and to date has engaged in no activities other than those
incident to its formation and the commencement of the Offer. Purchaser is a
direct wholly owned subsidiary of Parent. The principal executive offices of
Purchaser and Parent are located at 1440 Kiewit Plaza, Omaha, Nebraska 68131.
Berkshire Hathaway Inc. ("Berkshire" or "Parent"), a Delaware corporation,
is a holding company engaged through subsidiaries in a number of diverse
businesses, the most important of which is property and casualty insurance and
reinsurance offered on both a direct and reinsurance basis through insurance
subsidiaries.
Berkshire may be deemed to be controlled by Warren E. Buffett, who is
Berkshire's chairman and chief executive officer and who beneficially owns
Berkshire shares representing approximately 34.8% of its voting power.
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Additional information concerning Berkshire is set forth in Berkshire's
Annual Report on Form 10-K for the year ended December 31, 1999, and the
subsequent Quarterly Reports on Form 10-Q, which reports may be obtained from
the SEC in the manner set forth with respect to information concerning the
Company in Section 8.
The name, citizenship, business address, principal occupation, and five-year
employment history of each of the directors and executive officers of Parent
and Purchaser are set forth in Schedule I to this Offer to Purchase.
None of the Parent, Purchaser nor, to the best of their knowledge, any of
the persons listed in Schedule I to this Offer to Purchase, nor any associate
or majority-owned subsidiary of any of the foregoing, beneficially owns or has
any right to acquire, directly or indirectly, any Shares and none of the
Parent, Purchaser nor, to the best of their knowledge, any of the persons or
entities referred to above, nor any director, executive officer or subsidiary
of any of the foregoing, has effected any transaction in the Shares during the
past 60 days, other than pursuant to the Merger Agreement and the Shareholders
Agreement.
Except as provided in the Merger Agreement and Shareholders Agreement, and
as otherwise described in this Offer to Purchase, (i) none of the Parent,
Purchaser nor any of their respective subsidiaries nor, to the best of their
knowledge, any of the persons listed in Schedule I to this Offer to Purchase,
has any contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any such securities, finder's fees,
joint ventures, loan or option arrangements, puts or calls, guaranties of
loans, guaranties against loss, guarantees of profits, division of profits or
loss or the giving or withholding of proxies, and (ii) none of Parent,
Purchaser nor, to the best of their knowledge, any of the persons listed on
Schedule I to this Offer to Purchase, has had any business relationship or
transaction with the Company or any of its executive officers, directors or
affiliates that is required to be reported under the rules and regulations of
the SEC applicable to the Offer. Set forth below in Section 11 of this Offer
to Purchase and elsewhere herein is a summary description of the mutual
contacts, negotiations and transactions between any of Purchaser or Parent, or
any of their respective subsidiaries or any of the persons listed on Schedule
I to this Offer to Purchase, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
10. Source and Amount of Funds. The Offer is not conditioned upon any
financing arrangements. Purchaser estimates that the total amount of funds
required to purchase all of the outstanding Shares pursuant to the Offer and
the Merger and to pay related fees and expenses will be approximately $1
billion. Purchaser will obtain these funds from Parent, either directly or
indirectly, in the form of capital contributions and/or loans from Parent or
its affiliates. Parent will obtain all required funds through dividends and/or
loans from its affiliates. Parent and Purchaser do not have any alternative
financing arrangements.
11. Background of the Offer; Contacts with the Company; the Merger Agreement
and Shareholders Agreement.
Background of the Offer; Contacts with the Company.
In light of, among other factors, the increasing consolidation which has
taken place in the coatings industry in the past several years, the Company
has from time to time during the past 18 months considered the strategic
alternatives available to it, including possible business combination
transactions with third parties as well as pursuing a growth strategy through
acquisitions. During the Fall of 1999, the Company explored the possibility of
engaging in a business combination transaction and, in that connection,
engaged in preliminary discussions with certain parties with respect thereto,
including the possible sale of the Company. While the Company received
preliminary indications of interest from certain parties with whom it had such
preliminary discussions, the Board determined not to pursue any such
transactions at that time.
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In mid-July 2000, Mr. Mundheim, a director of the Company, contacted Warren
Buffett, Chief Executive Officer of Parent, on behalf of the Company, to
ascertain whether Parent would be interested in meeting with
representatives of the Company to discuss a possible business combination
transaction. Mr. Buffett indicated to Mr. Mundheim that he would be interested
in such a meeting. In early August 2000, Mr. Mundheim sent to Mr. Buffett, at
his request, certain publicly available information regarding the Company and
its business. On August 24, 2000, Richard Roob, Chairman of the Board of the
Company, Yvan Dupuy, President and Chief Executive Officer of the Company, and
Mr. Mundheim met with Mr. Buffett and Charles Munger, a director of Parent. At
that meeting, Mr. Buffett indicated that Parent would be interested in
considering a possible acquisition of the Company at an aggregate price of one
billion dollars in cash. Messrs. Roob and Dupuy advised Messrs. Buffett and
Munger that they would consider Parent's interest in a possible acquisition of
the Company and discuss it with the Board.
During the period from August 24 to September 27, 2000, the Company's senior
management engaged in internal discussions with respect to the possible
acquisition of the Company by Parent and other strategic alternatives.
At a meeting held on September 27, 2000, Mr. Roob and Mr. Dupuy reported to
the Board their meeting on August 24 with Mr. Buffett and Mr. Munger and the
Board discussed the possible sale of the Company to Parent on the basis of the
proposed transaction discussed at the August 24 meeting as well as other
strategic alternatives. In light of the significance of such a transaction to
the Company, the Board determined to reflect on the proposition and convene
again on October 10, 2000, to determine whether or not such a transaction
should be pursued. After such Board meeting, Mr. Mundheim contacted Mr.
Buffett to inform him of the action taken by the Board at such meeting.
On October 9, 2000, Mr. Dupuy contacted the party that had, in the Fall of
1999, expressed a preliminary interest in the possible acquisition of the
Company in an all cash transaction to determine whether that party would be
interested in pursuing such a transaction. The party indicated that it was not
interested in such a transaction.
At a meeting held on October 10, 2000, the Board discussed the possible
transaction with Parent and decided to authorize the Company's senior
management to engage in discussions and negotiations with Parent and its
representatives with a view to determining whether a transaction on terms
acceptable to the Company could be achieved. At that meeting, the Board also
authorized the Company to retain J.P. Morgan Securities Inc. ("J.P. Morgan")
as financial advisor to provide the Board with its opinion as to whether the
financial terms of the proposed transaction with Parent were fair to the
Company's shareholders. After such Board meeting, Mr. Mundheim called Mr.
Buffett to inform him of the action taken by the Board at such meeting.
On October 13, 2000, the Company retained J.P. Morgan to render a fairness
opinion in connection with the proposed transaction with Parent.
On October 23, 2000, representatives of Shearman & Sterling, the Company's
outside legal counsel, met with a representative of Munger, Tolles & Olson,
Parent's outside legal counsel, to discuss the terms of the proposed
transaction with Parent. On October 24, 2000, Parent and the Company entered
into the Confidentiality Agreement. On the same day, Shearman & Sterling
provided a draft of the Merger Agreement to Munger, Tolles & Olson.
Subsequently thereafter, due to the requirement by Parent that certain
shareholders of the Company support the proposed transaction, on October 31,
2000, Shearman & Sterling provided a draft of the Shareholders Agreement to
Munger, Tolles & Olson. During the period from October 30, 2000 through
November 8, 2000, representatives of Parent and the Company and their
respective legal advisers negotiated the terms of the Merger Agreement and the
Shareholders Agreement.
On November 8, 2000, the Board met to consider and review the terms of the
proposed Merger Agreement, and, following J.P. Morgan's oral delivery of its
opinion and after careful consideration, approved the Merger Agreement and the
transactions contemplated thereby and unanimously recommended that the holders
of Shares accept the Offer and tender their Shares pursuant thereto.
21
<PAGE>
Following the Board meeting on November 8, 2000, Parent, Purchaser and the
Company finalized and executed the Merger Agreement, and Parent, Purchaser and
all of the Company's directors and many of the trusts for which they serve as
trustees finalized and executed the Shareholders Agreement, as contemplated by
the Merger Agreement. Later that afternoon, Parent and the Company issued a
joint press release announcing the execution of the Merger Agreement and the
Shareholders Agreement.
On November 17, 2000, in accordance with the Merger Agreement, Parent and
Purchaser commenced the Offer.
The Merger Agreement
The following is a summary of the Merger Agreement, a copy of which is filed
as an Exhibit to the Form 8-K filed by the Company with the SEC on November 9,
2000. Such summary is qualified in its entirety by reference to the Merger
Agreement. Capitalized terms not otherwise defined in the following
description of the Merger Agreement have the respective meanings ascribed to
them in the Merger Agreement.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than seven
business days after the initial public announcement of the execution of the
Merger Agreement. The obligation of Purchaser to accept for payment, and to
pay for, Shares tendered pursuant to the Offer is subject to the satisfaction
of the Minimum Condition (as defined below under the heading "Conditions to
the Offer") and certain other conditions that are described below under the
heading "Conditions to the Offer". Subject to the terms and conditions of the
Merger Agreement, Purchaser expressly reserves the right to waive any
condition to the Offer, to increase the price per Share payable in the Offer,
and to make any other changes in the terms and conditions of the Offer;
provided, however, Purchaser may not (1) waive the Minimum Condition (except
under circumstances whereby the "Option" (as defined below under the heading
"The Shareholders Agreement--the Option") is or, upon the expiration of the
Offer, will be, exercisable in accordance with its terms, provided that such
Option is exercised by Parent or Purchaser as soon as practicable after it
becomes so exercisable and, upon any such exercise, the Minimum Condition will
be satisfied), (2) decrease the price per Share payable in the Offer, (3)
reduce the maximum number of Shares to be purchased in the Offer, (4) impose
conditions to the Offer in addition to those set forth below under the heading
"Conditions to the Offer", (5) except as described below, extend the Offer,
(6) change the form of consideration payable in the Offer, or (7) make any
other change in the terms or conditions of the Offer that is otherwise adverse
to the Company or the holders of Shares.
The Merger Agreement also provides that Purchaser may, without the consent
of the Company, (1) extend the Offer for up to 30 business days beyond the
scheduled expiration date, which will be 20 business days following the
commencement of the Offer, if, at the scheduled expiration date of the Offer,
any of the conditions to Purchaser's obligation to accept for payment, and to
pay for, the Shares, will not be satisfied or, to the extent permitted by the
Merger Agreement, waived, (2) extend the Offer for any period required by any
rule, regulation or interpretation of the Securities and Exchange Commission
(the "SEC"), or the staff thereof, that is applicable to the Offer, or (3)
extend the Offer for an aggregate period of not more than five business days
beyond the latest applicable date that would otherwise be permitted under
clause (1) or (2) of this paragraph, if, as of such date, all of the
conditions to Purchaser's obligations to accept for payment, and to pay for,
the Shares are satisfied or waived, but the number of Shares validly tendered
and not withdrawn pursuant to the Offer equals 75% or more, but less than 90%,
of the outstanding Shares on a fully diluted basis so long as the Purchaser
irrevocably waives the satisfaction of any of the conditions to the Offer that
are described below under the heading "Conditions to the Offer" (other than
the Minimum Condition and the condition set forth in clause 3(a) under
the heading "Conditions to the Offer") that subsequently may not be satisfied
during any such extension of the Offer. The Purchaser must extend the Offer if
(x) the sole condition remaining unsatisfied is the expiration or termination
of the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") or (y) the conditions set
forth in clause 3(c) or 3(d) under the heading "Conditions to the Offer" are
not satisfied, so long as the breach can be cured and the Company is
vigorously attempting to cure such breach.
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<PAGE>
Subject to the terms and conditions of the Offer, Purchaser shall, and
Parent shall cause Purchaser to, pay, as promptly as practicable after the
expiration of the Offer, for all Shares validly tendered and not withdrawn.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with NJBCA, Purchaser will be
merged with and into the Company. As a result of the Merger, the separate
corporate existence of Purchaser will cease and the Company will continue as
the Surviving Corporation and will become a wholly owned subsidiary of Parent.
At the effective time of the Merger (the "Effective Time"), each Share issued
and outstanding immediately prior to the Effective Time (other than any Shares
held in the treasury of the Company or owned by Purchaser, Parent or any
direct or indirect wholly owned subsidiary of Parent or the Company) will be
cancelled and converted automatically into the right to receive the Offer
Price in cash (the "Merger Consideration"). Pursuant to the Merger Agreement,
each share of common stock, no par value per share, of Purchaser issued and
outstanding immediately prior to the Effective Time will be converted into and
exchanged for one share of common stock, no par value per share, of the
Surviving Corporation.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Company immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation. The
Merger Agreement provides that, at the Effective Time, the Restated
Certificate of Incorporation of the Company, as amended (the "Certificate of
Incorporation"), will be the Certificate of Incorporation of the Surviving
Corporation. The Merger Agreement also provides that the By-laws of Purchaser,
as in effect immediately prior to the Effective Time, will be the By-laws of
the Surviving Corporation.
Shareholders' Meeting. Pursuant to the Merger Agreement, the Company, acting
through the Board, shall, if required by applicable law to consummate the
Merger, duly call, give notice of, convene and hold a special meeting of its
shareholders as soon as practicable following the date on which Purchaser
completes the purchase of Shares pursuant to the Offer for the purpose of
considering and taking action upon the Merger Agreement (the "Shareholders'
Meeting"). If Purchaser acquires at least two-thirds of the outstanding
Shares, Purchaser will have sufficient voting power to approve the Merger,
even if no other shareholder votes in favor of the Merger.
Proxy Statement. The Merger Agreement provides that the Company shall, if
required by applicable law to consummate the Merger, prepare and file with the
SEC a preliminary proxy or information statement (the "Proxy Statement")
relating to the Merger Agreement and the Merger and shall use all reasonable
efforts to cause a definitive Proxy Statement to be mailed to its shareholders
at the earliest practicable time following the consummation of the Offer. The
Company, subject to its fiduciary duties under applicable law, has agreed to
include in the Proxy Statement the recommendation of the Board that
shareholders of the Company vote in favor of the approval and adoption of the
Merger Agreement and the Merger. Parent and Purchaser and any of their
respective subsidiaries have agreed to cause to be voted all Shares owned by
them in favor of the Merger Agreement and the Merger. The Merger Agreement
provides that, in the event Purchaser shall acquire at least 90% of the
outstanding Shares, Parent, Purchaser and the Company will take all necessary
and appropriate action to cause the Merger to be effective, as soon as
practicable after such acquisition, without the Shareholders' Meeting.
Conduct of Business by the Company Pending the Merger. Pursuant to the
Merger Agreement, the Company has covenanted and agreed that, except as
otherwise contemplated therein or as required by applicable law, between the
date of the Merger Agreement and the Effective Time, unless Parent otherwise
agrees in writing, the Company will and will cause its subsidiaries (the
"Subsidiaries" and, individually, a "Subsidiary") to conduct its business in
the usual, regular and ordinary course consistent with past practice; and the
Company will use, and will cause its Subsidiaries to use, all reasonable
efforts to preserve substantially intact the business organization of the
Company and the Subsidiaries and to preserve the current relationships of the
Company and the Subsidiaries with customers, suppliers and other persons with
whom the Company or any Subsidiary has significant business relations. The
Merger Agreement provides that without limiting the generality of these
previous covenants, and except as expressly contemplated therein or as
required by applicable law, neither the
23
<PAGE>
Company nor any Subsidiary will, between the date of the Merger Agreement and
the Effective Time, directly or indirectly do, or propose to do, any of the
following, without the prior written consent of Parent, which consent will not
be unreasonably withheld or delayed: (1) amend or otherwise change its
Certificate of Incorporation or By-laws or equivalent organizational
documents; (2) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of (a) any
shares of capital stock of any class of the Company or any Subsidiary, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest, of
the Company or any Subsidiary (except for the issuance of Shares issuable
pursuant to Company stock options outstanding on the date of the Merger
Agreement) or (b) any assets of the Company or any Subsidiary for
consideration in excess of $10 million in the aggregate, except in the
ordinary course of business and in a manner consistent with past practices;
(3) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock (other than dividends from any Subsidiary to the Company),
except for (a) the year 2000 fourth quarter extra cash dividend on the Shares
in an amount not to exceed 12 cents per Share and (b) regular cash dividends
on the Shares declared and paid quarterly in amounts not to exceed 21 cents
per Share and at times consistent with past practices; (4) reclassify,
combine, split, subdivide or redeem, purchase or otherwise acquire, directly
or indirectly, any of its capital stock; (5) (a) acquire any corporation,
partnership, other business organization or any division thereof or any
material amount of assets, other than acquisitions of materials, equipment,
supplies or services in the ordinary course consistent with past practice, (b)
except for borrowings under existing credit facilities, incur any indebtedness
for borrowed money or issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any person, or make any loans or advances (other than loans
between the Company and its Subsidiaries) or capital contributions or
investments in any person other than the Company or its Subsidiaries for an
amount in excess of $10 million in the aggregate, (c) authorize capital
expenditures which are, in the aggregate, in excess of $10 million for the
Company and the Subsidiaries taken as a whole, provided such expenditures are
in the ordinary course of business or in connection with the restructuring of
manufacturing and distribution facilities of the Company disclosed in the SEC
reports filed by the Company prior to the date of the Merger Agreement or (d)
enter into or amend any contract, agreement, commitment or arrangement with
respect to any of the matters set forth in this clause (5); (6) increase the
compensation payable or to become payable to its directors, officers or
employees, except for increases (a) in accordance with past practices in
salaries or wages of employees of the Company or any Subsidiary who are not
directors or officers of the Company or (b) pursuant to employment, severance
or other agreements with directors, officers or employees in effect as of the
date of the Merger Agreement, or grant any severance or termination pay to, or
enter into any employment or severance agreement with, any director, officer
or, other than in accordance with past practices, other employee of the
Company or of any Subsidiary or establish, adopt, enter into or amend (other
than any amendments which are required by law) any collective bargaining,
bonus, profit-sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance, change of control, health, welfare or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any director, officer or
employee; (7) other than as required by GAAP to be implemented following the
date of the Merger Agreement, make any material change to its accounting
policies or procedures; (8) take any action that would, or is reasonably
likely to, result in (a) any of the representations and warranties of the
Company in the Merger Agreement becoming untrue or (b) any of the conditions
to the Merger described under the heading "Conditions to the Merger" not being
satisfied; (9) except in the usual, regular, and ordinary course of business
and consistent with past practice, make any tax election or settle or
compromise any federal, state, local or foreign income tax liability; (10)
except as set forth below under the heading "No Solicitation of Transactions",
waive or fail to enforce any provision of any confidentiality or standstill
agreement to which the Company is a party; or (11) make any commitment to take
any of actions prohibited in this paragraph.
Company Board Representation. The Merger Agreement provides that, promptly
after (1) the purchase of and payment for any Shares by Purchaser or any of
its affiliates pursuant to the Offer as a result of which Purchaser and its
affiliates own at least two-thirds of the Shares outstanding on a fully
diluted basis on the date of purchase, and (2) compliance with Section 14(f)
of the Exchange Act and Rule 14f-1 promulgated thereunder, whichever occurs
later, and from time to time thereafter, Purchaser will be entitled to
designate up to such
24
<PAGE>
number of directors, rounded up to the next whole number, on the Board as will
give Purchaser representation on the Board equal to the product of the total
number of directors on the Board (giving effect to the directors elected
pursuant to this sentence), multiplied by the percentage that the aggregate
number of Shares beneficially owned by Purchaser or any affiliate of Purchaser
following such purchase bears to the total number of Shares then outstanding,
and the Company will, at such time, promptly take all actions necessary to
cause Purchaser's designees to be elected as directors of the Company,
including increasing the size of the Board or securing the resignations of
incumbent directors, or both. Notwithstanding the foregoing, in the event that
Purchaser's designees are to be appointed or elected to the Board, until the
Effective Time, the Board shall have at least two directors who are directors
on the date of the Merger Agreement.
The Merger Agreement provides that following the election or appointment of
Purchaser's designees in accordance with the Merger Agreement and prior to the
Effective Time, any amendment of the Merger Agreement or the Certificate of
Incorporation or By-laws of the Company, any termination of the Merger
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Purchaser or
waiver of any of the Company's rights thereunder, will require the concurrence
of a majority of those directors of the Company then in office who were not
designated by Purchaser.
Access to Information; Confidentiality. Pursuant to the Merger Agreement,
until the Effective Time, the Company agreed to, and agreed to cause the
Subsidiaries and the officers, directors, employees, auditors and agents of
the Company and the Subsidiaries to, afford the officers, employees and agents
of Parent and Purchaser reasonable access at all reasonable times and upon
reasonable notice to the officers, employees, agents, properties, offices,
plants and other facilities, books and records of the Company and each
Subsidiary, and to furnish Parent and Purchaser such financial, operating and
other data and information as Parent or Purchaser, through its officers,
employees or agents, may reasonably request, except if such disclosure would
violate the terms of any applicable laws or governmental regulations or if
such information is about a third party and such disclosure would violate any
confidentiality agreement or provision in effect on the date of the Merger
Agreement to which the Company or any Subsidiary is a party. Parent and
Purchaser have agreed that such information shall be subject to the terms of
the Confidentiality Agreement outlined below.
No Solicitation of Transactions. Upon the execution of the Merger Agreement,
the Company has agreed to immediately cease any discussions or negotiations
with any third parties that may be ongoing with respect to an Acquisition
Proposal (as defined below). The Company has agreed that it will not, and it
will not permit any of its Subsidiaries, and it will not authorize or permit
any of its officers, directors, employees, or any affiliate, investment
banker, financial advisor, attorney, accountant or other advisor or
representative retained by it or any of its Subsidiaries, to directly or
indirectly, solicit, initiate or knowingly encourage any inquiries relating
to, or the submission of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal or participate in discussions or
negotiations regarding any Acquisition Proposal, or, in connection with any
Acquisition Proposal, furnish to any person any information or data with
respect to or access to the properties of the Company or any of its
Subsidiaries, or take any other action to facilitate the making of any
proposal that constitutes, or may reasonably be expected to lead to, an
Acquisition Proposal. "Acquisition Proposal" means (1) any proposal or offer
from any person relating to any direct or indirect acquisition or purchase of
(a) 15% or more of the assets of the Company or (b) over 15% of any class of
equity securities of the Company; (2) any tender offer or exchange offer as
defined pursuant to the Exchange Act that, if consummated, would result in any
person beneficially owning 15% or more of any class of equity securities of
the Company; or (3) any merger, consolidation, business combination, share
exchange, sale of all or a substantial part of the assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any
of its Subsidiaries, other than the transactions contemplated by the Merger
Agreement.
If, however, after the execution of the Merger Agreement and prior to the
purchase of Shares pursuant to the Offer, the Board receives an unsolicited
Acquisition Proposal that constitutes, or in the good faith judgment of the
Board would reasonably be expected to lead to, a Superior Proposal (as defined
below) and the Company is not in material breach of any of its obligations
under this "No Solicitations of Transactions" covenant, the
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Company may furnish information with respect to the Company and its
Subsidiaries pursuant to a customary confidentiality agreement and participate
in discussions or negotiations regarding such Acquisition Proposal subject to
certain notice requirements to Parent. Prior to taking any such action,
however, the Board must determine in good faith, after consultation with its
financial advisor and outside counsel, that the failure to take such actions
would be inconsistent with its fiduciary duties to the Company's shareholders
under applicable law. A material violation of the restrictions set forth in
the second sentence of the preceding paragraph by any officer of the Company
or any Subsidiary or any affiliate, director or investment banker, attorney or
other advisor or representative of the Company or any Subsidiary is deemed a
breach by the Company except where such violation is not related to a Superior
Proposal which the Company engages in discussions or enters into any agreement
with respect thereto. "Superior Proposal" means (1) a bona fide written
proposal or offer from any person for a direct or indirect acquisition or
purchase of (a) 50% or more of the assets of the Company or (b) over 50% of
any class of equity securities of the Company; (2) any tender offer or
exchange offer that, if consummated, would result in any person beneficially
owning 50% or more of any class of equity securities of the Company; or (3)
any merger, consolidation, business combination, share exchange, sale of all
or a substantial part of the assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company, other than the
transactions contemplated by the Merger Agreement, (a) which, if consummated,
would result in a transaction that is more favorable to the Company's
shareholders than the Offer and the Merger (taking into account all relevant
factors, including the likelihood of such offer resulting in a consummated
transaction) and (b) for which there is no financing contingency and the third
party has demonstrated that financing is reasonably likely to be obtained, in
each case as determined by the Board in its good faith judgment (after
consultation with its financial advisor and outside counsel).
The Company has also agreed that neither the Board nor any committee of the
Board shall (1) withdraw or modify, or propose publicly to withdraw or modify,
in a manner adverse to Parent or Purchaser, the approval, determination of
advisability or recommendation by the Board or any such committee of the
Offer, the Merger or the Merger Agreement unless the Board has determined in
good faith, after consultation with its financial advisor and outside counsel,
that the Offer, the Merger or the Merger Agreement is no longer in the best
interests of the Company's shareholders and that such withdrawal or
modification is, therefore, required in order to satisfy its fiduciary duties
to the Company's shareholders under applicable law and the Company is not in
material breach of any of its obligations under this "No Solicitation of
Transactions" covenant, (2) approve or recommend, or propose publicly to
approve or recommend, any Acquisition Proposal or (3) cause the Company to
enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, in the event that the Board determines (after
consultation with its outside counsel), prior to the purchase of Shares
pursuant to the Offer, that the failure to take such action would be
inconsistent with its fiduciary duties to the Company's shareholders under
applicable law and the Company is not in material breach of any of its
obligations under this "No Solicitation of Transactions" covenant, the Board
may, in response to a Superior Proposal that was unsolicited and made after
the date of the Merger Agreement, take any of the actions described in clause
(2) or (3) of this paragraph if the Board provides the Parent with three
business days' prior written notice of its intention to take such actions,
including the identity of the person making such Acquisition Proposal and
attaching the most current version of such Acquisition Proposal or any draft
of an acquisition agreement, if applicable.
The Merger Agreement provides that the Company shall promptly advise Parent
orally and in writing of, and periodically update Parent with respect to, any
Acquisition Proposal or any request for confidential information, the material
terms and conditions of such request or the Acquisition Proposal and the
identity of the soliciting party.
Employee Stock Options and Other Employee Benefits. The Merger Agreement
also provides that the Company will take all necessary action to ensure that
each outstanding Company Stock Option, whether or not exercisable and whether
or not vested, under any of the Company's 1998 Stock Incentive Plan, 1993
Stock
Option Plan or any stock option agreement or employment agreement (the
"Company Stock Option Plans") will be cancelled by the Company immediately
prior to the Effective Time and, in exchange therefor, each holder of such
Company Stock Option shall be entitled to receive an amount in cash in respect
thereof equal to the product
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of (i) the excess, if any, of the Merger Consideration over the per share
exercise price thereof and (ii) the number of shares subject thereto (such
payment to be net of applicable withholding taxes).
The Company also agreed to take all actions necessary to pass-through tender
rights with respect to the Shares held on behalf of the participants in the
Employee Stock Purchase Plan ("ESPP") and to tender those shares for which
instructions are received in accordance with those instructions. The Company
will receive the proceeds on behalf of the ESPP participants and will remit
those proceeds to the participants after withholding the balance of all
outstanding amounts due under any promissory notes thereunder from the
proceeds received in respect of such Shares.
From and after the Effective Time, Parent agreed to honor, and cause the
Surviving Corporation and its Subsidiaries to honor in accordance with their
terms, all contracts, agreements, arrangements, policies, plans and
commitments of the Company and its Subsidiaries as in effect immediately prior
to the Effective Time that are applicable to any current or former employees
or directors of the Company or any of its Subsidiaries. Parent also agreed
that, for a period of two years immediately following the Effective Time, it
will, or will cause the Surviving Corporation and its Subsidiaries to, provide
employee benefit and compensation plans, programs, contracts and arrangements
for the benefit of current or former employees of the Company and its
Subsidiaries which, in the aggregate, will provide benefits and compensation
that provide substantially comparable benefit levels and aggregate
compensation value to those provided to such employees as a group under the
employee benefit and compensation plans, programs, contracts and arrangements
of the Company and its Subsidiaries as in effect immediately prior to the
Effective Time; provided, however, that Parent will not have any obligation to
continue the stock option, stock purchase or other plans involving the
potential issuance of securities of the Surviving Corporation or Parent but
shall provide alternative benefits with substantially comparable value. In
addition, employees of the Company and its Subsidiaries shall receive credit
for purposes of eligibility to participate and vesting (but not for benefit
accruals) under any employee benefit plan, program or arrangement established
or maintained by the Surviving Corporation or any of its Subsidiaries for
service accrued or deemed accrued prior to the Effective Time with the Company
or any of its Subsidiaries; provided, however, that such crediting of service
shall not operate to duplicate any benefit or the funding of any such benefit.
Directors' and Officers' Indemnification and Insurance. The Merger Agreement
provides that from and after the Effective Time, Parent will cause the
Surviving Corporation as its sole shareholder to exculpate and indemnify,
defend, protect and hold harmless any person who is, has previously been or
who becomes prior to the Effective Time, an officer, director, employee or
agent (collectively, the "Indemnified Parties") of the Company against all
losses, claims, damages, liabilities, costs and expenses (including attorneys'
fees and expenses), judgments, fines, losses, and amounts paid in settlement
in connection with any actual or threatened action, suit, claim, proceeding or
investigation (each, a "Claim") to the extent based on, or arising out of,
(1) the fact that such person is or was a director, officer, employee or agent
of the Company or any of its Subsidiaries or is or was serving at the request
of the Company or any of its Subsidiaries as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or (2) the Merger Agreement, or any of the transactions
contemplated under the Merger Agreement, in each case to the extent that any
such Claim pertains to any matter or fact arising, existing, or occurring
prior to or at the Effective Time, regardless of whether such Claim is
asserted or claimed prior to, at or after the Effective Time, to the full
extent permitted under applicable law or the Company's Certificate of
Incorporation, By-laws or indemnification agreements in effect at the date of
the Merger Agreement; provided, however, that the Surviving Corporation will
not be required to indemnify an Indemnified Party with respect to any amounts
paid in settlement of any Claims without the written consent of Surviving
Corporation, which consent will not be unreasonably withheld or delayed. In
the event any Indemnified Party becomes involved in any capacity in any Claim
of the type described above, then from and after the Effective Time, Parent
will cause the Surviving Corporation to periodically advance to such
Indemnified Party its legal and other expenses, subject to the Indemnified
Party's undertaking to reimburse the amounts so advanced in the event of a
final non-appealable determination by a court of competent jurisdiction that
the Indemnified Party is not entitled thereto.
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Under the Merger Agreement, all rights to indemnification and all
limitations of liability existing in favor of the Indemnified Party as
provided under applicable law or the Company's Certificate of Incorporation,
by-laws or indemnification agreements in effect at the date of the Merger
Agreement will survive the Merger and will continue in full force and effect
for a period of six years from the Effective Time, provided that if any Claim
or Claims are asserted or made within this six-year period, all
indemnification rights with respect thereto will continue until disposition of
any and all such Claims; provided, however, that any determination required to
be made with respect to whether an Indemnified Party's conduct complies with
applicable law or the Company's organizational documents will be made by
independent legal counsel selected by the Indemnified Party and reasonably
acceptable to Parent.
The Merger Agreement also provides that for a period of six years after the
Effective Time, Parent will cause the Surviving Corporation as its sole
shareholder to maintain in effect the current (or substantially similar)
policies of directors' and officers' liability insurance maintained by the
Company with respect to claims arising from or related to facts or events that
occurred at or before the Effective Time, subject to a 200% maximum premium.
Further Action; Consents; Filings. The Merger Agreement provides that each
of the parties thereto will use its reasonable best efforts and cooperate
fully with one another (1) to take or do, or cause to be taken or done, all
appropriate action, all things necessary, proper or advisable under applicable
law or otherwise to consummate and make effective the transactions
contemplated by the Merger Agreement as promptly as possible, (2) to make all
necessary filings, and thereafter make any other required submissions, with
respect to the Merger Agreement and the related transactions required under
applicable law and (3) to obtain all required authorizations, consents, orders
and approvals of all governmental authorities necessary in connection with the
execution and delivery and performance of the Merger Agreement. Each of the
Company and Parent has agreed to use its reasonable best efforts to contest
and resist any action, including legislative, administrative or judicial
action, and to have vacated, lifted, reversed or overturned any governmental
order that is in effect and that restricts, prevents or prohibits the
consummation of any of the transactions contemplated by the Merger Agreement.
Minority Shares of Benjamin Moore & Co. Limited. Under the Merger Agreement,
as soon as practicable after, but in no event later than ten business days
after the Effective Time, Parent or its affiliate(s) (including the Surviving
Corporation) will offer to acquire, through a merger, tender offer or other
transaction ("Minority Purchase Transaction"), all outstanding shares of
Benjamin Moore & Co., Limited, a Canadian corporation (the "Canadian Sub"),
not owned by the Surviving Corporation ("Minority Shares") for cash in an
amount per share equal to CDN$93.55 ("Canadian Per Share Price"). In addition,
simultaneously with the consummation of the Minority Purchase Transaction,
Parent agreed to cause Surviving Corporation to take all necessary action to
ensure that each outstanding stock option (a "Canadian Sub Stock Option"),
whether or not exercisable and whether or not vested, under the Canadian Sub's
Stock Option Plan, any stock option agreement or employment agreement, will be
canceled by the Surviving Corporation simultaneously with the consummation of
the Minority Purchase Transaction, such that each holder of a canceled
Canadian Sub Stock Option will be entitled to receive at the time of such
consummation or as soon as practicable thereafter from the Canadian Sub in
consideration for the cancellation of such Canadian Sub Stock Option a cash
amount equal to the product of (1) the number of shares of Canadian Sub
previously subject to such Canadian Sub Stock Option and (2) the excess, if
any, of the Canadian Per Share Price over the exercise price per share of the
Canadian Sub previously subject to such Canadian Sub Stock Option.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company as to absence of conflict, absence of certain
changes or events concerning the Company's business, compliance with law,
corporate authority, litigation, employee benefit plans, labor matters, real
property and leases, intellectual property, environmental matters and taxes.
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Conditions to the Offer. The Offer is conditioned upon, among other things,
there having been validly tendered and not withdrawn prior to the expiration
of the Offer at least the number of Shares that when added to the Shares
already owned by Parent, Purchaser or any subsidiary of Parent, if any, shall
constitute two-thirds of the then outstanding Shares on a fully diluted basis
(on a "fully diluted basis" meaning the number of Shares outstanding, together
with the Shares which the Company may be required to issue pursuant to options
or obligations outstanding at that date and which do not terminate upon
consummation of the Offer under any employee stock or similar benefit plans or
otherwise, whether or not vested or then exercisable) (the "Minimum
Condition").
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, pay
for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any Shares tendered pursuant
to the Offer, and may extend, terminate or amend the Offer, if (1) immediately
prior to the expiration of the Offer, the Minimum Condition shall not have
been satisfied, (2) any applicable waiting period under the HSR Act or the
Canadian Competition Act shall not have expired or been terminated prior to
the expiration of the Offer, or (3) at any time on or after the date of this
Agreement and prior to the expiration of the Offer, any of the following
conditions shall exist:
(a) (i) there shall have been any statute, rule, regulation, judgment,
order or injunction entered, passed, promulgated, enforced, enacted or
issued, or applicable to the Offer by any Governmental Authority of
competent jurisdiction that (A) makes illegal, prohibits or materially
limits the ownership or operation by Parent, Purchaser or the Company of
all or a material portion of the business or assets of the Company and the
Subsidiaries, taken as a whole, as a result of the transactions
contemplated thereby; or (B) imposes limitations on the ability of Parent
or Purchaser to exercise effectively full rights of ownership of any
Shares, including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer on all matters properly
presented to the Company's shareholders, including, without limitation, the
approval of the Merger Agreement and the transactions contemplated thereby;
or (C) prohibits or makes illegal the acceptance for payment, payment for,
or purchase of Shares by Parent or Purchaser or the consummation of the
Offer or the Merger; or (D) otherwise renders Parent or Purchaser unable to
accept for payment, pay for, or to purchase some or all of the Shares; or
(ii) there shall have been any action or proceeding instituted by any
Governmental Authority and such action or proceeding is pending before a
Governmental Authority of competent jurisdiction that (A) seeks to make
illegal, prohibit or materially limit the ownership or operation by Parent
or Purchaser of all or a material portion of the business or assets of the
Company and the Subsidiaries, taken as a whole; or (B) seeks to impose
limitations on the ability of Parent or Purchaser to exercise effectively
full rights of ownership of any Shares, including, without limitation, the
right to vote any Shares acquired by Purchaser pursuant to the Offer on all
matters properly presented to the Company's shareholders, including,
without limitation, the approval of the Merger Agreement and the
transactions contemplated thereby; or (C) seeks to prohibit or make illegal
the acceptance for payment, payment for, or purchase of Shares by Parent or
Purchaser or the consummation of the Offer or the Merger; or (D) is
reasonably likely to result in a material delay in or seeks to restrict the
ability of Parent or Purchaser, or render Parent or Purchaser unable to
accept for payment, pay for, or to purchase some or all of the Shares;
(b) a Material Adverse Effect shall have occurred and be continuing;
(c) any representation or warranty of the Company in the Merger Agreement
that is qualified by a reference to Material Adverse Effect shall not be
true and correct or any such representation or warranty that is not so
qualified shall not be true and correct in all material respects, in each
case as if such representation or warranty was made as of such time on or
after the date of this Agreement (except for representations and warranties
made as of a specific date which shall be true and correct as of such
date);
(d) the Company shall have failed in any material respect to perform, or
to comply with, any material agreement or covenant of the Company to be
performed or complied with by it under the Merger Agreement (including,
without limitation, its agreements or covenants under the "No Solicitation
of Transactions" covenant);
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(e) the Merger Agreement shall have been terminated in accordance with
its terms; or
(f) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment
for Shares thereunder.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted or waived by either of them, in whole or in part, at any
time and from time to time, in the sole discretion of Parent or Purchaser.
Conditions to the Merger. Under the Merger Agreement, 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: (1) the Merger
Agreement and the transactions contemplated thereby will have been approved by
the affirmative vote of the shareholders of the Company to the extent required
by New Jersey Law and the Certificate of Incorporation; (2) any waiting period
(and any extension thereof) applicable to the consummation of the Merger under
the HSR Act and the Canadian Competition Act will have expired or been
terminated; (3) no governmental authority of competent jurisdiction will have
enacted, issued, promulgated, enforced or entered any law or injunction
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making the Merger illegal or otherwise prohibiting, precluding,
restraining or enjoining consummation of the transactions contemplated by the
Merger Agreement; and (4) Purchaser or its permitted assignee will have
purchased all Shares validly tendered and not withdrawn pursuant to the Offer,
provided that this condition will not be applicable to the obligations of
Parent or Purchaser if, in breach of the Merger Agreement, Purchaser fails to
purchase any Shares validly tendered and not withdrawn pursuant to the Offer.
In addition, under the Merger Agreement, the obligations of Parent and
Purchaser to effect the Merger are also subject to the satisfaction of the
further condition (which may be waived in whole or in part by Parent) that the
Company will have performed in all material respects all material obligations
required to be performed by it under the Merger Agreement on or before the
earlier of (1) such time as Parent's or Purchaser's designees shall constitute
at least a majority of the Board pursuant to the Merger Agreement and (2) the
closing held pursuant to the Merger Agreement; provided, however, that Parent
or Purchaser will waive this condition if Parent or Purchaser does not
designate their nominees as directors on the Board promptly after the purchase
of and payment for any Shares by Purchaser pursuant to the Merger Agreement.
Termination. The Merger Agreement provides that it may be terminated and the
Merger and the other transactions contemplated thereby may be abandoned at any
time prior to the Effective Time, notwithstanding any requisite approval and
adoption of the Merger Agreement and the transactions contemplated thereby by
the shareholders of the Company: (1) by mutual written consent of each of
Parent, Purchaser and the Company; (2) by either Parent or the Company if (a)
the Offer has not been consummated on or prior to March 7, 2001 (the "Outside
Date"), provided that (i) the right to terminate the Merger Agreement will not
be available to any party whose failure to perform or fulfill any obligation
under the Merger Agreement has been the cause of, or resulted in, the failure
to complete the Offer on or prior to such date, (ii) the passage of such
period will be tolled for any part thereof during which any party is subject
to a nonfinal injunction, order, decree, ruling or other action restraining,
enjoining or otherwise prohibiting the consummation of the Offer and (iii) the
Outside Date will be extended day-by-day for each day tolled and in no event
will the Outside Date be extended past May 7, 2001; (b) any governmental
authority or court of competent jurisdiction has enacted, issued, promulgated,
enforced or entered any injunction, order, decree or ruling which is then in
effect and has the effect of making consummation of the Merger illegal or
otherwise prohibiting consummation of the Merger, and such injunction, order,
decree or ruling has become final and non-appealable, provided that the party
seeking to terminate the Merger Agreement has used its reasonable best efforts
to remove or lift such injunction, order, decree or ruling; (c) the Offer has
expired, terminated or been withdrawn pursuant to its terms without any Shares
being purchased therein, provided that the right to terminate the Merger
Agreement pursuant to this clause will not be available to any party whose
failure to fulfill any obligation under the Merger Agreement has been the
cause of, or resulted in, the failure of Parent or Purchaser to purchase
Shares in the Offer; (3) by Parent if (a) due to an occurrence or circumstance
that, if occurring after the commencement of the Offer, would result in a
failure to satisfy any condition set forth in "Conditions to the Offer",
Parent and Purchaser have failed to commence the Offer on or
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prior to the seventh business day after the public announcement of the
execution of the Merger Agreement, provided that Parent may not terminate the
Merger Agreement pursuant to this clause if Parent or Purchaser is in material
breach of the Merger Agreement; (b) the Company, the Board or any committee
thereof, prior to the purchase of the Shares pursuant to the Offer, has (i)
(A) withdrawn, modified or changed, or proposed publicly to withdraw, modify
or change, its approval or recommendation of the Offer, the Merger Agreement
or the Merger in a manner adverse to Parent, (B) failed to reconfirm its
recommendation within four business days after a written request to do so, or
(C) approved or recommended, or proposed publicly to approve or recommend, to
the shareholders of the Company an Acquisition Proposal, or (ii) the Board or
any committee thereof has resolved to take any of the actions set out in
clause (A), (B) or (C) listed above; or (4) by the Company if (a) Purchaser
has failed to commence the Offer within seven business days after the public
announcement of the execution of the Merger Agreement, provided that the
Company may not terminate the Merger Agreement pursuant to this clause if it
is in material breach of the Merger Agreement or (b) the Company concurrently
enters into a definitive agreement providing for a Superior Proposal, provided
that (i) prior thereto or simultaneously therewith, the Company has paid the
termination fee specified under the heading "Fees and Expenses" and (ii) the
Company has complied with certain of its obligations under the "No
Solicitation of Transactions" covenant.
In the event of the termination of the Merger Agreement, the Merger
Agreement provides that (1) written notice of such termination be given to the
other party or parties specifying the provision of the Merger Agreement
pursuant to which such termination is made and (2) the Merger Agreement will
forthwith become void and there shall be no liability thereunder on the part
of any party thereto except under the provisions of the Merger Agreement
related to fees and expenses described in the following paragraph and under
certain other provisions of the Merger Agreement which survive termination,
provided that nothing in the Merger Agreement will relieve any party from
liability for any breach of the Merger Agreement.
Fees and Expenses. In the event that the Merger Agreement is terminated by
the Company pursuant to the provision described in clause 4(b) under the
heading "Termination", the Company will pay Parent a fee of $25 million (the
"Fee"), payable in immediately available funds, prior to or simultaneously
with the entering into of a definitive agreement specified in such clause. In
the event that (1) (a) (i) the Merger Agreement is terminated pursuant to the
provision described in clause 3(b) under the heading "Termination", (ii) the
Merger Agreement is terminated by the Company pursuant to the provision
described in clause 2(a) under the heading "Termination" or (iii) the Offer
has remained open for at least 20 business days and the Minimum Condition has
not been satisfied and the Merger Agreement is therefore terminated by Parent
pursuant to the provision described in clause 2(c) under the heading
"Termination", (b) at the time of such termination (i) a third party has
publicly made an Acquisition Proposal and such Acquisition Proposal has not
been withdrawn or (ii) a bona fide Acquisition Proposal has been made to the
Company, and (c) on the date of such termination, Parent is not in material
breach of the Merger Agreement and the Minimum Condition has not been
satisfied and (2) a definitive agreement is entered into providing for an
Acquisition Proposal within one year of the date of such termination pursuant
to clause (1) of this sentence, then the Company will pay Parent promptly, but
in no event later than three business days after the entering into of such
agreement referred to in clause (2) of this sentence, the Fee, payable in
immediately available funds. In the event that the Company fails to pay the
Fee when due, the Company will reimburse Parent and the Purchaser for the
costs and expenses actually incurred or accrued by Parent and Purchaser in
connection with the collection of the Fee, together with interest on such
unpaid Fee. Except as set forth in this paragraph, all costs and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated thereby will be paid by the party incurring such expenses,
whether or not any transaction is consummated.
The Shareholders Agreement
The following is a summary of the Shareholders Agreement, a copy of which
has been filed as an Exhibit to the Form 8-K filed by the Company with the SEC
on November 9, 2000. Such summary is qualified in its entirety by reference to
the Shareholders Agreement. Capitalized terms not otherwise defined in the
following description of the Shareholders Agreement have the respective
meanings ascribed to them in such agreement.
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Tendering of Shares. The Shareholders Agreement provides that promptly
following the commencement of the Offer, each Shareholder will tender, or
cause to be tendered, in the Offer all of his, her or its respective Shares
pursuant to the terms of the Offer.
Irrevocable Proxy. The Shareholders Agreement provides that from the date
thereof until the termination of the Shareholder's Agreement as provided for
therein, each Shareholder will vote, or direct to vote, such Shareholder's
Shares at every meeting of the shareholders of the Company however called (or
pursuant to any written consent, certificate or other document relating to the
Company that the law of the State of New Jersey may permit or require): (1) in
favor of the approval and adoption of the Merger Agreement and approval of the
Merger and all other transactions contemplated by the Merger Agreement and the
Shareholders Agreement; (2) against any action, agreement, transaction (other
than the Merger Agreement or the transactions contemplated thereby) or
proposal that (a) would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement, (b) is reasonably likely to result in any of the conditions to the
Company's obligations under the Merger Agreement not being fulfilled, (c)
would result in any change in the directors of the Company, other than those
changes contemplated by the Merger Agreement, (d) would result in any change
in the present capitalization of the Company or any amendment to the Company's
corporate structure or business or (e) would result in any other action that
could reasonably be expected to impede, interfere with, delay, postpone or
affect in a materially adverse manner the transactions contemplated by the
Shareholders Agreement or the Merger Agreement or the likelihood of such
transactions being consummated; and (3) in favor of any other matter necessary
to the consummation of the transactions contemplated by the Merger Agreement
or the Shareholders Agreement and considered and voted upon by the
shareholders of the Company.
Pursuant to the Shareholders Agreement, each Shareholder revoked all prior
proxies or powers of attorney with respect to any of his, her or its Shares
and constitutes and appoints Parent and Purchaser, or any nominee(s)
designated by Parent and Purchaser, with full power of substitution and
resubstitution at any time during the term of the Shareholders Agreement, as
his, her or its true and lawful attorney and proxy ("Proxy"), for and in his,
her or its name, place, and stead to demand that the Company call a special
shareholders meeting for the purpose of considering any matter referred to in
the preceeding paragraph and to vote such Shareholder's Shares. Further, each
Shareholder agreed to execute any and all documents and instruments necessary
or appropriate to effectuate the intent of the section of the Shareholders
Agreement granting Parent and Purchaser the Proxy. The Proxy is irrevocable
and coupled with an interest.
No Solicitation of Transactions. Pursuant to the Shareholders Agreement,
each Shareholder agreed that during the term thereof, the Shareholder will
not, nor will it authorize any of its agents or representatives to, directly
or indirectly, solicit, initiate or knowingly encourage any inquiries relating
to, or the submission of, any Acquisition Proposal (as defined in The Merger
Agreement--No Solicitation of Transactions). Each Shareholder further agrees
that it will not, nor will it authorize any of its agents or representatives
to, during the term of the Shareholders Agreement, participate in any
discussions or negotiations (except with Parent or Purchaser) regarding, or
furnish to any person any information with respect to (except to Parent or
Purchaser), or take any action to facilitate the making of any proposal that
constitutes, or may reasonably be expected to lead to, an Acquisition
Proposal. Upon the execution of the Shareholders Agreement, each Shareholder
agreed to immediately cease any discussions or negotiations of such
Shareholder and his, her or its representatives or agents with any person
(other than Parent or Purchaser or their affiliates or representatives) with
respect to any of the foregoing. Each Shareholder agreed to notify Parent and
Purchaser promptly of (1) any such proposal or offer, or any inquiry, or
contact, (2) the material terms and conditions of such proposal, offer,
inquiry, or contact, (3) the identity of the person making such proposal, and
(4) any changes to such proposal.
The Option. Pursuant to the Shareholders Agreement, for the duration of the
term thereof, each Shareholder granted to Parent and Purchaser an irrevocable
option (the "Option") to purchase such Shareholder's Shares at a price per
Share equal in cash to $37.82 or any higher price paid or to be paid by Parent
or Purchaser pursuant to the Offer or the Merger (the "Option Consideration").
The Option (1) will become exercisable for all Shares subject thereto on the
expiration date of the Offer or, if later, the date on which (a) all
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waiting periods under the HSR Act or other applicable law have expired or been
waived and (b) there is no preliminary or final injunction or other order
issued by any governmental authority prohibiting the exercise of the Option
pursuant to the Shareholders Agreement, if, but only if, (A) the number of
Shares tendered in the Offer, when added to the number of Shares not tendered,
if any, that are subject to the Option, will satisfy the Minimum Condition,
and (B) Purchaser has accepted for payment all Shares tendered and not
withdrawn in the Offer, and (2) will remain exercisable for a period of 15
days after the first date on which the Option becomes exercisable pursuant to
clause (1) of this sentence.
If the Option does not become exercisable due to (1) the termination or
withdrawal of the Offer prior to the expiration date of the Offer, or (2) the
failure of Purchaser to accept for payment all Shares tendered and not
withdrawn in the Offer, it will be deemed to have expired. In the event that
Parent or Purchaser wishes to exercise the Option, Parent or Purchaser, prior
to the expiration thereof, will send written notice to each Shareholder whose
Shares are subject to the Option, identifying the place for the closing of the
purchase of such Shares at least two business days prior to such closing.
Representations and Warranties. The Shareholders Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Shareholders as to absence of conflict, title to
shares, valid issuance and brokers.
No Disposition or Encumbrance of Shares. Pursuant to the Shareholders
Agreement, each Shareholder, severally and not jointly, agreed that, during
the term thereof, he, she or it will not, directly or indirectly, (1) sell,
assign, transfer, pledge, encumber or otherwise dispose of any of his, her or
its Shares, (b) deposit any of such Shares into a voting trust or enter into a
voting agreement or arrangement or grant any proxy or power of attorney other
than pursuant to the Shareholders Agreement, (3) enter into any contract,
option or other arrangement or undertaking with respect to the direct or
indirect sale, assignment, transfer or other disposition of any Shares (except
to Parent or Purchaser), or (4) take any action that would make any
representation or warranty of the Shareholder untrue or incorrect in any
material respect or have the effect of preventing or disabling the Shareholder
from performing his, her or its obligations under the Shareholders Agreement;
provided, however, that the Shareholder may transfer all or any of his, her or
its Shares for estate planning purposes to any person; provided, further, that
the obligations under the Shareholders Agreement will attach to such Shares
upon such transfer, and the transferee will be bound by such obligations.
Other Action. The Shareholders Agreement provides that each of the parties
to the Shareholders Agreement agrees to use all reasonable best efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws to
consummate and make effective the transactions among the parties thereto
contemplated thereunder.
Termination. The Shareholders Agreement will terminate upon the earliest to
occur of (1) the closing of the exercise of the Option or the expiration of
the Option Period, if the Option is not exercised, (2) the termination of the
Offer, (3) the termination of the Merger Agreement and (4) the Effective Time.
12. Purpose of the Offer and the Merger; Plans for the Company After the
Offer and the Merger; Shareholder Approval and Appraisal Rights.
Purpose of the Offer and the Merger. The purpose of the Offer and the Merger
is for Parent to acquire control of, and the entire equity interest in, the
Company. The Offer is intended to increase the likelihood that the Merger will
be completed promptly. The acquisition of the entire equity interest in the
Company has been structured as a cash tender offer followed by a cash merger
in order to provide a prompt and orderly transfer of ownership of the Company
from the shareholders to Parent and to provide the shareholders with cash in a
per Share amount equal to the Offer Price for all of their Shares.
Plans for the Company. Following the Merger, the Company will be operated as
a wholly owned subsidiary of Parent. Except as otherwise provided in this
Offer to Purchase, Purchaser and Parent have no present plans or proposals
that would result in an extraordinary corporate transaction, such as a merger,
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reorganization, liquidation or sale or transfer of a material amount of assets
involving the Company or its subsidiaries, or any other material changes in
the Company's capitalization, dividend policy, corporate structure, business
or the composition of the Company Board or the Company's management. Under the
Merger Agreement, however, as soon as practicable after the Effective Time,
Parent shall offer to acquire, or cause any of its affiliates (including the
Surviving Corporation) to acquire, all outstanding shares of Benjamin Moore &
Co., Limited, a Canadian corporation (the "Canadian Subsidiary"), for CDN
$93.55 per share, because the Canadian Subsidiary is not otherwise part of the
Offer.
Shareholder Approval. Under the New Jersey Act, the approval of the Company
Board and, except as described below, the approval of the Company's
shareholders are required to approve and adopt the Merger Agreement and the
transactions contemplated thereby, including the Merger. The Company Board has
unanimously approved and adopted the Merger Agreement and the transactions
contemplated thereby, and, unless the Merger is consummated pursuant to the
short-form merger provisions under the New Jersey Act described below, the
only remaining required corporate action of the Company is the approval of the
Merger Agreement and the Merger by the affirmative vote of two-thirds of the
votes cast by the holders of Shares entitled to vote thereon. Because the
Company was incorporated prior to 1969, and because the Company's Restated
Certificate of Incorporation does not provide for a lower voting requirement,
under Section 14A:10-3 of the New Jersey Act, such shareholder approval
requires an affirmative vote of two-thirds of the votes so cast rather than a
majority.
Accordingly, if the Minimum Condition is satisfied, Purchaser will have
sufficient voting power to cause the approval and adoption of the Merger
Agreement and the transactions contemplated thereby without the affirmative
vote of any other shareholder.
In the Merger Agreement, the Company has agreed to take all action necessary
to convene a meeting of its shareholders as soon as practicable after the
expiration of the Offer for the purpose of considering and taking action on
the Merger Agreement and the transactions contemplated thereby, if such action
is required.
Under the New Jersey Act, if Purchaser acquires, pursuant to the Offer or
otherwise, such number of Shares which, when added to the Shares owned of
record by Purchaser on such date, constitutes at least 90% of the then
outstanding Shares, Purchaser will be able to approve and adopt the Merger
Agreement and the transactions contemplated thereby, and effect the Merger
pursuant to the short-form merger provisions of Section 14A:10-5.1 of the New
Jersey Act, without a vote of the shareholders. Parent, Purchaser and the
Company have agreed to take all necessary and appropriate action to cause the
Merger to be effective as soon as practicable after such acquisition. If
Purchaser does not acquire such number of Shares which, when added to the
Shares owned of record by Purchaser on such date, constitutes at least 90% of
the then outstanding Shares pursuant to the Offer or otherwise and a vote of
the shareholders is required under the New Jersey Act, a significantly longer
period of time will be required to effect the Merger.
Appraisal Rights. No appraisal rights are available in connection with the
Offer or the Merger. Under Section 14A:11-1 of the New Jersey Act, because
shareholders will receive cash for their Shares, they are not entitled to any
appraisal or dissenters' rights.
Going Private Transactions. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. Parent does not believe that Rule
13e-3 will be applicable to the Merger. If applicable, Rule 13e-3 would
require, among other things, that certain financial information concerning the
Company and certain information relating to the fairness of the Merger and the
consideration offered to shareholders therein, be filed with the SEC and
disclosed to shareholders prior to consummation of the Merger.
13. Dividends and Distributions. The Merger Agreement provides that the
Company will not, between the date of the Merger Agreement and the Effective
Time, without the prior written consent of Parent, declare, set aside, make or
pay any dividend or other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock (other than dividends from
any subsidiary of the Company) except for
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(i) regular cash dividends on the Shares declared and paid quarterly in
amounts not to exceed $.210 per Share and at all time consistent with past
practices, and (ii) the extra cash dividend of $.120 per Share for the fourth
quarter of fiscal year 2000, which was declared on November 8, 2000, and is
payable on December 4, 2000, to shareholders of record on November 20, 2000.
All shareholders of record on November 20, 2000, who are entitled to receive
the extra fourth quarter cash dividend of $.120 per share declared by the
Company on November 8, 2000, and payable on December 4, 2000, will receive
such dividend regardless of whether they tender their shares in the offer.
14. Conditions of the Offer. Notwithstanding any other provision of the
Offer, Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c) under
the Exchange Act, pay for, and may delay the acceptance for payment of or,
subject to the restriction referred to above, the payment for, any Shares
tendered pursuant to the Offer, and may extend, terminate or amend the Offer,
if (i) immediately prior to the expiration of the Offer, the Minimum Condition
shall not have been satisfied, (ii) any applicable waiting period under the
HSR Act or the Canadian Competition Act (as defined herein) shall not have
expired or been terminated prior to the expiration of the Offer, or (iii) at
any time on or after the date of this Agreement and prior to the expiration of
the Offer, any of the following conditions shall exist:
(a) (I) there shall have been any statute, rule, regulation, judgment,
order or injunction entered, passed, promulgated, enforced, enacted or
issued, or applicable to the Offer by any Governmental Authority (as
defined in the Merger Agreement) of competent jurisdiction that (i) makes
illegal, prohibits or materially limits the ownership or operation by
Parent, Purchaser or the Company of all or a material portion of the
business or assets of the Company and the Subsidiaries (as defined in the
Merger Agreement), taken as a whole, as a result of the Transactions; or
(ii) imposes limitations on the ability of Parent or Purchaser to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to
the Offer on all matters properly presented to the Company's shareholders,
including, without limitation, the approval of this Agreement and the
Transactions; or (iii) prohibits or makes illegal the acceptance for
payment, payment for, or purchase of Shares by Parent or Purchaser or the
consummation of the Offer or the Merger; or (iv) otherwise renders Parent
or Purchaser unable to accept for payment, pay for, or to purchase some or
all of the Shares; or (II) there shall have been any action or proceeding
instituted by any Governmental Authority and such action or proceeding is
pending before a Governmental Authority of competent jurisdiction that (i)
seeks to make illegal, prohibit or materially limit the ownership or
operation by Parent or Purchaser of all or a material portion of the
business or assets of the Company and the Subsidiaries, taken as a whole;
or (ii) seeks to impose limitations on the ability of Parent or Purchaser
to exercise effectively full rights of ownership of any Shares, including,
without limitation, the right to vote any Shares acquired by Purchaser
pursuant to the Offer on all matters properly presented to the Company's
shareholders, including, without limitation, the approval of the Merger
Agreement and the transactions contemplated thereby; or (iii) seeks to
prohibit or make illegal the acceptance for payment, payment for, or
purchase of Shares by Parent or Purchaser or the consummation of the Offer
or the Merger; or (iv) is reasonably likely to result in a material delay
in or seeks to restrict the ability of Parent or Purchaser, or render
Parent or Purchaser unable to accept for payment, pay for, or to purchase
some or all of the Shares;
(b) a Material Adverse Effect (as defined in the Merger Agreement) shall
have occurred and be continuing;
(c) any representation or warranty of the Company in the Merger Agreement
that is qualified by a reference to Material Adverse Effect shall not be
true and correct or any such representation or warranty that is not so
qualified shall not be true and correct in all material respects, in each
case as if such representation or warranty was made as of such time on or
after the date of the Merger Agreement (except for representations and
warranties made as of a specific date which shall be true and correct as of
such date;
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(d) the Company shall have failed in any material respect to perform, or
to comply with, any material agreement or covenant of the Company to be
performed or complied with by it under the Merger Agreement (including,
without limitation, its agreements or covenants under Section 6.05 of the
Merger Agreement);
(e) the Merger Agreement shall have been terminated in accordance with
its terms; or
(f) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment
for Shares thereunder.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted or waived by either of them, in whole or in part, at any
time and from time to time, in the sole discretion of Parent or Purchaser.
15. Certain Legal Matters and Regulatory Approvals.
General. Except as described in this Section 15, based on information
provided by the Company, none of the Company, Purchaser or Parent is aware of
(i) any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the acquisition of Shares by Parent or Purchaser
pursuant to the Offer, the Merger or otherwise, or (ii) except as set forth
herein, any approval or other action by any governmental, administrative or
regulatory agency or authority, domestic or foreign, that would be required
prior to the acquisition of Shares by Purchaser pursuant to the Offer, the
Merger or otherwise. Should any such approval or other action be required,
Purchaser and Parent presently contemplate that such approval or other action
will be sought, except as described below under "State Antitakeover Statutes."
While, except as otherwise described in this Offer to Purchase, Purchaser does
not presently intend to delay the acceptance for payment of, or payment for,
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if 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, or other substantial
conditions complied with, in the event that such approvals were not obtained
or such other actions were not taken or in order to obtain any such approval
or other action. If certain types of adverse action are taken with respect to
the matters discussed below, Purchaser could decline to accept for payment, or
pay for, any Shares tendered. See Section 14 for certain conditions to the
Offer, including conditions with respect to governmental actions.
State Antitakeover Statutes. Section 14A:10A-4 of the New Jersey Act, in
general, prohibits a New Jersey 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 10% or more of the
voting power of the outstanding stock of the subject corporation) for a period
of five years following the date on which such person becomes an Interested
Stockholder unless prior to the date on which such person becomes an
Interested Stockholder the board of directors of the corporation approves the
Business Combination. Section 14A:10A-5 of the New Jersey Act, in general,
prohibits a New Jersey corporation, such as the Company, from engaging in a
Business Combination with an Interested Stockholder at any time unless (i)
prior to the date such person becomes an Interested Stockholder, the board of
directors of the corporation approves the Business Combination, (ii) the
Business Combination is approved by the affirmative vote of the holders of
two-thirds of the voting stock not beneficially owned by the Interested
Stockholder at a meeting called for such purpose, or (iii) the Business
Combination meets certain price requirements. The provisions of Sections
14A:10A-4 and 14A:10A-5 of the New Jersey Act are not applicable to any of the
transactions contemplated by the Merger Agreement because the Merger Agreement
and the transactions contemplated thereby (including the acquisition of Shares
pursuant to the Shareholders Agreement) were approved by the Company Board
prior to the execution thereof.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal
executive offices or principal places of business in such states. In Edgar v.
MITE Corp., the Supreme Court of the United States (the
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"Supreme Court") invalidated on constitutional grounds the Illinois Business
Takeover statute, which, as a matter of state securities law, made certain
corporate acquisitions more difficult. However, in 1987, in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana
may, as a matter of corporate law and, in particular, with respect to those
aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquirer from voting on the affairs of a target
corporation without the prior approval of the remaining shareholders. The
state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of shareholders in the state and
were incorporated there. Subsequently, in TLX Acquisition Corp. v. Telex
Corp., a Federal District Court in Oklahoma ruled that Oklahoma's takeover
statutes were unconstitutional insofar as they apply to corporations
incorporated outside Oklahoma because they would subject such corporations to
inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a
Federal District Court in Tennessee ruled that four Tennessee takeover
statutes were unconstitutional as applied to corporations incorporated outside
Tennessee. This decision was affirmed by the United States Court of Appeals
for the Sixth Circuit.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of New Jersey will by their
terms apply to the Offer, and, except as set forth above with respect to
Sections 14A:10A-4 and 14A:10A-5 of the New Jersey Act, neither Parent nor
Purchaser has attempted to comply with any state antitakeover statute or
regulation. Purchaser reserves the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer and nothing in
this Offer to Purchase or any action taken in connection with the Offer is
intended as a waiver of such right. If it is asserted that any state
antitakeover statute is applicable to the Offer and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer,
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and Purchaser might be unable
to accept for payment or pay for Shares tendered pursuant to the Offer or may
be delayed in consummating the Offer. In such case, Purchaser may not be
obligated to accept for payment, or pay for, any Shares tendered pursuant to
the Offer. See Section 14.
U.S. Antitrust Compliance. The Offer and the Merger are subject to the HSR
Act, which provides that certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the
Federal Trade Commission (the "FTC") and certain waiting period requirements
have been satisfied.
Parent expects to file its Notification and Report Form with respect to the
Offer and the Merger with the Antitrust Division and the FTC on or about
November 17, 2000, or as soon thereafter as practicable. The waiting period
under the HSR Act with respect to the Offer will expire at 11:59 p.m., New
York City time, the fifteenth day after the date Parent's form is filed,
unless early termination of the waiting period is granted. However, the DOJ or
FTC may extend the waiting period by requesting additional information or
documentary material from Parent or the Company. If such a request is made,
such waiting period will 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. Thereafter, the waiting period can 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 DOJ 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. Purchaser will not accept for payment Shares tendered
pursuant to the Offer unless and until the waiting period requirements imposed
by the HSR Act with respect to the Offer have been satisfied. See Section 14.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares
by Purchaser pursuant to the Offer and the Merger. At any time before or after
Purchaser's purchase of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares
pursuant to the Offer or seeking divestiture of Shares acquired by Purchaser
or the divestiture of substantial assets of Parent, the Company or any of
their respective subsidiaries. Private parties, as well as state
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governments, 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 a challenge is made, what the
result will be. See Section 14 of this Offer to Purchase for certain
conditions to the Offer that could become applicable in the event of such a
challenge.
Canadian Antitrust Compliance. Under the Competition Act (Canada), R.S.
1985, c.C-34, as amended (the "Canadian Competition Act"), parties to a merger
are required to pre-notify the Commissioner of Competition (the
"Commissioner"), who is responsible for the administration and enforcement of
the Canadian Competition Act, and provide detailed information with respect to
the proposed merger, where two thresholds related to the size of the parties
to the transaction and to the size of the transaction are met or exceeded.
Parent, Purchaser and the Company have determined that the two thresholds
set forth in the Canadian Competition Act have been met, and thus pre-
notification is required to the Commissioner. Accordingly, two Short Form
Information forms for Notifiable Transactions will be filed by
Purchaser/Parent and the Company with the Commissioner on or about November
17, 2000, or as soon thereafter as practicable.
As provided for under the Canadian Competition Act, where a Short Form is
used, the parties to a merger may not complete the transaction before the
expiration of a waiting period of 14 calendar days following the filing of the
required information with the Commissioner. During such waiting period, the
Commissioner may request that the parties provide additional information
and/or complete a Long Form Information form. Where a Long Form is requested,
the waiting period of 42 calendar days does not begin until the Long Form is
filed with the Commissioner.
Parent, Purchaser and the Company intend to complete the transaction only
upon the expiration of the relevant waiting period or after they have received
a "no action" letter from the Commissioner indicating that he will not make an
application to the Competition Tribunal in respect of the transaction.
Purchaser will not accept for payment Shares tendered pursuant to the Offer
unless and until the waiting period requirements imposed by the Canadian
Competition Act with respect to the Offer have been satisfied. See Section 14.
The Commissioner has the authority to challenge a merger regardless of its
size and regardless of whether the parties are required to pre-notify the
Commissioner of the transaction. Such challenges must be made on the basis
that the transaction is likely to result in a "substantial lessening or
prevention of competition" in a market.
16. Fees and Expenses.
Except as set forth below, Purchaser will not pay any fees or commissions to
any broker, dealer or other person for soliciting the tender of Shares
pursuant to the Offer.
Information Agent. Purchaser has retained Georgeson Shareholder
Communications Inc. to act as the Information Agent in connection with the
Offer. The Information Agent may contact holders of Shares by mail, telephone,
telex, telegraph and personal interviews and may request brokers, dealers and
other nominee shareholders to forward materials relating to the Offer to
beneficial owners of Shares. The Information Agent will receive reasonable and
customary compensation for such services, plus reimbursement of out-of-pocket
expenses, and Purchaser will indemnify the Information Agent against certain
liabilities and expenses in connection with the Offer, including liabilities
under the federal securities laws.
Depositary. Purchaser will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, plus reimbursement
for out-of-pocket expenses, and will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws. Brokers, dealers, commercial banks and trust
companies will be reimbursed by Purchaser for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
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17. Miscellaneous.
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid
state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Purchaser will make a good faith effort to comply with any such state
statute. If, after such good faith effort, Purchaser cannot comply with any
such state statute, the Offer will not made to (nor will tenders be accepted
from or on behalf of) holders of Shares in such state.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER, PARENT OR THE COMPANY NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the SEC the Schedule TO,
together with exhibits, furnishing certain additional information with respect
to the Offer, and may file amendments thereto. The Schedule TO, including
exhibits and any amendments thereto, may be inspected at, and copies may be
obtained from, the same places and in the same manner as set forth in Section
8 with respect to the Company (except that they will not be available at the
regional offices of the SEC).
B ACQUISITION, INC.
November 17, 2000
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SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND
PARENT
The following description sets forth (i) the name and title of each
executive officer and director of each of Purchaser and Parent, and (ii) each
such individual's business address, present principal occupation and material
positions and occupations within the past five years. Unless otherwise
specified, each person listed below is a citizen of the United States and has
his or her principal business address at 1440 Kiewit Plaza, Omaha, Nebraska
68131.
A. Directors and Executive Officers of Purchaser
The sole director of Purchaser is Marc D. Hamburg, and the executive
officers of Purchaser are Warren E. Buffett, President, and Marc D. Hamburg,
Vice President, Secretary and Treasurer.
B. Directors and Executive Officers of Parent
The Directors of Berkshire Hathaway Inc. are Warren E. Buffett, Charles T.
Munger, Susan T. Buffett, Howard G. Buffett, Malcolm G. Chace, Ronald L.
Olson, and Walter Scott, Jr. The executive officers of Berkshire Hathaway Inc.
are Warren E. Buffett, Chairman and Chief Executive Officer, Charles T.
Munger, Vice Chairman, and Marc D. Hamburg, Vice President and Treasurer.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment, Material
Positions Held
Name During Past Five Years, and Business Address
---- ----------------------------------------------------
<C> <S>
Warren E. Buffett.. Mr. Buffett has been Chairman and Chief Executive Officer
of Berkshire since 1970. He is also a director of The
Coca-Cola Company, The Gillette Company and The Washington
Post Company.
Charles T. Munger.. Mr. Munger has been a director and Vice Chairman of
Berkshire's Board of Directors since 1978. He is Chairman
of the Board of Directors and Chief Executive Officer of
Wesco Financial Corporation, Chairman of the Board of
Directors of Daily Journal Corporation and a director of
Costco Wholesale Corporation. His business address is 355
S. Grand Avenue, 34th Floor, Los Angeles, California
90071.
Howard G. Buffett.. Mr. Buffett is Chairman of the Board of Directors of The
GSI Group, a company primarily engaged in the manufacture
of agricultural equipment. From 1992 until June 5, 1995,
Mr. Buffett had been Vice President, Assistant to the
Chairman and a Director of Archer Daniels Midland Company,
a company engaged principally in the business of
processing and merchandising agricultural commodities. He
is also a director of Coca-Cola Enterprises, Inc., Lindsay
Manufacturing Co. and Mond Industries Inc. His business
address is 1004 East Illinois Street, Assumption, Illinois
62510.
Susan T. Buffett... Mrs. Buffett has been a director of Berkshire since 1991.
Mrs. Buffett has not been employed in the past five years.
Malcolm G. Chace... In 1996, Mr. Chace was named Chairman of the Board of
Directors of BankRI, a community bank located in the state
of Rhode Island. Prior to 1996, Mr. Chace had been a
private investor. Mr. Chace's business address is One
Providence Washington Plaza, Providence, Rhode Island
02903.
Marc D. Hamburg.... Mr. Hamburg has been the Vice President and Treasurer of
Berkshire for more than the past five years.
</TABLE>
40
<PAGE>
<TABLE>
<C> <S>
Ronald L. Olson.... Mr. Olson has, for more than the past five years, been a
partner in the law firm of Munger, Tolles & Olson LLP. He
is also a director of Edison International, Western Asset
Trust, Inc. and Pacific American Income Shares Inc. His
business address is 355 S. Grand Avenue, 35th Floor, Los
Angeles, California 90071.
Walter Scott, Jr... Mr. Scott has been Chairman of the Board of Level 3
Communications, Inc., a communications and information
services company, since 1979. Level 3 Communications was
formerly known as Peter Kiewit Sons', Inc., for which,
until the spin-off of its construction operations in March
1998, Mr. Scott also served as Chief Executive Officer.
Mr. Scott is also a director of Burlington Resources,
Inc., ConAgra, Inc., Valmont Industries, Inc.,
Commonwealth Telephone Enterprises, Inc. and RCN
Corporation.
</TABLE>
41
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for the Shares and any other
required documents should be sent by each shareholder of the Company or such
shareholder's broker-dealer, commercial bank, trust company or other nominee
to the Depositary as follows:
The Depositary for the Offer is:
EquiServe Trust Company, N.A.
<TABLE>
<CAPTION>
By Hand: By First-Class Mail: By Overnight Courier:
<S> <C> <C>
Securities Transfer & EquiServe Trust Company, N.A. EquiServe Trust Company, N.A.
Reporting Services, Inc. Attn: Corporate Actions Attn: Corporate Actions
c/o EquiServe Trust Company, N.A. P.O. Box 8029 150 Royall Street
100 William Street, Galleria Boston, MA 02266-8029 Canton, MA 02021
New York, NY 10038
</TABLE>
By Facsimile Transmission:
(Eligible Institutions Only)
(781) 575-2233 or (781) 575-2232
Confirm by Telephone to:
(781) 575-3100
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Information
Agent at its telephone number and location listed below. You may also contact
your broker, dealer, commercial bank or trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the offer is:
[LOGO OF GEORGESON SHAREHOLDER COMMUNICATIONS INC.]
17 State Street
10th floor
New York, NY 10004
Bankers and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
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