<PAGE>
Exhibit (A).(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Bush Boake Allen Inc.
at
$48.50 Net Per Share
by
B Acquisition Corp.
a wholly owned subsidiary of
International Flavors & Fragrances Inc.
-----------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, NOVEMBER 3, 2000, UNLESS THE OFFER IS EXTENDED.
-----------------
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED AS
OF SEPTEMBER 25, 2000, AMONG BUSH BOAKE ALLEN INC. (THE "COMPANY"),
INTERNATIONAL FLAVORS & FRAGRANCES INC. ("PARENT") AND B ACQUISITION CORP., A
WHOLLY OWNED SUBSIDIARY OF PARENT ("MERGER SUBSIDIARY"). THE OFFER IS
CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT
PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT
NUMBER OF SHARES WHICH REPRESENTS MORE THAN 66 2/3% OF THE SHARES OUTSTANDING
(ON A FULLY DILUTED BASIS) ON THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT AND
THE EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE HART-
SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, OR MATERIAL
APPLICABLE FOREIGN ANTITRUST REGULATIONS. THE OFFER IS ALSO SUBJECT TO OTHER
TERMS AND CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. INTERNATIONAL PAPER
COMPANY, WHICH HOLDS APPROXIMATELY 68% OF THE OUTSTANDING SHARES OF THE
COMPANY, HAS AGREED TO TENDER ITS SHARES IN THE OFFER. SEE SECTIONS 10 AND 13.
---------------
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY (1) DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN) ARE ADVISABLE AND
IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, (2) APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER, AND (3) RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES (AS DEFINED HEREIN) PURSUANT TO THE OFFER.
---------------
IMPORTANT
Any shareholder of the Company desiring to tender all or any portion of such
shareholder's Shares must either (1) complete and sign the enclosed Letter of
Transmittal (as defined herein) (or facsimile thereof) in accordance with the
Instructions in the Letter of Transmittal, have such shareholder's signature
thereon guaranteed (if required by Instruction 1 to the Letter of
Transmittal), mail or deliver the Letter of Transmittal (or a facsimile
thereof) and any other required documents to the Depositary (as defined
herein) and either deliver the certificates for such Shares to the Depositary
or tender such Shares pursuant to the procedure for book-entry transfer
discussed in Section 3 of this Offer to Purchase or (2) request such
shareholder's broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for such shareholder. Any shareholder whose Shares
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee must contact such broker, dealer, commercial bank, trust
company or other nominee to tender such Shares.
Any shareholder of the Company who desires to tender Shares and whose
certificates evidencing such Shares are not immediately available, or who
cannot comply with the procedures for book-entry transfer on a timely basis,
or who cannot deliver all required documents to the Depositary prior to the
expiration of the Offer, may tender such Shares by following the procedures
for guaranteed delivery discussed in Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Dealer Manager
(as defined herein) or the Information Agent (as defined herein) at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase,
the Letter of Transmittal, the Notice of Guaranteed Delivery (as defined
herein) and other tender offer materials may also be directed to the
Information Agent (as defined herein). A shareholder may also contact such
shareholder's broker, dealer, commercial bank or trust company for assistance.
---------------
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
October 6, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
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SUMMARY TERM SHEET......................................................... 1
INTRODUCTION............................................................... 6
THE OFFER.................................................................. 8
1. Terms of the Offer.................................................... 8
2. Acceptance for Payment and Payment for Shares......................... 10
3. Procedures for Accepting the Offer and Tendering Shares............... 11
4. Withdrawal Rights..................................................... 14
5. Certain Federal Income Tax Consequences............................... 15
6. Price Range of the Shares; Dividends.................................. 16
7. Certain Information Concerning the Company............................ 16
8. Certain Information Concerning Merger Subsidiary and Parent........... 18
9. Sources and Amount of Funds........................................... 19
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
10. Background of the Offer; Purpose of the Offer and the Merger; the
Merger Agreement and Certain Other Agreements........................ 19
11. Plans for the Company; Other Matters................................. 34
12. Dividends and Distributions.......................................... 36
13. Conditions to the Offer.............................................. 36
14. Effect of the Offer on the Market for Shares; NYSE Quotation;
Exchange Act Registration; Margin Regulations........................ 37
15. Certain Legal Matters; Regulatory Approvals.......................... 38
16. Fees and Expenses.................................................... 41
17. Miscellaneous........................................................ 42
Schedule I--Information Concerning Directors and Executive Officers of
Merger Subsidiary and Parent............................................. I-1
</TABLE>
<PAGE>
SUMMARY TERM SHEET
B Acquisition Corp. is offering to purchase all of the issued and
outstanding shares of common stock of Bush Boake Allen Inc. for $48.50 per
share in cash. The following are some of the questions you, as a shareholder
of Bush Boake Allen, may have and answers to those questions. We urge you to
read carefully the remainder of this Offer to Purchase and the Letter of
Transmittal because the information in this summary term sheet is not
complete. Additional important information is contained in the remainder of
this Offer to Purchase and the Letter of Transmittal.
Who is Offering to Buy My Securities?
Our name is B Acquisition Corp. We are a Virginia corporation formed for the
purpose of making a tender offer for all of the common stock of Bush Boake
Allen and have carried on no activities other than in connection with the
merger agreement among Bush Boake Allen, International Flavors & Fragrances
Inc. and ourselves. We are a wholly owned subsidiary of International Flavors
& Fragrances, a New York corporation. See the "Introduction" and Section 1.
What are the Classes and Amounts of Securities Sought in the Offer?
We are seeking to purchase all of the issued and outstanding shares of
common stock of Bush Boake Allen. See the "Introduction" and Section 1.
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 $48.50 per share, net to you, in cash. If you are the
record owner of your shares and you tender your shares to us in the offer, you
will not have to pay brokerage fees or similar expenses. If you own your
shares through a broker or other nominee, and your broker tenders your shares
on your behalf, your broker or nominee may charge you a fee for doing so. You
should consult your broker or nominee to determine whether any charges will
apply. See the "Introduction."
Do You Have the Financial Resources to Make Payment?
International Flavors & Fragrances, our parent company, will provide us with
sufficient funds to purchase all shares validly tendered and not withdrawn in
the offer and to provide funding for the merger, which is expected to follow
the successful completion of the offer in accordance with the terms and
conditions of the merger agreement. International Flavors & Fragrances will
obtain its funds under a credit facility from Citibank, N.A. and Salomon Smith
Barney Inc. See Section 9.
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,
and we have already arranged for all of our funding to come from International
Flavors & Fragrances under a credit facility from Citibank and Salomon Smith
Barney. Additionally, the offer is not subject to any financing condition. See
Section 9.
How Long Do I Have to Decide Whether to Tender in the Offer?
You will have at least until 12:00 midnight, New York City time, on Friday,
November 3, 2000, to tender your shares in the offer. Further, if you cannot
deliver everything that is required in order to make a valid tender by that
time, you may be able to use a guaranteed delivery procedure, which is
described later in this Offer to Purchase. See Sections 1 and 3.
1
<PAGE>
Can the Offer be Extended and Under What Circumstances?
We have agreed in the merger agreement that:
. Without the consent of Bush Boake Allen, we may extend the offer beyond
the scheduled expiration date from time to time, if at that date any of
the conditions to our obligation to accept for payment and to pay for
the shares are not satisfied or, to the extent permitted by the merger
agreement, waived, for a period of time until such conditions are
satisfied or waived. If any of the conditions are not satisfied or
waived on any scheduled expiration date, we are required to extend the
offer until the conditions are satisfied or waived, unless they could
not reasonably be expected to be satisfied by January 31, 2001.
. Without the consent of Bush Boake Allen, we may extend the offer for any
period required by any rule, regulation, interpretation or position of
the Securities and Exchange Commission or its staff applicable to the
offer or any period required by applicable law.
. Without the consent of Bush Boake Allen, we may extend the offer for one
or more subsequent offering periods up to an additional 20 business days
in the aggregate pursuant to Rule 14d-11 of the Securities Exchange Act
of 1934, as amended. There will be no withdrawal rights during the
subsequent offering period.
See Section 1 of this Offer to Purchase for more details on our ability to
extend the offer.
How Will I be Notified if the Offer is Extended?
If we extend the offer, we will inform The Bank of New York, the depositary
for the offer, of that fact and will make a public announcement of the
extension not later than 9:00 a.m., New York City time, on the next business
day after the day on which the offer was scheduled to expire. See Section 1.
What are the Most Significant Conditions to the Offer?
. We are not obligated to accept for payment or to purchase any shares
that are validly tendered unless the number of shares validly tendered
and not properly withdrawn before the expiration date of the offer
represents more than 66 2/3% of the then outstanding shares on a fully
diluted basis on the date of purchase in the offer. We call this
condition the "minimum condition." For purposes of the offer, "on a
fully diluted basis" means, as of any time, the number of shares
outstanding, together with the shares which Bush Boake Allen may be
required to issue pursuant to warrants, options or obligations
outstanding at that date under any employee benefit arrangements, as
these arrangements are defined in the merger agreement, or otherwise,
whether or not vested or then exercisable. International Paper Company,
which owns approximately 68% of Bush Boake Allen's outstanding shares,
has agreed to tender its shares in the offer. Assuming International
Paper tenders all of the shares of Bush Boake Allen common stock it
beneficially owns in the offer and no additional shares are issued by
Bush Boake Allen, International Flavors & Fragrances will be able to
effect the merger without any other shareholder tendering shares in the
offer. Bush Boake Allen has agreed to consent to a waiver of the minimum
condition if International Paper has tendered its shares, but the total
number of shares tendered does not constitute more than 66 2/3% of the
outstanding shares of Bush Boake Allen on a fully diluted basis.
Moreover, Bush Boake Allen has been advised that each of its directors
and executive officers intends to tender pursuant to the offer all
shares owned of record and beneficially by such directors and executive
officers. To the extent that directors and executive officers of Bush
Boake Allen exercise stock options under Bush Boake Allen's stock option
plans and do not tender the shares underlying the stock options in the
offer, it is possible that we will not receive more than 66 2/3% of the
outstanding shares in the offer, depending on the number of shares
tendered in the offer by shareholders other than International Paper and
the directors and executive officers of Bush Boake Allen. Additionally,
International Paper has entered into a voting and tender agreement with
International Flavors & Fragrances, us and the Company, which grants
International Flavors & Fragrances an option to purchase the shares
owned by International Paper in connection with termination of the
merger agreement under certain circumstances. See Section 10.
2
<PAGE>
. We are not obligated to accept for payment or to purchase shares that
are validly tendered if the applicable waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act or under applicable merger
control regulations of foreign governmental entities, individually or in
the aggregate, having jurisdiction over a material portion of Bush Boake
Allen's business or assets have not expired or been terminated by the
expiration date of the offer.
. We are not obligated to accept for payment or to purchase shares that
are validly tendered at any time on or after the date of the merger
agreement and prior to the date shares are first accepted for payment
under the offer if, among other things, an event, change, occurrence or
development of a state of facts or circumstances, subject to certain
exceptions, having a material adverse effect on the business, assets,
liabilities, results of operations or financial condition of Bush Boake
Allen and its subsidiaries has occurred.
. The offer is also subject to a number of other conditions. We can waive
most of the conditions to the offer without Bush Boake Allen's consent.
We cannot waive the minimum condition without such consent; however,
Bush Boake Allen has agreed to consent to a waiver of the minimum
condition if International Paper has tendered its shares, but the total
number of shares tendered does not constitute more than 66 2/3% of the
outstanding shares of Bush Boake Allen on a fully diluted basis.
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 The Bank of New York, the
depositary for the offer, not later than the time the tender offer expires. If
your shares are held in street name, the shares can be tendered by your
nominee through The Bank of New York. 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
trading days. For the tender to be valid, however, the depositary must receive
the missing items within that three trading day period. See Section 3.
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 Monday, December 4, 2000, you may
withdraw them at any time after that date until we accept shares for payment.
This right to withdraw, however, will not apply to the subsequent offering
period discussed in Section 1. See Section 4.
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.
What Does the Bush Boake Allen Board of Directors Recommend Regarding the
Offer?
We are making the offer pursuant to the merger agreement, which has been
unanimously approved by the Bush Boake Allen board of directors. The board of
directors of Bush Boake Allen unanimously (1) determined that the terms of the
offer and the merger are advisable and in the best interests of Bush Boake
Allen and its shareholders, (2) approved the merger agreement and the
transactions contemplated thereby, including the offer and the merger, and (3)
recommends that Bush Boake Allen's shareholders accept the offer and tender
their shares pursuant to the offer. See the "Introduction."
3
<PAGE>
Have Any Bush Boake Allen Shareholders Agreed to Tender Their Shares?
Yes. International Paper, Bush Boake Allen's principal shareholder, owning
approximately 68% of Bush Boake Allen's outstanding shares, has agreed to
tender its shares in the offer. In addition, Bush Boake Allen has been advised
that each of its directors and executive officers intends to tender pursuant
to the offer all shares owned of record and beneficially by such directors and
executive officers. If International Paper tenders its shares in the offer and
such shares at that time constitute more than 66 2/3% of the outstanding
shares, the merger can be effected without a tender of shares by any other
shareholder of Bush Boake Allen.
If More Than 66 2/3% of the Outstanding Shares Are Tendered and Accepted for
Payment, Do You Anticipate that Bush Boake Allen Will 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, Bush Boake Allen will no longer 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 Bush Boake Allen common stock will
no longer be eligible to be traded on the New York Stock Exchange; there may
not be a public trading market for Bush Boake Allen common stock; and Bush
Boake Allen may cease making filings with the Securities and Exchange
Commission or otherwise cease being required to comply with the SEC rules
relating to publicly held companies. See Section 14.
Will the Tender Offer Be Followed by a Merger if All of the Bush Boake Allen
Shares Are Not Tendered in the Offer?
Yes. If we accept for payment and pay for more than 66 2/3% of the shares of
Bush Boake Allen on a fully diluted basis, we will be merged with and into
Bush Boake Allen. If that merger takes place, International Flavors &
Fragrances will own all of the issued and outstanding shares of Bush Boake
Allen, and all remaining shareholders of Bush Boake Allen, other than us, will
receive in the merger $48.50 per share in cash, or any higher price per share
that is paid in the offer. See the "Introduction."
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 Bush Boake Allen that are still in the hands of
the public may be so small that there no longer will be an active public
trading market, or, possibly, there may not be any public trading market, for
the Bush Boake Allen common stock. Also, as described above, Bush Boake Allen
may cease making filings with the SEC or otherwise may not be required to
comply with the SEC rules relating to publicly held companies. See the
"Introduction" and Sections 11 and 14.
What Is the Market Value of My Shares as of a Recent Date?
On September 22, 2000, the last trading day before we announced the
acquisition, the last sale price of Bush Boake Allen common stock reported on
the New York Stock Exchange was $43.563 per share. On October 5, 2000, the
last trading day before we commenced the tender offer, the last sale price of
Bush Boake Allen common stock reported on the New York Stock Exchange was
$47.875. We encourage you to obtain a recent quotation for shares of Bush
Boake Allen common stock in deciding whether to tender your shares. See
Section 6.
4
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Generally, What Are the 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. If the shares exchanged constitute
capital assets in the hands of the shareholder, such gain or loss will be
capital gain or loss. In general, capital gains recognized by an individual
will be subject to a maximum United States federal income tax rate of 20% if
the shares were held for more than one year, and if held for one year or less
they will be subject to tax at ordinary income tax rates. See Section 5.
To Whom May I Speak if I Have Questions About the Tender Offer?
You may call Georgeson Shareholder Communications Inc. at (212) 440-9800
(banks and brokers call collect) or (800) 223-2064 (all others call toll free)
or Morgan Stanley & Co. Incorporated at (212) 761-8322 (call collect).
Georgeson is acting as the information agent and Morgan Stanley is acting as
the dealer manager for our tender offer. See the back cover of this Offer to
Purchase.
5
<PAGE>
To the Holders of Common Stock of
Bush Boake Allen Inc.:
INTRODUCTION
B Acquisition Corp., a Virginia corporation ("Merger Subsidiary") and a
wholly owned subsidiary of International Flavors & Fragrances Inc., a New York
corporation ("Parent"), hereby offers to purchase all the issued and
outstanding shares (the "Shares") of common stock, par value $1.00 per share
(the "Common Stock"), of Bush Boake Allen Inc., a Virginia corporation (the
"Company"), at a price of $48.50 per Share (the "Offer Price"), net to the
seller in cash, without interest, upon the terms and subject to the conditions
discussed in this Offer to Purchase and in the related Letter of Transmittal
(which, as amended or supplemented from time to time, together constitute the
"Offer").
Tendering shareholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
purchase of Shares by Merger Subsidiary pursuant to the Offer. Shareholders
who hold their Shares through a bank or broker should check with such
institution as to whether they will charge any service fees. However, if you
fail to complete and sign the Substitute Form W-9 that is included in the
Letter of Transmittal, you may be subject to a required backup federal income
tax withholding of 31% of the gross proceeds payable in the Offer. Merger
Subsidiary will pay all fees and expenses of Morgan Stanley & Co. Incorporated
("Morgan Stanley"), which is acting as the dealer manager for the Offer (in
such capacity, the "Dealer Manager"), The Bank of New York, which is acting as
the depositary for the Offer (in such capacity, the "Depositary"), and
Georgeson Shareholder Communications Inc., which is acting as information
agent for the Offer (in such capacity, the "Information Agent"), incurred in
connection with the Offer and in accordance with the terms of the agreements
entered into between Merger Subsidiary and/or Parent and each such person. See
Section 16.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of September 25, 2000 (the "Merger Agreement"), among the Company, Parent
and Merger Subsidiary. Pursuant to the Merger Agreement, as soon as
practicable after the completion of the Offer and satisfaction or waiver, if
permissible, of all conditions to the Merger (as defined below), 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 of the Company (if required by applicable law), Merger Subsidiary
will be merged with and into the Company (the "Merger") and the Company will
be the surviving corporation in the Merger (the "Surviving Corporation") in
accordance with the Virginia Stock Corporation Act, as amended (the "VSCA").
At the effective time of the Merger (the "Effective Time"), each Share then
outstanding (other than Shares held by (i) any subsidiaries of the Company and
(ii) Parent or any of its subsidiaries, including Merger Subsidiary), will be
converted into the right to receive $48.50 in cash (the "Merger
Consideration"), without interest. The Merger Agreement is more fully
described in Section 10.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") UNANIMOUSLY (1)
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE ADVISABLE AND IN THE
BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, (2) APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND
THE MERGER, AND (3) RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
Credit Suisse First Boston Corporation ("CSFB"), financial advisor to the
Company, has delivered to the Company Board its written opinion, dated as of
September 25, 2000, to the effect that as of such date and based upon and
subject to the matters stated in the opinion, the $48.50 per Share cash
consideration to be received in the Offer and the Merger by the holders of
Shares was fair, from a financial point of view, to such holders (other than
Parent and its affiliates). The full text of CSFB's written opinion, dated
September 25, 2000, which describes
6
<PAGE>
the assumptions made, procedures followed, matters considered and limitations
on the review undertaken, is attached as an annex to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-
9"), which has been filed by the Company with the Securities and Exchange
Commission (the "SEC") in connection with the Offer and which is being mailed
to holders of Shares herewith. Holders of Shares are urged to read the full
text of that opinion carefully.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED
HEREIN) THAT NUMBER OF SHARES REPRESENTING MORE THAN 66 2/3% OF THE SHARES
OUTSTANDING (ON A FULLY DILUTED BASIS) ON THE DATE SHARES ARE ACCEPTED FOR
PAYMENT IN THE OFFER (THE "MINIMUM CONDITION") AND THE EXPIRATION OR
TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), OR MATERIAL
APPLICABLE FOREIGN ANTITRUST REGULATIONS. THE OFFER IS ALSO SUBJECT TO OTHER
TERMS AND CONDITIONS. SEE SECTION 13.
For purposes of the offer, "on a fully diluted basis" means, as of any time,
the number of Shares outstanding, together with the Shares which the Company
may be required to issue pursuant to warrants, options or obligations
outstanding at that date under any Employee Benefit Arrangements (as defined
in the Merger Agreement), or otherwise, whether or not vested or then
exercisable.
The Company has represented to Parent and Merger Subsidiary that, as of the
date of the Merger Agreement, 19,351,063 Shares were issued and outstanding
and 1,401,714 Shares were reserved for issuance upon exercise of stock
options. International Paper Company, a New York corporation and the principal
shareholder of the Company (the "Principal Shareholder"), beneficially owns
13,150,000 Shares and has agreed to tender all of its Shares in the Offer
pursuant to a Voting and Tender Agreement, dated as of September 25, 2000 (the
"Support Agreement"), among the Principal Shareholder, the Company, Parent and
Merger Subsidiary. Assuming the Principal Shareholder tenders all of the
Shares it beneficially owns in the Offer and no additional Shares are issued
by the Company, Parent will be able to effect the Merger without the need for
any other shareholder to tender Shares in the Offer. The Company has agreed to
consent to a waiver of the Minimum Condition to enable Merger Subsidiary to
purchase the Shares owned by the Principal Shareholder if the Principal
Shareholder has tendered its Shares, but the total number of Shares tendered
does not constitute more than 66 2/3% of the outstanding Shares of Common
Stock on a fully diluted basis on the date of purchase in the Offer. Moreover,
the Company has been advised that each of its directors and executive officers
intends to tender pursuant to the Offer all Shares owned of record and
beneficially by such directors and executive officers. To the extent that
directors and executive officers of the Company exercise Stock Options under
the Company Stock Option Plans (each as defined herein) and do not tender the
Shares underlying the Stock Options in the Offer, it is possible that Merger
Subsidiary will not receive more than 66 2/3% of the outstanding Shares in the
Offer, depending on the number of Shares tendered in the Offer by shareholders
other than the Principal Shareholder and the directors and executive officers
of the Company. Additionally, pursuant to the Support Agreement, the Principal
Shareholder has granted Merger Subsidiary an option (the "Option") to purchase
all of the Shares owned by Principal Shareholder at a purchase price per Share
equal to $48.50 (adjustable as described in Section 10, the "Option Price") in
connection with termination of the Merger Agreement under certain
circumstances. See Sections 10 and 13.
The Merger Agreement provides that, upon the acceptance by Merger Subsidiary
for payment of, and payment for, any Shares pursuant to the Offer, Parent
shall be entitled to designate such number of directors, rounded up to the
next whole number, on the Company Board so that the percentage of Parent's
nominees on the Company Board equals the percentage of outstanding Shares
beneficially owned by Parent and its affiliates. The Company will, at such
time, upon the request of Merger Subsidiary, take all reasonable actions to
cause Parent's designees to be elected or appointed to the Company Board, if
necessary, by increasing the size of the Company Board or securing
resignations of incumbent directors or both.
7
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Consummation of the Merger is conditioned upon, among other things, the
approval of the Merger Agreement by the requisite vote of shareholders of the
Company, if required by the VSCA. Under the VSCA, the affirmative vote of the
holders of more than 66 2/3% of the outstanding Shares is the only vote of any
class or series of the Company's capital stock that would be necessary to
approve the Merger Agreement and the Merger at any required meeting of the
Company's shareholders. If the Minimum Condition is satisfied, or waived, and
following the purchase of Shares by Merger Subsidiary pursuant to the Offer,
Merger Subsidiary and its affiliates will own more than 66 2/3% of the
outstanding Shares, and Merger Subsidiary will be able to effect the Merger
without the affirmative vote of any other shareholder. The Merger Agreement is
more fully described in Section 10.
Under Section 13.1-719 of the VSCA, if a corporation owns at least 90% of
the outstanding shares of each class of a subsidiary corporation, the
corporation holding such stock may merge such subsidiary into itself, or
itself into such subsidiary, without any action or vote on the part of the
board of directors or the shareholders of such other corporation (a "short-
form merger"). Pursuant to the Merger Agreement, in the event that Merger
Subsidiary acquires at least 90% of the outstanding Shares in the Offer,
Merger Subsidiary and Parent shall take all necessary actions to cause the
Merger to become effective, as soon as practicable after the expiration of the
Offer, without a meeting of the shareholders of the Company. Even if Merger
Subsidiary does not own 90% of the outstanding Shares following consummation
of the Offer, Parent or Merger Subsidiary could seek to purchase additional
Shares in the open market, from the Company or otherwise in order to reach the
90% threshold and effect a short-form merger. The consideration per Share paid
for any Shares so acquired in open market purchases may be greater or less
than the Offer Price. Parent presently intends to effect a short-form merger
of Merger Subsidiary into the Company, if permitted to do so under the VSCA.
See Section 11.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE OFFER
1. Terms of the Offer.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), Merger Subsidiary will accept for payment and pay for all Shares
validly tendered prior to the Expiration Date, and not properly withdrawn in
accordance with Section 4. Parent will provide Merger Subsidiary with
sufficient funds to purchase all Shares validly tendered and not withdrawn in
the Offer. The term "Expiration Date" shall mean 12:00 Midnight, New York City
time, on Friday, November 3, 2000, unless and until Merger Subsidiary, in
accordance with the terms of the Merger Agreement, shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by Merger Subsidiary, shall expire.
The Offer is conditioned upon the satisfaction or waiver of the Minimum
Condition, the expiration or termination of any waiting period imposed by the
HSR Act, or under material applicable foreign antitrust regulations, and the
other conditions discussed in Section 13. If such conditions are not satisfied
prior to the Expiration Date, Merger Subsidiary reserves the right, subject to
the terms of the Merger Agreement and subject to complying with applicable
rules and regulations of the SEC, to (i) decline to purchase any Shares
tendered in the Offer and terminate the Offer and return all tendered Shares
to the tendering shareholders, (ii) waive any or all conditions to the Offer
(except the condition discussed in the following paragraph) and, to the extent
permitted by applicable law, purchase all Shares validly tendered, (iii)
extend the Offer and, subject to the right of shareholders to withdraw Shares
until the Expiration Date, retain all Shares which have been tendered during
the period or periods for which the Offer is extended, or (iv) subject to the
next paragraph, amend the Offer.
The Merger Agreement provides that, without the prior written consent of the
Company, Merger Subsidiary shall not (i) decrease the per Share price or the
number of Shares sought in the Offer, (ii) change the form of the
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consideration to be paid in the Offer, (iii) make any change which imposes
conditions to the Offer in addition to those discussed in Section 13, (iv)
impose additional conditions to the Offer, (v) make any change that is
otherwise adverse to the holders of Shares or (vi) waive the Minimum
Condition; however, the Company has agreed to consent to the waiver of the
Minimum Condition to allow Merger Subsidiary to purchase the Shares owned by
the Principal Shareholder.
The Merger Agreement requires Merger Subsidiary to accept for payment and
pay for all Shares validly tendered and not withdrawn pursuant to the Offer if
all conditions to the Offer are satisfied on the Expiration Date.
Subject to the terms of the Merger Agreement, Merger Subsidiary may, without
the consent of the Company, extend the Offer beyond the scheduled Expiration
Date (i) from time to time, if at that date any of the conditions to Merger
Subsidiary's obligation to accept for payment and to pay for Shares are not
satisfied or, to the extent permitted by the Merger Agreement, waived, for a
period of time until such conditions are satisfied or waived, however, if any
of the conditions to the Offer are not satisfied or waived on any scheduled
expiration date, Parent and Merger Subsidiary are required to extend the Offer
until the condition or conditions are satisfied or waived, unless the
condition or conditions could not reasonably be expected to be satisfied by
January 31, 2001, (ii) for any period required by any rule, regulation,
interpretation or position of the SEC or its staff applicable to the Offer or
any period required by applicable law or (iii) for one or more subsequent
offering periods of up to an additional twenty (20) business days in the
aggregate (a "Subsequent Offering Period"). Rule 14d-11 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), permits
Merger Subsidiary, subject to certain conditions, to provide a Subsequent
Offering Period following the expiration of the Offer on Friday, November 3,
2000. A Subsequent Offering Period is an additional period of time from three
(3) business days to twenty (20) business days in length, beginning after
Merger Subsidiary purchases Shares tendered in the Offer, during which time
shareholders may tender, but not withdraw, their Shares and receive the Offer
Price.
Pursuant to Rule 14d-7 under the Exchange Act, no withdrawal rights apply to
Shares tendered during a Subsequent Offering Period and no withdrawal rights
apply during the Subsequent Offering Period with respect to Shares tendered in
the Offer and accepted for payment. During a Subsequent Offering Period,
Merger Subsidiary will promptly purchase and pay for all Shares tendered at
the same price paid in the Offer.
Subject to the applicable rules and regulations of the SEC and the
provisions of the Merger Agreement, Merger Subsidiary also expressly reserves
the right, in its sole discretion, at any time or from time to time, to (i)
terminate the Offer if any of the conditions discussed in Section 13 have not
been satisfied and (ii) waive any condition to the Offer or otherwise amend
the Offer in any respect, in each case by giving written notice of such
extension, termination, waiver or amendment to the Depositary and by making a
public announcement thereof. If Merger Subsidiary accepts for payment any
Shares pursuant to the Offer, it will accept for payment all Shares validly
tendered prior to the Expiration Date and not properly withdrawn, and will
promptly pay for all Shares so accepted for payment.
The rights reserved by Merger Subsidiary in the preceding paragraph are in
addition to Merger Subsidiary's rights discussed in Section 13. Any extension,
delay, termination, waiver or amendment will be followed as promptly as
practicable by a public announcement thereof, such announcement in the case of
an extension to be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date, in
accordance with the public announcement requirements of Rule 14e-1(d) under
the Exchange Act. Subject to applicable law (including Rules 14d-4(d) and 14d-
6(c) under the Exchange Act, which require that material changes be promptly
disseminated to shareholders in a manner reasonably designed to inform them of
such changes) and without limiting the manner in which Merger Subsidiary may
choose to make any public announcement, Merger Subsidiary shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release to the Dow Jones News
Service.
If Merger Subsidiary extends the Offer or if Merger Subsidiary is delayed in
its acceptance for payment of, or payment for, Shares or it is unable to pay
for Shares pursuant to the Offer for any reason, then, without
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prejudice to Merger Subsidiary's rights under the Offer, the Depositary may
retain tendered Shares on behalf of Merger Subsidiary, and such Shares may not
be withdrawn except to the extent tendering shareholders are entitled to
withdrawal rights as described herein under Section 4. However, the ability of
Merger Subsidiary to delay the payment for Shares that Merger Subsidiary has
accepted for payment is limited by (i) Rule 14e-1(c) under the Exchange Act,
which requires that a bidder pay the consideration offered or return the
securities deposited by or on behalf of shareholders promptly after the
termination or withdrawal of such bidder's offer, unless such bidder elects to
offer a Subsequent Offering Period and pays for Shares tendered during the
Subsequent Offering Period in accordance with Rule 14d-11 under the Exchange
Act and (ii) the terms of the Merger Agreement, which require that Merger
Subsidiary accept for payment Shares that are validly tendered and not
withdrawn pursuant to the Offer as soon as it is legally permitted to do so
under applicable law and promptly pay for such Shares.
If Merger Subsidiary 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, Merger Subsidiary will disseminate additional tender offer
materials and extend the Offer to the extent required by Rules 14d-4(d), 14d-
6(c) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following material changes in the terms of the Offer,
other than a change in price, percentage of securities sought or inclusion of
or changes to a dealer's soliciting fee, will depend upon the facts and
circumstances, including the materiality, of the changes. In the SEC's view,
an offer should remain open for a minimum of five (5) business days from the
date the material change is first published, sent or given to shareholders
and, if material changes are made with respect to information that approaches
the significance of price and share levels, a minimum of ten (10) business
days may be required to allow for adequate dissemination to shareholders.
Accordingly, if, prior to the Expiration Date, Merger Subsidiary decreases the
number of Shares being sought or increases or decreases the consideration
offered pursuant to the Offer in accordance with the terms of the Merger
Agreement, and if the Offer is scheduled to expire at any time earlier than
the tenth (10th) business day from the date that notice of such increase or
decrease is first published, sent or given to shareholders, the Offer will be
extended at least until the expiration of such tenth (10th) business day. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or a federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, New York City time.
The Company has provided Merger Subsidiary with the Company's shareholder
list and security position listings for the purpose of disseminating this
Offer to Purchase to holders of Shares. This Offer to Purchase, the related
Letter of Transmittal and other relevant materials will be mailed to record
holders of Shares whose names appear on the Company's shareholder list and
will be furnished, for subsequent transmittal to beneficial owners of Shares,
to brokers, dealers, commercial banks, trust companies and similar persons
whose names, or the names of whose nominees, appear on the shareholder list
or, if applicable, who are listed as participants in a clearing agency's
security position listing.
2. Acceptance for Payment and Payment for Shares.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment) and the satisfaction or waiver of all the conditions to the
Offer discussed in Section 13, Merger Subsidiary will accept for payment and
will pay for all Shares validly tendered on or prior to the Expiration Date
and not properly withdrawn pursuant to the Offer as soon as it is permitted to
do so under applicable law. If there is a Subsequent Offering Period following
the Offer, Merger Subsidiary will immediately accept and promptly pay for all
Shares as they are tendered in the Subsequent Offering Period. Subject to the
Merger Agreement and compliance with Rule 14e-1(c) under the Exchange Act,
Merger Subsidiary expressly reserves the right to delay payment for Shares in
order to comply in whole or in part with any applicable law. See Section 15.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or confirmation
(a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the
Depositary's account at The
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Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedures discussed in Section 3, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message (as defined below) in lieu of the Letter of Transmittal and (iii) any
other documents required by the Letter of Transmittal.
For purposes of the Offer, Merger Subsidiary will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when Merger Subsidiary gives oral or written notice to
the Depositary of Merger Subsidiary's acceptance for payment of such Shares
pursuant to the Offer. Upon the terms and subject to the conditions of the
Offer, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the Offer Price therefor with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payments
from Merger Subsidiary and transmitting such payments to tendering
shareholders whose Shares have been accepted for payment. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the
Offer is delayed, or Merger Subsidiary is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to Merger Subsidiary's
rights discussed in Section 1, the Depositary may, nevertheless, on behalf of
Merger Subsidiary, retain tendered Shares, and such Shares may not be
withdrawn, except to the extent that the tendering shareholders are entitled
to withdrawal rights as described in Section 4 and as otherwise required by
Rule 14e-1(c) under the Exchange Act.
Under no circumstances will interest on the Offer Price for Shares be paid,
regardless of any delay in making such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are
submitted evidencing more Shares than are tendered, Share Certificates
evidencing unpurchased Shares will be returned, without expense to the
tendering shareholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedure discussed in Section 3, such Shares will be credited
to an account maintained at the Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.
Merger Subsidiary reserves the right to transfer or assign, in whole or from
time to time in part, to any direct or indirect wholly owned subsidiary of
Parent, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
Merger Subsidiary of its obligations under the Offer in the event of a breach
by the transferee and will in no way prejudice the rights of tendering
shareholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
3. Procedures for Accepting the Offer and Tendering Shares.
Valid Tenders. In order for a shareholder validly to tender Shares pursuant
to the Offer, either (i) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message in
lieu of the Letter of Transmittal) and any other documents required by the
Letter of Transmittal must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and either the
Share Certificates evidencing tendered Shares must be received by the
Depositary at such address or such Shares must be tendered pursuant to the
procedure for book-entry transfer described below and a Book-Entry
Confirmation must be received by the Depositary, in each case on or prior to
the Expiration Date, or (ii) the tendering shareholder must comply with the
guaranteed delivery procedures described below.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, that states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that 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 Merger Subsidiary may enforce such
agreement against such participant.
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Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the system of the Book-Entry
Transfer Facility may make a book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery
of Shares may be effected through book-entry transfer at the Book-Entry
Transfer Facility, either the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and
any other required documents, must, in any case, be received by the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
prior to the Expiration Date, or the tendering shareholder must comply with
the guaranteed delivery procedure described below.
Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Depositary.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder of the Shares tendered therewith, unless such holder has completed
either the box entitled "Special Delivery Instructions" or the box entitled
"Special Payment Instructions" on the Letter of Transmittal or (ii) if the
Shares are tendered for the account of a firm that is participating in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution" and collectively, "Eligible Institutions").
In all other cases, all signatures on a Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 1 of the Letter of
Transmittal. If a Share Certificate is registered in the name of a person or
persons other than the signer of the Letter of Transmittal, or if payment is
to be made or delivered to, or a Share Certificate not accepted for payment or
not tendered is to be issued, in the name of, a person other than the
registered holder(s), then the Share Certificate must be endorsed or
accompanied by appropriate duly executed stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the Share
Certificate, with the signature(s) on such Share Certificate or stock powers
guaranteed by an Eligible Institution as provided in the Letter of
Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and the Share Certificates evidencing such shareholder's Shares are
not immediately available or such shareholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such shareholder cannot complete the procedure for
delivery by book-entry transfer on a timely basis, such Shares may
nevertheless be tendered; provided that all of the following conditions are
satisfied:
1. such tender is made by or through an Eligible Institution;
2. a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Merger Subsidiary, is received
prior to the Expiration Date by the Depositary as provided below; and
3. the Share Certificates (or a Book-Entry Confirmation) evidencing all
tendered Shares, in proper form for transfer, in each case together with
the Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message), and any other documents required
by the Letter of Transmittal are received by the Depositary within three
New York Stock Exchange Inc. (the "NYSE") trading days after the date of
such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mailed to the Depositary and must include a
guarantee by an Eligible Institution substantially in the form set forth in
the form of Notice of Guaranteed Delivery made available by Merger Subsidiary.
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In all cases, Shares will not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) is
received by the Depositary.
The method of delivery of Share Certificates, the Letter of Transmittal and
all other required documents, including delivery through the Book-Entry
Transfer Facility, is at the option and risk of the tendering shareholder, and
the delivery will be deemed made only when actually received by the Depositary
(including, in the case of a book-entry transfer, receipt of a Book-Entry
Confirmation). If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.
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 Merger Subsidiary in its sole
discretion, which determination shall be final and binding on all parties.
Merger Subsidiary reserves the absolute right to reject any and all tenders
determined by it not to be in proper form or the acceptance for payment of
which may, in the opinion of its counsel, be unlawful. Merger Subsidiary also
reserves the absolute right to waive any defect or irregularity in the tender
of any Shares of any particular shareholder, whether or not similar defects or
irregularities are waived in the case of other shareholders. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived to the satisfaction of Merger
Subsidiary. None of Parent, Merger Subsidiary, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Merger Subsidiary's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and the instructions thereto) will be final and binding.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of Merger
Subsidiary as such shareholder's proxies, each with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the
full extent of such shareholder's rights with respect to the Shares tendered
by such shareholder and accepted for payment by Merger Subsidiary (including,
with respect to any and all other Shares or other securities issued or
issuable in respect of such Shares on or after the date of this Offer to
Purchase). All such proxies shall be considered coupled with an interest in
the tendered Shares. Such appointment will be effective when, and only to the
extent that, Merger Subsidiary accepts such Shares for payment. Upon such
acceptance for payment, all prior proxies given by such shareholder with
respect to such Shares (and such other Shares and securities) will be revoked
without further action, and no subsequent proxies may be given nor any
subsequent written consent executed by such shareholder (and, if given or
executed, will not be deemed to be effective) with respect thereto. The
designees of Merger Subsidiary will, with respect to the Shares and other
securities for which the appointment is effective, be empowered to exercise
all voting and other rights of such shareholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
shareholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. Merger Subsidiary reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon Merger Subsidiary's payment for such Shares, Merger Subsidiary must be
able to exercise full voting rights with respect to such Shares.
The tender of Shares pursuant to any one of the procedures described above
will constitute the tendering shareholder's acceptance of the Offer, as well
as the tendering shareholder's representation and warranty that such
shareholder has the full power and authority to tender and assign the Shares
tendered, as specified in the Letter of Transmittal. Merger Subsidiary's
acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the tendering shareholder and Merger
Subsidiary upon the terms and subject to the conditions of the Offer.
Backup Withholding. Under the "backup withholding" provisions of United
States federal income tax law, the Depositary may be required to withhold 31%
of the amount of any payments pursuant to the Offer. In order to prevent
backup federal income tax withholding with respect to payments to certain
shareholders of the Offer Price for Shares purchased pursuant to the Offer,
each such shareholder must provide the Depositary with such shareholder's
correct taxpayer identification number ("TIN") and certify that such
shareholder is not subject to
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backup withholding by completing the Substitute Form W-9 in the Letter of
Transmittal. Certain shareholders (including, among others, all corporations
and certain foreign individuals and entities) are not subject to backup
withholding. If a shareholder does not provide its correct TIN or fails to
provide the certifications described above, the Internal Revenue Service may
impose a penalty on the shareholder and payment of cash to the shareholder
pursuant to the Offer may be subject to backup withholding. All shareholders
surrendering Shares pursuant to the Offer should complete and sign the
Substitute Form W-9 included in the Letter of Transmittal to provide the
information necessary to avoid backup withholding. Non-corporate foreign
shareholders should complete and sign a Form W-8 (a copy of which may be
obtained from the Depositary) in order to avoid backup withholding. See
Instruction 8 of the Letter of Transmittal.
4. Withdrawal Rights.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
such Shares tendered pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date and, unless theretofore accepted for payment by Merger
Subsidiary pursuant to the Offer, may also be withdrawn at any time after
Monday, December 4, 2000.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to
Purchase. Any such notice of withdrawal must specify the name, address and TIN
of the person who tendered the Shares to be withdrawn, the number of Shares to
be withdrawn and the name of the registered holder of such Shares, if
different from that of the person who tendered such Shares. If Share
Certificates evidencing Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such Share Certificates, the serial numbers shown on such Share Certificates
must be submitted to the Depositary and the signature(s) on the notice of
withdrawal must be guaranteed by an Eligible Institution, unless such Shares
have been tendered for the account of an Eligible Institution. If Shares have
been tendered pursuant to the procedure for book-entry transfer as discussed
in Section 3 hereof, 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.
If Merger Subsidiary 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 Merger Subsidiary's rights
under the Offer, the Depositary may, nevertheless, on behalf of Merger
Subsidiary, retain tendered Shares, and such Shares may not be withdrawn
except to the extent that tendering shareholders are entitled to withdrawal
rights as described herein.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Merger Subsidiary, in its sole
discretion, whose determination will be final and binding. None of Parent,
Merger Subsidiary, the Dealer Manager, the Depositary, the Information Agent
or any other person will be under duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of
the Offer. However, withdrawn Shares may be re-tendered at any time prior to
the Expiration Date or during the Subsequent Offering Period by following one
of the procedures described in Section 3.
No withdrawal rights will apply to Shares tendered during a Subsequent
Offering Period and no withdrawal rights apply during the Subsequent Offering
Period with respect to Shares tendered in the Offer and accepted for payment.
See Section 1.
Merger Subsidiary expressly reserves the right, in its sole discretion, to
delay acceptance for payment of, or payment for, Shares in order to comply in
whole or in part with any applicable law. If Merger Subsidiary is delayed in
its acceptance for payment of, or payment for, Shares or is unable to accept
for payment or pay for
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Shares pursuant to the Offer for any reason, then, without prejudice to Merger
Subsidiary's rights under the Offer (including such rights as are discussed in
Sections 1 and 13) (but subject to compliance with Rule 14e-1(c) under the
Exchange Act), the Depositary may, nevertheless, on behalf of Merger
Subsidiary, retain tendered Shares, and such Shares may not be withdrawn
except to the extent tendering shareholders are entitled to exercise, and duly
exercise, withdrawal rights as described in Section 4.
5. Certain Federal Income Tax Consequences.
The following is a general summary of certain 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"). This
discussion is for general information only and does not purport to consider
all aspects of federal income taxation that may be relevant to holders of
Shares. The discussion is based on the provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), existing regulations promulgated thereunder
and administrative and judicial interpretations thereof, all as in effect as
of the date hereof and all of which are subject to change (possibly with
retroactive effect). This discussion applies only to Holders that hold Shares
as "capital assets" within the meaning of Section 1221 of the Code (generally,
property held for investment), and does not apply to Shares acquired pursuant
to the exercise of employee stock options or otherwise as compensation, Shares
held as part of a "straddle," "hedge," "conversion transaction," "synthetic
security" or other integrated investment, or to certain types of Holders
(including, without limitation, financial institutions, insurance companies,
tax-exempt organizations and dealers in securities) that may be subject to
special rules. This discussion does not address the federal income tax
consequences to a Holder that, for federal income tax purposes, is a non-
resident alien individual, a foreign corporation, a foreign partnership or a
foreign estate or trust, nor does it consider the effect of any state, local,
foreign or other tax laws.
EACH HOLDER SHOULD CONSULT ITS TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF THE SALE OF ITS SHARES, INCLUDING THE APPLICATION AND
EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS AND POSSIBLE CHANGES IN
TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local and foreign income and other tax
laws. For federal income tax purposes, a Holder who sells Shares pursuant to
the Offer or receives cash in exchange for Shares pursuant to the Merger will
generally recognize capital gain or loss equal to the difference (if any)
between the amount of cash received and the Holder's adjusted tax basis in
Shares sold or surrendered in the Merger. Gain or loss must be determined
separately for each block of Shares tendered pursuant to the Offer or
surrendered for cash pursuant to the Merger (for example, Shares acquired at
the same cost in a single transaction). Such capital gain or loss will be
long-term capital gain or loss if the Holder has held such Shares for more
than one year at the time of the consummation of the Offer or the Merger. For
federal income tax purposes, net capital gain recognized by individuals (or an
estate or certain trusts) from the sale of property held for more than twelve
months will generally be taxed at a maximum tax rate of 20%. There are
limitations on the deductibility of capital losses.
Payments in connection with the Offer or Merger may be subject to "backup
withholding" at a rate of 31% unless a Holder of Shares (i) provides a correct
taxpayer identification number ("TIN") (which, for an individual Holder, is
the Holder's social security number) and any other required information, or
(ii) is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact, and otherwise complies with applicable
requirements of the backup withholding rules. A Holder that does not provide a
correct TIN may be subject to penalties imposed by the Internal Revenue
Service (the "IRS"). Shareholders may prevent backup withholding by completing
and signing the Substitute Form W-9 included as part of the Letter of
Transmittal. Any amount paid as backup withholding does not constitute an
additional tax and will be creditable against the Holder's federal income tax
liability, provided that the required information is given to the IRS. Each
Holder should consult its tax advisor as to such Holder's qualification for
exemption from backup withholding and the procedure for obtaining such
exemption.
15
<PAGE>
6. Price Range of the Shares; Dividends.
The Shares are traded on the NYSE under the symbol "BOA." The following
table sets forth, for each of the fiscal quarters indicated, the high and low
reported sales prices per Share on the NYSE.
<TABLE>
<CAPTION>
Common Stock
-----------------
High Low
-------- --------
<S> <C> <C>
Fiscal Year 1998
First Quarter............................................... $33.8750 $25.4375
Second Quarter.............................................. 33.00 28.00
Third Quarter............................................... 33.6875 26.25
Fourth Quarter.............................................. 35.500 25.00
Fiscal Year 1999
First Quarter............................................... $35.1250 $25.9375
Second Quarter.............................................. 30.375 24.3125
Third Quarter............................................... 29.25 22.125
Fourth Quarter.............................................. 26.25 22.50
Fiscal Year 2000
First Quarter............................................... $28.9375 $24.00
Second Quarter.............................................. 44.50 28.00
Third Quarter (through October 5, 2000)..................... 47.9375 41.5625
</TABLE>
On September 22, 2000, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Shares on the NYSE was $43.563 per Share. On October 5, 2000, the
last full trading day prior to the commencement of the Offer, the last
reported sales price of the Shares on the NYSE was $47.875 per Share.
Shareholders are urged to obtain a current market quotation for the Shares.
The Company did not declare or pay any cash dividends during any of the
periods indicated in the above table. In addition, under the terms of the
Merger Agreement, the Company is not permitted to declare or pay dividends
with respect to the Shares without the prior written consent of Parent, and
Parent does not intend to consent to any such declaration or payment.
7. Certain Information Concerning the Company.
General. The information concerning the Company contained in this Offer to
Purchase has been furnished by the Company or has been taken from, or based
upon, publicly available documents and records on file with the SEC and other
public sources. Neither Parent, Merger Subsidiary nor the Information Agent
assumes responsibility for the accuracy or completeness of the information
concerning the Company contained in such documents and records or for any
failure by the Company to disclose events which may have occurred or may
affect the significance or accuracy of any such information but which are
unknown to Parent, Merger Subsidiary or the Information Agent.
The Company, a Virginia corporation, or its predecessors have been in the
flavor and fragrance business since the mid-1800s. Union Camp Corporation
("Union Camp") acquired the Company in 1982 from Albright & Wilson which was
then a wholly owned subsidiary of Tenneco, Inc. In June 1994, the Company
completed an initial public offering of 6,065,000 Shares which resulted in
31.6% of its outstanding Shares being publicly held with the remaining 68.4%
being held by Union Camp. On April 20, 1999, through the merger of Union Camp
with and into the Principal Shareholder, the Principal Shareholder became the
majority shareholder of the Company.
The Company's business is organized into two operating segments: (i) flavor
(including compound flavors, essential oils, seasonings and spice extracts)
and fragrance and (ii) aroma chemicals. The Company's flavor products impart a
desired taste and smell to a broad range of consumer products including soft
drinks,
16
<PAGE>
confections, dietary foods, snack foods, dairy products, pharmaceuticals and
alcoholic beverages. The Company's fragrance products are used in a wide
variety of products including soaps, detergents, air fresheners, cleaners,
cosmetics and toiletries and related products. The Company is also a major
producer of aroma chemicals, products which are primarily used as raw
materials in fragrance compounds. The Company has operations in 38 countries
in North and South America, Europe, Asia, Australia, the Middle East and
Africa.
The Company's principal offices are located at 7 Mercedes Drive, Montvale,
New Jersey and its telephone number at such address is (201) 391-9870.
Certain Projected Financial Data of the Company. Prior to entering into the
Merger Agreement, representatives of Parent conducted a due diligence review
of the Company and in connection with such review received certain projections
of the Company's future operating performance. The projections were not
prepared with a view to public disclosure or compliance with the published
guidelines of the SEC or the guidelines established by the American Institute
of Certified Public Accountants regarding projections and forecasts. The
projections contain forward-looking statements, do not purport to present
results of operations in accordance with generally accepted accounting
principles and have not been audited or examined by the Company's independent
auditors. The summary of projected financial data set forth below is presented
for the limited purpose of giving the shareholders of the Company access to
financial data prepared by the Company's management that were made available
to Parent in connection with its due diligence investigation.
Bush Boake Allen Inc.
($ in millions)
<TABLE>
<CAPTION>
Projected FYE December 31,
----------------------------------
2000 2001 2002 2003 2004
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Sales.................................... $506.0 $546.0 $591.9 $642.3 $694.6
EBITDA....................................... 72.2 78.4 89.5 103.1 113.9
Net Income................................... 28.1 31.6 39.1 48.2 55.7
</TABLE>
The foregoing forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from the
projections. The Company has advised Parent and Merger Subsidiary that its
internal financial forecasts (upon which the projections provided to Parent
were based in part) are, in general, prepared solely for internal use and
capital budgeting and other management decisions, and are subjective in many
respects and thus susceptible to interpretations and periodic revision based
on actual experience and business developments. The projections also reflect
numerous assumptions (not all of which were provided to Parent), all made by
management of the Company, with respect to industry performance, general
business, economic, market and financial conditions and other matters,
including effective tax rates consistent with historical levels for the
Company, all of which are difficult to predict, many of which are beyond the
Company's control and none of which were subject to approval by Parent, Merger
Subsidiary or the Principal Shareholder. Accordingly, there can be no
assurance that the assumptions made in preparing the projections will prove
accurate, and actual results may be materially greater or less than those
contained in the projections. The inclusion of the projections herein should
not be regarded as an indication that any of Parent, Merger Subsidiary, the
Company or the Principal Shareholder or their respective affiliates or
representatives considered or consider the projections to be a reliable
prediction of future events, and the projections should not be relied upon as
such. None of Parent, Merger Subsidiary or any of their respective affiliates
assumes any responsibility for the validity, reasonableness, accuracy or
completeness of the projections. None of Parent, Merger Subsidiary, the
Company or the Principal Shareholder or any of their respective affiliates or
representatives has made, or makes, any representation to any person regarding
the information contained in the projections and none of them intends to
update or otherwise revise the projections to reflect circumstances existing
after the date when made or to reflect the occurrence of future events even in
the event that any or all of the assumptions underlying the projections are
shown to be in error.
17
<PAGE>
Miscellaneous. For a description of certain business relationships between
the Company and Parent and their respective affiliates, see Section 8.
Financial Information. Certain financial information relating to the Company
is hereby incorporated by reference to the audited financial statements for
the Company's 1998 and 1999 fiscal years set forth in the Company's 1999
Annual Report, incorporated by reference on the Company's Form 10-K for the
fiscal year ended December 31, 1999, beginning on page 35 of such report. The
report may be inspected at, and copies may be obtained from, the same places
and in the same manner set forth under "--Available Information" below.
Available Information. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational reporting
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the SEC
relating to its business, financial condition and other matters. Information
as of particular dates concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of such persons in transactions
with the Company is required to be disclosed in proxy statements distributed
to the Company's shareholders and filed with the SEC. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices
located at Seven World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Information regarding the public reference facilities may be obtained from the
SEC by telephoning 1-800-SEC-0330. The Company's filings are also available to
the public on the SEC's Internet site (http://www.sec.gov). Copies of such
materials may also be obtained by mail from the Public Reference Section of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
8. Certain Information Concerning Merger Subsidiary and Parent.
Merger Subsidiary and Parent.
General. Merger Subsidiary is a newly formed Virginia corporation and is a
wholly owned subsidiary of Parent. Merger Subsidiary was organized in
connection with the Offer and the Merger and has not carried on any
significant activities other than in connection with the Offer and the Merger.
Until immediately prior to the time Shares are purchased pursuant to the
Offer, it is not anticipated that Merger Subsidiary will have any significant
assets or liabilities or engage in any significant activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger.
Parent is a New York corporation and is a leading creator and manufacturer
of flavor and fragrance products used by other manufacturers to impart or
improve flavor or fragrance in a wide variety of consumer products. Fragrance
products are sold principally to manufacturers of perfumes, cosmetics, soaps
and detergents, and flavor products to manufacturers of prepared foods,
beverages, dairy foods, pharmaceuticals and confectionery products.
The principal offices of Merger Subsidiary and Parent are located at 521
West 57th Street, New York, New York 10019-2960. The telephone number of
Merger Subsidiary and Parent at such location is (212) 765-5500.
Except as discussed in this Offer to Purchase, neither Merger Subsidiary nor
Parent has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies.
Except as discussed in this Offer to Purchase, none of Merger Subsidiary,
Parent, any of their respective affiliates, nor, to the best knowledge of
Merger Subsidiary or Parent, any of the persons listed on Schedule I, has had,
since January 1, 1996, any business relationships or transactions with the
Company or any of its executive
18
<PAGE>
officers, directors or affiliates that would be required to be reported under
the rules of the SEC. Except as described in this Offer to Purchase, there
have been no contacts, negotiations or transactions between Merger Subsidiary
or Parent, any of their respective affiliates or, to the best knowledge of
Merger Subsidiary or Parent, any of the persons listed on Schedule I and the
Company or its affiliates concerning a merger, consolidation or acquisition,
tender offer or other acquisition of securities, election of directors or a
sale or other transfer of a material amount of assets.
9. Sources and Amount of Funds.
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required by Merger Subsidiary to consummate the Offer and the
Merger, and expected to be incurred by Parent, is estimated to be
approximately $970 million plus any related transaction fees and expenses.
Merger Subsidiary will acquire all such funds from Parent, which intends to
obtain funds in accordance with the terms of a commitment letter, dated
September 21, 2000 (the "Commitment Letter"), among Parent, as borrower,
Citibank, N.A., as underwriter and administrative agent ("Citibank"), and
Salomon Smith Barney Inc., as arranger ("SSB" and, together with Citibank,
"Citi/SSB"). Pursuant to the Commitment Letter, Citi/SSB intend to make
available to Parent a $1,000,000,000 credit facility. Citibank has committed
to underwrite up to $350,000,000 of a bilateral 180-day bridge facility to a
capital markets takeout (the "Bridge Facility") and up to $650,000,000 of a
364-day revolving credit facility (the "364-Day Facility" and together with
the Bridge Facility, the "Facilities") and to act as administrative agent for
the 364-Day Facility. SSB has committed to act as arranger for the 364-Day
Facility. The Commitment Letter provides that Parent and Citi/SSB intend to
enter into a credit agreement (the "Credit Agreement") among Parent, as
borrower, and Citi/SSB, as lenders, for the Facilities. The Commitment Letter
contains, and the Credit Agreement will contain, representations and
warranties, conditions precedent, covenants, events of default and other
provisions customarily found in similar agreements. This summary is not a
complete description of the terms and conditions of the Commitment Letter, and
is qualified in its entirety by reference to the full text of the Commitment
Letter, which is incorporated herein by reference and a copy of which has been
filed with the Commission as an exhibit to a Tender Offer Statement on
Schedule TO (the "Schedule TO"). This Commitment Letter may be examined, and
copies obtained, in the manner described in Section 7 of this Offer to
Purchase.
10. Background of the Offer; Purpose of the Offer and the Merger; the Merger
Agreement and Certain Other Agreements.
Background of the Offer.
As part of their ongoing efforts to develop the business of the Company, the
Company's senior management and the Company Board have from time to time
considered various strategic transactions, including a possible sale or merger
of the Company. In connection with these efforts, the Company consulted with
CSFB, in late May and early June 2000. Throughout this period, various press
reports indicated that the Principal Shareholder, which owns approximately 68%
of the Company's Shares, was considering selling certain of its non-core
assets.
On June 16, 2000, Parent contacted Mr. Julian W. Boyden, Chairman, President
and Chief Executive Officer of the Company, and expressed interest in
acquiring all of the Shares of the Company for up to approximately $40 per
Share. As the Company was still in the process of considering its options,
extensive discussions were not pursued with Parent at that time.
On June 20, 2000, the Company publicly announced that it had retained CSFB
to explore strategic alternatives, including a possible merger or sale of the
Company. After evaluating with senior management of the Company the likely
interest of various strategic buyers in such a transaction, CSFB contacted, on
behalf of the Company, approximately 27 parties. Those parties who indicated a
general interest in pursuing a transaction were asked to enter into a
confidentiality agreement with the Company and 19 of these potential buyers,
including Parent, executed confidentiality agreements.
19
<PAGE>
Between June 2000 and July 2000, the parties, including Parent, that
executed confidentiality agreements were sent information concerning the
Company and were asked to submit non-binding and preliminary indications of
the level of their interest by July 28, 2000. On July 27, 2000, Parent engaged
Morgan Stanley to act as its financial advisor in connection with a possible
transaction with the Company. On July 28, 2000, five parties, including
Parent, submitted indications of interest. The values indicated in the
preliminary bids ranged from $30.53 per Share to approximately $47.55 per
Share.
Following the receipt of the indications of interest, a meeting of the
Company Board was convened to review the sale process and the indications of
interest with CSFB. After the meeting, four of the five potential bidders,
including Parent, were provided with access to additional information
regarding the Company, including presentations by the management of the
Company, access to financial and other information of the Company, tours of
certain of the Company's operating facilities and plants and interviews with
certain of the Company's management. One bidder was eliminated from the
process prior to this stage because the price it had preliminarily indicated
it was prepared to pay was significantly lower than that of the other bidders.
The due diligence process described above was conducted by Parent and the
three other potential bidders throughout August and early September 2000. The
Company's legal and financial advisors also had discussions with these bidders
about issues that had arisen in due diligence and possible transaction
structures. The bidders were invited to submit, by not later than September
15, 2000, definitive offers to acquire the Company.
On September 15, 2000, two final bids were received. Parent submitted a cash
offer of $46.15 per Share and a second bidder ("Second Bidder") submitted a
cash offer of approximately $43.70 per Share. The offers received from Parent
and Second Bidder were both fully-financed and subject to customary
conditions. Second Bidder's offer was, however, subject to approval by its
board of directors (which was not expected to meet until September 22, 2000).
Parent and Second Bidder each requested an option to purchase the Principal
Shareholder's Shares as a condition to entering into a transaction with the
Company.
On September 18, 2000, senior executives of the Company met with their legal
and financial advisors to discuss the final bids. After the meeting, CSFB
contacted, on behalf of the Company, Second Bidder and Parent to invite each
party to raise the price of its offer and submit its best price.
Second Bidder responded on September 19, 2000 by orally raising its offer
from $43.70 to approximately $45.50 per Share, subject to approval by its
board of directors. The Company responded that a higher price would be
required to win the auction. On September 20, 2000, Second Bidder conveyed its
interest in acquiring the Company at a price per Share of somewhere in the
range between $46 and $47 and expressed strong doubts about any interest
beyond that range.
On September 20, 2000, Parent increased its offer to $47.15 per Share,
subject to obtaining the Option. The Company consulted with the Principal
Shareholder, and responded that at a price of $47.50, the Company would
consent to, and the Principal Shareholder would be prepared to grant, the
Option, subject to agreement on transaction terms that were acceptable to the
Company Board. Parent agreed orally to raise its bid to $47.50 per Share,
subject to reaching an agreement with Company to negotiate exclusively for a
period of time sufficient to allow the Company Board to consider the
transaction and the Principal Shareholder's board of directors to consider the
Option and the Support Agreement and, if satisfied, give the necessary
approval.
On September 21, 2000, the legal advisors of Parent and Company met to
negotiate the terms of the Merger Agreement, the Support Agreement and an
exclusivity agreement (the "Exclusivity Agreement"). After extensive
negotiations and significant progress with respect to the resolution of
outstanding issues (other than the offer price), the Exclusivity Agreement was
executed. The Principal Shareholder executed a similar exclusivity agreement
with Parent at that time. Also on September 21, the Second Bidder orally
notified the Company that it was prepared to recommend to its own board of
directors that it make an offer to the Company of up to $48.50 per Share.
20
<PAGE>
On the morning of September 22, 2000, the Company received an unsolicited
bid of $48.50 per Share from Second Bidder which indicated that its board of
directors had approved the bid. The Company did not respond to the bid in
accordance with the Exclusivity Agreement entered into with Parent.
On the afternoon of September 22, 2000, the Company Board had a meeting by
telephone at which they were informed of the progress that had been made in
negotiations with Parent and that Second Bidder had subsequently submitted a
bid of $48.50 per Share.
The Company and its legal advisors had various discussions with Parent and
its legal advisors on September 23 and 24, 2000.
On September 24, 2000, a meeting of the Company Board was held at the
Company's offices. The Company Board discussed the specifics of the proposed
transaction with Parent, and agreed to reconvene the following day.
On September 25, the board of directors of Parent met to consider the Merger
Agreement and the transactions contemplated thereby and to determine whether
to increase its offer price. After consideration, the board of directors of
Parent authorized the increase of the offer price to $48.50 and voted to
approve the Merger Agreement, the Support Agreement and the transactions
contemplated thereby. Parent thereafter advised the Company that it would
raise its offer price to $48.50 per Share if the Company and the Principal
Shareholder were prepared to approve and enter into the transaction promptly
that day.
At the Company Board meeting later that morning, CSFB reviewed with the
Board and delivered its oral opinion, which opinion was confirmed by delivery
of a written opinion dated September 25, 2000, to the effect that, as of the
date of the opinion and based upon and subject to the matters stated in such
opinion, the $48.50 per Share cash consideration to be received in the Offer
and the Merger by holders of Shares was fair, from a financial point of view,
to such holders (other than Parent and its affiliates). After deliberation,
the Company Board approved the Support Agreement. Members of the Company Board
affiliated with the Principal Shareholder abstained from voting with respect
to the approval of the Support Agreement because the Principal Shareholder was
a party to that agreement. The Company Board then unanimously approved the
Merger Agreement and related agreements, the Offer and the Merger and
authorized the execution of the Merger Agreement and related agreements. The
Principal Shareholder, the Company, Parent and Merger Subsidiary executed the
Support Agreement and the Company, Parent and Merger Subsidiary executed the
Merger Agreement on September 25. Immediately thereafter, the Company and
Parent issued press releases announcing the execution of the Merger Agreement.
On October 6, 2000, Parent and Merger Subsidiary commenced the Offer.
Purpose of the Offer and the Merger. The purpose of the Offer and the Merger
is to enable Parent to acquire control of, and the entire equity interest in,
the Company. The Offer is being made pursuant to the Merger Agreement and is
intended to increase the likelihood that the Merger will be effected. The
purpose of the Merger is to acquire all of the outstanding Shares not
purchased pursuant to the Offer.
Shareholders of the Company who sell their Shares in the Offer will cease to
have any equity interest in the Company or any right to participate in its
earnings and future growth. If the Merger is consummated, non-tendering
shareholders will no longer have an equity interest in the Company and instead
will have only the right to receive cash consideration pursuant to the Merger
Agreement. Similarly, after selling their Shares in the Offer or the
subsequent Merger, shareholders of the Company will not bear the risk of any
decrease in the value of the Company.
The primary benefits of the Offer and the Merger to the shareholders of the
Company are that such shareholders are being afforded an opportunity to sell
all of their Shares for cash at a price which represents a premium of
approximately (i) 42.1% over the closing sales price of the Shares on June 20,
2000, the last full trading day prior to the public announcement that the
Company had engaged CSFB to review strategic
21
<PAGE>
alternatives and (ii) 11.3% over the closing sales price of the Shares on
September 22, 2000, the last full trading day prior to the initial public
announcement that the Company, Merger Subsidiary and Parent had executed the
Merger Agreement. The Offer allows shareholders to receive the same cash price
for their Shares, at the same time, as the price to be received by the
Principal Shareholder in the Offer.
Merger Agreement.
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full
text of the Merger Agreement filed with the SEC as an exhibit to the Schedule
TO and is incorporated herein by reference. Capitalized terms not otherwise
defined below shall have the meanings set forth in the Merger Agreement. The
Merger Agreement may be examined, and copies obtained, as described in Section
7 of this Offer to Purchase.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Merger Subsidiary
with respect to, among other things, corporate organization, authority to
enter into the Merger Agreement, no conflicts between the Merger Agreement and
the Company's organizational documents, agreements or applicable law, the
receipt of required consents, capital structure, subsidiaries, filings with
the SEC, financial statements, absence of certain changes or events,
undisclosed liabilities, the accuracy of certain disclosures, litigation,
benefit plans, absence of changes in benefit plans, labor matters, compliance
with applicable laws, tax matters, environmental matters, real property,
leased property, intellectual property, brokers' and finders' fees, receipt of
the opinion of Credit Suisse First Boston, state takeover statutes, votes
required to approve the Merger Agreement, transactions with affiliates,
material contracts and absence of other representations.
In the Merger Agreement, each of Parent and Merger Subsidiary has made
customary representations and warranties to the Company with respect to, among
other things, corporate organization, authority to enter into the Merger
Agreement, no conflicts between the Merger Agreement and Parent's and Merger
Subsidiary's organizational documents and agreements or applicable law, the
receipt of required consents, the accuracy of certain disclosures, financing,
broker's and finder's fees, non-ownership of Shares, litigation and absence of
other representations.
Certain representations and warranties in the Merger Agreement are qualified
as to "materiality" or "Material Adverse Effect." For purposes of the Merger
Agreement and this Offer to Purchase, a "Company Material Adverse Effect"
means any change or effect that is materially adverse to the business, assets,
liabilities, results of operations or financial condition of the Company and
its subsidiaries taken as a whole or adversely affects the ability of such
person to consummate the transactions contemplated by the Merger Agreement in
any material respect or materially impairs or delays the Company's ability to
perform its obligations under the Merger Agreement, however, a Company
Material Adverse Effect does not include (i) changes in or resulting from
general economic or financial or market conditions, including changes in the
trading price of the Company's Shares, (ii) changes in conditions or
circumstances generally affecting the flavor, fragrance and aroma chemical
industries in which the Company and its subsidiaries operate, including any
regulatory changes, or (iii) any effect resulting from the Company's
compliance with the terms of the Merger Agreement. For purposes of the Merger
Agreement and this Offer to Purchase, a "Parent Material Adverse Effect" means
any change or effect that has been or is materially adverse to the business,
assets, liabilities, results of operations or financial condition of Parent
and its subsidiaries taken as a whole or adversely affects the ability of
Parent to consummate the transactions contemplated by the Merger Agreement in
any material respect or materially impairs or delays Parent's ability to
perform its obligations under the Merger Agreement, however, a Parent Material
Adverse Effect does not include (i) changes in or resulting from general
economic, financial or market conditions, (ii) changes in conditions or
circumstances generally affecting the industry in which Parent and its
subsidiaries operate, including regulatory changes, (iii) changes resulting
from the Merger Agreement or from the announcement of the transactions
contemplated by the Merger Agreement or (iv) any effect resulting from
Parent's compliance with the terms of the Merger Agreement.
22
<PAGE>
Conditions to the Merger. The respective obligations of each party to effect
the Merger are subject to the satisfaction or written waiver on or prior to
the Closing Date of the following conditions: (i) the Merger Agreement and the
Merger shall have been approved by the requisite vote of the shareholders in
accordance with the VSCA; (ii) Merger Subsidiary shall have accepted for
payment and paid for all Shares validly tendered in the Offer and not
withdrawn; provided, that this condition will be deemed to be satisfied if
Merger Subsidiary shall have failed to purchase Shares so tendered and not
withdrawn in violation of the terms of the Merger Agreement or the Offer;
(iii) the consummation of the Merger shall not be restrained, enjoined or
prohibited by any order, judgment, decree, injunction or ruling of a court of
competent jurisdiction or any Governmental Entity entered; provided that the
party invoking this condition shall have complied with its obligations under
the Merger Agreement; and (iv) any necessary waiting period under the HSR Act
or under foreign antitrust laws applicable to the Merger shall have expired or
been earlier terminated, except that with respect to any foreign antitrust
laws, where the failure to so expire or terminate would not materially
adversely effect the transactions contemplated by the Merger Agreement.
Directors and Officers. Promptly after the purchase of and payment for any
Shares by Merger Subsidiary pursuant to the Offer, Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on
the Company Board as is equal to at least that number of directors which
equals the product of the total number of directors on the Company Board
(after giving effect to any increase in the size of the Company Board)
multiplied by a fraction, the numerator of which is the number of Shares
beneficially owned by Merger Subsidiary at such time (including Shares so
accepted for payment and for which payment has been made) and the denominator
of which shall be the total number of Shares then outstanding. In furtherance
thereof, the Company shall, upon request of Parent, take all reasonable
actions to cause Parent's designees to be elected or appointed, including
without limitation, increasing the size of its Board of Directors and/or
securing the resignations of incumbent directors. At such time, the Company
shall, if requested by Parent, also take all action reasonably necessary to
cause persons designated by Parent to constitute at least the same percentage
(rounded up to the next whole number) as Parent is entitled to designate on
the Company Board of (i) each committee of the Company Board, (ii) each board
of directors (or similar body) of each subsidiary of the Company and (iii)
each committee (or similar body) of each such board.
The Merger Agreement provides that the Company's obligation to appoint
Parent's designees to the Company Board is subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The Company will promptly
take all actions required pursuant to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder in order to fulfill its obligations under
the Merger Agreement, including mailing to shareholders the information
required by such Section 14(f) and Rule 14f-1 (or including such information
in the Schedule 14D-9 initially filed with the SEC and distributed to the
shareholders of the Company) as is necessary to enable Parent's designees to
be elected to the Company Board. Parent or Merger Subsidiary will supply to
the Company in writing and be solely responsible for any information with
respect to either of them and their nominees, officers, directors and
affiliates required by such Section 14(f) and Rule 14f-1.
Notwithstanding the foregoing, the parties to the Merger Agreement shall use
their respective reasonable best efforts to ensure that at least two of the
members of the Company Board shall, at all times prior to the Effective Time,
be directors of the Company who were directors of the Company on the date of
the Merger Agreement and who are not officers of the Company (the "Continuing
Directors"), provided, that, if there shall be in office less than two
Continuing Directors for any reason, the Company Board shall cause the person
designated by the remaining Continuing Director to fill such vacancy who shall
be deemed to be a Continuing Director for all purposes of the Merger
Agreement. From and after the time, if any, that Parent's designees constitute
a majority of the Company Board and prior to the Effective Time, any
termination of the Merger Agreement by the Company, any amendment of the
Merger Agreement or the Support Agreement, any amendment to the Company's
articles of incorporation or bylaws that adversely affects the shareholders,
any extension of time for performance of any of the obligations of Parent or
Merger Subsidiary under the Merger Agreement, any enforcement of or any waiver
of compliance with any of the agreements or conditions contained in the Merger
Agreement for the benefit of the Company may be effected by the Company Board
only with a majority vote of the directors then in office who were not
designated by Parent.
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The directors and officers of Merger Subsidiary immediately prior to the
Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation as of the Effective Time until their successors are duly
elected or appointed and qualified in accordance with the articles of
incorporation and bylaws of the Surviving Corporation and applicable law.
Shareholders' Meeting. If required by the Company's articles of
incorporation and/or applicable law in order to consummate the Merger, the
Company shall take all action necessary in accordance with the VSCA and its
articles of incorporation and bylaws to duly call, give notice of, convene and
hold a meeting of the Company's shareholders (the "Shareholders Meeting") as
promptly as practicable following the acceptance for payment of and purchase
of Shares by Parent pursuant to the Offer for purposes of considering and
taking action upon the Merger Agreement. At the Shareholders Meeting, all of
the Shares then owned by Parent, Merger Subsidiary or any other subsidiary of
Parent shall be voted to approve the Merger and the Merger Agreement (subject
to applicable law). Subject to the fiduciary obligations of the Board under
applicable law, the Company Board shall recommend that the Company's
shareholders vote to approve the Merger and the Merger Agreement if such vote
is sought, shall use its reasonable best efforts to solicit from shareholders
of the Company proxies in favor of the Merger and shall take all other action
in its judgment necessary and appropriate to secure the vote of shareholders
required by the VSCA to effect the Merger. The Company shall cause such
recommendation to be included in the Company Proxy Statement.
In the event that Parent, Merger Subsidiary or any other subsidiary of
Parent shall acquire at least 90% of the outstanding shares of each
outstanding class of capital stock of the Company pursuant to the Offer, the
parties agree to take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after the acceptance for payment of
any payment for shares by Merger Subsidiary pursuant to the Offer without a
meeting of shareholders of the Company, in accordance with Section 13.1-719 of
the VSCA.
Proxy Statement. If required under applicable law, the Company shall
promptly prepare the Company Proxy Statement, file it with the SEC under the
Exchange Act as promptly as practicable after Merger Subsidiary purchases
Shares pursuant to the Offer, and use all reasonable efforts to have the
Company Proxy Statement cleared by the SEC. Parent, Merger Subsidiary and the
Company shall cooperate with each other in the preparation of the Company
Proxy Statement, and the Company shall notify Parent of the receipt of any
comments of the SEC with respect to the Company Proxy Statement and of any
requests by the SEC for any amendment or supplement thereto or for additional
information and shall provide to Parent promptly copies of all correspondence
between the Company or any representative of the Company and the SEC. The
Company shall give Parent and its counsel the opportunity to review the
Company Proxy Statement prior to its being filed with the SEC and shall give
Parent and its counsel the opportunity to review all amendments and
supplements to the Company Proxy Statement and all responses to requests for
additional information and replies to comments prior to their being filed
with, or sent to, the SEC. Each of the Company, Parent and Merger Subsidiary
agrees to use its reasonable best efforts, after consultation with the other
parties hereto to respond promptly to all such comments of and requests by the
SEC. As promptly as practicable after the Company Proxy Statement has been
cleared by the SEC, the Company shall mail the Company Proxy Statement to the
shareholders of the Company.
Stock Options. Immediately following the acceptance for payment and purchase
of Shares by Merger Subsidiary pursuant to the Offer, each outstanding option
to purchase Company Common Stock (a "Stock Option") granted under the
Company's 1994 Stock Option and Stock Award Plan and the Company's 1998
Directors' Stock Option Plan (collectively, the "Company Option Plans") shall
become fully exercisable and vested. Until immediately prior to the Effective
Time, each holder of an outstanding Stock Option may surrender to the Company
such Stock Option, which shall then be cancelled, in exchange for payment to
be made at the time of surrender by Parent or Merger Subsidiary to the holder
of the Stock Option in an amount equal to the product of (x) the Merger
Consideration over the per share exercise price of the Stock Option, and (y)
the number of Shares subject to the Stock Option (such payment to be net of
taxes required to be withheld with respect thereto by applicable law) (the
"Option Consideration"). Immediately prior to the Effective Time, (i) the
Company shall terminate the Company Option Plans and (ii) each Stock Option
which remains outstanding at such time shall be cancelled in consideration of
a payment made at the Effective Time by Parent or Merger
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Subsidiary to the holder of each then outstanding Stock Option of the relevant
Option Consideration with respect to such Stock Option. Parent, Merger
Subsidiary and the Company shall cooperate and take all steps necessary to
give effect to this paragraph. After the date of the Merger Agreement, the
Company shall not grant any additional Stock Options under the Company Option
Plans. The Company will use its best efforts to obtain all necessary consents
and take any further action necessary to effect the foregoing so that as of
the Effective Time no Stock Options will be exercisable for stock of the
Surviving Corporation.
Employee Benefit Matters. For a period of one year after the Effective Time,
Parent will cause to remain in effect for the benefit of the employees of the
Company and its subsidiaries (and, to the extent applicable, former employees)
all Employee Plans in effect on the date of the Merger Agreement or provide
each employee (and, to the extent applicable, former employees) of the
Surviving Corporation and its subsidiaries who was an employee prior to the
Effective Time with benefits that, with respect to such employee (or former
employee), are at least substantially equivalent on an aggregate basis to the
benefits to which they were entitled under such Employee Plans. Without
limiting the generality of the foregoing, all vacation, holiday, sickness and
personal days accrued by the employees of the Company and its subsidiaries
shall be honored. In the event that any employee of the Surviving Corporation
or one of its subsidiaries is at any time after the Effective Time transferred
to Parent or any affiliate of Parent or becomes a participant in an employee
benefit plan, program or arrangement maintained by or contributed by Parent or
any affiliate of Parent, Parent shall cause such plan, program or arrangement
to treat the prior service of such employee with the Company and its
subsidiaries, to the extent prior service is generally recognized under the
comparable plan, program or arrangement of the Company, as service rendered to
Parent or such affiliates for purposes of eligibility, vesting or entitlement
to early retirement benefits, vacation time or severance benefits under such
plans. Parent shall cause to be waived any pre-existing condition limitation
under their welfare plans that might otherwise apply to such employee or, to
the extent applicable, a former employee, other than limitations that are
already in effect with respect to such employees and that have not been
satisfied or waived as of the Effective Time under any Employee Plan
maintained for such employees immediately prior to the Effective Time. Parent
agrees to recognize (or cause to be recognized) the dollar amount of all
expenses incurred by such employees or, to the extent applicable, former
employees, during the calendar year in which the Effective Time occurs for
purposes of satisfying the calendar year deductibles, contribution obligation
payment limitations and lifetime maximums for such year under the relevant
benefit plans of Parent and its subsidiaries. Parent is not required to
continue any specific Employee Plans or to continue the employment of any
employee; provided, however, that any changes that Parent may make to any such
Employee Plans are consistent with the Merger Agreement and are permitted by
the terms of the Employee Plans and under any applicable law. Notwithstanding
anything contained in the Merger Agreement to the contrary, nothing in the
Merger Agreement shall require the duplication of benefits to any employees or
former employees.
With respect to any Defined Benefit Plan, benefits shall be frozen and cease
to accrue as of the Effective Time. As of the Effective Time, all active
employees of the Company or any subsidiary who were participants in the
Defined Benefit Plans immediately prior to the Effective Time shall become
participants in the tax-qualified Defined Benefit Plan of Parent, which plan
shall recognize service with the Company or any subsidiary prior to the
Effective Time for purposes of eligibility and vesting, but not for purposes
of benefit accrual.
Interim Operations. The Merger Agreement provides that from the date of the
Merger Agreement to the Effective Time, subject to certain exceptions, the
Company shall, and shall cause each of its subsidiaries to, act and carry on
their business in the ordinary course of business consistent with past
practice and, to the extent consistent therewith, use their commercially
reasonable efforts to preserve intact their current business organizations and
relationships with third parties, keep available the services of their present
officers and key employees and preserve the goodwill of those engaged in
material business relationships with the Company. Without limiting the
generality of the foregoing, except as expressly approved in writing by Parent
or provided in the Merger Agreement or as specified in the Company Disclosure
Letter, the Company shall not, and shall not permit any of its subsidiaries
to, without the prior consent of Parent:
(a) adopt or propose any change in its articles of incorporation or
bylaws or other comparable charter or organizational documents;
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(b) acquire or agree to acquire (i) by merging or consolidating with, or
by purchasing a substantial portion of the equity or assets of any business
or any corporation, partnership, joint venture, association or other
business organization or division thereof that would be material to the
Company and its subsidiaries, taken as a whole, or (ii) any assets except
for purchases of inventory and equipment in the ordinary course of business
consistent with past practice. The Company shall not, and shall not permit
any of its subsidiaries to, directly or indirectly, acquire, make any
investment (other than short term investments in the ordinary course of
business or investments not exceeding $1,000,000 individually or
$10,000,000 in the aggregate) in, or make any capital contributions to, any
person (other than a subsidiary of the Company) other than in the ordinary
course of business;
(c) sell, lease, license, pledge, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets, or stock or other ownership interest in any of its properties or
subsidiaries other than (i) in the ordinary course of business consistent
with past practice, (ii) pursuant to any agreements existing as of the date
of the Merger Agreement and entered into in the ordinary course of business
consistent with past practice, (iii) any Liens for taxes not yet due and
payable or being contested in good faith by appropriate proceedings, (iv)
such mechanics and similar Liens, if any, as do not materially detract from
the value of any material properties or assets or materially interfere with
the present use of any of such properties or assets or (iv) which would not
reasonably be expected to result, individually or in the aggregate, in a
Company Material Adverse Effect;
(d) declare, set aside, or pay any dividends or make any distributions on
shares of capital stock other than dividends or distributions by any wholly
owned subsidiary of the Company to the Company or another wholly owned
subsidiary;
(e) (i) issue, deliver, grant or sell, or authorize or propose the
issuance, delivery, grant or sale of, any capital stock of the Company or
any securities of the Company subsidiaries, or any security, option or
instrument convertible into or exercisable for either of the foregoing,
other than the issuance of Shares upon the exercise of Stock Options, (ii)
split, combine or reclassify any capital stock of the Company or any of its
subsidiaries or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of
the Company or any of its subsidiaries or (iii) except as required or
permitted by the Merger Agreement, repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its subsidiaries or
any other securities thereof or any rights, warrants or options to acquire
any such shares or other securities;
(f) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person in an aggregate principal amount in excess
of $10 million, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement
condition of another person, except for borrowings for working capital
purposes and the endorsement of checks in the ordinary course of business
consistent with past practice; or (ii) make any material loans, advances or
capital contributions to, or investments in, any other person, other than
to the Company or any direct or indirect wholly owned subsidiary of the
Company or as otherwise made in the ordinary course of business consistent
with past practice;
(g) (i) increase the compensation payable or to become payable to its
officers, directors or key employees, (ii) grant any severance or
termination pay to officers, directors or key employees (except pursuant to
existing agreements, plans or policies), (iii) enter into any employment,
severance or consulting agreement with any current or former director,
officer or other employee of the Company or any subsidiary or (iv)
establish, adopt, enter into, amend or accelerate the payment, right to
payment or vesting of any collective bargaining, bonus, profit sharing,
thrift, compensation stock option, restricted stock, pension, retirement,
deferred compensation, employment termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
current or former director, officer or employee (any of the foregoing being
an "Employee Benefit Arrangement") except for (A) increase in wages, salary
and benefits of officers or employees of the Company or its subsidiaries in
accordance with past practice and (B) increases in salary, wages and
benefits granted to officers and employees of the Company or its
subsidiaries
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in conjunction with promotions or other changes in job status in the
ordinary course of business consistent with past practice; provided,
however, that nothing will be deemed to prohibit (i) the payment of
benefits as they become payable under the terms of the Employee Benefit
Arrangements as in effect on the date of the Merger Agreement or (ii)
entering into any agreement in connection with new hires in the ordinary
course;
(h) plan, announce, implement or effect any reduction in force, lay-off,
early retirement program, severance program or other program or effort
concerning the termination of employment of employees of the Company or its
subsidiaries, provided, however, that routine employee terminations shall
be allowed;
(i) (i) change any of the accounting methods used by it unless required
by GAAP or (ii) make any material election relating to Taxes, change any
material election relating to Taxes already made, adopt or change any
accounting method relating to material Taxes unless required by GAAP, enter
into any closing agreement relating to material Taxes, settle any claim or
assessment relating to material Taxes or consent to any claim or assessment
relating to material Taxes or any waiver of the statute of limitations for
any such claim or assessment;
(j) make any capital expenditure or expenditures in excess of $500,000
individually or $2.5 million in the aggregate, other than as previously
disclosed;
(k) enter into, materially amend or terminate, or release or assign any
material right in, any material contract, other than contracts in the
ordinary course of business consistent with past practice or related to the
purchase or sale of inventory, involving payments to or by the Company of
less than $7 million per year;
(l) other than in connection with the licensing of the Company's
products, enter into any agreement, understanding or commitment that
materially restrains, limits or impedes the Company's ability to compete
with or conduct any material line of business, including, but not limited
to, geographic limitations on the Company's activities;
(m) enter into, or modify any existing transaction with any Affiliate in
a manner materially adverse to the Company;
(n) waive any material non-compete, standstill or non-disclosure
obligations;
(o) adopt any plan of liquidation, dissolution, winding-up or similar
transaction; and
(p) agree or commit to do any of the foregoing.
No Solicitation. The Merger Agreement provides that the Company shall not,
and shall use its best efforts to cause its subsidiaries and any of its or its
subsidiaries' officers, directors, employees, investment bankers, attorneys,
accountants and other agents and advisors not to, directly or indirectly, (i)
solicit, initiate or knowingly encourage inquiries relating to, or the
submission of, any Acquisition Proposal, (ii) engage in negotiations or
discussions with, or in any other way knowingly cooperate with, any person
(other than Parent, Merger Subsidiary or their respective directors, officers,
employees, agents and representatives) that may be considering making, or has
made, an Acquisition Proposal, (iii) furnish to any person any information or
data with respect to or access to the properties of the Company or any of its
subsidiaries to, or take any action to, facilitate the making of any proposal
that constitutes or may reasonably be expected to lead to, any Acquisition
Proposal or (iv) enter into any agreement with respect to any Acquisition
Proposal or approve or resolve to approve any Acquisition Proposal. The
Company shall as promptly as reasonably practicable (but in no case later than
48 hours after receipt thereof) provide Parent with the identity of such
person and a reasonable description of such Acquisition Proposal. The Company
shall keep Parent fully informed on a current basis of the status and details
of any such Acquisition Proposal. An "Acquisition Proposal" means any offer or
proposal for, or any indication of interest in, (i) a merger, share exchange,
recapitalization, liquidation, reclassification or business combination or
similar transaction, (ii) any sale, lease, exchange, transfer or other
disposition of 10% or more of the assets of the Company and its subsidiaries,
taken as a whole, or (iii) any tender offer or exchange offer that, if
consummated, would result in any person beneficially owning 10% or more of the
outstanding shares of capital stock of the Company involving the Company or
any of its subsidiaries, other than the transactions contemplated by the
Merger Agreement. The Company shall, and shall cause its subsidiaries and the
directors, employees and other
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agents and representatives of the Company and its subsidiaries to, immediately
cease and cause to be terminated, its existing solicitation activity,
discussions or negotiations with any parties conducted theretofore by the
Company or any of its representatives with respect to an Acquisition Proposal.
Notwithstanding the foregoing, the Company Board (or its authorized
representatives) is not prohibited from, prior to the purchase of Shares
pursuant to the Offer, (i) furnishing non-public information to, or entering
into customary confidentiality agreements on terms, taken as a whole, no less
favorable to the Company than the terms of the Confidentiality Agreement
between Parent and the Company with, or entering into discussions or
negotiations with, any person in connection with an unsolicited Acquisition
Proposal to the Company or its shareholders, but only if the Company Board
determines in good faith that such Acquisition Proposal, if accepted,
constitutes a Superior Proposal, (ii) entering into a definitive agreement
providing for the implementation of a Superior Proposal if the Company is
concurrently terminating the Merger Agreement pursuant to Section 8.1(g)
thereof and paying the Termination Fee (as defined below) and Parent's
Expenses, (iii) taking and disclosing to its shareholders a position with
respect to such Acquisition Proposal contemplated by Rule 14e-2(a) promulgated
under the Exchange Act or (iv) making any disclosure to its shareholders which
the Company Board determines, after consultation with legal counsel, is
required to be taken or made under applicable law.
A "Superior Proposal" means a bona fide Acquisition Proposal on terms which
the Company Board determines in its good faith judgment (after consultation
with a nationally-recognized investment banking firm acting as the Company's
advisor) to be more favorable from a financial point of view to the Company
and its shareholders than the transactions contemplated by the Merger
Agreement, which the Company Board determines in good faith is reasonably
capable of being financed, and the conditions to the consummation of which
are, in the good faith determination of the Company Board, reasonably capable
of being satisfied.
State Takeover Laws. If any "fair price," "business combination" or "control
share acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated by the Merger Agreement or the
Support Agreement, including the purchases of Shares in the Offer, the Merger
or the acquisition of Shares pursuant to the option set forth in the Support
Agreement, the Company and its Board of Directors shall take all such action
as may be reasonably necessary or advisable to obtain such approvals and take
such actions as are necessary or advisable so that the transactions
contemplated by the Merger Agreement and the Support Agreement may be
consummated as promptly as practicable on their terms and otherwise act to
minimize the effects of any such statute or regulation on the transactions
contemplated.
Termination. The Merger Agreement may be terminated and the Offer and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval of matters presented in connection with the Merger by
the shareholders of the Company or Parent:
(a) by the mutual written consent of the Company and Parent;
(b) by either of the Company or Parent if the Offer has not been
consummated on or before January 31, 2001 (the "Termination Date");
provided, however, that the party seeking to terminate the Merger Agreement
shall not have breached in any material respect its obligations under the
Merger Agreement; and provided, further, that the Termination Date shall be
extended for an additional period of up to thirty (30) days, if each of the
conditions to the consummation of the Offer, other than the conditions
described in clauses (A)(y) and (B)(a) described below in Section 13, shall
have been satisfied on or prior to the Termination Date;
(c) by either the Company or Parent, if there shall be any applicable
law, rule or regulation that makes consummation of the Offer or the Merger
illegal or otherwise prohibited or if any judgment, injunction, order or
decree of a court or governmental agency or authority of competent
jurisdiction shall restrain or prohibit the consummation of the Offer or
the Merger, and such judgment, injunction, order or decree shall become
final and nonappealable;
(d) by either Company or Parent, if prior to the completion of the Offer,
(x) there has been a breach by the other party of, or any inaccuracy in,
any representation or warranty (without regard to any Company
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Material Adverse Effect or Parent Material Adverse Effect, as the case may
be, contained in such representations and warranties) contained in the
Merger Agreement which would reasonably be expected, individually or in the
aggregate, to have a Parent Material Adverse Effect or Company Material
Adverse Effect, as the case may be, or (y) there has been a material breach
of any of the covenants or agreements set forth in the Merger Agreement on
the part of the other party which breach is, in the case of (x) or (y), not
cured within thirty (30) days after written notice of such breach is given
by the terminating party to the other party;
(e) by the Company, if the Offer has not been timely commenced, provided,
that the Company may not so terminate if it is in material breach of its
obligations under the Merger Agreement;
(f) by Parent, if the Company Board shall have failed to recommend, or
shall have withdrawn or modified in a manner adverse to Parent, its
approval or recommendation of the Merger Agreement, the Offer or the Merger
or shall have recommended or announced a neutral position with respect to,
or entered into, or publicly announced its intention to enter into, an
agreement with respect to an Acquisition Proposal (or shall have resolved
to do any of the foregoing);
(g) by the Company concurrently with or following payment of the
Termination Fee and Parent's Expenses, if, prior to the purchase of Shares
pursuant to the Offer, the Company Board shall concurrently approve and the
Company shall concurrently enter into, a definitive agreement providing for
the implementation of a Superior Proposal; provided, however, that (x) the
Company shall have notified Parent in writing that it intends to enter into
such an agreement, attaching the most current version of such agreement to
such notice and (y) during the five (5) business day period after such
notice, the Company shall have offered to negotiate with and, if accepted,
negotiate in good faith with (and shall have caused its legal and financial
advisors to do the same) Parent to attempt to make such commercially
reasonable adjustments as would enable the Company to proceed with the
Merger Agreement in lieu of the Superior Proposal, it being understood that
(A) the Company shall not enter into any such agreement during such five-
day period and (B) the Company agrees to notify Parent promptly if its
intention to enter into a written agreement referred to in its notification
shall change at any time after giving effect to such notification;
(h) by Parent or the Company if as the result of the failure of any of
the conditions discussed in Section 13 to be satisfied, the Offer shall
have terminated or expired in accordance with its terms without Merger
Subsidiary having purchased any Shares pursuant to the Offer; provided,
however, that the right to terminate the Merger Agreement for this reason
shall not be available to any party whose material breach of any of its
obligations under the Merger Agreement results in the failure of any such
condition; and
(i) by Parent, if the Company shall have taken any action to exempt any
acquisition of Shares by any person, other than Parent, Merger Subsidiary
or any of their respective Affiliates, from Article 14 or Article 14.1 of
the VSCA.
Termination Fee. If (i) the Company terminates the Merger Agreement as
described in paragraph (g) under the heading "Termination" above or (ii)
Parent terminates the Merger Agreement as described in paragraphs (f) or (i)
under the heading "Termination" above, then, in each case, the Company will
pay, or cause to be paid to Parent, (i) Parent's Expenses up to a maximum of
$1 million and (ii) an amount equal to $29.1 million (the "Termination Fee").
In addition, so long as Parent has complied with all its material
obligations under the Merger Agreement and the Company is not entitled to
terminate the Merger Agreement as described in paragraphs (c), (d) or (e)
under the heading "Termination" above, if (i) the Merger Agreement is
terminated as described in paragraphs (b) or (h) under the heading
"Termination" above as a result of the non-satisfaction of the Minimum
Condition, (ii) the shareholders of the Company have failed to approve the
Merger Agreement and the Merger by the requisite vote in accordance with the
VSCA or (iii) Parent has terminated the Merger Agreement as described in
paragraph (d) under the heading "Termination" above; and
(1) at the time of the termination of the Offer, termination of the
Merger Agreement, shareholder vote or breach, as the case may be, any
person (other than Parent) shall have publicly announced, and not withdrawn
in good faith, an Acquisition Proposal; and
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(2) within twelve (12) months after termination of the Merger Agreement,
the Company shall have entered into an agreement with respect to an
Acquisition Proposal or consummated an Acquisition Proposal;
then the Company shall pay to Parent an amount equal to Parent's Expenses (not
in excess of $1 million) and the Termination Fee, in each case prior to or
concurrently with entering into any such agreement or consummating such
Acquisition Proposal, as the case may be.
Indemnification. Pursuant to the Merger Agreement, Parent and Merger
Subsidiary have agreed that the articles of incorporation and bylaws of the
Surviving Corporation shall contain provisions with respect to indemnification
substantially to the same effect as those set forth in the articles of
incorporation and the bylaws of the Company, which provisions shall not be
amended, modified or otherwise repealed for a period of six years after the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time were directors, officers, employees
or agents of the Company, unless such modification is required after the
Effective Time by law.
The Merger Agreement also provides that Parent shall cause the Surviving
Corporation, to the fullest extent permitted under applicable law or under the
Surviving Corporation's articles of incorporation or bylaws or any
indemnification agreement in effect as of the date of the Merger Agreement, to
indemnify and hold harmless, each present and former director, officer or
employee of the Company or any of its subsidiaries (collectively, the
"Indemnified Parties") against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, (x) arising out of or pertaining to the transactions
contemplated by the Merger Agreement or (y) otherwise with respect to any acts
or omissions occurring at or prior to the Effective Time ("Indemnification
Liabilities"), to the same extent as provided in the Company's articles of
incorporation or bylaws or any applicable contract or agreement as in effect
on the date of the Merger Agreement, in each case for a period of six years
after the date of the Merger Agreement. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time) and subject to the specific terms of any indemnification
contract, after the Effective Time, the Surviving Corporation shall assume and
direct all the defense thereof, including settlement, and the Indemnified
Parties shall cooperate in the defense of any such matter. An Indemnified
Party shall have a right to participate in (but not control) the defense of
any such matter with its own counsel and at its own expense. Notwithstanding
the right of the Surviving Corporation to assume and control the defense of
such litigation, claim or proceeding, such Indemnified Party shall have the
right to employ separate counsel and to participate in the defense of such
litigation, claim or proceeding, and the Surviving Corporation shall bear the
reasonable fees, costs and expenses of such separate counsel and shall pay
such fees, costs and expenses promptly after receipt of an invoice from such
Indemnified Party if (i) the use of counsel chosen by the Surviving
Corporation to represent such Indemnified Party would present such counsel
with a conflict of interest, (ii) the defendants in, or targets of, any such
litigation, claim or proceeding shall have been advised by counsel that there
may be legal defenses available to it or to other Indemnified Parties which
are different from or in addition to those available to the Surviving
Corporation, or (iii) the Surviving Corporation shall not have employed
counsel satisfactory to such Indemnified Party, in the exercise of the
Indemnified Party's reasonable judgment, to represent such Indemnified Party
within a reasonable time after notice of the institution of such litigation,
claim or proceeding. The Surviving Corporation shall not settle any such
matter unless (i) the Indemnified Party gives prior written consent, which
shall not be unreasonably withheld or delayed, or (ii) the terms of the
settlement provide that the Indemnified Party shall have no responsibility for
the discharge of any settlement amount and impose no other obligations or
duties on the Indemnified Party and the settlement discharges all rights
against Indemnified Party with respect to such matter. In no event shall the
Surviving Corporation be liable for any settlement effected without its prior
written consent. Any Indemnified Party wishing to claim indemnification, upon
learning of any such claim, action, suit, proceeding or investigation, shall
promptly notify Parent and the Surviving Corporation (but the failure so to
notify shall not relieve the Surviving Corporation from any liability which it
may have except to the extent such failure materially prejudices such
Surviving Corporation). The Indemnified Parties as a group will be represented
by a single law firm (plus no more than one local counsel in any jurisdiction)
with respect to each
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such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two
or more Indemnified Parties. Notwithstanding anything to the contrary, in the
event (i) that any claim or claims for indemnification are asserted or made
within such six-year period, all rights to indemnification in respect of any
such claim or claims shall continue until the disposition of any and all such
claims and (ii) that any determination required to be made with respect to
whether an Indemnified Party's conduct is entitled to indemnification under
the Merger Agreement, or complies with the standards set forth under the VSCA,
the Company's articles of incorporation or bylaws or any such agreement, as
the case may be, such determination shall be made by independent legal counsel
of national reputation selected by such Indemnified Party and reasonably
acceptable to Parent.
In addition, Parent will provide, or cause the Surviving Corporation to
provide, for a period of not less than six years after the Effective Time, the
Company's current directors and officers an insurance and indemnification
policy that provides coverage for events occurring at or prior to the
Effective Time (the "D&O Insurance") that is no less favorable than the
existing policy pursuant to which such directors and officers are covered or,
if substantially equivalent insurance coverage is unavailable, the best
available coverage; provided, however, that Parent and the Surviving
Corporation shall not be required to pay an annual premium for the D&O
Insurance in excess of two hundred percent (200%) of the annual premium
currently paid by the Company for such insurance, but in such case shall
purchase as much of such coverage as possible for such amount.
The provisions with respect to indemnification survive the consummation of
the Merger, are intended to benefit the Indemnified Parties, are be binding on
all successors and assigns of the Surviving Corporation and are enforceable by
the Indemnified Parties.
Support Agreement.
The following is a summary of certain provisions of the Support Agreement.
This summary is not a complete description of the terms and conditions of the
Support Agreement and is qualified in its entirety by reference to the full
text of the Support Agreement filed with the SEC as an exhibit to the Schedule
TO and is incorporated herein by reference. Capitalized terms not otherwise
defined below shall have the meanings set forth in the Support Agreement. The
Support Agreement may be examined, and copies obtained, as discussed in
Section 7 of this Offer to Purchase.
As a condition to the willingness of Parent and Merger Subsidiary to enter
in the Merger Agreement, Parent and Merger Subsidiary required that the
Principal Shareholder enter into the Support Agreement. The Support Agreement
provides that the Principal Shareholder shall promptly (and in any event
within ten (10) business days) following the commencement of the Offer, tender
(a) the certificates representing all the Shares of Company Common Stock owned
as of the date of the Support Agreement and all the Shares of Company Common
Stock which may hereafter be acquired by, or on behalf of the Principal
Shareholder (the "Principal Shareholder Shares") and (b) all other customary
documents or instruments required to be delivered pursuant to the terms of the
Offer Document.
The Support Agreement provides that the Principal Shareholder shall not,
subject to applicable law, withdraw the tender of the Principal Shareholder
Shares except if there is any amendment that adversely affects the Principal
Shareholder nor may the Principal Shareholder sell, give, assign, hypothecate,
pledge, encumber, grant a security interest in or otherwise dispose of or
transfer (whether by operation of law or by agreement or otherwise), any of
the Principal Shareholder Shares or any right, title or interest therein or
thereto or enter into any contract, option or other agreement or understanding
with respect to any of the foregoing.
Representations and Warranties. In the Support Agreement, the Principal
Shareholder made customary representations and warranties to Parent, including
representations and warranties relating to corporate power and authority to
enter into the Support Agreement, the absence of conflicts, and its title to
the Principal Shareholder Shares. Parent and Merger Subsidiary made customary
representations and warranties to the Principal Shareholder relating to
corporate power and authority to enter into the Support Agreement.
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Covenants. The Support Agreement contains various covenants of the Principal
Shareholder, including the following:
(a) The Principal Shareholder will not enter into any agreement or take
any other action that would restrict, limit or interfere with the
performance of the Principal Shareholder's obligations under the Merger
Agreement or the Support Agreement or the consummation of the transactions
contemplated by such agreements.
(b) The Principal Shareholder will not by any action or omission cause
any Liens to attach to the Principal Shareholder Shares.
(c) From the date of the Support Agreement until the Effective Time, the
Principal Shareholder, Parent, Merger Subsidiary and the Company will use
their respective reasonable best efforts to consult with each other before
issuing any press release or making any public statement with respect to
the transactions contemplated by the Merger Agreement and the Support
Agreement, and, except as may be required by the applicable law or any
listing agreement with the NYSE, will not issue any such press release or
make any such public statement prior to such consultation.
(d) The Principal Shareholder will, as soon as practicable, file a
Notification and Report Form under the HSR Act with the Federal Trade
Commission (the "FTC") and the Antitrust Division in connection with the
transactions contemplated by the Merger Agreement and the Support Agreement
as the "ultimate parent entity" of the Company, if required under
applicable law, and will make any filing or seek any consent, including any
filings under any applicable foreign antitrust laws as may be required in
connection with the Merger Agreement and the Support Agreement. The
Principal Shareholder will cooperate fully with the Company and Parent and
use its best efforts to respond as promptly as practicable to all inquiries
received from the FTC or the Antitrust Division or any regulatory agencies
for additional information or documentation. The Principal Shareholder will
use its best efforts to take or cause to be taken all actions necessary,
proper or advisable to obtain any consent, waiver, approval or
authorization relating to any antitrust law that is required for the
consummation of the transactions contemplated by the Merger Agreement and
the Support Agreement.
(e) The Principal Shareholder acknowledged that no rights of appraisal
are available to it in connection with the Merger and irrevocably and
unconditionally waived and agreed to prevent the exercise of, any rights of
appraisal, any dissenters' rights and any similar rights relating to the
Merger or any related transaction that the Principal Shareholder may
directly or indirectly have by virtue of the ownership of any Shares.
(f) The Principal Shareholder will, subject to the terms of the Support
Agreement, use its reasonable best efforts to take, or cause to be taken,
all actions, and to do or cause to be done, all things necessary, proper or
advisable under the applicable laws and regulations to consummate and make
effective the transactions contemplated by the Support Agreement.
(g) The Principal Shareholder will, without additional consideration and
at the Principal Shareholder's sole expense, take all actions and execute
all documents or other instruments necessary to carry out and further the
intent of the Support Agreement.
(h) The Principal Shareholder acknowledged that it is aware of the non-
solicitation covenants of the Company contained in the Merger Agreement and
agreed to comply with the terms of such section as if it were an agent of
the Company for all purposes of said section.
Option. Pursuant to the Support Agreement the Principal Shareholder granted
Parent the Option to purchase all of the Principal Shareholder Shares at the
Option Price subject to certain conditions. Subject to the conditions
described below, Parent may exercise the Option, at any time prior to the date
forty (40) days after the expiration or termination of the Merger Agreement
(such fortieth (40th) day being herein called the "Option Expiration Date") if
the Merger Agreement is terminated pursuant to a "Triggering Termination." For
purposes of the Support Agreement, a "Triggering Termination" means a
termination of the Merger Agreement (x) if the Company entered into a
definitive agreement providing for the implementation of a Superior Proposal
as
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described in paragraph (g) under the heading "Merger Agreement-Termination"
above or (y) as a result of a breach, in any material respect, by the
Principal Shareholder of its obligations to tender the Principal Shareholder
Shares or failure to cooperate with all regulatory filings as described in
clause (d) under the heading "Covenants" above. Parent can exercise the Option
by delivering written notice thereof to the Principal Shareholder (the
"Notice"), specifying the date, time and place for the closing of such
purchase which date shall not be less than three (3) business day nor more
than five (5) business days from the date Parent provides the Notice (the
"Option Closing"). The Option Closing shall take place on the date and at the
time and place specified in such notice; provided, that if at such time any of
the conditions specified below shall not have been satisfied (or waived),
Parent may postpone the Option Closing (but in no event for more than ninety
(90) days) until a date within five (5) business days after such conditions
are satisfied. Upon the exercise of the Option (and subject to the
satisfaction of the conditions discussed below), Parent shall be entitled to
purchase the Principal Shareholder Shares and the Principal Shareholder shall
sell the Principal Shareholder Shares to Parent.
Option Conditions. The obligation of Parent to purchase the Principal
Shareholder Shares at the Option Closing is subject to the following
conditions: (i) the waiting period under the HSR Act and all other foreign
antitrust laws described in clause (d) under the heading "Merger Agreement--
Conditions to the Merger" with respect to the acquisition of such Shares shall
have expired or been terminated and (ii) there shall be no preliminary or
permanent injunction or other order, decree or ruling issued by any foreign,
supranational, federal, state, municipal or other court, administrative
agency, commission or other governmental or regulatory body or authority or
instrumentality or political subdivision, or any official thereof (each a
"Governmental Entity"), nor any statute, rule, regulation or order promulgated
or enacted by any Governmental Entity prohibiting, or otherwise restraining,
such purchase.
Option Price Adjustment. In the event of any change in the Company's capital
stock by reason of any stock dividend, stock split, merger, consolidation,
recapitalization, combination, conversion, exchange of shares, extraordinary
or liquidating dividend or other change in the corporate or capital structure
of the Company which would have the effect of diluting or changing Parent's
rights under the Support Agreement, the number and kind of Principal
Shareholder Shares or other securities subject to the Support Agreement and
the Option Price shall be appropriately and equitably adjusted so that Parent
shall receive pursuant to the exercise of the Option that number and class of
shares or other securities or property that Parent or Merger Subsidiary, as
the case may be, would have received in respect of the Principal Shareholder
Shares purchasable pursuant to the exercise of the Option if such purchase had
occurred immediately prior to such event.
If the Option is exercised and the Option Shares are acquired by Parent,
Parent shall offer to purchase all outstanding shares of the Company Common
Stock or effect a merger or similar business combination at a price per share
not less than the price per share paid for the Option Shares.
Voting Agreement and Proxy. The Support Agreement provides that during the
time the agreement is in effect, at any meeting of the shareholders of the
Company and in any action by written consent of the shareholders of the
Company, the Principal Shareholder shall vote the Principal Shareholder
Shares: (x) in favor of the Merger, the Merger Agreement and the transactions
contemplated by the Merger Agreement and (y) against any (i) Acquisition
Proposal, (ii) action or agreement that would reasonably be expected to result
in a breach of any covenant or any other obligation or agreement of the
Company under the Merger Agreement or which would reasonably be expected to
result in any of the conditions to the Company's obligations under the Merger
Agreement not being fulfilled or (iii) any other action which is intended, or
would reasonably be expected, to impede or materially delay, the consummation
of the transactions contemplated by the Merger Agreement or the Support
Agreement or materially adversely affect the contemplated economic benefits to
Parent of the transactions contemplated by the Merger Agreement or the Support
Agreement.
Pursuant to the Support Agreement, the Principal Shareholder may not (i)
grant any proxy, power-of-attorney or other authorization in or with respect
to any or all of the Principal Shareholder Shares to any person other than
Parent or Merger Subsidiary or (ii) deposit the Principal Shareholder Shares
into a voting trust or enter into a voting agreement or similar arrangement
with respect to such Principal Shareholder Shares.
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Termination. The Support Agreement terminates upon the earliest of (i) the
Effective Time, (ii) the Option Closing and (iii) the termination of the
Merger Agreement in accordance with its terms, however, if the Merger
Agreement is terminated pursuant to a Triggering Termination, the Support
Agreement will not terminate unless and until the Option expires.
11. Plans for the Company; Other Matters.
Plans for the Company.
If, as and to the extent that Merger Subsidiary acquires control of the
Company, Merger Subsidiary intends to conduct a detailed review of the Company
and its assets, corporate structure, capitalization, operations, properties,
policies, management and personnel and to consider and determine what, if any,
changes would be desirable in light of the circumstances which then exist.
Such changes could include, among other things, changes in the Company's
business, corporate structure, articles of incorporation, bylaws,
capitalization, management or dividend policy. Following the Merger, Parent
will consider whether to pursue any dispositions of certain assets acquired in
the Merger, which may include a portion of the aroma chemicals business.
Assuming Merger Subsidiary purchases Shares pursuant to the Offer, Parent
intends to exercise promptly its rights under the Merger Agreement to obtain
majority representation on, and control of, the Company Board. See "Section
10-Merger Agreement-Directors" above. Parent will exercise such rights by
causing the Company to elect to the Company Board the following individuals:
Richard A. Goldstein, Douglas J. Wetmore, Carlos A. Lobbosco, Stephen A.
Block, William S. Kane, D. Wayne Howard, James P. Huether and Bruce S.
Leskanic. Information with respect to such directors is contained in Schedule
I hereto and in Schedule I to the Schedule 14D-9. The Merger Agreement
provides that, upon the purchase of, and payment for, any Shares by Parent or
any of its subsidiaries pursuant to the Offer, Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on
the Company Board such that the percentage of its designees on the Company
Board shall equal the percentage of the outstanding Shares beneficially owned
by Parent and its affiliates at such time. The Merger Agreement provides that
the directors and officers of Merger Subsidiary at the Effective Time of the
Merger will, from and after the Effective Time, be the initial directors and
officers, respectively, of the Surviving Corporation. See Section 10.
Merger Subsidiary or an affiliate of Merger Subsidiary may, following the
consummation or termination of the Offer, seek to acquire additional Shares
through open market purchases, privately negotiated transactions, a tender
offer or exchange offer or otherwise, upon such terms and at such prices as it
shall determine, which may be more or less than the price to be paid pursuant
to the Offer. Merger Subsidiary and its affiliates also reserve the right to
dispose of any or all Shares acquired by them, subject to the terms of the
Merger Agreement.
Except as disclosed in this Offer to Purchase, and except as may be effected
in connection with the integration of operations referred to above, none of
Merger Subsidiary, Parent or the Principal Shareholder has any present plans
or proposals that would result in an extraordinary corporate transaction, such
as a merger, reorganization, liquidation, relocation of operations, or sale or
transfer of a material amount of assets, involving the Company or any of its
subsidiaries, or any material changes in the Company's capitalization,
corporate structure, business or composition of its management or the Company
Board.
Other Matters.
Shareholder Approval. Under the VSCA, the approval of the Company Board and
the affirmative vote of the holders of more than two-thirds of the outstanding
Shares are required to approve the Merger Agreement and transactions
contemplated thereby. The Company has represented in the Merger Agreement that
the execution and delivery of the Merger Agreement by the Company and the
consummation by the Company of the transactions contemplated by the Merger
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject to the approval of the Merger by the Company's
shareholders in accordance with the VSCA. The Company Board has also approved
the Merger Agreement for purposes of Section 13.1-716 of the VSCA and has
represented to Parent and Merger Subsidiary that the restrictions on
affiliated transactions
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contained in Article 14 of the VSCA and control share acquisitions contained
in Article 14.1 of the VSCA are inapplicable to the transactions contemplated
by the Merger Agreement and the Support Agreement, including the Offer, the
Merger and any exercise of the Option set forth in the Support Agreement. In
addition, the Company has represented that the affirmative vote of the holders
of more than two-thirds of the outstanding Shares is the only vote of the
holders of any class or series of the Company's capital stock which is
necessary to approve the Merger Agreement and the transactions contemplated
thereby, including the Merger. Therefore, unless the Merger is consummated
pursuant to the short-form merger provisions under the VSCA described below
(in which case no further corporate action by the shareholders of the Company
will be required to complete the Merger), the only remaining required
corporate action of the Company will be the approval of the Merger Agreement
and the transactions contemplated thereby by the affirmative vote of the
holders of more than two-thirds of the Shares. The Merger Agreement provides
that Parent will vote, or cause to be voted, all of the Shares then owned by
Parent, Merger Subsidiary or any of Parent's other subsidiaries and affiliates
in favor of the approval of the Merger and the Merger Agreement. In the event
that Parent, Merger Subsidiary and Parent's other subsidiaries acquire in the
aggregate more than two-thirds of the Shares entitled to vote on the approval
of the Merger and the Merger Agreement, they would have the ability to effect
the Merger without the affirmative votes of any other shareholders.
Short-Form Merger. Section 13.1-719 of the VSCA provides that if a
corporation owns at least 90% of the outstanding shares of each class of
another corporation, the corporation holding such stock may merge itself into
such corporation without any action or vote on the part of the board of
directors or the shareholders of such other corporation. In the event that
Parent, Merger Subsidiary and any other subsidiaries of Parent acquire in the
aggregate at least 90% of the outstanding Shares, pursuant to the Offer, the
Option set forth in the Support Agreement or otherwise, then, at the election
of Parent, a short-form merger could be effected without any approval of the
Company Board or the shareholders of the Company, subject to compliance with
the provisions of Section 13.1-719 of the VSCA. Even if Parent and Merger
Subsidiary do not own 90% of the outstanding Shares following consummation of
the Offer, Parent and Merger Subsidiary could seek to purchase additional
Shares in the open market, from the Company or otherwise in order to reach the
90% threshold and employ a short-form merger. The consideration per Share paid
for any Shares so acquired may be greater or less than that paid in the Offer.
Parent presently intends to effect a short-form merger if permitted to do so
under the VSCA.
Dissenters' Rights. Holders of the Shares are not entitled to dissenters'
rights, rights of appraisal or other similar rights in connection with the
Merger pursuant to Sections 13.1-729 et seq. of the VSCA, unless (i) in the
event a shareholder vote is required to approve the Merger pursuant to the
VSCA, on the record date fixed by the Company Board to determine the
shareholders entitled to receive notice of and vote at a meeting to approve
the Merger, or (ii) in the event a short-form merger is allowed, immediately
prior to the Effective Time, the Common Stock is not either (A) listed on a
national securities exchange or on the NASDAQ or (B) held by at least 2,000
record shareholders. If dissenters' rights are available, Article 15 of the
VSCA provides that dissenting shareholders of the Company who comply with the
applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or expectation of the Merger) and to
receive payment of such fair value in cash, together with a fair rate of
interest thereon, if any. Any such judicial determination of the fair value of
the Shares could be based upon factors other than, or in addition to, the
price per Share to be paid in the Merger or the market value of the Shares.
The value so determined could be more or less than the price per Share to be
paid in the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING SHAREHOLDERS UNDER THE
VSCA DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY SHAREHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE
UNDER THE VSCA. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE
STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE VSCA.
Rule 13e-3. The SEC has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which Merger
Subsidiary seeks
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to acquire the remaining Shares not held by it. Merger Subsidiary currently
anticipates that Rule 13e-3 will be inapplicable to the Merger. If Rule 13e-3
were applicable to the Merger, it would require, among other things, that
certain financial information concerning the Company, and certain information
relating to the fairness of the proposed transaction and the consideration
offered to minority shareholders in such a transaction, be filed with the SEC
and disclosed to minority shareholders prior to consummation of the
transaction.
12. Dividends and Distributions.
As described above, the Merger Agreement provides that during the period
from the date of the Merger Agreement to the Effective Time, the Company shall
not, and shall not permit any of its subsidiaries to, without the written
consent of Parent, (A) except as provided in the Company Disclosure Letter,
declare, set aside or pay any dividends, or make any distributions on shares
of its outstanding capital stock (other than, with respect to a wholly owned
subsidiary of the Company, to the Company or another wholly owned subsidiary
of the Company), (B) split, combine or reclassify any capital stock of the
Company or any of its subsidiaries or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
capital stock of the Company or any of its Subsidiaries or (C) except as
required or permitted by the Merger Agreement, repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its subsidiaries
or any other securities thereof or any rights, warrants or options to acquire
any such shares or other securities.
13. Conditions to the Offer.
Notwithstanding any other provision of the Offer, Parent and Merger
Subsidiary shall not be required to accept for payment or purchase or pay for
any tendered Shares, (A) if (x) the Minimum Condition has not been satisfied
by the Expiration Date of the Offer or (y) the applicable waiting period under
the HSR Act or under any other applicable merger control regulations enforced
by Governmental Entities, individually or in the aggregate, having
jurisdiction over a material portion of the Company's business or assets shall
not have expired or been terminated by the expiration date of the Offer, or
(B) at any time on or after the date of the Merger Agreement and prior to the
date Shares are first accepted for payment under the Offer, if any of the
following conditions exist:
(a) any order or preliminary or permanent injunction shall be entered in
any action or proceeding before any court of competent jurisdiction or any
statute, rule, judgment, regulation, legislation, or order shall be
enacted, entered, enforced, promulgated, amended or issued by any United
States Governmental Entity, any other Governmental Entity or Entities
having in the aggregate jurisdiction over a material portion of the
Companys business or assets which shall (i) make illegal, restrain or
prohibit the acceptance for payment of, or payment for, any Shares by
Parent, Merger Subsidiary or any other affiliate of Parent or the
consummation of the Merger; (ii) prohibit or limit materially the ownership
or operation by Parent or Merger Subsidiary or any of their subsidiaries of
all or any material portion of the business or assets of the Company or any
of its subsidiaries (taken as a whole), or compel Parent, on the one hand,
or the Company and its subsidiaries, taken as a whole, on the other hand,
to dispose of or hold separate all or any material portion of their
respective businesses or material assets, (iii) impose or confirm material
limitations on the ability of Parent or Merger Subsidiary or any other
affiliate of Parent to exercise full rights of ownership of any Shares in
any material respect, including, without limitation, the right to vote any
Shares acquired by Merger Subsidiary pursuant to the Offer or otherwise on
all matters properly presented to the Companys shareholders, including,
without limitation, the approval and adoption of the Merger Agreement and
the transactions contemplated by the Merger Agreement; (iv) require
divestiture by Parent, Merger Subsidiary or any other affiliate of Parent
of any Shares; or (v) otherwise would have a Company Material Adverse
Effect; provided that with respect to any injunction issued by a
Governmental Entity in which the lead plaintiffs are not Governmental
Entities, Parent shall first be required to use its best efforts to defend
against any preliminary or permanent injunction;
(b) the Company Board or any committee thereof shall have (i) withdrawn,
modified or changed, in a manner adverse to Parent or Merger Subsidiary,
the recommendation by the Company Board or such committee of the Offer, the
Merger or the Merger Agreement, (ii) approved, recommended or announced a
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neutral position with respect to, or proposed publicly to approve,
recommend or announce a neutral position with respect to, an Acquisition
Proposal, (iii) provided notice that the Company has entered into an
agreement for the implementation of a Superior Proposal or (iv) resolved to
do any of the foregoing;
(c) there shall have occurred, and continued to exist, (i) any general
suspension of, or limitation on prices for, trading in securities on the
NYSE, (ii) a declaration of a banking moratorium or any general suspension
of payments in respect of banks in the United States, (iii) a commencement
of a war or armed hostilities directly involving the United States (other
than an action involving United Nations' personnel or support of United
Nations' personnel) or (iv) in the case of any of the foregoing clauses (i)
through (iii) existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof;
(d) (i) any of the representations and warranties (other than those
regarding capitalization) made by the Company in the Merger Agreement shall
not have been true and correct when made, or shall thereafter have ceased
to be true and correct as if made as of such later date (other than
representations and warranties made as of a specified date) (without regard
to any Company Material Adverse Effect contained in such representations or
warranties) except to the extent that any such failure to be true and
correct would not have a Company Material Adverse Effect, (ii)
capitalization representations and warranties shall not have been true and
correct, individually or in the aggregate, in all material respects when
made, or (iii) the Company shall not in all material respects have
performed each material obligation and agreement and complied with each
material covenant to be performed and complied with by it under the Merger
Agreement;
(e) the Merger Agreement shall have been terminated in accordance with
its terms; or
(f) there shall have occurred an event, change, occurrence, or
development of a state of facts or circumstances having a Company Material
Adverse Effect
which in the reasonable judgment of Parent or Merger Subsidiary makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
of, or payment for, Shares.
The foregoing conditions are for the benefit of Parent and Merger Subsidiary
and may, subject to the terms of the Merger Agreement, be waived by Parent and
Merger Subsidiary in whole or in part at any time and from time to time in
their discretion. The failure by Parent or Merger Subsidiary at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time prior to the Effective Time.
14. Effect of the Offer on the Market for the Shares; NYSE Quotation; Exchange
Act Registration; Margin Regulations.
Market for the Shares. The purchase of Shares by Merger Subsidiary pursuant
to the Offer will reduce the number of holders of Shares and the number of
Shares that might otherwise trade publicly and, which, depending upon the
number of Shares so purchased, could adversely affect the liquidity and market
value of the remaining Shares held by the public. Merger Subsidiary cannot
predict whether the reduction in the number of Shares that might otherwise
trade publicly would have an adverse or beneficial effect on the market price
for, or marketability of, the Shares or whether it would cause future market
prices to be greater or less than the Offer Price.
Stock Listing. The Shares are listed on the NYSE. After consummation of the
Offer and depending upon the aggregate market value and the per Share price of
any Shares not purchased pursuant to the Offer, the Shares may no longer meet
the requirements for continued listing on the NYSE. According to the NYSE's
published guidelines, the NYSE may delist the Shares if, among other things:
(i) the number of total shareholders falls below 400; (ii) the number of total
shareholders falls below 1,200 and the average monthly trading volume is less
than 100,000 shares (for the most recent 12 months); or (iii) the number of
publicly held Shares (exclusive
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<PAGE>
of holdings of officers and directors of the Company and their immediate
families and other concentrated holdings of 10% or more) should fall below
600,000. If as a result of the purchase of Shares pursuant to the Offer, the
Shares no longer meet the requirements of the NYSE for continued listing and
the listing of the Shares is discontinued, the market for the Shares could be
adversely affected. According to the Company, as of the date of the Merger
Agreement, there were approximately 162 holders of record of the Shares and
19,351,063 Shares outstanding.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on other securities exchanges or in the over-the-counter
market and that price quotations would be reported by such exchanges or
through the Nasdaq Stock Market, Inc. or other sources. The extent of the
public market for the Shares and the availability of such quotations would
depend, however, upon such factors as the number of shareholders and/or the
aggregate market value of the publicly traded Shares remaining at such time,
the interest in maintaining a market in the Shares on the part of securities
firms, the possible termination of registration under the Exchange Act as
described below, and other factors. Merger Subsidiary cannot predict whether
the reduction in the number of Shares that might otherwise trade publicly
would have an adverse or beneficial effect on the market price for, or
marketability of, the Shares or whether it would cause future market prices to
be greater or lesser than the Offer Price.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the SEC if the Shares are
neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be
furnished by the Company to its shareholders and to the SEC and would make
certain provisions of the Exchange Act no longer applicable to the Company,
such as the short-swing profit recovery provisions of Section 16(b), the
requirement of furnishing a proxy statement pursuant to Section 14(a) in
connection with shareholders' meetings and the related requirement of
furnishing an annual report to shareholders and the requirements of Rule 13e-3
under the Exchange Act with respect to "going private" transactions.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant
to Rule 144 or Rule 144A promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), may be impaired or eliminated.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding stock exchange listing
and market quotations, it is possible that, following the Offer, the Shares
would no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and, therefore, could no longer be
used as collateral for loans made by brokers. In addition, if registration of
the Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
Merger Subsidiary currently intends to seek delisting of the Shares from the
NYSE and the termination of the registration of the Shares under the Exchange
Act promptly after the completion of the Offer, provided that the requirements
for such delisting and termination are met. If the NYSE listing and the
Exchange Act registration of the Shares are not terminated prior to the
Merger, then the Shares will be delisted from the NYSE and the registration of
the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
15. Certain Legal Matters; Regulatory Approvals.
General. Except as described in this Section 15, based on information
provided by the Company, none of the Company, Merger Subsidiary 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 Merger
Subsidiary pursuant to the Offer, the Merger or otherwise, or
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<PAGE>
(ii) except as discussed 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 Merger
Subsidiary pursuant to the Offer, the Merger or otherwise. Should any such
approval or other action be required, Merger Subsidiary and Parent presently
contemplate that such approval or other action will be sought, except as
described below under "State Antitakeover Statutes." While Merger Subsidiary
does not presently believe that any competition waiting period or approval
will materially 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 materially adverse to the Company's business or that material
parts of the Company's business might not have to be disposed of, or other
substantial conditions complied with, 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, Merger Subsidiary could decline to accept for
payment, or pay for, any Shares tendered. See Section 13 for certain
conditions to the Offer, including conditions with respect to governmental
actions.
State Antitakeover Statutes. Article 14 of the VSCA in general, prohibits a
Virginia corporation, such as the Company, from engaging in an "affiliated
transaction" (defined in Section 13.1-725 of the VSCA to include a variety of
transactions, including mergers) with an "interested shareholder" (defined in
Section 13.1-725 of the VSCA generally as a person that is the beneficial
owner of 10% or more of the outstanding voting stock of the subject
corporation) for a period of three years following the date that such person
became an interested shareholder unless the board of directors of the
corporation and the holders of two-thirds of the voting shares, other than the
shares beneficially owned by the interested shareholder, approved the
affiliated transaction or, prior to the date such person became an interested
shareholder, the board of directors approved the transaction that resulted in
the shareholder becoming an interested shareholder. The provisions of Article
14 of the VSCA are inapplicable to any of the acquisitions of Shares
contemplated by the Merger Agreement and the Support Agreement because the
Merger Agreement, the Support Agreement and the transactions contemplated
thereby were approved by the Company Board prior to the execution thereof.
Article 14.1 of the VSCA provides that shares of an "issuing public
corporation" that are acquired in a "control share acquisition" generally will
have no voting rights unless such rights are conferred on those shares by the
vote of the holders of a majority of all the outstanding shares, other than
the shares beneficially owned by the interested shareholder and shares owned
by certain other affiliates of the corporation. A control share acquisition is
defined, with certain exceptions ("excepted acquisitions"), as the acquisition
of beneficial ownership of voting shares which would cause the acquirer to
have voting power within the following ranges or to move upward from one range
into another: (i) 20% to 33 1/3%; (ii) 33 1/3% to 50%; or (iii) more than 50%.
For the purposes of Article 14.1 of the VSCA an issuing public corporation is
a Virginia corporation with 300 or more shareholders. The provisions of
Article 14.1 of the VSCA are inapplicable to an acquisition of shares of a
publicly held Virginia corporation (i) pursuant to a merger or share exchange
effected in compliance with the VSCA if the issuing public corporation is a
party to the merger or share exchange agreement, (ii) pursuant to a tender or
exchange offer that is made pursuant to an agreement to which the issuing
public corporation is a party, or (iii) directly from the issuing public
corporation, or from any corporation, that before such share acquisition,
beneficially owns shares having at least a majority of the votes entitled to
be cast in the election of directors of the issuing corporation. The
acquisition of beneficial ownership of the Shares pursuant to the transactions
contemplated by the Merger Agreement and the Support Agreement will be
excepted acquisitions for purposes of Article 14.1 of the VSCA.
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 "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
39
<PAGE>
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.
Parent and Merger Subsidiary do not believe that the antitakeover laws and
regulations of any state other than the Commonwealth of Virginia will by their
terms apply to the Offer, and, except as discussed above with respect to
Articles 14 and 14.1 of the VSCA, neither Parent nor Merger Subsidiary has
attempted to comply with or become exempted from any state antitakeover
statute or regulation. Merger Subsidiary 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,
Merger Subsidiary might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and Merger Subsidiary
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, Merger
Subsidiary may not be obligated to accept for payment, or pay for, any Shares
tendered pursuant to the Offer. See Section 13.
Pursuant to the terms of the Merger Agreement, if any "fair price,"
"business combination" or "control share acquisition" statute or other similar
statute or regulation shall become applicable to the transactions contemplated
by the Merger Agreement or the Support Agreement, including the purchases of
Shares in the Offer, the Merger or the acquisition of Shares pursuant to the
option set forth in the Support Agreement, the Company and its Board of
Directors shall take all such action as may be reasonably necessary or
advisable to obtain such approvals and take such actions as are necessary or
advisable so that the transactions contemplated by the Merger Agreement and
the Support Agreement may be consummated as promptly as practicable on their
terms and otherwise act to minimize the effects of any such statute or
regulation on the transactions contemplated.
Antitrust. 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 "DOJ") and the FTC and certain waiting period
requirements have been satisfied.
Parent filed its Notification and Report Form with respect to the Offer
under the HSR Act on October 6, 2000. On October 6, 2000, the Principal
Shareholder filed, on behalf of the Company, its Notification and Report Form
with respect to the Offer. The waiting period under the HSR Act with respect
to the Offer will expire at 11:59 p.m., New York City time, on October 21,
2000, the fifteenth day after the date Parent's form was filed, unless early
termination of the waiting period is granted. However, the DOJ or the 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 day after
substantial compliance by Parent with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized
by the HSR Act. Thereafter, such waiting period may be extended only by court
order or with the consent of Parent. 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. Merger Subsidiary 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 13.
The FTC and the DOJ frequently scrutinize the legality of mergers and
acquisitions under U.S. Antitrust Laws (as defined below) of transactions such
as Merger Subsidiary's acquisition of Shares pursuant to the Offer and the
Merger. At any time before or after Merger Subsidiary's acquisition of Shares,
the DOJ or the FTC could take such action under the U.S. Antitrust Laws as it
deems necessary or desirable in the public interest, including seeking to
enjoin the acquisition of Shares pursuant to the Offer or otherwise seeking
divestiture of Shares
40
<PAGE>
acquired by Merger Subsidiary or divestiture of substantial assets of Parent
or its subsidiaries. Private parties, as well as state governments, may also
bring legal action under U.S. Antitrust Laws under certain circumstances.
Based upon an examination of information provided by the Company relating to
the businesses in which Parent and the Company are engaged, Parent and Merger
Subsidiary believe that the acquisition of Shares by Merger Subsidiary will
not violate U.S. Antitrust Laws. Nevertheless, there can be no assurance that
a challenge to the Offer or other acquisition of Shares by Merger Subsidiary
on antitrust grounds will not be made or, if such a challenge is made, of the
result. See Section 13 for certain conditions to the Offer, including
conditions with respect to litigation and certain governmental actions.
As used in this Offer to Purchase, "U.S. Antitrust Laws" shall mean and
include the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act,
the Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or
restraint of trade.
Parent and the Company conduct operations in a large number of other
jurisdictions throughout the world, where other antitrust filings or approvals
may be required or advisable in connection with the completion of the Offer
and the Merger. Parent, the Principal Shareholder and the Company currently
intend to make filings or seek approvals in certain other jurisdictions;
however, Parent and the Company do not expect such filings or approvals to
materially delay the consummation of the transactions contemplated by the
Merger Agreement. Parent and the Company believe that the transactions
contemplated by the Merger Agreement should be approved without any conditions
in all countries where approval is required. However, it cannot be ruled out
that any foreign antitrust authority might seek to require remedial
undertakings as a condition to its approval.
Federal Reserve Board Regulations. Regulations T, U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or
maintenance of credit for the purpose of buying or carrying margin stock,
including the Shares, if the credit is secured directly or indirectly by
margin stock. Such secured credit may not be extended or maintained in an
amount that exceeds the maximum loan value of all the direct and indirect
collateral securing the credit, including margin stock and other collateral.
16. Fees and Expenses.
Parent has engaged Morgan Stanley to act as Dealer Manager in connection
with the Offer and Morgan Stanley has provided certain financial advisory
services to Parent in connection with the acquisition of the Company. Parent
will pay Morgan Stanley customary compensation such services in connection
with the Offer and the Merger. Parent has also agreed to reimburse Morgan
Stanley for all reasonable fees, expenses and costs, including reasonable fees
and expenses of legal counsel, and to indemnify Morgan Stanley and certain
related persons against certain liabilities and expenses in connection with
its engagement, including certain liabilities under the federal securities
laws.
Merger Subsidiary and Parent have retained Georgeson Shareholder
Communications Inc. to serve as the Information Agent and The Bank of New York
to serve as the Depositary in connection with the Offer. The Information Agent
may contact holders of Shares by personal interview, mail, telephone, telex,
telegraph and other methods of electronic communication and may request
brokers, dealers, commercial banks, trust companies and other nominees to
forward the Offer materials to beneficial holders. The Information Agent and
the Depositary will each receive reasonable and customary compensation for
their services, be reimbursed for certain reasonable out-of-pocket expenses
and be indemnified against certain liabilities in connection with their
services, including certain liabilities and expenses under the federal
securities laws.
Except as discussed above, neither Parent nor Merger Subsidiary will pay any
fees or commissions to any broker or dealer or other person or entity in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, banks and trust companies will be reimbursed by Merger
Subsidiary for customary mailing and handling expenses incurred by them in
forwarding the Offer materials to their customers.
41
<PAGE>
17. Miscellaneous.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to holders of Shares. Merger
Subsidiary is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Merger Subsidiary becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of the Shares pursuant
thereto, Merger Subsidiary shall make a good faith effort to comply with such
statute or seek to have such statute declared inapplicable to the Offer. If,
after such good faith effort, Merger Subsidiary cannot comply with such state
statute, the Offer will not be made to (nor will tenders be accepted from or
on behalf of) holders of Shares in such state.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR MERGER SUBSIDIARY NOT CONTAINED HEREIN
OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Merger Subsidiary and Parent have filed with the SEC the Schedule TO
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed with the SEC the Schedule 14D-9 pursuant to
Rule 14d-9 under the Exchange Act, setting forth its recommendation with
respect to the Offer and the reasons for its recommendation and furnishing
certain additional related information. Such Schedules and any amendments
thereto, including exhibits, should be available for inspection and copies
should be obtainable in the same manner described in Section 7 of this Offer
to Purchase (except that such material will not be available at the regional
offices of the SEC).
B Acquisition Corp.
October 6, 2000
42
<PAGE>
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND
EXECUTIVE OFFICERS OF MERGER SUBSIDIARY AND PARENT
1. Directors and Executive Officers of Merger Subsidiary. The following
table sets forth the name and present principal occupation or employment, and
material occupations, positions, offices or employments for the past five
years, of each director and executive officer of Merger Subsidiary. Unless
otherwise indicated, each such person is a citizen of the United States of
America, and the business address of each such person is c/o 521 West 57th
Street, New York, New York 10019-2960. Unless otherwise indicated and except
with respect to Merger Subsidiary, which was formed on September 22, 2000,
each such person has held his or her present occupation as set forth below for
the past five years.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- ---------------------------------------------------------
<C> <S>
Richard A. Goldstein Member, Board of Directors and President of Merger
Subsidiary. Chairman and Chief Executive Officer of
Parent since June 2000. President and Chief Executive
Officer of Unilever United States, Inc., and President of
Unilever North American Foods prior thereto. Member,
Board of Directors of Legacy Hotels and Fiduciary Trust
Company International.
Douglas J. Wetmore Member, Board of Directors and Vice President of Merger
Subsidiary. Member, Board of Directors since 1998 and
Senior Vice President and Chief Financial Officer of
Parent since September 2000. Vice President and Chief
Financial Officer of Parent from April 1998 to September
2000. Controller of Parent prior thereto.
Stephen A. Block Member, Board of Directors, Vice President, Secretary and
Treasurer of Merger Subsidiary. Senior Vice President,
General Counsel and Secretary of Parent since February
2000. Senior Vice President, Law & Regulatory Affairs and
Secretary of Parent from May 1999 to February 2000. Vice
President, Law & Regulatory Affairs and Secretary of
Parent prior thereto.
</TABLE>
2. Directors and Executive Officers of Parent. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each director and executive officer of Parent. Unless otherwise indicated,
each such person is a citizen of the United States of America and the business
address of each such person is c/o 521 West 57th Street, New York, New York
10019-2960. Unless otherwise indicated and except with respect to Merger
Subsidiary, which was formed on September 22, 2000, each such person has held
his or her present occupation as set forth below, or has been an executive
officer at Parent for the past five years.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- ---------------------------------------------------------
<C> <S>
Richard A. Goldstein Chairman and Chief Executive Officer of Parent since June
2000. Member, Board of Directors and President of Merger
Subsidiary. President and Chief Executive Officer of
Unilever United States, Inc., and Business Group
President of Unilever North American Foods prior thereto.
Member, Board of Directors of Legacy Hotels and Fiduciary
Trust Company International.
Douglas J. Wetmore Member, Board of Directors since 1998 and Senior Vice
President and Chief Financial Officer of Parent since
September 2000. Vice President and Chief Financial
Officer of Parent from April 1998 to September 2000.
Member, Board of Directors and Vice President of Merger
Subsidiary. Controller of Parent prior thereto.
Carlos A. Lobbosco Member, Board of Directors since December 1999, Executive
Vice President since September 2000 and President,
Fragrance Division, of Parent since February 1999. Vice
President of Parent prior thereto. Citizen of Argentina.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- -----------------------------------------------------
<C> <S>
Robert G. Corbett Member, Board of Directors since November 1998 and
Vice President of Parent since May 1997. President,
Flavor Division, of Parent from September 1998 to
October 2000. Area Manager, North America Flavors, of
Parent prior thereto.
D. Wayne Howard Executive Vice President of Parent since September
2000. Vice President, Supply Chain Strategy of
Nordstrom, Inc. from January 2000 to August 2000.
Vice President, Strategic Sourcing Foods North
America, of Unilever from March 1999 to January 2000.
Vice President, Sourcing of Lipton from February 1997
to March 1999. Vice President, Supply Chain of Lipton
Canada, a division of Unilever, from June 1999 to
January 1997. Vice President, Finance and Operations
of Lipton-Monarch, a division of Unilever, prior
thereto.
Stephen A. Block Senior Vice President, General Counsel and Secretary
of Parent since February 2000. Member, Board of
Directors, Vice President, Secretary and Treasurer of
Merger Subsidiary. Senior Vice President, Law &
Regulatory Affairs and Secretary of Parent from May
1999 to February 2000. Vice President, Law &
Regulatory Affairs and Secretary of Parent prior
thereto.
William S. Kane Vice President of Parent since September 1999. Senior
Vice President Human Resources of Channel One Network
from 1997 to 1999. Director of Human Resources,
Frigidaire Division of Electrolux, prior thereto.
Thomas E. Kinlin Vice President of Parent since September 1999.
Employed by Parent in other positions prior thereto.
Jose A. Rodriguez Vice President of Parent since May 1998. Employed by
Parent in other positions prior thereto.
Margaret Hayes Adame Member, Board of Directors of Parent. President,
Fashion Group International. Member, Board of
Directors of North American Watch Corporation.
Richard M. Furlaud Member, Board of Directors of Parent. Chairman and
Chief Executive Officer of Parent from December 1999
to May 2000.
Peter A. Georgescu Member, Board of Directors of Parent. Chairman
Emeritus of Young & Rubicam, Inc. Member, Board of
Directors of Briggs & Stratton Corporation.
George Rowe, Jr. Member, Board of Directors of Parent. Attorney,
member of law firm of Fulton, Rowe, Hart & Coon.
Henry P. van Ameringen Member, Board of Directors of Parent. President of
van Ameringen Foundation, Inc.
William D. Van Dyke, III Member, Board of Directors of Parent. Senior Vice
President of Salomon Smith Barney, Inc.
</TABLE>
I-2
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, Share Certificates and
any other required documents should be sent or delivered by each shareholder
of the Company or such shareholder's broker, dealer, commercial bank, trust
company or other nominee to the Depositary, at the applicable address set
forth below:
The Depositary for the Offer is:
The Bank of New York
By Mail: By Facsimile By Hand or Overnight
Transmission: Courier:
Tender & Exchange
Department (212) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York New York, New York 10286
10286-1248
To Confirm Facsimile Transmissions:
(For Eligible Institutions Only)
(212) 815-6156
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may be directed to the Information Agent at
its address and telephone number set forth below. Shareholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
[LOGO]
17 State Street, 10th Floor
New York, New York 10004
Banks & Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Call Collect: (212) 761-8322
