<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
GIBSON GREETINGS, INC.
(NAME OF SUBJECT COMPANY)
GRANITE ACQUISITION CORP.
AND
AMERICAN GREETINGS CORPORATION
(BIDDERS)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(INCLUDING ASSOCIATED SERIES B PREFERRED STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
------------------------
374827103
(CUSIP NUMBER OF CLASS OF SECURITIES)
JON GROETZINGER, JR., ESQ.
ONE AMERICAN ROAD
CLEVELAND, OHIO 44114
(216) 252-7300
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
COPY TO:
LYLE G. GANSKE, ESQ.
JONES, DAY, REAVIS & POGUE
NORTH POINT
901 LAKESIDE AVENUE
CLEVELAND, OHIO 44114
(216) 586-3939
------------------------
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
Transaction Valuation* Amount of Filing Fee**
- ---------------------------------------------------------------------------------------------
$186,034,917 $37,207
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
* Estimated for purposes of calculating the filing fee only. Such amount was
derived by multiplying $10.25, the amount offered for each share of common
stock, par value $0.01 per share (the "Shares"), of Gibson Greetings, Inc.,
by the sum of (i) 15,846,663, representing all of the Shares that were issued
and outstanding as of October 29, 1999, and (ii) 2,303,085, representing all
of the Shares that may be issued upon the exercise of all outstanding options
to purchase Shares.
** 1/50th of 1% of the value of the transaction.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: FILING PARTY:
FORM OR REGISTRATION NO.: DATE FILED:
PAGE 1 OF 6 PAGES
(EXHIBIT INDEX IS LOCATED ON PAGE 6)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
This Tender Offer Statement on Schedule 14D-1 is filed by American
Greetings Corporation ("Parent") and Granite Acquisition Corp., a wholly owned
subsidiary of Parent ("Purchaser"), relating to the offer by Purchaser to
purchase all outstanding shares of common stock (the "Shares") of Gibson
Greetings, Inc. (the "Company"), and the associated Series B Preferred Stock
Purchase Rights (the "Rights"), issued pursuant to the Rights Agreement, dated
September 8, 1999, between the Company and The Bank of New York, as Rights Agent
(as the same may be amended, the "Rights Agreement"), at a purchase price of
$10.25 per Share (and associated Right), net to the seller in cash, without
interest, on the terms and subject to the conditions set forth in the Offer To
Purchase, dated November 9, 1999 (the "Offer To Purchase"), and in the related
Letter of Transmittal and any amendments or supplements thereto, copies of which
are attached hereto as Exhibits (a)(1) and (a)(2), respectively (which
collectively constitute the "Offer").
The item numbers and responses thereto below are in accordance with the
requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Gibson Greetings, Inc. The address
of its principal executive offices is 2100 Section Road, Cincinnati, Ohio 45237.
The telephone number of the Company at such location is (513) 841-6600.
(b) The information set forth on the cover page and under "Introduction" in
the Offer To Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer To Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d), (g) This Statement is filed by Purchaser and Parent. The
information set forth on the cover page, under "Introduction," in Section 9
("Certain Information Concerning Purchaser and Parent") and in Schedule I of the
Offer To Purchase is incorporated herein by reference.
(e)-(f) None of Purchaser, Parent or, to the knowledge of Purchaser and
Parent, any of the persons listed in Schedule I to the Offer To Purchase has
during the last five years been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or administrative body of a competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a)-(b) The information set forth under "Introduction" and in Section 8
("Certain Information Concerning the Company"), Section 9 ("Certain Information
Concerning Purchaser and Parent"), Section 11 ("Background of the Offer") and
Section 12 ("Purpose of the Offer and the Merger; Plans for the Company; the
Merger Agreement; Other Matters") of the Offer To Purchase is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer To Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(e) The information set forth under "Introduction" and in Section 12
("Purpose of the Offer and the Merger; Plans for the Company; the Merger
Agreement; Other Matters") and in Section 13 ("Dividends and Distributions") of
the Offer To Purchase is incorporated herein by reference.
2
<PAGE> 3
(f)-(g) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares, Stock Exchange Listing and Exchange Act Registration, and
Margin Securities") of the Offer To Purchase is incorporated herein by
reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a)-(b) The information set forth under "Introduction" and in Section 9
("Certain Information Concerning Purchaser and Parent") of the Offer To Purchase
is incorporated herein by reference.
ITEM 7.CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES
The information set forth under "Introduction" and in Section 9 ("Certain
Information Concerning Purchaser and Parent") and Section 12 ("Purpose of the
Offer and the Merger; Plans for the Company; the Merger Agreement; Other
Matters") of the Offer To Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth under "Introduction" and in Section 16 ("Fees and
Expenses") of the Offer To Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in Section 9 ("Certain Information Concerning
Purchaser and Parent") of the Offer To Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth under "Introduction" and in Section 9
("Certain Information Concerning Purchaser and Parent") and Section 12 ("Purpose
of the Offer and the Merger; Plans for the Company; the Merger Agreement; Other
Matters") of the Offer To Purchase is incorporated herein by reference.
(b)-(c) The information set forth under "Introduction" and in Section 14
("Certain Conditions of the Offer") and Section 15 ("Certain Legal Matters") of
the Offer To Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares, Stock Exchange Listing and Exchange Act Registration, and
Margin Securities") of the Offer To Purchase is incorporated herein by
reference.
(e) To the knowledge of Parent and Purchaser, no legal proceedings relating
to the Offer and the Merger required to be disclosed in Item 10(e) of Schedule
14D-1 are pending or have been instituted.
(f) The information set forth in the Offer To Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C>
(a)(1) Offer To Purchase, dated November 9, 1999
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
(a)(5) Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
(a)(7) Form of Summary Advertisement, dated November 9, 1999
(a)(8) Text of Joint Press Release of Amber and Granite, dated
November 3, 1999
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C>
(b) Not applicable
(c)(1) Agreement and Plan of Merger, dated as of November 2, 1999,
among American Greetings Corporation, Granite Acquisition
Corp. and Gibson Greetings, Inc.
(c)(2) Confidentiality Agreement, dated October 29, 1998, between
American Greetings Corporation and Gibson Greetings, Inc.
(c)(3) Standstill Agreement, dated October 26, 1998, between
American Greetings Corporation and Gibson Greetings, Inc.
(d) Not applicable
(e) Not applicable
(f) Not applicable
</TABLE>
4
<PAGE> 5
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: November 9, 1999
GRANITE ACQUISITION CORP.
By: /s/ MORRY WEISS
----------------------------------
Name: Morry Weiss
Title: President
AMERICAN GREETINGS CORPORATION
By: /s/ MORRY WEISS
----------------------------------
Name: Morry Weiss
Title: Chairman and Chief
Executive Officer
5
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
(a)(1) Offer To Purchase, dated November 9, 1999
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
(a)(5) Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
(a)(7) Form of Summary Advertisement, dated November 9, 1999
(a)(8) Text of Joint Press Release of Amber and Granite, dated
November 3, 1999
(c)(1) Agreement and Plan of Merger, dated as of November 2, 1999,
among American Greetings Corporation, Granite Acquisition
Corp. and Gibson Greetings, Inc.
(c)(2) Confidentiality Agreement, dated October 29, 1998, between
American Greetings Corporation and Gibson Greetings, Inc.
(c)(3) Standstill Agreement, dated October 26, 1998, between
American Greetings Corporation and Gibson Greetings, Inc.
</TABLE>
6
<PAGE> 1
Offer To Purchase for Cash
All Outstanding Shares of Common Stock
(Including Associated Series B Preferred Stock Purchase Rights)
of
Gibson Greetings, Inc.
at
$10.25 Net Per Share
(Subject to Possible Upward Adjustment)
by
Granite Acquisition Corp.,
a wholly owned subsidiary of
American Greetings Corporation
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, DECEMBER 8, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER THAT NUMBER
OF SHARES OF COMMON STOCK (THE "SHARES") OF GIBSON GREETINGS, INC. (THE
"COMPANY"), THAT, TOGETHER WITH THE SHARES THEN OWNED BY AMERICAN GREETINGS
CORPORATION ("PARENT"), REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING
ON A FULLY-DILUTED BASIS (ASSUMING THE EXERCISE OF ALL OUTSTANDING OPTIONS THAT
ARE EXERCISABLE AND IN-THE-MONEY AT THE OFFER PRICE). THE OFFER IS ALSO SUBJECT
TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE THE
INTRODUCTION AND SECTIONS 1, 14 AND 15 OF THIS OFFER TO PURCHASE.
THE BOARD OF DIRECTORS OF THE COMPANY, HAS UNANIMOUSLY (i) DETERMINED THAT
THE MERGER AGREEMENT AMONG PARENT, GRANITE ACQUISITION CORP. ("PURCHASER") AND
THE COMPANY, AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND
THE MERGER (AS DEFINED HEREIN), ARE FAIR TO AND IN THE BEST INTERESTS OF THE
HOLDERS OF SHARES (THE "STOCKHOLDERS"), (ii) APPROVED AND ADOPTED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER AND (iii) RESOLVED TO RECOMMEND THAT STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER.
------------------------
Any Stockholder desiring to tender all or a portion of its Shares should
either (1) complete and sign the appropriate Letter(s) of Transmittal (or a
manually signed facsimile thereof) in accordance with the instructions in such
Letter of Transmittal, mail or deliver such Letter(s) of Transmittal and any
other required documents to the Depositary and either deliver the certificates
for those Shares to the Depositary along with such Letter(s) of Transmittal or
tender those Shares pursuant to the procedures for book-entry transfer set forth
in Section 3 hereof or (2) request its broker, dealer, commercial bank, trust
company or other nominee to effect the tender on its behalf. Any Stockholder
whose Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact that broker, dealer, commercial
bank, trust company or other nominee if the Stockholder desires to tender such
Shares.
Any Stockholder who desires to tender Shares and whose certificate(s)
representing those Shares are not immediately available or who cannot comply
with the procedures for book-entry transfer on a timely basis must tender those
Shares by following the procedures for guaranteed delivery set forth in Section
3 hereof.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer To Purchase. Requests for additional
copies of this Offer To Purchase, the Letter of Transmittal and other related
materials may be directed to the Information Agent or to brokers, dealers,
commercial banks or trust companies.
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
November 9, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION............................................................. 1
1. Terms of the Offer.......................................... 3
2. Acceptance for Payment and Payment for Shares............... 4
3. Procedure for Tendering Shares.............................. 6
4. Withdrawal Rights........................................... 8
5. Certain Federal Income Tax Consequences of the Offer and the
Merger...................................................... 9
6. Price Range of the Shares; Dividends on the Shares.......... 10
7. Effect of the Offer on the Market for Shares, Stock Exchange
Listing and Exchange Act Registration, and Margin
Securities.................................................. 10
8. Certain Information Concerning the Company.................. 12
9. Certain Information Concerning Purchaser and Parent......... 13
10. Source and Amount of Funds.................................. 14
11. Background of the Offer..................................... 15
12. Purpose of the Offer and the Merger; Plans for the Company;
the Merger Agreement; Other Matters......................... 18
13. Dividends and Distributions................................. 32
14. Certain Conditions of the Offer............................. 33
15. Certain Legal Matters and Regulatory Approvals.............. 33
16. Fees and Expenses........................................... 36
17. Miscellaneous............................................... 36
SCHEDULE I............................................................... I-1
</TABLE>
i
<PAGE> 3
To the Holders of Common Stock of Gibson Greetings, Inc.
INTRODUCTION
Granite Acquisition Corp. ("Purchaser"), a wholly owned subsidiary of
American Greetings Corporation ("Parent"), hereby offers to purchase all
outstanding shares of common stock (the "Shares") of Gibson Greetings, Inc.
("Company") and the associated Series B Preferred Stock Purchase Rights (the
"Rights"), issued pursuant to the Rights Agreement, dated September 8, 1999,
between the Company and The Bank of New York, as Rights Agent (as the same may
be amended, the "Rights Agreement"), at a purchase price of $10.25 per Share and
associated Right (subject to possible upward adjustment as described below, the
"Offer Price"), net to the seller in cash, without interest, on the terms and
subject to the conditions set forth in this Offer To Purchase and in the related
Letter of Transmittal (which, together with any amendments or supplements hereto
or thereto, collectively constitute the "Offer"). Unless the context otherwise
requires, all references to Shares in this Offer To Purchase will include the
associated Rights and all references to the Rights will include all benefits
that may inure to holders of the Rights pursuant to the Rights Agreement,
including the right to receive any payment due upon redemption of the Rights.
The Offer Price will be increased by an amount equal to 30% of any
after-tax gain realized by the Company in any sale or disposition for cash by
the Company or its subsidiaries, prior to the Expiration Date (as hereinafter
defined), of all or any part of the Company's investment in E-Greetings Network
("EGN"), divided by the total number of Shares then outstanding on a fully
diluted basis, assuming for this purpose the exercise only of outstanding
options, whether or not such options are then vested, that are (or, giving
effect to the adjustment in the Offer Price contemplated hereby, would be)
in-the-money. The price used to compute any after-tax gain on any sale or
disposition will be the cash received by the Company, but only if such cash is
for an aggregate amount in excess of the Company's then net book value of its
interest in EGN. See Sections 2 and 12 of this Offer To Purchase. If the Offer
Price is increased, the Offer will remain open for a minimum of ten business
days from the date of such increase.
Holders of Shares ("Stockholders") who have Shares registered in their own
name and who tender directly to the Depositary will not be obligated to pay
brokerage fees or commissions or, except as set forth in Instruction 6 to the
Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to the
Offer. Stockholders who hold their Shares through their broker or bank should
consult with such institution as to whether there are any fees applicable to a
tender of Shares. Purchaser will pay all charges and expenses of Wasserstein
Perella & Co., Inc., as the dealer manager (the "Dealer Manager"), First Chicago
Trust Company of New York, as the depositary (the "Depositary"), and Corporate
Investor Communications, Inc., as the information agent (the "Information
Agent"), in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD"), HAS
UNANIMOUSLY (i) DETERMINED THAT THE MERGER AGREEMENT (AS HEREINAFTER DEFINED)
AMONG PARENT, PURCHASER AND THE COMPANY, AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER (AS HEREINAFTER DEFINED), ARE FAIR
TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS, (ii) APPROVED AND ADOPTED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER
AND THE MERGER AND (iii) RESOLVED TO RECOMMEND THAT STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
J.P. Morgan Securities Inc., the Company's financial advisor, has delivered
to the Company Board a written opinion dated November 2, 1999 to the effect
that, as of such date and based on and subject to certain matters stated in such
opinion, the $10.25 per Share cash consideration to be received in the Offer and
the Merger by Stockholders (other than Parent and its affiliates) was fair, from
a financial point of view, to such Stockholders. A copy of J.P. Morgan
Securities Inc.'s written opinion is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
filed with the Securities and Exchange Commission (the "Commission") in
connection with the Offer, a copy of which is being furnished to Stockholders
concurrently with this Offer To Purchase. Stockholders are urged to read the
opinion in its entirety for a description of the assumptions made, matters
considered and limitations of the review undertaken by J.P. Morgan Securities
Inc.
<PAGE> 4
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 2, 1999 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, for the commencement
of the Offer by Purchaser and further provides that after the purchase of Shares
pursuant to the Offer, subject to the satisfaction or waiver of certain
conditions, Purchaser will be merged with and into the Company (the "Merger"),
with the Company surviving the Merger as a wholly owned subsidiary of Parent
(the "Surviving Corporation"). In the Merger, each Share (excluding Shares owned
by Stockholders who have properly exercised their dissenters' rights under the
Delaware General Corporation Law ("Delaware Law"), Shares owned by Parent and
its subsidiaries and Shares held by the Company as treasury stock) issued and
outstanding immediately prior to the effective time of the Merger (the
"Effective Time") will be converted at the Effective Time into the right to
receive the Offer Price (or any greater amount paid for Shares pursuant to the
Offer), in cash payable to the holder thereof, without interest, prorated for
fractional Shares and less any required withholding taxes and, in certain
circumstances, stock transfer taxes (the "Merger Consideration").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES,
THAT, TOGETHER WITH THE SHARES THEN OWNED BY PARENT, REPRESENTS AT LEAST A
MAJORITY OF THE SHARES OUTSTANDING ON A FULLY-DILUTED BASIS (ASSUMING THE
EXERCISE OF ALL OUTSTANDING OPTIONS THAT ARE EXERCISABLE AND IN-THE-MONEY AT THE
OFFER PRICE) (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN
OTHER CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE, INCLUDING THE EXPIRATION
OR EARLIER TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-
RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 AND THE REGULATIONS THEREUNDER (THE
"HSR ACT"). SEE SECTIONS 1, 14 AND 15 OF THIS OFFER TO PURCHASE.
The Merger Agreement provides that if (x)(1)the applicable waiting period
under the HSR Act shall not have expired or been terminated or (2) the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
or the Federal Trade Commission (the "FTC") is challenging by litigation or
otherwise any of the transactions contemplated by the Merger Agreement and (y)
the Merger Agreement is terminated for any reason other than because the Company
Board (1) has withdrawn or modified its recommendation of the Merger Agreement,
the Offer or the Merger, (2) recommends or enters into an alternative
transaction or (3) removes any of its anti-takeover defenses, then Parent is
obligated to pay the Company a $20 million termination fee. In addition,
concurrently with the signing of the Merger Agreement, Parent contributed $10
million to a Rabbi Trust established by the Company to fund the compensation and
benefits to be provided to employees of the Company and its subsidiaries under
incentive arrangements designed and adopted by the Company (the "Rabbi Trust").
The Company has informed Purchaser in the Merger Agreement that, as of
October 29, 1999, there were 15,846,663 Shares issued and outstanding, and
2,303,085 options outstanding to purchase Shares ("Options"), which were granted
under the Company's stock option plans (collectively, the "Stock Option Plans").
The completion of the Merger is subject to the satisfaction or waiver of a
number of conditions, including, if required, the approval of the Merger by the
requisite vote or consent of the Stockholders. The Company's Certificate of
Incorporation and Delaware Law require the affirmative vote of holders of a
majority of the outstanding Shares to approve the Merger. As a result, if the
Minimum Condition and the other conditions to the Offer are satisfied and the
Offer is consummated, Purchaser will own a sufficient number of Shares to ensure
that the Merger will be approved. Under Delaware Law, if, after consummation of
the Offer, Purchaser owns at least 90% of the Shares then outstanding, Purchaser
will be able to cause the Merger to occur without a vote of the Stockholders.
If, however, after consummation of the Offer, Purchaser owns less than 90% of
the then outstanding Shares, a vote of the Stockholders will be required under
Delaware Law to approve the Merger, and a significantly longer period of time
will be required to effect the Merger. See Section 12. As of the date of this
Offer To Purchase, Parent beneficially owns 15 Shares.
No dissenters' rights are available in connection with the Offer.
Stockholders may exercise dissenters' rights, however, in connection with the
Merger regardless of whether the Merger is consummated with or without a vote of
the Stockholders.
2
<PAGE> 5
The Merger Agreement is more fully described in Section 12. Certain federal
income tax consequences of the sale of Shares pursuant to the Offer and the
conversion of Shares into the Merger Consideration pursuant to the Merger are
described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
On the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment (and thereby purchase) all Shares
that are validly tendered and not withdrawn in accordance with Section 4 prior
to the Expiration Date. As used in the Offer, the term "Expiration Date" means
12:00 midnight, New York City time, on Wednesday, December 8, 1999, unless and
until Purchaser, in accordance with the terms of the Offer and the Merger
Agreement, extends the period of time during which the Offer is open, in which
event the term "Expiration Date" means the latest time and date on which the
Offer, as so extended, expires.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition. The Offer is also subject to certain other conditions set
forth in Section 14, including the expiration or termination of all waiting
periods imposed by the HSR Act. Purchaser expressly reserves the right to waive
the condition set forth in Section 14 relating to the representations and
warranties and covenants of the Company; provided, however, that no other change
in the conditions of the Offer may be made without the prior written consent of
the Company. Subject to the terms of the Merger Agreement, without the prior
written consent of the Company, Purchaser will have the right to extend the
Offer (i) from time to time if, at the scheduled or extended expiration date of
the Offer, any of the conditions set forth in Section 14 exist, until such
conditions no longer exist or (ii) for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer or any period required by applicable law; provided,
however, that each such extension will be for such period (not to exceed 20
business days without the consent of Parent) as may be specified by the Company.
If all of the conditions to the Offer are satisfied or waived on any scheduled
expiration date of the Offer, the Company will have the right to require
Purchaser to extend the Offer on one or more occasions for an aggregate period
of not more than 20 business days beyond the latest expiration date that would
otherwise be permitted under the clause (i) or (ii) of the previous sentence,
if, on such expiration date the number of Shares tendered (and not withdrawn)
pursuant to the Offer, together with the Shares then owned by Parent, represents
less than 90% of the outstanding Shares on a fully-diluted basis (assuming the
exercise of all outstanding Options that are exercisable and in-the-money at the
Offer Price), and Purchaser will have the right to extend the Offer on one
occasion for a period of not more than 5 business days pursuant to the
provisions of this sentence; provided, however, that the Company may prevent
such extension by Purchaser if the Company, in its reasonable judgment,
determines that such an extension could threaten in any way the consummation of
the Offer. If all of the conditions to the Offer are not satisfied or waived on
any scheduled expiration date of the Offer, Purchaser shall extend the Offer
from time to time until such conditions are satisfied or waived; provided,
however, that each such extension will be for such period (not to exceed 20
business days without the consent of Parent) as may be specified by the Company
and; provided further, however, that Purchaser will not be required to extend
the Offer if the Merger Agreement is terminable because the Offer has not been
consummated on or before 18 months after the execution of the Merger Agreement
(except as extended for the time period equal to the time period beyond ten
business days during which either the Company or Parent fails to make an HSR
Filing) or within ten days following the satisfaction of all other conditions of
the Offer, the Minimum Condition shall not have been satisfied (except as
extended to allow for the extension of the Expiration Date of the Offer pursuant
to clause (ii) of the fourth sentence of this paragraph or pursuant to the
adjustment of the Offer Price as described above). Purchaser shall, and Parent
shall cause it to, accept for payment and pay for, as promptly as practicable
after the expiration of the Offer, all Shares properly tendered and not
withdrawn pursuant to the Offer that Purchaser is obligated to purchase.
Subject to the terms of the Merger Agreement and the rights of tendering
Stockholders to withdraw their Shares, Purchaser will retain all tendered Shares
until the Expiration Date.
3
<PAGE> 6
Subject to the applicable regulations of the Commission and the terms of
the Merger Agreement as described in the second preceding paragraph, Purchaser
also expressly reserves the right, in its sole discretion, at any time or from
time to time, to (i) delay acceptance for payment of, or regardless of whether
such Shares were theretofore accepted for payment, payment for, such Shares
pending receipt of any regulatory or governmental approvals specified in Section
15; (ii) terminate the Offer (whether or not any Shares have theretofore been
accepted for payment) if any condition referred to in Section 14 exists; (iii)
waive the condition set forth in Section 14 relating to the representations and
warranties and covenants of the Company; or (iv) except as set forth in the
Merger Agreement, otherwise amend the Offer in any respect, in each case, by
giving oral or written notice of such termination, waiver or amendment to the
Depositary.
The rights reserved by Purchaser in the immediately preceding paragraph are
in addition to Purchaser's rights described in Section 14. Any extension,
termination or amendment of the Offer will be followed as promptly as
practicable by public announcement thereof, and such announcement in the case of
an extension will be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which Purchaser may choose to make any public
announcement, subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Securities Exchange Act of 1934 (the "Exchange Act"), which require
that material changes be promptly disseminated to holders of Shares), Purchaser
will have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to the Dow Jones News
Service.
If Purchaser makes a material change in the terms of the Offer, or if it
waives a material condition to the Offer, Purchaser will extend the Offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during
which an offer must remain open following material changes in the terms of the
Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances, including the materiality
of the changes. In the Commission's view, an offer should remain open for a
minimum of five business days from the date the material change is first
published, sent or given to Stockholders, and, if material changes are made with
respect to information that approaches the significance of price and the
percentage of securities sought, a minimum of ten business days may be required
to allow for adequate dissemination and investor response. The requirement to
extend the Offer will not apply to the extent that the number of business days
remaining between the occurrence of the change and the then-scheduled Expiration
Date equals or exceeds the minimum extension period that would be required
because of such amendment. 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 Purchaser with its stockholder list and security
position listings for the purpose of disseminating the Offer to the
Stockholders. This Offer To Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment (and thereby purchase) and pay
for Shares that are validly tendered and not properly withdrawn prior to the
Expiration Date, as soon as practicable after the Expiration Date. Subject to
the applicable rules of the Commission and the terms of the Merger Agreement,
Purchaser expressly reserves the right to delay acceptance for payment of, or
payment for, Shares in order to comply, in whole or in part, with any other
applicable law, government regulation or condition contained therein. See
Sections 1, 14 and 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates for the
Shares (or a timely Book-Entry Confirmation (as defined in Section 3) with
respect to the Shares), (ii) the Letter of Transmittal (or a manually signed
facsimile thereof), properly
4
<PAGE> 7
completed and duly executed with any required signature guarantees (or, in the
case of a book-entry transfer of Shares, an Agent's Message), and (iii) all
other documents required by the Letter of Transmittal. See Section 3.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to and received by the Depositary and forming part of a
Book-Entry Confirmation, which states that (i) 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, (ii) such participant has received and agrees to be bound by the
terms of the applicable Letter of Transmittal, and (iii) Purchaser may enforce
such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) tendered Shares if, as and when Purchaser gives
oral or written notice to the Depositary of Purchaser's acceptance of such
Shares for payment. In all cases, payment for Shares purchased pursuant to the
Offer will be made by deposit of the purchase price with the Depositary, which
will act as agent for the tendering Stockholders for the purpose of receiving
payment from Purchaser and transmitting payment to the tendering Stockholders
whose Shares have been accepted for payment. If, for any reason, acceptance for
payment of any Shares tendered pursuant to the Offer is delayed, or Purchaser is
unable to accept for payment Shares tendered pursuant to the Offer, then,
without prejudice to Purchaser's rights described in Section 14, the Depositary
may, nevertheless, on behalf of Purchaser, retain the tendered Shares, and such
Shares may not be withdrawn, except to the extent that the tendering
Stockholders 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 ACCRUE ON THE CONSIDERATION TO BE PAID
FOR THE SHARES BY PURCHASER, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not purchased for any reason or if certificates
are submitted for more Shares than are tendered, certificates for the Shares not
purchased or tendered will be returned pursuant to the instructions of the
tendering Stockholder without expense to the tendering Stockholder (or, in the
case of Shares delivered by book-entry transfer into the Depositary's account at
a Book-Entry Transfer Facility pursuant to the procedures set forth in Section
3, the Shares will be credited to an account maintained at the appropriate
Book-Entry Transfer Facility) as promptly as practicable following the
expiration, termination or withdrawal of the Offer.
Parent or Purchaser reserves the right, subject to the provisions of the
Merger Agreement, to assign, in whole or from time to time in part, to one or
more of Parent's subsidiaries or affiliates the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but no such assignment
will relieve Parent or Purchaser of its obligations under the Offer or prejudice
the rights of tendering Stockholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
If a Liquidation Event occurs (or if more than one such Liquidation Event
occurs, with respect to each Liquidation Event), each of the Merger
Consideration and the Offer Price will be increased by an amount equal to 30% of
any after-tax gain (after giving full effect to any capital loss carry-forward
available to the Company, the availability of which is confirmed by the
Company's independent accountants) on such Liquidation Event, calculated in
accordance with generally accepted accounting principles, divided by the total
number of Shares then outstanding on a fully diluted basis, assuming for this
purpose the exercise only of outstanding Options, whether or not such Options
are then vested, that are (or, giving effect to the adjustment in the Offer
Price contemplated hereby, would be) in-the-money. A "Liquidation Event" means
any sale or disposition for cash (including, without limitation, a sale or
disposition by EGN of all or substantially all of its assets followed by a
distribution of the cash proceeds thereof to shareholders of EGN, a merger or
consolidation involving EGN, a purchase of all or substantially all of the stock
of EGN by a third party or the repurchase by EGN of any of its capital stock
from the Company or its subsidiaries) by the Company or its subsidiaries of all
or any part of its investment in EGN prior to the Expiration Date. The price
used to compute any after-tax gain on a Liquidation Event will be the cash
received by the Company in such sale or disposition (net of any underwriting
discounts and other amounts paid by the Company in connection with such sale),
but only if such cash is for an aggregate amount in excess of the Company's then
net book value of its interest in EGN. See the discussion entitled "The Merger
Agreement--Consideration to be Paid in the Merger" in Section 12 of this Offer
To Purchase.
5
<PAGE> 8
IF, PRIOR TO THE EXPIRATION DATE, PURCHASER INCREASES THE CONSIDERATION TO
BE PAID PER SHARE PURSUANT TO THE OFFER, PURCHASER WILL PAY THE INCREASED
CONSIDERATION FOR ALL SHARES PURCHASED PURSUANT TO THE OFFER, WHETHER OR NOT THE
SHARES WERE TENDERED PRIOR TO THE INCREASE IN CONSIDERATION.
3. PROCEDURE FOR TENDERING SHARES
VALID TENDERS. For Shares to be validly tendered pursuant to the Offer,
either (i) the appropriate Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer of Shares, an Agent's
Message), and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer To Purchase prior to the Expiration Date and either (a)
certificates representing tendered Shares must be received by the Depositary at
any one of those addresses prior to the Expiration Date or (b) the Shares must
be delivered pursuant to the procedures for book-entry transfer set forth below
and a Book-Entry Confirmation must be received by the Depositary prior to the
Expiration Date or (ii) the tendering Stockholder must comply with the
guaranteed delivery procedures set forth below. If certificates for Shares are
forwarded separately to the Depositary, a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) must accompany each such delivery.
No alternative, conditional or contingent tenders will be accepted.
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF
THE TENDERING STOCKHOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE DEPOSITARY. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer To Purchase. Any financial institution that is a participant in the
Book-Entry Transfer Facility system may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer the 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. Although delivery
of the Shares may be effected through book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility, the Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed with
any required signature guarantees, or an Agent's Message, and any other required
documents must, in any case, be transmitted to, and received by, the Depositary
at one of its addresses set forth on the back cover of this Offer To Purchase
prior to the Expiration Date, or the tendering Stockholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-entry
transfer of Shares into the Depositary's account at the Book-Entry Transfer
Facility as described above is referred to as a "Book-Entry Confirmation."
DELIVERY OF THE LETTER OF TRANSMITTAL OR OTHER DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY OF THE LETTER OF TRANSMITTAL OR
SUCH OTHER DOCUMENTS 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 Shares tendered therewith (which term, for purposes of this Section, includes
any participant in the Book-Entry Transfer Facility system whose name appears on
a security position listing as the owner of the Shares) and such registered
holder has not completed either the box entitled "Special Delivery Instructions"
or the box entitled "Special Payment Instructions" on the Letter of Transmittal
or (ii) if such Shares are tendered for the account of a financial institution
(including most commercial banks, savings and loans associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 1 of the Letter of Transmittal.
If the certificates representing Shares are registered in the name of a
person other than the signer of the Letter of Transmittal or if payment is to be
made or if certificates for Shares not tendered or not accepted for payment are
to be returned to a person other than the registered holder of the certificates
surrendered, then the
6
<PAGE> 9
tendered certificates representing Shares must be endorsed or accompanied by
appropriate stock powers, in each case signed exactly as the name or names of
the registered holder or owners appears on the certificates, with the signatures
on the certificates or stock powers guaranteed by an Eligible Institution as
described above and as provided in the Letter of Transmittal. See Instructions 1
and 5 of the Letter of Transmittal.
GUARANTEED DELIVERY. If a Stockholder wishes to tender Shares pursuant to
the Offer and the Stockholder's certificates are not immediately available or
the procedures for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to be received by the Depositary
prior to the Expiration Date, the Shares may nevertheless be tendered if all the
following guaranteed delivery procedures are complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser with this Offer
To Purchase, is received by the Depositary as provided below prior to the
Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer or a Book-Entry Confirmation with respect to all tendered Shares,
together with a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof) and any required signature
guarantees (or, in the case of a book-entry transfer of Shares, an Agent's
Message) in connection with a book-entry transfer of Shares, and any other
documents required by the Letter of Transmittal, are received by the
Depositary within three Nasdaq National Market trading days after the date
of execution of the Notice of Guaranteed Delivery. A "Nasdaq trading day"
is any day on which The Nasdaq Stock Market, Inc.'s ("Nasdaq") Nasdaq
National Market is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mailed to the Depositary and must include
an endorsement by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery and a representation that the Stockholder on whose behalf
the tender is being made is deemed to own the Shares being tendered within the
meaning of Rule 14e-4 under the Exchange Act.
Notwithstanding any other provision of this Offer To Purchase, payment for
Shares accepted for payment pursuant to the Offer in all cases will be made only
after timely receipt by the Depositary of certificates for (or Book-Entry
Confirmation with respect to) the Shares, a Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed with all
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and all other documents required by the Letter of Transmittal.
Accordingly, payment may not be made to all tendering Stockholders at the same
time, and will depend upon when Share certificates are received by the
Depositary or Book-Entry Confirmations of such Shares are received into the
Depositary's account at the Book-Entry Transfer Facility.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING OF 31% OF THE PAYMENTS MADE TO STOCKHOLDERS WITH RESPECT TO THE
PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER OR THE MERGER, A
STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH ITS CORRECT TAXPAYER IDENTIFICATION
NUMBER AND CERTIFY THAT IT IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX
WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF
TRANSMITTAL. SEE SECTION 5 BELOW AND INSTRUCTION 10 OF THE LETTER OF
TRANSMITTAL.
DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination will be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares determined not to be in proper form or the
acceptance of or payment for which may, in the opinion of counsel, be unlawful
and reserves the absolute right to waive any defect or irregularity in any
tender of Shares. Subject to the terms of the Merger Agreement, Purchaser
expressly reserves the right to waive the condition set forth in Section 14 of
this Offer To Purchase relating to representations and warranties and covenants
of the Company; provided, however, that no
7
<PAGE> 10
other change in the conditions set forth in Section 14 of this Offer To Purchase
may be made without the prior written consent of the Company.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter(s) of Transmittal and the instructions thereto) will be
final and binding on all parties. No tender of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived. None of Purchaser, Parent, Depositary, the Dealer Manager, 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.
APPOINTMENT AS PROXY. By executing the Letter of Transmittal, a tendering
Stockholder irrevocably appoints designees of Purchaser as his attorneys-in-fact
and proxies, with full power of substitution and resubstitution, in the manner
set forth in the Letter of Transmittal, to the full extent of the Stockholder's
rights with respect to the Shares tendered by the Stockholder and purchased by
Purchaser and with respect to any and all other Shares or other securities
issued or issuable in respect of those Shares, on or after the date of the
Offer. All such powers of attorney and proxies will be considered coupled with
an interest in the tendered Shares. Such appointment will be effective when, and
only to the extent that, Purchaser accepts the Shares for payment. Upon
acceptance for payment, all prior powers of attorney and proxies given by the
Stockholder with respect to the Shares (and any other Shares or other securities
so issued in respect of such purchased Shares) will be revoked, without further
action, and no subsequent powers of attorney and proxies may be given (and, if
given, will not be deemed effective) by the Stockholder. The designees of
Purchaser will be empowered to exercise all voting and other rights of the
Stockholder with respect to such Shares (and any other Shares or securities so
issued in respect of such purchased Shares) as they in their sole discretion may
deem proper, including without limitation in respect of any annual or special
meeting of the Stockholders, or any adjournment or postponement of any such
meeting.
Purchaser reserves the absolute right to require that, in order for Shares
to be validly tendered, immediately upon Purchaser's acceptance for payment of
the Shares, Purchaser must be able to exercise full voting and other rights with
respect to the Shares, including voting at any meeting of Stockholders then
scheduled.
Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering Stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment by Purchaser as provided in this Offer To
Purchase, may also be withdrawn at any time after January 8, 2000 (or such later
date as may be applicable if the Offer is extended).
If Purchaser extends the Offer, is delayed in its purchase of or payment
for Shares, or is unable to purchase or pay for Shares for any reason then,
without prejudice to the rights of Purchaser, tendered Shares may be retained by
the Depositary on behalf of Purchaser and may not be withdrawn, except to the
extent that tendering Stockholders are entitled to withdrawal rights as set
forth in this Section 4.
The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the terms of the Merger
Agreement and provisions of Rule 14e-1(c) under the Exchange Act, which requires
Purchaser to pay the consideration offered or to return Shares deposited by or
on behalf of Stockholders promptly after the termination or withdrawal of the
Offer.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer To Purchase. Any such notice
of withdrawal must specify the name of the persons who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder, if different from that of the person who tendered the Shares. If
certificates evidencing Shares have been delivered or otherwise identified to
the Depositary then, prior to the release of the certificates, the tendering
Stockholder must also submit the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn, and the signature on the
8
<PAGE> 11
notice of withdrawal must be guaranteed by an Eligible Institution (except in
the case of Shares tendered for the account of an Eligible Institution). If
Shares have been tendered pursuant to the procedure for book-entry transfer set
forth in Section 3, the notice of withdrawal must specify the name and number of
the account at the applicable Book-Entry Transfer Facility to be credited with
the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding on all parties. No withdrawal of
Shares will be deemed to have been made properly until all defects and
irregularities have been cured or waived. None of Parent, Purchaser, the Dealer
Manager, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failing to give such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3 above.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER
The following is a summary of the material federal income tax consequences
of the Offer and the Merger to Stockholders whose Shares are purchased pursuant
to the Offer or whose Shares are converted into the right to receive the Merger
Consideration in the Merger (including any cash amounts received by dissenting
Stockholders pursuant to the exercise of dissenters' rights). This discussion is
based upon the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the applicable Treasury Regulations promulgated and proposed
thereunder, and published judicial authority and administrative rulings and
practice. Legislative, judicial or administrative authorities or interpretations
are subject to change, possibly on a retroactive basis, at any time and a change
could alter or modify the statements and conclusions set forth below. It is
assumed for purposes of this discussion that the Shares are held as "capital
assets" within the meaning of Section 1221 of the Code. This discussion does not
address all aspects of federal income taxation that may be relevant to a
particular Stockholder in light of such Stockholder's personal investment
circumstances, or those Stockholders subject to special treatment under the
federal income tax laws (for example, life insurance companies, tax-exempt
organizations, foreign corporations and nonresident alien individuals) or to
Stockholders who acquired their Shares through the exercise of employee stock
options or other compensation arrangements. In addition, the discussion does not
address any aspect of foreign, state or local income taxation or any other form
of taxation that may be applicable to a Stockholder.
CONSEQUENCES OF THE OFFER AND THE MERGER TO STOCKHOLDERS
The receipt of the Offer Price and the Merger Consideration (and any cash
amounts received by dissenting Stockholders pursuant to the exercise of
dissenters' rights) will be a taxable transaction for federal income tax
purposes (and also may be a taxable transaction under applicable state, local
and other income tax laws). In general, for federal income tax purposes, a
Stockholder will recognize gain or loss equal to the difference between its
adjusted tax basis in the Shares sold pursuant to the Offer or converted to cash
in the Merger or pursuant to the exercise of dissenters' rights and the amount
of cash received therefor. Such gain or loss will be capital gain or loss and
will be long-term gain or loss, if, on the date of sale (or, if applicable, the
date of the Merger), the Shares were held for more than one year.
BACKUP TAX WITHHOLDING
Under the Code, a Stockholder may be subject, under certain circumstances,
to "backup withholding" at a 31% rate with respect to payments made in
connection with the Offer or the Merger. Backup withholding generally applies if
the Stockholder (i) fails to furnish his social security number or other
taxpayer identification number ("TIN"), (ii) furnishes an incorrect TIN, (iii)
fails properly to report interest or dividends, or (iv) under certain
circumstances, fails to provide a certified statement, signed under penalties of
perjury, that the TIN provided is his correct number and that he or she is not
subject to backup withholding. Backup withholding is not an additional tax but
merely an advance payment, which may be refunded to the extent it results in an
9
<PAGE> 12
overpayment of tax. Certain persons generally are exempt from backup
withholding, including corporations and financial institutions. Certain
penalties apply for failure to furnish correct information and for failure to
include the reportable payments in income. Each Stockholder should consult with
its own tax advisor as to its qualifications for exemption from withholding and
the procedure for obtaining such exemption.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE OFFER
AND THE MERGER TO THEM IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, (the "Company Form 10-K"), the Shares are traded on the
Nasdaq National Market under the symbol "GIBG." The following table sets forth,
for the periods indicated, the reported high and low sale prices for the Shares
on the Nasdaq National Market as reported in the Company Form 10-K with respect
to calendar years 1997 and 1998, and as reported thereafter by published
financial sources with respect to calendar year 1999.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1997
First Quarter............................................... $21 5/8 $18
Second Quarter.............................................. 23 1/4 19
Third Quarter............................................... 26 3/4 18 1/2
Fourth Quarter.............................................. 26 1/4 20 1/2
1998
First Quarter............................................... $28 3/8 $18 7/8
Second Quarter.............................................. 29 1/4 21 15/16
Third Quarter............................................... 26 3/8 16
Fourth Quarter.............................................. 20 3/4 8 3/4
1999
First Quarter............................................... $12 1/8 $ 6 1/8
Second Quarter.............................................. 10 1/16 5 15/16
Third Quarter............................................... 6 5/8 3 15/16
Fourth Quarter (through November 8, 1999)................... 8 15/16 4 1/4
</TABLE>
On November 2, 1999, the last full trading day before the public
announcement of the Merger Agreement, the last reported sale price on the Nasdaq
National Market was $5 1/2 per Share. On November 8, 1999, the last full trading
day before the commencement of the Offer, the last reported sale price on the
Nasdaq National Market was $8 29/32 per Share. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR SHARES.
No dividends were declared or paid in 1999, 1998 or 1997. The terms of
certain of the Company's financing agreements contain covenants that could limit
the payment of cash dividends. The Company has agreed in the Merger Agreement
that it will not pay any dividend or other distribution payable in cash, stock
or property with respect to the Shares.
7. EFFECT OF THE OFFER ON THE MARKET FOR SHARES, STOCK EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION, AND MARGIN SECURITIES.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of holders
of Shares, which could adversely affect the liquidity and market value of the
remaining Shares held by Stockholders other than Purchaser. Purchaser cannot
predict whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Shares or whether it would cause future market prices to be
greater or less than the Offer Price.
10
<PAGE> 13
NASDAQ QUOTATION. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the standards for continued inclusion
in Nasdaq. According to Nasdaq's published guidelines, the Shares would not be
eligible to be included for quotation if, among other things, the number of
publicly held Shares falls below 500,000, the number of holders of Shares falls
below 400 or the aggregate market value of such publicly held Shares falls below
$3,000,000. If these standards are not met, the Shares might continue to be
quoted on The Nasdaq SmallCap Market, Inc., but if the number of holders of the
Shares falls below 300, or if the number of publicly held Shares falls below
100,000, or if the aggregate market value of such publicly held Shares falls
below $200,000 or there are not at least two registered and active market makers
(one of which may be a market maker entering a stability bid), Nasdaq rules
provide that the securities would no longer qualify for inclusion in Nasdaq and
Nasdaq would cease to provide any quotations. Shares held directly or indirectly
by an officer or director of the Company or by a beneficial owner of more than
10% of the Shares will ordinarily not be considered as being publicly held for
purposes of these standards. In the event the Shares are no longer eligible for
Nasdaq quotation, quotations might still be available from other sources. The
extent of the public market for the Shares and the availability of such
quotations would, however, depend upon the number of holders of such Shares
remaining at such time, the interest in maintaining a market in such Shares on
the part of securities firms, the possible termination of registration of such
Shares under the Exchange Act as described below and other factors.
Purchaser has been advised by the Company that as of November 5, 1999,
there were approximately 600 holders of record of the Shares. The Company has
advised Purchaser that it believes that the number of beneficial owners of the
Shares as of November 5, 1999, is approximately 4,500.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange and there are fewer than 300 record holders of the Shares. The
termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
holders of Shares and to the Commission and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), and the requirement of furnishing a proxy statement in connection with
Stockholders' meetings pursuant to Section 14(a), no longer applicable to the
Shares. Furthermore, if the Shares are no longer registered under the Exchange
Act, the requirements of Rule 13e-3 under the Exchange Act with respect to
"going private" transactions would no longer be applicable to the Company. In
addition, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended. Purchaser believes that the purchase of the Shares pursuant to the
Offer may result in the Shares becoming eligible for termination of registration
under the Exchange Act, and it is the intention of Purchaser to cause the
Company to make an application for termination of registration of the Shares as
soon as possible after successful completion of the Offer if the Shares are then
eligible for such termination.
If registration of the Shares is not terminated prior to the Merger, then
following the consummation of the Merger, the Shares will no longer be eligible
for Nasdaq quotation and the registration of the Shares under the Exchange Act
will be terminated.
MARGIN REGULATIONS. The Shares are currently "margin securities," as such
term is defined under the rules of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), which has the effect, among other things,
of allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, following the Offer, it is possible that the Shares might no
longer constitute "margin securities" for purposes of the margin regulations of
the Federal Reserve Board, in which event such Shares could no longer be used as
collateral for loans made by brokers.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be "margin securities" or be eligible for Nasdaq
reporting. Purchaser intends to seek to cause the Company to terminate the
registration of the Shares under the Exchange Act as soon after consummation of
the Offer as the requirements for termination of the registration of the Shares
are met.
11
<PAGE> 14
8. CERTAIN INFORMATION CONCERNING THE COMPANY
GENERAL INFORMATION. The Company is a Delaware corporation with its
principal executive offices located at 2100 Section Road, Cincinnati, Ohio
45237. The Company and its wholly owned and majority owned subsidiaries operate
in a single industry segment--the design and sale of greeting cards, paper
partywares, gift wrap and related specialty relationship-fostering products. The
foregoing description of the Company's business has been derived in part from
the Company Form 10-K and is qualified in its entirety by reference to the
Company Form 10-K.
HISTORICAL FINANCIAL INFORMATION. Certain selected consolidated financial
information with respect to the Company and its subsidiaries excerpted from the
Company 10-K and the Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1999 (the "Company Form 10-Q") is set forth below. More
comprehensive financial information is included in such reports (including
management's discussion and analysis of financial condition and results of
operations) and other documents filed by the Company with the Commission, and
the following summary is qualified in its entirety by reference to such reports
and other documents and all of the financial information (including any related
notes) contained therein. Such reports and other documents should be available
for inspection and copies should be obtainable in the manner set forth below
under "Available Information."
GIBSON GREETINGS, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED FISCAL YEAR ENDED
JUNE 30, --------------------------------------
-------------------- DECEMBER 31,
1999 1998 1998(1)(2) 1997 1996(3)
INCOME STATEMENT DATA -------- -------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Revenues.......................... $144,498 $206,726 $408,530 $397,717 $390,246
Net Income (loss)................. (27,792) (3,343) 2,183 21,598 21,962
Net Income (loss) per share:
Basic........................... (1.76) (0.20) 0.13 1.32 1.36
Diluted......................... (1.76) (0.20) 0.13 1.27 1.34
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
-------- --------------------------------
1999 1998 1997 1996
BALANCE SHEET DATA -------- -------- -------- --------
<S> <C> <C> <C> <C>
Total Assets.................................... $383,663 $437,451 $443,322 $451,559
Debt due within one year(4)..................... 78 155 7,890 7,901
Long-term debt(5)............................... 10,069 10,384 24,158 40,898
Stockholders' equity............................ 242,857 271,478 281,744 256,316
</TABLE>
- ---------------
(1) Excluding the effect of the restructuring charge, 1998 net income would have
totaled $15,969, or $0.97 per diluted share.
(2) Includes the operations of The Ink Group Companies since July 3, 1998, the
date of acquisition, and The Paper Factory of Wisconsin, Inc. through August
31, 1998, the date of divestiture.
(3) Includes the operations of Gibson de Mexico S.A. de C.V. through September
1, 1996, the date of liquidation.
(4) Includes the current portion of long-term debt at December 31, which
consisted of $155 in 1998, $7,890 in 1997, $7,901 in 1996, $9,894 in 1995
and $11,164 in 1994.
(5) Excludes $12,040 in capitalized lease obligation at December 31, 1998, which
is included in other liabilities as part of the Company's restructuring
reserve.
12
<PAGE> 15
AVAILABLE INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act. In accordance with the Exchange Act, the
Company files periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters. The
Company is required to disclose in such proxy statements certain 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 those persons in transactions
with the Company. Such reports, proxy statements and other information may be
inspected at the Commission's office at 450 Fifth Street, N.W., Washington, D.C.
20549, and also should be available for inspection and copying at the regional
offices of the Commission located at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies may be obtained upon payment of the Commission's
prescribed fees by writing to its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or through the Commission's website
(http://www.sec.gov).
Although neither Parent nor Purchaser believes as of the date of this Offer
To Purchase that statements contained herein based upon such documents are
untrue in any material respect, none of Parent, Purchaser, Dealer Manager or
Information Agent assumes any responsibility for the accuracy or completeness of
the information concerning the Company, furnished by the Company, or contained
in the documents and records referred to herein 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
and Purchaser.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Purchaser, a Delaware corporation, was organized to acquire all of the
Shares pursuant to the Offer and the Merger and has not conducted any unrelated
activities since its organization. All of the outstanding capital stock of
Purchaser is owned directly by Parent. The principal executive offices of
Purchaser are located at One American Road, Cleveland, Ohio 44144.
Parent is an Ohio corporation, with its principal executive offices located
at One American Road, Cleveland, Ohio 44144. Parent and its subsidiaries operate
predominantly in a single industry--the design, manufacture and sale of everyday
and seasonal greeting cards and other social expression products. The name,
business address, citizenship, present principal occupation and employment
history for the past five years of each of the executive officers and directors
of Parent and Purchaser are set forth on Schedule I.
Set forth below is certain selected consolidated financial information with
respect to Parent and its subsidiaries, excerpted from Parent's Annual Report on
Form 10-K for the fiscal year ended February 28, 1999 (the "Parent 10-K"), and
Parent's Quarterly Report on Form 10-Q for the fiscal quarter ended August 31,
1999 (the "Parent 10-Q"). More comprehensive financial information is included
in such reports (including management's discussion and analysis of financial
condition and results of operations) and other documents filed by Parent with
the Commission, and the following summary is qualified in its entirety by
reference to such reports and other documents and all the financial information
(including any related notes) contained therein. The Parent 10-K and the Parent
10-Q are incorporated herein by reference. Such reports and other documents
should be available for inspection and copies should be obtainable from the
offices of the Commission in the same manner as set forth under "Available
Information" in Section 8 above.
13
<PAGE> 16
AMERICAN GREETINGS CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED FISCAL YEAR ENDED
AUGUST 31, FEBRUARY 28 OR 29,
-------------------- --------------------------------------
1999 1998 1999 1998 1997
SUMMARY OF OPERATIONS -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Sales....................... $936,540 $967,641 $2,205,706 $2,198,765 $2,161,089
Net Income...................... $(15,451) $ 47,756 $ 180,222 $ 190,084 $ 167,095
Earnings Per Share.............. (0.23) 0.67 2.56 2.58 2.23
Earnings per share -- assuming
dilution...................... (0.23) 0.67 2.53 2.55 2.22
Cash dividends per share........ 0.20(1) 0.37 0.94 0.71 0.67
</TABLE>
- ---------------
(1) Dividend of $0.19 per share paid June 10,1999, was declared in February
1999.
<TABLE>
<CAPTION>
AUGUST 31, FEBRUARY 28 OR 29,
---------- --------------------------------------
1999 1999 1998 1997
FINANCIAL POSITION ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Total assets.............................. $1,103,569 $2,419,328 $2,161,464 $2,135,120
Long-term debt............................ 439,490 463,246 148,800 219,639
Stockholders' equity...................... 1,199,392 1,346,611 1,345,217 1,361,655
</TABLE>
Except as set forth elsewhere in this Offer To Purchase or Schedule I
hereto: (i) neither Parent nor Purchaser nor, to the knowledge of Parent or
Purchaser, any of the persons listed in Schedule I hereto or any associate or
majority-owned subsidiary of Parent or Purchaser or any of the persons so
listed, (a) beneficially owns or has a right to acquire any Shares or any other
equity securities of the Company, (b) has effected any transaction in the Shares
or any other equity securities of the Company during the past 60 days, or (c)
has any contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company (including any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss or the giving or withholding
of proxies, consents or authorizations); (ii) there have been no transactions
that would require reporting under the rules and regulations of the Commission
between Parent or Purchaser or any of their respective subsidiaries or, to the
knowledge of Parent or Purchaser, any of the persons listed in Schedule I
hereto, on the one hand, and the Company or any of its executive officers,
directors or affiliates, on the other hand; and (iii) there have been no
contacts, negotiations or transactions between Parent or Purchaser or any of
their respective subsidiaries or, to the knowledge of Parent or Purchaser, any
of the persons listed in Schedule I hereto, on the one hand, and the Company or
its subsidiaries or affiliates, on the other hand, concerning a merger,
consolidation or acquisition, a tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Purchaser to pay the aggregate
purchase price to be paid pursuant to the Offer and the Merger, to cash out the
Options and to pay the fees and expenses related to the Offer and the Merger is
estimated to be approximately $175 million. These funds are expected to be
provided to Purchaser in the form of capital contributions or advances made by
Parent. Parent plans to obtain the funds for such capital contributions or
advances from cash on hand, borrowings under its existing bank credit facilities
or a combination thereof.
14
<PAGE> 17
11. BACKGROUND OF THE OFFER
In March 1995, Mr. Morry Weiss, Chairman and Chief Executive Officer of
Parent, acting on rumors of the possible sale of the Company, publicly announced
Parent's interest in acquiring parts of the Company's business if the Company
were to put itself up for sale. In response to this announcement, the Executive
Committee of the Company Board sent Mr. Weiss a letter identifying certain
regulatory issues raised by a proposed business combination between Parent and
the Company, and invited Mr. Weiss and his legal advisors to present a solution
to these concerns.
On July 6, 1995, the Company publicly announced that it was exploring the
sale of the Company.
On July 14, 1995, the legal advisors of Parent and the Company met to
discuss the regulatory issues that would arise in a proposed business
combination of Parent and the Company. The Company's legal advisors stated their
concerns that obtaining regulatory approval for a business combination of Parent
and the Company would be difficult. In addition, the Company's representatives
expressed their concerns over sharing competitively sensitive information with
Parent and with the negative impact a failed transaction could have on the
Company's morale, personnel, retention of key customers and competitive position
in the greeting card industry. Parent's legal advisors stated their belief that
obtaining regulatory approval was not an insurmountable problem.
On July 21, 1995, the Executive Committee of the Company Board decided to
terminate discussions between Parent and the Company due to regulatory and
business concerns, and on July 24, 1995, the Company publicly announced its
rejection of Parent's proposal. Parent subsequently announced the possibility
that it would pursue an unsolicited takeover of the Company, but never initiated
one.
On February 29, 1996, each director of the Company received a letter from
Parent proposing a business combination between the Company and Parent in which
the Company's stockholders would receive consideration of $18 per share, in cash
or Parent stock. The Executive Committee of the Company Board again informed
Parent that it had concluded that at that time the regulatory risks of the
proposed business combination with Parent were too high, and reject Parent's
proposal.
On March 4, 1996, Parent publicly announced its interest in acquiring the
Company, without indicating the terms of its proposal. On March 5, 1996, the
Company issued a press release rejecting Parent's proposal and terminating
discussions with Parent. Parent publicly disclosed the terms of its proposal to
acquire the Company and its continued interest in acquiring the Company on March
6, 1996. On March 7, 1996, Parent indicated that it would not attempt an
unsolicited takeover of the Company, but would leave its $18 proposal open until
March 19, 1996. The Company responded that it would not consider Parent's
proposal and planned to focus on rebuilding its business and remain independent.
On March 19, 1996, Parent announced that its proposal to acquire the Company had
expired and that it was abandoning further efforts to acquire the Company.
For the remainder of 1996 through late 1998, there were no further contacts
between the Company and Parent regarding any possible business combination.
In October 1998, Mr. Weiss called Mr. Frank J. O'Connell, Chairman, Chief
Executive Officer and President of the Company, to discuss a possible
transaction between Parent and the Company. Mr. O'Connell, after consultation
with the Company's legal and financial advisors, decided to meet with Mr. Weiss
to determine if a proposed business combination between Parent and the Company
was possible given the Company's weakening financial performance and competitive
position in the greeting card industry. At a meeting on October 25, 1998, Mr.
Weiss and Mr. O'Connell discussed in more detail the possible terms of such a
transaction. In connection with these discussions, the parties executed a
standstill agreement, pursuant to which Parent agreed not to purchase or agree
or offer to purchase ownership of any of the Company's securities or assets, or
solicit, or participate in a solicitation of, any proxy from stockholders of the
Company, unless approved by the Company, and a confidentiality agreement, which
included covenants by Parent to maintain the confidentiality of any information
received by Parent regarding the Company.
On November 3, 1998, the Company received a letter from Parent proposing a
business combination between the Company and Parent in which the Company's
stockholders would receive consideration of $20 per share. Over the next several
weeks, Mr. Weiss and Mr. O'Connell had numerous telephone conversations
15
<PAGE> 18
involving the status of a possible business combination between the companies.
Mr. O'Connell reiterated the Company Board's concerns regarding regulatory risks
and the negative impact that a failed business combination would likely have on
the Company's business and stockholder value and requested that Parent clarify
its proposal in terms of protecting the Company and its stockholders against the
risks of a failed transaction.
On February 18, 1999, the Company announced its financial results for the
fourth quarter and full year ended December 31, 1998. The Company reported lower
net income and earnings per share for each such period in 1998 compared to the
same period a year earlier. The Company cited an increasingly competitive
greeting card industry hurt by declining unit volume and increased price
sensitivity among the reasons for its financial problems. The stock price of the
Company declined substantially following this announcement.
On May 6, 1999, the Company announced its financial results for the first
quarter ended March 31, 1999. The Company again reported a net loss for such
period attributed, in part, to lower-than-anticipated sales of everyday products
and higher returns and allowances. The stock price of the Company continued to
decline following this announcement.
On May 14, 1999, Mr. Weiss sent the Company an unsolicited letter briefly
outlining a new proposal for a business combination in which Parent would
acquire the Company for $10 per share in cash. On May 19, 1999, Mr. Albert R.
Pezzillo, chairman of a Special Committee of the Company Board that considered
Parent's proposal, sent Mr. Weiss a letter indicating that the Special Committee
would need to receive a more detailed proposal from Parent which included a
regulatory strategy, assurances from Parent that it would fully assume any
regulatory risks and specific terms of a proposed merger agreement that would
maximize the chances for a successful transaction.
On June 8, 1999, Mr. Weiss, Mr. O'Connell, Mr. Pezzillo and their
respective legal and economic advisors met to discuss the feasibility and terms
of a business combination.
Discussions continued for the next week, with Parent presenting a new
proposal on June 18, 1999, in which Parent would acquire the Company for $10 per
share in cash, pay the Company a termination fee of $5 million if regulatory
approval were not obtained and fund a $4 million program to retain key employees
of the Company. The Company informed Parent that the Company Board had met,
together with its legal and financial advisors, to consider Parent's proposal
and had determined that the economic protections offered by Parent did not
sufficiently protect the Company in the event that regulatory approval were not
obtained and that Parent's proposal was therefore rejected.
On July 19, 1999, the Company released a preliminary analysis of its
results for the second quarter ended June 30, 1999. The Company announced that
it expected a further decline in its financial results with a continued increase
in its loss per share due to weak sales and its on-going restructuring plan. In
addition, the Company announced that it expected to report a loss for the full
year ended December 31, 1999.
Following continued discussions and negotiations, Mr. Weiss telephoned Mr.
O'Connell and Mr. Pezzillo on July 19, 1999, with an updated proposal. The
proposal contemplated a $10 per share cash offer for the Company, a $15 million
termination fee if regulatory approval were not obtained and a $15 million
retention program for the Company funded by Parent. Mr. O'Connell sent Mr. Weiss
a letter dated July 26, 1999, detailing the Company Board's structural
requirements for a proposed business combination. The letter indicated that
Parent would have to agree to fully commit to obtaining regulatory approval,
limited termination rights under the Merger Agreement, limited closing
conditions to the Offer, a non-refundable $15 million retention program and a
$15 million termination fee payable in all circumstances except if the Company
Board recommended a superior transaction with another party pursuant to its
fiduciary obligations.
Mr. Weiss responded with a letter dated July 29, 1999, addressing the
Company Board's concerns. Mr. O'Connell sent Mr. Weiss a letter dated August 4,
1999, which indicated that the Company Board met to consider Parent's latest
proposal, and, after consultation with its financial and legal advisors,
determined that Parent had not adequately addressed the Company Board's concerns
regarding assumption of regulatory risk and certainty of closing. Consequently,
the Company Board had rejected Parent's latest proposal.
16
<PAGE> 19
During August 1999, Mr. Weiss and Mr. O'Connell continued to discuss a
possible business combination. In a letter dated August 11, 1999, Mr. O'Connell
communicated to Mr. Weiss that the Company Board, after consultation with its
legal and financial advisors, instructed Mr. O'Connell that it would not
consider another proposal from Parent unless such proposal contained guarantees
on assumption of regulatory risk, certainty of closing of the transaction and
adequate financial safeguards for the Company and its stockholders in the event
of a failed transaction.
Parent and the Company exchanged numerous written communications during the
month of August that detailed each party's position on a variety of issues. In
late August 1999, Mr. Weiss indicated to Mr. O'Connell that Parent was
reevaluating its previously stated proposal to acquire the Company at a price of
$10 per Share. Mr. O'Connell, after conferring with the Company Board, advised
Mr. Weiss that the Company would not consider an offer of less than $10 per
Share.
Mr. Weiss and Mr. O'Connell continued discussions during September 1999,
engaging in numerous telephone calls, exchanging detailed written communications
and meeting with their respective legal and financial advisors. By mid-September
1999, Parent and the Company had agreed on certain key contract terms which the
Company Board required. The parties also had limited discussions regarding price
per Share. Among the key terms the parties agreed to were: a non-refundable $15
million retention program funded by Parent; a $15 million termination fee
payable by Parent in all circumstances except if the Company accepted a superior
proposal from another party pursuant to its fiduciary obligations; limited
closing conditions to the Offer and the Merger; and representations and
warranties of the Company given only as of the date of the Merger Agreement,
including the Company's representation and warranty regarding material adverse
changes in the Company's business.
From September 23, 1999 to October 2, 1999, Parent conducted business and
legal due diligence of the Company and its operations.
From October 1, 1999, through October 14, 1999, representatives of Parent
and the Company negotiated the terms of the Merger Agreement. During this
period, the Company determined that a higher termination fee would better
protect the Company and its stockholders in the event of a failed transaction.
Parent and the Company agreed to increase the termination fee to $20 million
while reducing the retention program to $10 million. The parties continued to
have on-going discussions on price. On October 14, 1999, negotiations between
the parties terminated due to differences on key contract terms relating to
allocation of regulatory risk.
On October 24, 1999, Mr. Weiss contacted Mr. O'Connell to inquire if the
parties would be able to settle their outstanding differences. Mr. O'Connell
insisted that no further negotiations would take place unless Parent was willing
to accept all of the regulatory risk of a proposed business combination. After
conferring with senior management and his legal advisors, Mr. Weiss telephoned
later that week and indicated that Parent, under certain conditions, would
accept certain regulatory risks.
On October 28, 1999, Mr. O'Connell and Mr. Pezzillo spoke with Mr. Weiss
and reported that the Company Board had rejected Parent's revised proposal due
to the conditions required by Parent with respect to the regulatory risk. During
this telephone call, the parties resolved the outstanding issues and tentatively
agreed on a price of $10.25 per Share, which Mr. Weiss confirmed in an October
29, 1999, telephone call with Mr. O'Connell.
From October 30, 1999, to November 1, 1999, representatives of Parent and
the Company finalized the terms of the Merger Agreement.
At a special meeting held on November 1, 1999, the Board of Directors of
Parent approved the Offer, the Merger and the Merger Agreement.
The Company informed Parent that on November 1 and 2, 1999, at a special
meeting of the Company Board, (i) Mr. O'Connell updated the directors on the
status of the discussions with Parent, (ii) representatives of J.P. Morgan
Securities Inc. delivered their oral opinion to the Company Board (subsequently
confirmed in writing) that, as of such date, the consideration proposed to be
received by the stockholders of the Company in the Offer and in the Merger was
fair, from a financial point of view, to such holders and (iii) the Company
Board, by a unanimous vote, approved the Offer, the Merger and the Merger
Agreement and determined to recommend that
17
<PAGE> 20
the Company's stockholders accept the Offer and tender their Shares and approve
the Merger and the Merger Agreement.
The Company, Parent and Purchaser executed the Merger Agreement in the
evening on November 2, 1999, and publicly announced the transaction on the
morning of November 3, 1999.
On November 9, 1999, Purchaser commenced the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; OTHER MATTERS
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer and the Merger is to enable Purchaser to acquire,
in one or more transactions, control of, and the entire equity interest, in the
Company. The Offer is intended to increase the likelihood that the Merger will
be completed promptly. The acquisition of the entire equity interest in the
Company has been structured as a cash tender offer followed by a cash merger in
order to provide a prompt and orderly transfer of ownership of the Company from
the Stockholders to Parent and to provide the Stockholders with cash in a per
Share amount equal to the Offer Price for all of their Shares.
PLANS FOR THE COMPANY
Following consummation of the Merger, Parent presently intends to operate
the company as a subsidiary under the name of the Company. However, Parent will
conduct a further review of the Company and its subsidiaries and their
respective assets, businesses, corporate structure, capitalization, operations,
properties, policies, management and personnel. After such review, Parent will
determine what actions or changes, if any, would be desirable in light of the
circumstances which then exist, and reserves the right to effect such actions or
changes. Parent's decisions could be affected by information hereafter obtained,
changes in general economic or market conditions or in the business of the
Company or its subsidiaries, actions by the Company or its subsidiaries and
other factors.
Except as otherwise provided in this Offer To Purchase, and for possible
transactions between the Company and other subsidiaries of Parent in connection
with the integration of business conducted by the Company with the other
businesses of Parent and its subsidiaries after the Effective Time, Purchaser,
Parent and the directors and officers of Purchaser and Parent listed on Schedule
I have no current plans or proposals that would result in (i) an extraordinary
corporate transaction, such as a merger, reorganization, liquidation or sale or
transfer of a material amount of assets involving the Company or any of its
Subsidiaries, (ii) a sale or transfer of a material amount of the assets of the
Company or any of its Subsidiaries, (iii) any change in the present Company
Board or management of the Company, (iv) any material change in the present
capitalization or dividend policy of the Company, (v) any material change in the
Company's corporate structure or business, (vi) causing a class of securities of
the Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an interdealer quotation system of a registered
national securities association, or (vii) a class of equity securities of the
Company becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Exchange Act.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement
and is qualified in its entirety by reference to the complete text of the Merger
Agreement, a copy of which is filed with the Commission as an exhibit to the
Schedule 14D-1 and is incorporated herein by reference. The Merger Agreement
should be read in its entirety for a more complete description of the matters
summarized below. The Merger Agreement may be examined, and copies obtained from
the offices of the Commission in the same manner as set forth in Section 8
above. Defined terms used below and not defined herein have the respective
meanings assigned to those terms in the Merger Agreement.
18
<PAGE> 21
THE OFFER. The Merger Agreement provides for the commencement of the Offer,
completion of which is subject only to the conditions set forth in Section 14 of
this Offer To Purchase. Purchaser expressly reserved the right in the Merger
Agreement to waive the condition set forth in Section 14 relating to the
representations and warranties and covenants of the Company; provided, however,
that no other change in the conditions of the Offer may be made without the
prior written consent of the Company. Subject to the terms of the Merger
Agreement, without the prior written consent of the Company, Purchaser will have
the right to extend the Offer (i) from time to time if, at the scheduled or
extended expiration date of the Offer, any of the conditions set forth in
Section 14 exist, until such conditions no longer exist or (ii) for any period
required by any rule, regulation, interpretation or position of the SEC or the
staff thereof applicable to the Offer or any period required by applicable law;
provided, however, that each such extension will be for such period (not to
exceed 20 business days without the consent of Parent) as may be specified by
the Company. If all of the conditions to the Offer are satisfied or waived on
any scheduled expiration date of the Offer, the Company will have the right to
require Purchaser to extend the Offer on one or more occasions for an aggregate
period of not more than 20 business days beyond the latest expiration date that
would otherwise be permitted under clause (i) or (ii) of the previous sentence,
if, on such expiration date the number of Shares tendered (and not withdrawn)
pursuant to the Offer, together with the Shares then owned by Parent, represents
less than 90% of the outstanding Shares on a fully-diluted basis (assuming the
exercise of all outstanding Options that are exercisable and in-the-money at the
Offer Price), and Purchaser will have the right to extend the Offer on one
occasion for a period of not more than 5 business days pursuant to the
provisions of this sentence; provided, however,that the Company may prevent such
extension by Purchaser if the Company, in its reasonable judgment, determines
that such an extension could threaten in any way the consummation of the Offer.
If all of the conditions to the Offer are not satisfied or waived on any
scheduled expiration date of the Offer, Purchaser will extend the Offer from
time to time until such conditions are satisfied or waived; provided, however,
that each such extension will be for such period (not to exceed 20 business days
without the consent of Parent) as may be specified by the Company and; provided
further, however, that Purchaser will not be required to extend the Offer if the
Merger Agreement is terminable because the Offer has not been consummated on or
before 18 months after the execution of the Merger Agreement (except as extended
for the time period equal to the time period beyond ten business days during
which either the Company or Parent fails to make an HSR Filing) or within ten
days following the satisfaction of all other conditions of the Offer, the
Minimum Condition shall not have been satisfied (except as extended to allow for
the extension of the Expiration Date of the Offer pursuant to clause (ii) of the
fourth sentence of this paragraph or pursuant to the adjustment of the Offer
Price as described above). Purchaser will, and Parent will cause it to, accept
for payment and pay for, as promptly as practicable after the expiration of the
Offer, all Shares properly tendered and not withdrawn pursuant to the Offer that
Purchaser is obligated to purchase.
See Section 14 of this Offer To Purchase for a discussion of the conditions
to the Offer.
The Company made representations to Parent and Purchaser in the Merger
Agreement that (a) the Company Board, at a meeting duly called and held, (i)
unanimously determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, are fair to and in the
best interests of the Stockholders, (ii) unanimously approved and adopted the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger (such approval being sufficient to render Section 203 of Delaware
Law, Articles V and VI of the Company's Certificate of Incorporation and the
Rights Agreement inapplicable to the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger), (iii) unanimously
resolved to recommend acceptance of the Offer and approval and adoption of the
Merger Agreement and the Merger by the Stockholders, provided, however, that,
the Company Board may, subject to the terms of the Merger Agreement and its
fiduciary duties under applicable law, withdraw, modify or amend such
recommendation and (iv) amended the Rights Agreement in order to (A) render the
Rights Agreement inapplicable to the Offer, the Merger and the other
transactions contemplated by the Merger Agreement, (B) ensure that (1) neither
Parent nor any of its subsidiaries nor any of its permitted assignees or
transferees is an Acquiring Person (as defined in the Rights Agreement) pursuant
to the Rights Agreement and (2) a Stock Acquisition Date, Triggering Event or
Distribution Date (in each case, as defined in the Rights Agreement) does not
occur by reason of the execution of the Merger Agreement, the commencement or
completion of the Offer, the consummation of the Merger or the other
transactions contemplated by the Merger Agreement and (b) that
19
<PAGE> 22
J.P. Morgan Securities Inc. has delivered to the Company Board its opinion that
the consideration to be received in the Offer and the Merger is fair to the
Stockholders from a financial point of view.
BOARD REPRESENTATION. The Merger Agreement provides that effective upon the
acceptance for payment pursuant to the Offer of a number of Shares that
satisfies the Minimum Condition, Parent will be entitled to designate the number
of directors, rounded up to the next whole number, on the Company Board that
equals the product of (i) the total number of directors on the Company Board
(giving effect to the election of any additional directors pursuant to this
provision) and (ii) the percentage that the number of Shares beneficially owned
by Parent (including Shares accepted for payment) bears to the total number of
Shares outstanding, and the Company shall take all action necessary to cause
Parent's designees to be elected or appointed to the Company Board, including,
without limitation, increasing the number of directors, and seeking and
accepting resignations of incumbent directors. At such time, the Company will
also use its best efforts to cause individuals designated by Parent to
constitute the number of members, rounded up to the next whole number, on (i)
each committee of the Company Board other than the Executive Committee or any
committee of the Board established to take action under the Merger Agreement and
(ii) each board of directors of each subsidiary of the Company (and each
committee thereof) that represents the same percentage as such individuals
represent on the Company Board. Notwithstanding the foregoing, the Company shall
use its reasonable best efforts to ensure that at least three members of the
Company Board and such committees and boards as of the date of the Merger
Agreement who are not employees of the Company (the "Continuing Directors") will
remain members of the Company Board and such committees and boards until the
Effective Time, provided, however, that, if the number of Continuing Directors
is reduced below three prior to the Effective Time, the remaining such Directors
will be entitled to designate to fill the vacancy a person who is not an
officer, director or designee of Parent or any of its affiliates and who will be
deemed to be a Continuing Director for all purposes of the Merger Agreement. The
Company's obligations to appoint Parent's designees to the Company Board will be
subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Company will promptly take all actions, and will include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as Section 14(f) and Rule 14f-1 require in order to fulfill its
obligations. Parent shall supply to the Company in writing and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Following the election or appointment of Parent's designees and until the
Effective Time, the approval of a majority of the Continuing Directors of the
Company then in office who were not designated by Parent shall be required to
authorize (and such authorization will constitute the authorization of the
Company Board and no other action on the part of the Company, including any
action by any other director of the Company, will be required to authorize) any
termination of the Merger Agreement by the Company, any amendment of the Merger
Agreement requiring action by the Company Board, any extension of time for
performance of any obligation or action thereunder by Parent or Purchaser and
any waiver of compliance with any of the agreements or conditions contained
therein for the benefit of the Company.
THE MERGER. The Merger Agreement provides that at the Effective Time,
Purchaser will be merged with and into the Company in accordance with Delaware
Law, whereupon the separate existence of Purchaser will cease, and the Company
will be the surviving corporation (the "Surviving Corporation"). The certificate
of incorporation of Purchaser in effect at the Effective Time will be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, provided, however, that, at the Effective Time,
Article I of such certificate of incorporation will be amended to read as
follows: "The name of the corporation is Gibson Greetings, Inc." The bylaws of
Purchaser in effect at the Effective Time will be the bylaws of the Surviving
Corporation until amended in accordance with applicable law. From and after the
Effective Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (i) the directors of Purchaser at the Effective
Time will be the directors of the Surviving Corporation and (ii) the officers of
Purchaser at the Effective Time will be the officers of the Surviving
Corporation.
CONSIDERATION TO BE PAID IN THE MERGER. The Merger Agreement provides that
at the Effective Time, by virtue of the Merger and without any action on the
part of Parent, Purchaser or the Company or the holders of any of the following
securities: (i) except as described below, each Share outstanding immediately
prior to the Effective Time will be converted into the right to receive the
Merger Consideration; (ii) each Share held by the Company as treasury stock or
owned by Parent or any of its subsidiaries immediately prior to the Effective
20
<PAGE> 23
Time will be canceled, and no payment will be made with respect thereto; and
(iii) each share of common stock of Purchaser outstanding immediately prior to
the Effective Time will be converted into and become one share of common stock
of the Surviving Corporation with the same rights, powers and privileges as the
shares so converted and will constitute the only outstanding shares of capital
stock of the Surviving Corporation.
If, during the period between the date of the Merger Agreement and the
Effective Time, any change in the outstanding Shares occurs, including by reason
of any reclassification, recapitalization, stock split or combination, exchange
or readjustment of Shares, or stock dividend thereon with a record date during
such period, the cash payable pursuant to the Offer, the Merger Consideration
and any other amounts payable pursuant to the Merger Agreement will be
appropriately adjusted.
If a Liquidation Event occurs (or if more than one such Liquidation Event
occurs, with respect to each Liquidation Event), each of the Merger
Consideration and the Offer Price will be increased by an amount equal to 30% of
any after-tax gain (after giving full effect to any capital loss carry-forward
available to the Company, the availability of which is confirmed by the
Company's independent accountants) on such Liquidation Event, calculated in
accordance with generally accepted accounting principles, divided by the total
number of Shares then outstanding on a fully diluted basis, assuming for this
purpose the exercise only of outstanding Options, whether or not such Options
are then vested, that are (or, giving effect to the adjustment in the Offer
Price contemplated hereby, would be) in-the-money. The price used to compute any
after-tax gain on a Liquidation Event will be the cash received by the Company
in such sale or disposition (net of any underwriting discounts and other amounts
paid by the Company in connection with such sale), but only if such cash is for
an aggregate amount in excess of the Company's then net book value of its
interest in EGN.
COMPANY STOCK OPTION PLANS. The Merger Agreement provides that the Company
shall take all actions necessary (which include, but are not limited to,
satisfying the requirements of Rule 16b-3(e) promulgated under Section 16 of the
Exchange Act, without incurring any liability in connection therewith, and
seeking any consents required of holders of Options) to provide that at or
immediately prior to the Effective Time, each Option outstanding under any of
the Company's Stock Option Plans, whether or not vested or exercisable, will be
canceled, and the Company shall pay each holder of any such Option, at or
promptly after the Effective Time, for each such Option surrendered an amount in
cash determined by multiplying (i) the excess, if any, of the Merger
Consideration over the applicable exercise price of such Option by (ii) the
number of Shares such holder could have purchased (assuming full vesting of all
options) had such holder exercised such Option in full immediately prior to the
Effective Time. Prior to the Effective Time, the Company will make any
amendments to the terms of the Stock Option Plans deemed necessary by the
Company or Parent to give effect to the transactions contemplated above. Except
as provided in the Merger Agreement or as otherwise agreed to by the parties,
the Company will cause the Stock Option Plans to terminate as of the Effective
Time and the Company will ensure that following the Effective Time, no holder of
Options or any participant in the Stock Option Plans will have any right to
acquire any equity securities of the Company, the Surviving Corporation or any
subsidiary thereof.
STOCKHOLDER MEETING. The Merger Agreement provides that the Company will
cause a meeting of the Stockholders (the "Company Stockholder Meeting") to be
duly called and held as soon as reasonably practicable after consummation of the
Offer for the purpose of voting on the approval and adoption of the Merger
Agreement and the Merger, unless Delaware Law does not require a vote of the
Stockholders for consummation of the Merger. Subject to the provisions of the
Merger Agreement, the Company Board will recommend approval and adoption of the
Merger Agreement and the Merger by the Stockholders. The Merger Agreement also
provides that, notwithstanding the above, if Parent, Purchaser or any other
subsidiary of Parent acquires at least 90% of the outstanding Shares pursuant to
the Offer or otherwise, the parties to the Merger Agreement will, at the request
of Parent, take all necessary and appropriate action to cause the Merger to be
effective as soon as practicable after the acceptance for payment and purchase
of Shares pursuant to the Offer without a meeting of Stockholders in accordance
with Delaware Law.
REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the
Company has made representations and warranties as of the date of signing the
Merger Agreement with respect to, among other things: (i) its organization,
corporate powers and qualifications, (ii) its corporate power and authority to
execute, deliver and
21
<PAGE> 24
perform the Merger Agreement and, subject to obtaining any necessary Stockholder
approval, consummate the transactions contemplated thereby, (iii) the absence of
required governmental authorizations for the execution, delivery and performance
by the Company of the Merger Agreement and the consummation by the Company of
the transactions contemplated thereby, (iv) the absence of conflicts or defaults
between the Merger Agreement and the transactions contemplated thereby with the
Company's certificate of incorporation or bylaws, laws, statutes, ordinances,
rules, regulations, judgments, injunctions, orders or decrees, contracts.
licenses, leases, or loans and the absence of required consents, (v) the
capitalization of the Company, (vi) the organization, corporate powers and
qualifications of the Company's material subsidiaries and the ownership by the
Company of its material subsidiaries, (vii) the accuracy of documents filed by
the Company with the Commission, (viii) the accuracy of financial statements
filed by the Company with the Commission, (ix) the conduct of the business of
the Company and the absence of certain events since June 30, 1999, (x) the
absence of undisclosed material liabilities, (xi) compliance with laws and court
orders, (xii) the absence of litigation, (xiii) the absence of finders fees and
commissions (excluding fees and commissions to be paid to J.P. Morgan Securities
Inc.) payable in connection with the transactions contemplated by the Merger
Agreement, (xiv) certain tax considerations, (xv) employee benefit plans, (xvi)
certain environmental matters, (xvii) the Company's action to exempt the Offer,
the Merger, the Merger Agreement and the transactions contemplated thereby from
the provisions of Section 203 of Delaware Law and Articles V and VI of the
Company's certificate of incorporation and the Company's action to render the
Rights Agreement inapplicable to the Offer, the Merger and the other
transactions contemplated by the Merger Agreement, (xviii) certain intellectual
property matters and (xix) the current status of the Company's Year 2000
readiness. The continued accuracy of the representations and warranties of the
Company in the Merger Agreement is not a condition to closing either the Offer
or the Merger.
Pursuant to the Merger Agreement, Parent and Purchaser have made
representations and warranties with respect to, among other things, (i) their
organization and corporate power, (ii) their corporate power and authority to
execute, deliver and perform the Merger Agreement and the transactions
contemplated by the Merger Agreement, (iii) the absence of required governmental
authorizations for the execution, delivery and performance by Parent and the
Purchaser of the Merger Agreement and the consummation by Parent and Purchaser
of the transactions contemplated thereby, (iv) the absence of conflicts or
defaults between the Merger Agreement and the transactions contemplated thereby
with Parent or Purchaser's certificate of incorporation or bylaws, laws, rules,
regulations, judgments, injunctions, orders or decrees and the absence of
required consents, (v) the absence of finders fees and commissions (excluding
fees and commissions to be paid to Wasserstein & Perella & Co., Inc. in
connection with the transactions contemplated by the Merger Agreement), and (vi)
the availability of funds or borrowing capacity necessary for the transactions
contemplated by the Merger Agreement.
CONDUCT OF BUSINESS PENDING THE MERGER. Pursuant to the terms of the Merger
Agreement the Company has agreed that during the period from the date of the
Merger Agreement until the Effective Time, (i) the Company and its subsidiaries
will conduct their business and affairs in the ordinary course consistent with
past practice and will use their reasonable best efforts to preserve intact
their business organizations and relationships with third parties; (ii) the
Company will not amend its certificate of incorporation or bylaws; (iii) the
Company will not declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to its capital stock; and
neither the Company nor any of its subsidiaries will (y) issue, sell, transfer,
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class of
the Company or any of its subsidiaries, other than issuances of Shares pursuant
to securities, options, warrants, calls, commitments or rights that have been
granted at the date of the Merger Agreement and are or become exercisable prior
to the Effective Time and previously disclosed to Parent in writing or as set
forth in various documents filed with the Commission or (z) redeem, purchase or
otherwise acquire directly or indirectly any of its capital stock; provided,
however, that, the Company is not prohibited from issuing shares, options or
warrants to acquire up to 100,000 shares of capital stock of any class of the
Company pursuant to its 1999 Incentive Stock Option Plan for a period of ten
business days following the date of the Merger Agreement, provided, however,
that, no such issuances will be made to the Chief Executive Officer or Chief
Financial Officer of the Company and the Company will not be prohibited from
taking any action pursuant to the Company's obligations to The Ink Group NZ
Limited or The Ink Group Publishers PTY Limited regarding any put rights held by
such entities; (iv) the Company will not (y) incur any long-term indebtedness
(whether evidenced by a
22
<PAGE> 25
note or other instrument, pursuant to a financing lease, sale-leaseback
transaction, or otherwise) or incur short-term indebtedness other than under
lines of credit existing on the date of the Merger Agreement other than, in each
case, to operate the Company's business in the ordinary course or (z) except in
the ordinary course of business consistent with past practice, enter into,
amend, terminate, renew or fail to use reasonable efforts to renew in any
material respect any material contract; (v) except pursuant to employment
contracts in effect on the date of the Merger Agreement, neither the Company nor
any of its subsidiaries will (x) grant any increase in the compensation or
benefits payable or to become payable by the Company or any of its subsidiaries
to any employee, (y) adopt, enter into, amend or otherwise increase, or
accelerate the payment or vesting of the amounts, benefits or rights payable or
accrued or to become payable or accrued under any bonus, incentive compensation,
deferred compensation, severance, termination, change in control, retention,
hospitalization or other medical, life, disability, insurance or other welfare,
profit sharing, stock option, stock appreciation right, restricted stock or
other equity based, pension, retirement or other employee compensation or
benefit plan, program agreement or arrangement, or (z) enter into or amend in
any material respect any employment or collective bargaining agreement or,
except in accordance with the existing written policies of the Company or
existing contracts or agreements, grant any severance or termination pay to any
officer, director or employee of the Company or any of its subsidiaries,
provided, however, that the Company is not prohibited from taking any action
under the Merger Agreement pursuant to its program established by the Rabbi
Trust and the related plan; (vi) neither the Company nor its subsidiaries will
change the accounting principles used by it unless required by generally
accepted accounting principles (or, if applicable with respect to subsidiaries,
foreign generally accepted accounting principles); (vii) neither the Company nor
any of its subsidiaries will acquire by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, otherwise acquire any assets of any
other person (other than the purchase of assets from suppliers or vendors in the
ordinary course of business consistent with past practice) for an amount in
excess of $10 million, individually or in the aggregate, other than (x) any
investment by the Company in EGN necessary to maintain the Company's pro rata
investment in EGN or (y) any exercise by the Company of its warrants in EGN;
(viii) neither the Company nor any of its subsidiaries will sell, lease,
exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange,
transfer or otherwise dispose of, any of its assets except (x) pursuant to
existing contracts or commitments and (y) in the ordinary course of business
consistent with past practice, except that the Company may dispose of in any
manner and at any time all or a portion of its interest in EGN, provided,
however, that, if the Company disposes of EGN and such disposition is (A) for an
aggregate amount less than $30 million or (B) to an affiliate of the Company,
then such disposition shall be for an amount at least equal to fair market value
of the Company's interest in EGN that is disposed; (ix) the Company and its
subsidiaries will not mortgage, pledge, hypothecate, grant any security interest
in, or otherwise subject to any other lien on any of its properties or assets,
except in connection with the incurrence of indebtedness permitted under the
Merger Agreement; (x) neither the Company nor its subsidiaries will compromise,
settle, grant any waiver or release relating to or otherwise adjust any material
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), including any litigation, except for any such
compromise, settlement, waiver, release or adjustment in the ordinary course of
business consistent with past practice and involving a payment by the Company or
any of its subsidiaries not in excess of $250,000 in the aggregate following
prior notice to and consultation with Parent; and (xi) neither the Company nor
any of its subsidiaries will enter into an agreement, contract, commitment or
arrangement to do any of the foregoing.
CONSENTS, APPROVALS AND FILINGS. The Merger Agreement provides that the
Company and Parent will use their 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 applicable laws and regulations to consummate the transactions
contemplated by the Merger Agreement, including, without limitation, using their
best efforts to cause the conditions to the Offer to be satisfied as soon as
reasonably possible and, subject to the terms and conditions of the Merger
Agreement, consummating the Offer as soon as possible after such conditions are
satisfied or waived. Each of the Parent and Company also agree to make an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated by the Merger Agreement as
promptly as practicable and in any event within ten business days of the date of
the Merger Agreement and to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to the HSR
Act and to take
23
<PAGE> 26
all other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.
In connection with the efforts referenced above to obtain all requisite
approvals and authorizations for the transactions contemplated by the Merger
Agreement under the HSR Act or any other Antitrust Law (as defined below), each
of Parent and Company will use its reasonable best efforts to (i) cooperate in
all respects with each other in connection with any filing or submission and in
connection with any investigation or other inquiry, including any proceeding
initiated by a private party, (ii) keep the other party informed in all material
respects of any material communication received by such party from, or given by
such party to, the FTC, the Antitrust Division or any other governmental
authority and of any material communication received or given in connection with
any proceeding by a private party, in each case regarding any of the
transactions contemplated by the Merger Agreement and (iii) permit the other
party to review any material communication given by it to, and consult with each
other in advance of any meeting or conference with, the FTC, the Antitrust
Division or any such other governmental authority or, in connection with any
proceeding by a private party. Subject to the Confidentiality Agreement, dated
as of October 28, 1998 between the Company and Parent (the "Confidentiality
Agreement"), covenants by the Parent regarding confidentiality set forth in the
Merger Agreement, and any attorney-client, work product or other privilege, each
of the parties to the Merger Agreement will coordinate and cooperate fully with
the other parties to the Merger Agreement in exchanging such information and
providing such assistance as such other parties may reasonably request in
connection with the foregoing and in seeking early termination of any applicable
waiting periods under the HSR Act. Any competitively sensitive information that
is disclosed pursuant to the foregoing will be limited to each of Parent's and
the Company's respective counsel and economists pursuant to a separate customary
confidentiality agreement. For purposes of the Merger Agreement, "Antitrust Law"
means the Sherman Act, the Clayton Act, the HSR Act, the Federal Trade
Commission Act, and all other federal, state and foreign, if any, 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 or
lessening of competition through merger or acquisition.
The Merger Agreement also provides that each of Parent and the Company
shall use its best efforts to resolve such objections if any, as may be asserted
with respect to the transactions contemplated by the Merger Agreement under any
Antitrust Law. In connection with the foregoing, if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by the Merger Agreement as violative of any Antitrust Law, each of
Parent and the Company shall cooperate in all respects with each other and use
its respective best efforts to contest and resist any such action or proceeding
and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent, that is
in effect and that prohibits, prevents or restricts consummation of the
transactions contemplated by the Merger Agreement, including, without
limitation, vigorously defending in litigation on the merits any claim asserted
in any court by any party through a final and nonappealable judgment.
If any objections are asserted with respect to the transactions
contemplated by the Merger Agreement under any Antitrust Law or if any suit is
instituted by any government authority or any private party challenging any of
the transactions contemplated by the Merger Agreement as violative of any
Antitrust Law, each of Parent and the Company shall use its best efforts to
resolve such objections or challenge as such governmental authority or private
party may have to such transactions under such Antitrust Law so as to permit
consummation of the transactions contemplated by the Merger Agreement. In
furtherance and not in limitation of the foregoing, each of Parent and the
Company (and, to the extent required by any governmental authority, its
respective subsidiaries and affiliates over which it exercises control) shall be
required to pursue a resolution with any governmental authority and, if
acceptable to any governmental authority, enter into a settlement, undertaking,
consent decree, stipulation or other agreement with such governmental authority
regarding antitrust matters in connection with the transactions contemplated by
the Merger Agreement (each, a "Settlement"). Notwithstanding anything else
contained in the Merger Agreement, neither Parent nor the Company will be
required to enter into any Settlement that requires Parent and/or the Company to
sell or otherwise dispose of assets of Parent and its subsidiaries
24
<PAGE> 27
and/or the Company and its subsidiaries (any such action, a "Divestiture") if
such Divestiture would have a material adverse effect on the pro forma combined
business of Parent and the Company.
The Company acknowledged that Parent will lead the process to obtain all
necessary waivers, consents and approvals, and to effect all necessary filings
under the Antitrust Law, and that Parent's reasonable determination after
consultation with the Company as to the appropriate course of action to obtain
such waivers, consents and approvals will be final, provided, however, that, the
foregoing will not limit in any respect any of the parties' obligations under
the Merger Agreement.
DIRECTOR AND OFFICER LIABILITY. The Merger Agreement provides that Parent
shall cause the Surviving Corporation to do the following: (i) for six years
after the Effective Time, indemnify and hold harmless the present and former
officers and directors of the Company (each an "Indemnified Person") in respect
of acts or omissions occurring at or prior to the Effective Time to the fullest
extent permitted by Delaware Law or any other applicable laws or provided under
the Company's certificate of incorporation and bylaws in effect on the date of
the Merger Agreement, provided, however, that such indemnification will be
subject to any limitation imposed from time to time under applicable law; (ii)
for six years after the Effective Time, provide officers' and directors'
liability insurance in respect of acts or omissions occurring prior to the
Effective Time covering each such Indemnified Person currently covered by the
Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount no less favorable than those of such policy in
effect on the date of the Merger Agreement. If Parent, the Surviving Corporation
or any of its successors or assigns (x) consolidates with or merges into any
other person and will not be the continuing or surviving corporation or entity
of such consolidation or merger, or (y) transfers or conveys all or
substantially all of its properties and assets to any person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Parent or the Surviving Corporation, as the case may
be, will assume the obligations set forth in this provision. The rights of each
Indemnified Person under this paragraph will be in addition to any rights such
person may have under the certificate of incorporation or bylaws of the Company
or any of its subsidiaries, or under Delaware Law or any other applicable laws.
These rights will survive consummation of the Merger and are intended to
benefit, and will be enforceable by, each Indemnified Person.
The Merger Agreement also provides that Parent shall, prior to the
Effective Time, provide the Company with pre-paid, irrevocable officers' and
directors' liability insurance with a nationally recognized insurance provider
with an A.M. Best rating of at least "A", in amounts and for such periods of
time as specified above.
EMPLOYEE BENEFITS. The Merger Agreement provides that for a period of one
year after the Effective Time, Parent will maintain or cause to be maintained
employee compensation and benefit plans and arrangements for the benefit of each
individual who is an employee of the Company or its subsidiaries as of the
Effective Time (each a "Transferred Employee") that are no less favorable to
such Transferred Employee than the compensation and benefits provided to the
Transferred Employee by the Company and its subsidiaries immediately prior to
the Effective Time. Without limiting the generality of the foregoing, (i) for a
period of one year after the Effective Time, Parent will maintain or cause to be
maintained severance and employment termination benefits no less favorable to
each Transferred Employee than the severance and employment termination benefits
provided under the plans, policies and practices of the Company and its
subsidiaries, immediately prior to the Effective Time, and (ii) for a period of
one year after the Effective Time Parent will maintain or cause to be maintained
for the benefit of each eligible current and former employee of the Company and
its subsidiaries (and his or her eligible domestic partner) the post-retirement
medical and life insurance benefits maintained by the Company and its
subsidiaries immediately prior to the Effective Time and will make such benefits
available to each such individual on a basis no less favorable to such
individual than the basis on which such benefits were provided to similarly
situated individuals immediately prior to the Effective Date.
If Transferred Employees or former employees of the Company or its
subsidiaries are included in any benefit plan, policy, or arrangement of Parent
or its affiliates such individuals will receive credit for service prior to the
Effective Time with the Company and its subsidiaries and their respective
predecessors for all purposes to the same extent such service was recognized
under any similar Employee Plan (as hereinafter defined) of the Company or its
subsidiaries, except that such service will not be counted for purposes of
benefit accruals under any defined benefit pension plan to the extent that it
would result in a duplication of vested benefits accrued by
25
<PAGE> 28
any such individual under any Employee Plan of the Company or its subsidiaries.
If Transferred Employees or former employees of the Company or its subsidiaries
(or their domestic partners or dependents) are included in any medical, dental
or health plan other than the plans they participated in at the Effective Time
(a "Successor Plan"), any such Successor Plan will waive pre-existing
conditions, to the extent such conditions were not applicable under the Employee
Plans of the Company and its subsidiaries, and will provide that any expenses
incurred prior to such change will be taken into account under the deductible
and out-of-pocket maximums under such Successor Plan. For purposes of the Merger
Agreement, "Employee Plan" means any material, written "employee benefit plan,"
as defined in Section 3(3) of ERISA, or employment, severance or similar
contract or other plan providing for severance benefits, bonuses,
profit-sharing, stock option or other stock related rights or other forms of
incentive or deferred compensation, health, medical or disability benefits which
is maintained, administered or contributed to by the Company or any ERISA
Affiliate and covers any employee or former employee of the Company or any
subsidiary, or with respect to which the Company or any subsidiary has any
liability. For purposes of the Merger Agreement, "ERISA Affiliate" of any entity
means any other entity that, together with such entity, would be treated as a
single employer under Section 414 of the Internal Revenue Code of 1986.
NO SOLICITATION. The Merger Agreement provides that from the date of the
Merger Agreement until the acceptance for payment by Purchaser of the Shares
tendered into the Offer or the earlier termination of the Merger Agreement, the
Company will not, and will cause its subsidiaries and the officer, directors,
investment bankers, attorneys, accountants, consultants or other agents or
advisors of the Company and its subsidiaries not to (i) take any action (A) to
solicit or (B) for the primary purpose of initiating or encouraging the
submission of any Acquisition Proposal (as hereinafter defined), (ii) engage in
substantive discussions or negotiations with, or disclose any material nonpublic
information relating to the Company or any of its subsidiaries or afford access
to the properties, books or records of the Company or any of its subsidiaries
to, any person who the Company should reasonably be expected to know is
considering making, or has made and Acquisition Proposal or (iii) otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage
any effort or attempt by any other person, in each case, for the primary purpose
of making any Acquisition Proposal or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the
Offer, the Merger or any other transaction contemplated by the Merger Agreement.
The Company will notify Parent promptly after receipt by the Company (or any of
its advisors) of any Acquisition Proposal, or any request for nonpublic
information relating to the Company or any of its subsidiaries or for access to
the properties, books or records of the Company or any of its subsidiaries by
any person who the Company should reasonably be expected to know is considering
making, or has made, an Acquisition Proposal. The Company will, and will cause
its subsidiaries and the directors, officers and other agents of the Company and
its subsidiaries to, cease immediately and cause to be terminated all
discussions and negotiations with any persons conducted prior to the date of the
Merger Agreement with respect to any Acquisition Proposal. Nothing contained in
the Merger Agreement will prevent the Company Board from complying with Rule
14e-2 under the Exchange Act with respect to any Acquisition Proposal.
Notwithstanding the foregoing, prior to the acceptance for payment by
Purchaser of the Shares tendered in the Offer the Company may, if it gives
Parent notice of its intention to do so, negotiate or otherwise engage in
substantive discussions with, and furnish nonpublic information to, any person
who delivers an unsolicited Superior Proposal (as hereinafter defined) if (i)
the Company, among other things, notifies Parent promptly after its receipt of
any Acquisition Proposal, (ii) the Company Board determines in its good faith,
reasonable judgment, after consultation with and the receipt of advice from its
financial advisor and outside counsel, that failure to take such action could
create a reasonable possibility of a breach of the fiduciary duties of the
Company Board under applicable law, and (iii) such person executes a
confidentiality agreement with the Company not more favorable to the recipient
of such information than the Confidentiality Agreement.
For the purposes of the Merger Agreement, an "Acquisition Proposal" means
any offer or proposal for, or any indication of interest in, a merger,
consolidation, tender offer, share exchange, business combination,
reorganization, recapitalization or other similar transaction involving the
Company or any of its subsidiaries or any proposal or offer to acquire, directly
or indirectly, any equity interest in, any voting securities of, or a
substantial portion of the assets of, the Company or any of its subsidiaries,
other than (i) the transactions
26
<PAGE> 29
contemplated by the Merger Agreement and (ii) any transaction involving EGN. For
purposes of the Merger Agreement, a "Superior Proposal" means any bona fide,
unsolicited written Acquisition Proposal for at least a majority of the
outstanding Shares on terms that the Company Board determines in good faith by a
majority vote, on the basis of the advice of a financial advisor of nationally
recognized reputation and taking into account all the terms and conditions of
the Acquisition Proposal, including any break-up fees, expense reimbursement
provisions and conditions to consummation, (i) is more favorable to all the
Company's stockholders than as provided under the Merger Agreement, (ii) is
reasonably capable of obtaining any required financing and (iii) is reasonably
capable of being completed.
The Company Board will be permitted to withdraw, or modify in a manner
adverse to Parent, its recommendation to the Stockholders under the Merger
Agreement if the Company Board determines in its good faith, reasonable
judgment, after consultation with and the receipt of advice from its financial
advisor and outside counsel, that an Acquisition Proposal is a Superior Proposal
and that failure to take such action could create a reasonable possibility of a
breach of the fiduciary duties of the Company Board under applicable law.
STANDSTILL AND CONFIDENTIALITY AGREEMENTS. The Merger Agreement provides
that during the period from the date of the Merger Agreement through the
Effective Time, the Company will not terminate, amend, modify or waive any
provision of any confidentiality or standstill agreement for the benefit of the
Company or any of its subsidiaries, other than the Confidentiality Agreement
pursuant to its terms or by written agreement of the parties thereto, provided,
however, that the Company may take such action if the Company Board determines
in its good faith, reasonable judgment, after consultation with and the receipt
of advice from its financial advisor and outside counsel, that failure to do so
would create a reasonable possibility of breach of the fiduciary duties of the
Company Board under applicable law, and provided, further, however, that this
provision will not apply to any confidentiality agreement that is not related
to, or does not arise from, an Acquisition Proposal.
RIGHTS AGREEMENT AND ANTI-TAKEOVER PROVISIONS. The Merger Agreement
provides that the Company Board will take all further action reasonably
requested in writing by Parent (including redeeming the Rights immediately prior
to the Effective Time or further amending the Rights Agreement) in order to
render the Rights Agreement inapplicable to the Offer and the Merger and the
other transactions contemplated thereby to the extent provided therein and in
the Rights Agreement. Except as described above with respect to the Offer, the
Merger and the other transactions contemplated by the Merger Agreement or
approved in writing by Parent, the Company Board of Directors will not (i) amend
the Rights Agreement, (ii) redeem the Rights or (iii) take any action with
respect to, or make any determination under, the Rights Agreement to facilitate
an Acquisition Proposal, provided, however, that the Company may take such
action if the Company Board determines in its good faith, reasonable judgment,
after consultation with and the receipt of advice from its financial advisor and
outside counsel, that failure to do so would create a reasonable possibility of
a breach of its fiduciary duties under applicable law. In addition, except as
otherwise provided in the Merger Agreement, the Company will not approve an
Acquisition Proposal, other than the Offer, the Merger and the other
transactions contemplated by the Merger Agreement, for purposes of Section 203
of Delaware Law or Article VI of the Company's Certificate of Incorporation,
provided, however, that the Company may take such action if the Company Board
determines in its good faith, reasonable judgment, after consultation with and
the receipt of advice from its financial advisor and outside counsel, that
failure to do so would create a reasonable possibility of a breach of its
fiduciary duties under applicable law.
CONDITIONS TO THE MERGER. Pursuant to the Merger Agreement, the respective
obligations of each party to effect the Merger will be subject to the
satisfaction of the following conditions: (i) if required by Delaware Law, the
Merger Agreement shall have been approved and adopted by the Stockholders in
accordance with such law; (ii) no injunction shall have been issued and remain
in effect which restrains consummation of the Merger; and (iii) the number of
Shares tendered pursuant to the Offer and not withdrawn, together with the
Shares then owned by Parent, satisfies the Minimum Condition and the Purchaser
has accepted for payment and paid for such Shares.
The Merger Agreement further provides that the respective obligation of
each of Parent and Purchaser to effect the Merger will be subject to the
satisfaction or waiver, prior to the Effective Time, of the additional
27
<PAGE> 30
condition that the Company shall have performed in all material respects is
obligations with respect to the election or appointment of Parent's designees to
the Company Board, as described above.
TERMINATION AND FEES. The Merger Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
approval of the Merger Agreement by the Stockholders): (i) by mutual written
agreement of the Company and Parent; (ii) by either the Company or Parent, if,
(A) the Offer has not been consummated on or before 18 months after the date of
the Merger Agreement, provided, however, that (x) the right to terminate the
Merger Agreement pursuant to this clause (A) will not be available to any party
whose breach of any provision of the Merger Agreement results in the failure of
the Offer to be consummated by such time and (y) such 18 month period will be
extended for the time period equal to the time period beyond ten business days
during which either the Company or Parent fails to make an HSR Filing as
described above, (B) within ten days following satisfaction of all other
conditions to the Offer, the Minimum Condition has not been satisfied, provided,
however, that, such ten day period will be extended for a period to allow for
the extension of the Expiration Date for an increase in the Offer Price and as
may be required by the Commission, (C) a permanent injunction which is final and
nonappealable shall have been issued restraining or otherwise prohibiting
consummation of the Merger or any of the other transactions contemplated by the
Merger Agreement, provided, however, that the party seeking to terminate the
Merger Agreement pursuant to this clause (C) shall have used all efforts to
prevent the entry of such permanent injunction or (D) the other party has
breached or failed to perform in all material respects any of its obligations
described above in the section above entitled "Consents, Approvals and Filings,"
on or prior to such time, provided, however, that, such party shall have failed
to substantially cure such failure to perform within a reasonable time after
being notified of such failure to perform; (iii) by Parent, if, after the date
of the Merger Agreement and prior to the acceptance for payment of the Shares
under the Offer: (A) the Company Board shall have withdrawn, or modified in a
manner materially adverse to Parent, its approval or recommendation of the
Merger Agreement, the Offer or the Merger, or shall have recommended an
Acquisition Proposal other than by Parent or its affiliates, (B) the Company
Board shall have (x) amended the Rights Agreement to facilitate an Acquisition
Proposal or (y) terminated or redeemed the Rights, except in each case as is
necessary to render the Rights Agreement inapplicable to the Offer and the
Merger and the other transactions contemplated by the Merger Agreement (or any
other Acquisition Proposal by Parent or its affiliates) or as directed by Parent
pursuant to the Merger Agreement, (C) the Company Board shall have taken action
under Section 203 of Delaware Law or Article VI of the Company's Certificate of
Incorporation to approve any transaction other than the Offer and the Merger and
the other transactions contemplated thereby (or any other Acquisition Proposal
by Parent or its affiliates), or (D) the Company shall have breached or failed
to perform any of its obligations under the Merger Agreement required to be
performed on or prior to such time or any of the representations and warranties
of the Company under the Merger Agreement shall fail to be accurate as of the
date made, provided, however, that in each such case, (x) the Company shall have
failed to substantially cure such breach, failure to perform or inaccuracy
within a reasonable time after being notified by Parent of such breach, failure
to perform or inaccuracy and (y) such breach, failure to perform or inaccuracy
would have, individually or in the aggregate, a Material Adverse Effect on the
Company; and (iv) by the Company, if, prior to the acceptance for payment of the
Shares under the Offer the Company Board shall have recommended, or entered into
an agreement with respect to, a Superior Proposal.
The party desiring to terminate the Merger Agreement as described above
(other than pursuant to clause (i) above) must give notice of such termination
to the other party. Termination by the Company as described in clause (iv) above
will not be effective unless and until the Company has paid to Parent the fee
described below. Termination by Parent as described in clauses (i), (ii)(A),
(ii)(C), (ii)(D) or (iii)(D) above will not be effective unless and until Parent
has paid, or caused the Escrow Agent (as hereinafter defined) to pay, to the
Company the fee described below.
In the Merger Agreement, the Company has agreed to pay Parent a fee in
immediately available funds equal to $7 million concurrently with the
termination of the Merger Agreement if the Merger Agreement is terminated by
Parent pursuant to the events described in clauses (iii)(A), (iii)(B) or
(iii)(C) of the second preceding paragraph or by the Company pursuant to the
events described in clause (iv) of the second preceding paragraph; provided,
however, that Parent or Purchaser is not in breach of its representations and
warranties under the
28
<PAGE> 31
Merger Agreement and has not failed to perform in all material respects each of
its obligations under the Merger Agreement.
In the Merger Agreement, Parent has agreed to pay, or cause to be paid to,
the Company a fee in immediately available funds equal to $20 million
simultaneously with the termination of the Merger Agreement if the Merger
Agreement is terminated as a result of the occurrence of any of the events
described in clauses (i), (ii)(A), (ii)(C), (ii)(D) or (iii)(D) of the third
preceding paragraph; provided, however, that, at the time of such termination,
the applicable waiting period under the HSR Act shall not have expired or been
terminated and the FTC, the Antitrust Division or any other person shall not be
challenging by litigation or otherwise any of the transactions contemplated by
the Merger Agreement. Concurrently with the signing of the Merger Agreement,
Parent delivered the $20 million termination fee to The Bank of New York (the
"Escrow Agent") to be held, invested and disbursed by the Escrow Agent as
provided in the Escrow Agreement, dated as of November 2, 1999, between the
Company and the Escrow Agent.
EXPENSES. Except as described below, all costs and expenses incurred in
connection with the Merger Agreement will be paid by the party incurring such
cost or expense. Whether or not the transactions contemplated by the Merger
Agreement are consummated, Parent has agreed to pay all costs and expenses
incurred by the Company or its subsidiaries in connection with the Merger
Agreement arising from the HSR Act review and the Company's obligations
described in the section above entitled "Consents, Approvals and Filings,"
including, without limitation, all costs and expenses related to prior antitrust
analyses undertaken by the Company and its advisors in connection with the
transactions contemplated by the Merger Agreement since October 1, 1998,
preparing and filing the Notifications and Report Form pursuant to the HSR Act,
responding to a second request issued under the HSR Act, preventing the entry of
any injunction, appealing any such injunction, obtaining all necessary consents,
approvals or waivers from any government authorities, opposing vigorously any
litigation or administrative proceeding relating primarily to antitrust aspects
of the Merger Agreement or the transactions contemplated thereby or otherwise
complying with any Antitrust Law. Parent shall promptly pay such costs and
expenses as they are incurred by the Company, provided, however, that, Parent's
obligation to pay such costs and expenses will not exceed in the aggregate $2.5
million.
RABBI TRUST. Concurrently with the signing of the Merger Agreement, Parent
contributed cash in the amount of $10 million to the Rabbi Trust, which was
established by the Company to fund the compensation and benefits to be provided
to employees of the Company and its subsidiaries under incentive arrangements
designed and adopted by the Company. The incentives will reward certain
specified employees of the Company who remain with the Company through the
Effective Time, facilitating the Company's continued operation of its business
during the period before the Effective Time.
CONFIDENTIALITY. The Merger Agreement provides that prior to the Effective
Time and after any termination of the Merger Agreement and for two years
thereafter, Parent will hold, and will use its best efforts to cause its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents (including, without limitation, any economists employed by Parent to
assist in its antitrust review of the Offer, the Merger and the transactions
contemplated thereby) to hold, in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of law, all
confidential documents and information concerning the Company or any of its
subsidiaries furnished to Parent or its affiliates in connection with the
transactions contemplated by the Merger Agreement, including, without
limitation, the stockholder lists furnished by the Company to Parent, except to
the extent that such information can be shown to have been (i) previously known
on a nonconfidential basis by Parent, (ii) in the public domain through no fault
of Parent or (iii) later lawfully acquired by Parent from sources other than the
Company, provided, however, that Parent may disclose such information to its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents in connection with the transactions contemplated by the Merger Agreement
so long as Parent informs such persons of the confidential nature of such
information and directs them to treat it confidentially. Parent and its
affiliates will satisfy their obligation to hold any such information in
confidence if they exercise the same care with respect to such information as a
reasonable person would take to preserve the confidentiality of their own
similar information under similar circumstances. If the Merger Agreement is
terminated, Parent and its affiliates will, and will use their best efforts to
cause their officers, directors, employees, accountants, counsel, consultants,
advisors and agents to, destroy or deliver to the Company, upon request, all
documents and other materials, and
29
<PAGE> 32
all copies thereof, that Parent or its affiliates obtained, or that were
obtained on their behalf, from the Company or any of its subsidiaries in
connection with the Merger Agreement and that are subject to such confidence.
Notwithstanding anything therein to the contrary, the terms of the
Confidentiality Agreement executed by Parent will remain in full force and
effect.
AMENDMENTS AND WAIVERS. The Merger Agreement provides that any provision of
the Merger Agreement may be amended or waived prior to the Effective Time, if,
but only if, such amendment or waiver is in writing and is signed, in the case
of an amendment, by each party to the Merger Agreement or, in the case of a
waiver, by each party against whom the waiver is to be effective, provided,
however, that, after the adoption of the Merger Agreement by the Stockholders
and without their further approval, no such amendment or waiver will reduce the
amount or change the kind of consideration to be received in exchange for the
Shares.
THIRD PARTY BENEFICIARIES. Except with respect to any Indemnified Person,
no provision of the Merger Agreement is intended to confer any rights, benefits,
remedies, obligations, or liabilities thereunder upon any person other than the
parties thereto and their respective successors and assigns.
OTHER MATTERS
EFFECTS OF INABILITY TO CONSUMMATE THE MERGER. Pursuant to the Merger
Agreement, following the consummation of the Offer and subject to certain other
conditions, Purchaser will be merged with and into the Company. If, following
the Offer, approval of the Stockholders is required by applicable law in order
to consummate the Merger of Purchaser with the Company, the Company will submit
the Merger to the Stockholders for approval. If the Merger is submitted to the
Company's Stockholders for approval, the Merger will require the approval of the
holders of a majority of the outstanding Shares, including the Shares owned by
Purchaser. If the Offer is consummated, and the Minimum Condition is satisfied
without being reduced or waived, Purchaser will be able to approve the Merger
without the vote of any other Stockholder.
If the Merger is consummated, Stockholders who elected not to tender their
Shares in the Offer will receive the same amount of consideration in exchange
for each Share as they would have received in the Offer, subject to their rights
to exercise dissenters' rights.
If, following the consummation of the Offer, the Merger is not consummated,
Parent, which owns 100% of the Common Stock of Purchaser, indirectly will
control the number of Shares acquired by Purchaser pursuant to the Offer. Under
the Merger Agreement, promptly following payment by Purchaser for Shares
purchased pursuant to the Offer, and from time to time thereafter, subject to
applicable law, the Company has agreed to take all actions necessary to cause a
majority of the directors of the Company selected by Parent to consist of
persons designated by Parent (whether, by election or by the resignation of
existing directors and causing Parent designees to be elected). As a result of
its ownership of such Shares and right to designate nominees for election to the
Company Board, Parent indirectly will be able to influence decisions of the
Board and the decisions of Purchaser as a Stockholder of the Company. This
concentration of influence in one Stockholder may adversely affect the market
value of the Shares.
If Parent controls more than 50% of the outstanding Shares following the
consummation of the Offer but the Merger is not consummated, Stockholders of the
Company, other than those affiliated with Parent, will lack sufficient voting
power to elect directors or to cause other actions to be taken that require
majority approval. If for any reason following completion of the Offer, the
Merger is not consummated, Parent and Purchaser reserve the right, subject to
its standstill agreement with the Company (as amended by the Merger Agreement)
and to any applicable legal restrictions, to acquire additional Shares through
private purchases, market transactions, tender or exchange offers or otherwise
on terms and at prices that may be more or less favorable than those of the
Offer or, subject to any applicable legal restrictions, to dispose of any or all
Shares acquired by Parent and Purchaser.
STATUTORY REQUIREMENTS. In general, under Delaware Law a merger of two
Delaware corporations requires the adoption of a resolution by the board of
directors of each of the corporations desiring to merge approving an Agreement
of Merger containing provisions with respect to certain statutorily specified
matters and the approval of such Agreement of Merger by the stockholders of each
corporation by the affirmative vote of the holders of a majority of all the
outstanding shares of stock entitled to vote on such merger. According to the
Company's
30
<PAGE> 33
Certificate of Incorporation, the Shares are the only securities of the Company
that entitle the holders thereof to voting rights.
Delaware Law also provides that if a parent company owns at least 90% of
each class of stock of a subsidiary, the parent company can effect a short-form
merger with that subsidiary without the action of the other stockholders of the
subsidiary. Accordingly, if as a result of the Offer or otherwise Purchaser
acquires or controls the voting power of at least 90% of the Shares, Purchaser
could, and intends to, effect the Merger without prior notice to, or any action
by, any other stockholder of the Company.
APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. If the Merger is consummated, however, Stockholders who have not tendered
their Shares will have certain rights under Delaware Law to dissent and demand
appraisal of, and to receive payment in cash of the fair value of, their Shares.
Stockholders who perfect such rights by complying with the procedures set forth
in Section 262 of Delaware Law ("Section 262") will have the fair value of their
Shares (exclusive of any element of value arising from the accomplishment or
expectation of the Merger) determined by the Delaware Court of Chancery and will
be entitled to receive a cash payment equal to such fair value from the
Surviving Corporation. In addition, such dissenting Stockholders would be
entitled to receive payment of a fair rate of interest from the date of
consummation of the Merger on the amount determined to be the fair value of
their Shares. In determining the fair value of the Shares, the court is required
to take into account all relevant factors. Accordingly, such determination could
be based upon considerations other than, or in addition to, the market value of
the Shares, including, among other things, asset values and earning capacity. In
Weinberger v. UOP, Inc., the Delaware Supreme Court stated that "proof of value
by any techniques or methods that are generally considered acceptable in the
financial community and otherwise admissible in court" should be considered in
an appraisal proceeding. The Weinberger court also noted that under Section 262,
fair value is to be determined "exclusive of any element of value arising from
the accomplishment or expectation of the merger." In Cede & Co. v. Technicolor,
Inc., however, the Delaware Supreme Court stated that, in the context of a
two-step cash merger, "to the extent that value has been added following a
change in majority control before cash-out, it is still value attributable to
the going concern," to be included in the appraisal process. As a consequence of
the foregoing, the fair value determined in any appraisal proceeding could be
the same as or more or less than the Offer Price.
Parent does not intend to object, assuming the proper procedures are
followed, to the exercise of appraisal rights by any Stockholder and the demand
for appraisal of, and payment in cash for the fair value of, the Shares. Parent
intends, however, to cause the Surviving Corporation to argue in an appraisal
proceeding that, for purposes of such proceeding, the fair value of each Share
is less than the price paid in the Merger. In this regard, Stockholders should
be aware that opinions of investment banking firms as to the fairness from a
financial point of view (including J.P. Morgan Securities Inc. opinion described
herein) are not necessarily opinions as to "fair value" under Section 262.
Several decisions by Delaware courts have held that, in certain
circumstances, a controlling stockholder of a company involved in a merger has a
fiduciary duty to other stockholders that requires that the merger be "entirely
fair" to such other stockholders. In determining whether a merger is fair to
minority stockholders, Delaware courts have considered, among other things, the
type and amount of consideration to be received by the stockholders and whether
there was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and in Rabkin v. Philip A. Hunt Chemical Corp. that although the
remedy ordinarily available to minority stockholders in a cash-out merger that
is found to be not fair to the minority stockholders is the right to appraisal
described above, monetary damages, injunctive relief or such other relief as the
court may fashion may be available if a merger is found to be the product of
procedural unfairness, including fraud, misrepresentation or other misconduct.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER
DELAWARE LAW DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE
UNDER DELAWARE LAW.
THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE
TO THE APPLICABLE PROVISIONS OF DELAWARE LAW.
31
<PAGE> 34
GOING PRIVATE TRANSACTIONS. The Commission 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 Purchaser seeks to acquire the remaining Shares not held by it. However,
Purchaser believes that Rule 13e-3 will be inapplicable because it is
anticipated that (i) the Shares will be deregistered under the Exchange Act
prior to the Merger or other business combination or (ii) the Merger or other
business combination will be consummated within one year after the purchase of
the Shares pursuant to the Offer and the amount paid per Share in the Merger or
other business combination is at least equal to the amount paid per Share in the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information regarding the Company and certain information regarding
the fairness of the Merger and the consideration offered to minority
Stockholders be filed with the Commission and disclosed to minority Stockholders
prior to consummation of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS
If, during the period between the dates of this Agreement and the Effective
Time, any change in the outstanding Shares occurs, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of Shares, or stock dividend thereon with a record date during such
period, the cash payable pursuant to the Offer, the Merger Consideration and any
other amounts payable pursuant to this Agreement will be appropriately adjusted.
The Merger Agreement provides that, the Company will not declare, set aside
or pay any dividend or other distribution payable in cash, stock or property
with respect to its capital stock; and neither the Company nor any of its
subsidiaries will (i) issue, sell, transfer, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock of any class of the Company or any of its subsidiaries,
other than issuances of Shares pursuant to securities, option, warrants, calls,
commitments or rights that have been granted at the date hereof and are or
become exercisable prior to the Effective Time and previously disclosed to
Parent in writing or as set forth in the Company's SEC filings or (ii) redeem,
purchase or otherwise acquire directly or indirectly any of its capital stock;
provided, however, that this paragraph will not prohibit the Company from (A)
issuing shares, options or warrants to acquire up to 100,000 shares of capital
stock of any class of the company pursuant to its 1999 Incentive Stock Option
Plan for a period of 10 business days following the date of the Merger
Agreement; provided, however, that, no such issuances will be made to the Chief
Executive Officer or Chief Financial Officer of the Company or (B) taking any
action pursuant to the Company's obligations to The Ink Group NZ Limited or The
Ink Group Publishers PTY Limited regarding any put rights held by such entities.
If on or after the date of the Merger Agreement the Company declares or
pays any dividend on the Shares or any distribution (including, without
limitation, the issuance of additional Shares pursuant to a stock dividend or
stock split, the issuance of other securities or the issuance of rights for the
purchase of any securities) with respect to the Shares that is payable or
distributable to Stockholders of record on a date prior to the transfer into the
name of Purchaser or its nominees or transferees on the Company's stock transfer
records of the Shares purchased pursuant to the Offer, and if Shares are
purchased in the Offer, then, without prejudice to Purchaser's rights under
Section 14, (i) the Offer Price will be reduced by the amount of any such cash
dividend or cash distribution and (ii) any such non-cash dividend, distribution,
issuance, proceeds or rights to be received by the tendering stockholders will
(A) be received and held by the tendering stockholders for the account of
Purchaser and will be required to be promptly remitted and transferred by each
tendering Stockholder to the Depositary for the account of Purchaser,
accompanied by appropriate documentation of transfer or (B) at the direction of
Purchaser, be exercised for the benefit of Purchaser, in which case the proceeds
of such exercise will promptly be remitted to Purchaser. Pending such remittance
and subject to applicable law, Purchaser will be entitled to all rights and
privileges as owner of any such non-cash dividend, distribution, issuance,
proceeds or rights and may withhold the entire purchase price or deduct from the
purchase price the amount of value thereof, as determined by Purchaser in its
sole discretion.
32
<PAGE> 35
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer or the Merger Agreement,
Parent and Purchaser will not be required to accept for payment any Shares if
prior to the expiration date of the Offer, any of the following conditions
exist: (a) an injunction shall have been issued and remain in effect that
restrains consummation of the Offer; (b) the Company shall have breached or
failed to perform in all material respects any of its obligations under the
Merger Agreement required to be performed on or prior to such time or any of the
representations and warranties of the Company under the Merger Agreement fails
to be accurate as of the date made; provided, however, that, such breach,
failure to perform or inaccuracy would have, individually or in the aggregate, a
material adverse effect (i) on the business, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole or (ii) on the
ability of the Company to perform its obligations under or to consummate the
transactions contemplated by the Merger Agreement; (c) the applicable waiting
period under the HSR Act relating to the Merger shall not have expired or been
terminated; (d) the number of Shares tendered pursuant to the Offer and not
withdrawn, together with the Shares then owned by Parent, represents less than a
majority of the Shares outstanding on a fully-diluted basis (assuming the
exercise of all outstanding options that are exercisable and in-the-money at the
Offer Price); or (e) the Merger Agreement shall have been terminated in
accordance with its terms.
A public announcement may be made of a material change in, or waiver of,
such conditions and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver.
Purchaser acknowledges that the Commission believes that (i) if Purchaser
is delayed in accepting the Shares it must either extend the Offer or terminate
the Offer and promptly return the Shares and (ii) the circumstances in which a
delay in payment is permitted are limited and do not include unsatisfied
conditions of the Offer, except with respect to most required regulatory
approvals.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS
Except as described in this Offer To Purchase, based on a review of
publicly available filings made by the Company with the Commission and other
publicly available information concerning the Company, but without any
independent investigation, neither Purchaser nor Parent is aware of any license
or regulatory permit that appears to be material to the business of the Company
and its subsidiaries, taken as a whole, that might be adversely affected by
Purchaser's acquisition of Shares as contemplated in this Offer To Purchase or
of any approval or other action by any governmental authority that would be
required for the acquisition or ownership of Shares by Purchaser as contemplated
in this Offer To Purchase. Should any such approval or other action be required,
Purchaser and Parent presently contemplate that such approval or other action
will be sought, except as described below under "State Takeover Laws." There can
be no assurance, however, that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or other actions were not taken or in order to obtain any such approval
or other action. If certain types of adverse action are taken with respect to
the matters discussed below, Purchaser could decline to accept for payment or
pay for any Shares tendered. See Section 14 above for certain conditions to the
Offer.
STATE TAKEOVER LAWS. A number of states throughout the United States
(including Delaware where the Company is incorporated and Ohio where the Company
has its headquarters) have enacted takeover statutes that purport, in varying
degrees, to be applicable to attempts to acquire securities of corporations that
are incorporated or have assets, Stockholders, executive offices or places of
business in those states. To the extent that certain provisions of certain of
these state takeover statutes purport to apply to the Offer or the Merger,
Parent and Purchaser believe that such laws conflict with federal law and
constitute an unconstitutional burden on interstate commerce. In Edgar v. MITE
Corp., the Supreme Court of the United States invalidated on constitutional
grounds the Illinois Business Takeover Act, which, as a matter of state
securities law, made certain corporate acquisitions more difficult. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target
33
<PAGE> 36
corporation without prior approval of the remaining Stockholders, provided that
the laws were applicable only under certain conditions. Subsequently, in TLX
Acquisition Corp. v. Telex Corp., a Federal district court in Oklahoma ruled
that the Oklahoma statutes were unconstitutional insofar as they apply to
corporations incorporated outside Oklahoma in that they would subject such
corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v.
McReynolds, a Federal district court in Tennessee ruled that four Tennessee
takeover statutes were unconstitutional as applied to corporations incorporated
outside Tennessee. This decision was affirmed by the United States Court of
Appeals for the Sixth Circuit. In December 1988, a Federal district court in
Florida held, in Grand Metropolitan PLC v. Butterworth, that the provisions of
the Florida Affiliated Transactions Act and Florida Control Share Acquisition
Act were unconstitutional as applied to corporations incorporated outside of
Florida.
Sections 1707.01, 1707.041, and 1707.042 of the Ohio Revised Code
(collectively, the "Ohio Take-Over Act") regulate tender offers for any equity
security of a subject company from a resident of Ohio if, after the purchase,
the offeror would directly or indirectly be the beneficial owner of more than
10% of any class of issued and outstanding equity securities of such company (a
"control bid"). A subject company includes an issuer, such as the Company, that
either has its principal place of business or principal executive offices
located in Ohio or owns or controls assets located in Ohio that have a fair
market value of at least $1.0 million, and that has more than 10% of its
beneficial or record equity security holders resident in Ohio, or has more than
10% of its equity securities owned, beneficially or of record, by residents in
Ohio, or has 1,000 beneficial or record equity security holders who are resident
in Ohio. A subject company, however, need not be incorporated in Ohio.
The Ohio Take-Over Act prohibits an offeror from making a control bid for
securities of a subject company pursuant to a tender offer until the offeror has
filed specified information with the Ohio Division of Securities (the "Ohio
Division"). In addition, the offeror is required to deliver a copy of such
information to the subject company not later than the offeror's filing with the
Ohio Division and to send or deliver such information and the material terms of
the proposed offer to all offerees in Ohio as soon as practicable after the
offeror's filing with the Ohio Division.
Within five calender days of such filing, the Ohio Division may, by order,
summarily suspend the continuation of the control bid if it determines that the
offeror has not provided all of the specified information or that the control
bid materials provided to offerees do not provide full disclosure of all
material information concerning the control bid. If the Ohio Division summarily
suspends a control bid, it must schedule and hold a hearing within 10 calendar
days of the date on which the suspension is imposed and must make its
determination within three calendar days after the hearing has been completed
but no later than 14 calendar days after the date on which the suspension is
imposed. The Ohio Division may maintain its suspension of the continuation of
the control bid if, based upon the hearing, it determines that all of the
information required to be provided by the Ohio Take-Over Act has not been
provided by the offeror, that the control bid materials provided to offerees do
not provide full disclosure of all material information concerning the control
bid, or that the control bid is in material violation of any provision of the
Ohio securities laws. If, after the hearing, the Ohio Division maintains the
suspension, the offeror has the right to correct the disclosure and other
deficiencies identified by the Ohio Division and to reinstitute the control bid
by filing new or amended information pursuant to the Ohio Take-Over Act.
Purchaser has filed the information required under the Ohio Take-Over Act.
Other than as described in this Offer To Purchase, Purchaser has not
attempted to comply with any state takeover statutes in connection with the
Offer or the Merger although, pursuant to the Merger Agreement, the Company has
represented that the Company Board has taken appropriate action to render
Section 203 of Delaware Law inapplicable to the Offer, the Merger and the
transactions contemplated by the Merger Agreement. Purchaser reserves the right
to challenge the validity or applicability of any state law allegedly applicable
to the Offer or the Merger, and nothing in this Offer To Purchase nor any action
taken in connection herewith is intended as a waiver of that right. In the event
that it is asserted that one or more state takeover statutes apply to the Offer
or the Merger, and it is not determined by an appropriate court that such
statute or statutes do not apply or are invalid as applied to the Offer or the
Merger, as applicable, Purchaser may be required to file certain documents with,
or receive approvals from, the relevant state authorities, and Purchaser might
be unable to accept
34
<PAGE> 37
for payment or purchase Shares tendered pursuant to the Offer or be delayed in
continuing or consummating the Offer. In such case, Purchaser may not be
obligated to accept for purchase, or pay for, any Shares tendered. See Section
14.
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15-calendar-day waiting period following the filing by Purchaser of a
Notification and Report Form with respect to the Offer, unless Purchaser
receives a request for additional information or documentary material from the
Antitrust Division or the FTC or unless early termination of the waiting period
is granted. Such filing is expected to be filed as promptly as practicable after
commencement of the Offer. If, however, within the initial 15-day waiting
period, either the Antitrust Division or the FTC requests additional information
or documentary material from Purchaser concerning the Offer, the waiting period
will be extended and would expire 11:59 p.m., New York City time, on the tenth
calendar day after the date of substantial compliance by Purchaser with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, the waiting
period may be extended only by court order or with the consent of Purchaser. In
practice, complying with a request for additional information or documentary
material can take a significant amount of time. In addition, if the Antitrust
Division or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and may
agree to delay consummation of the transaction while the negotiations continue.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares pursuant
to the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by
Purchaser or the divestiture of substantial assets of Purchaser or its
subsidiaries, or the Company or its subsidiaries. Private parties may also bring
legal action under the antitrust laws under certain circumstances. While Parent
and Purchaser believe that the Offer and the Merger do not involve a violation
of antitrust laws, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such a challenge is made, of the
result of that challenge. See Section 14 for certain conditions to the Offer,
including conditions with respect to an injunction.
In the Merger Agreement, Parent and the Company have agreed to use their
best efforts to consummate the transactions contemplated by the Merger Agreement
as soon as possible, including making the HSR Filing. Parent and the Company
have also agreed to use their reasonable best efforts to cooperate with each
other in connection with the HSR Filing and any investigation or other inquiry
initiated by the Antitrust Division or the FTC and any proceeding initiated by a
private party. Parent and the Company have also agreed to use their best efforts
to resolve objections or challenges to the consummation of the transactions
contemplated the Merger Agreement, including, entering into a settlement,
undertaking, consent decree, stipulation or other agreement, provided, however,
that neither Parent nor the Company will be required to enter into any
resolution that requires a Divestiture if such Divestiture would have a material
adverse effect on the pro forma combined business of Parent and the Company. See
the discussion entitled "The Merger Agreement--Consents, Approvals and Filings"
in Section 12 of this Offer To Purchase.
Foreign Approvals. According to publicly available information, the Company
conducts business in a number of other foreign countries and jurisdictions. In
connection with the acquisition of the Shares pursuant to the Offer or the
Merger, the laws of certain of those foreign countries and jurisdictions may
require the filing of information with, or the obtaining of the approval or
consent of, governmental authorities in such countries and jurisdictions. The
governments in such countries and jurisdictions might attempt to impose
additional conditions on the Company's operations conducted in such countries
and jurisdictions as a result of the acquisition of the Shares pursuant to the
Offer or the Merger. If such approvals or consents are found to be required, the
parties intend to make the appropriate filings and applications. In the event
such a filing or application is made for the requisite foreign approvals or
consents, there can be no assurance that such approvals or consents will be
granted and, if such approvals or consents are received, there can be no
assurance as to the date of such approvals or consents. In addition, there can
be no assurance that Purchaser will be able to cause
35
<PAGE> 38
the Company or its subsidiaries to satisfy or comply with such laws or that
compliance or noncompliance will not have adverse consequences for the Company
or any subsidiary after purchase of the Shares pursuant to the Offer or the
Merger.
16. FEES AND EXPENSES
Wasserstein Perella & Co., Inc. is acting as Dealer Manager in connection
with the Offer and as financial advisor to Parent in connection with Parent's
proposed acquisition of the Company, for which services Wasserstein Perella &
Co., Inc. will receive customary compensation. In addition, Parent has agreed to
reimburse Wasserstein Perella & Co., Inc. for its reasonable expenses incurred
in rendering its services (including reasonable legal expenses) under its
engagement agreement with Parent and has agreed to indemnify Wasserstein Perella
& Co., Inc. against certain liabilities and expenses in connection with the
Offer and the Merger, including certain liabilities under the federal securities
laws.
In the ordinary course of its business, Wasserstein Perella & Co., Inc.
engages in securities trading, market-making and brokerage activities and may,
at any time, hold long or short positions and may trade or otherwise effect
transactions in securities of the Company and Parent.
Corporate Investor Communications, Inc. has been retained by Purchaser as
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interview and may request brokers, dealers and other nominee Stockholders to
forward material relating to the Offer to beneficial owners of Shares. Purchaser
will pay the Information Agent reasonable and customary compensation for all
such services in addition to reimbursing the Information Agent for reasonable
out-of-pocket expenses in connection therewith.
In addition, First Chicago Trust Company of New York has been retained as
the Depositary. Purchaser will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, will reimburse the
Depositary for its reasonable out-of-pocket expenses in connection therewith and
will indemnify the Depositary against certain liabilities and expenses in
connection therewith, including certain liabilities under the federal securities
laws.
Except as set forth above, neither Parent nor Purchaser will pay any fees
or commissions to any broker dealer or other person for soliciting tenders of
Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies and other nominees will, upon request, be reimbursed by Parent or
Purchaser for customary clerical and mailing expenses incurred by them in
forwarding offering materials to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) Stockholders residing in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities,
blue sky or other laws of the jurisdiction. However, Purchaser may, in its
discretion, take such action as it may deem necessary to make the Offer in any
jurisdiction and extend the Offer to Stockholders in that jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of Purchaser by one or more registered brokers or dealers that are
licensed under the laws of the jurisdiction.
Purchaser has filed with the Commission the Schedule 14D-1 pursuant to Rule
14d-1 under the Exchange Act containing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments to the Schedule
14D-1, including exhibits, may be examined and copies may be obtained from the
principal office of the Commission in the manner set forth in Section 8 above
(except that they will not be available at the regional offices of the
Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, THE INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
36
<PAGE> 39
Neither the delivery of the Offer To Purchase nor any purchase pursuant to
the Offer will under any circumstances create any implication that there has
been no change in the affairs of Parent, Purchaser, the Company or any of their
respective subsidiaries since the date as of which information is furnished or
the date of this Offer To Purchase.
GRANITE ACQUISITION CORP.
November 9, 1999
37
<PAGE> 40
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT
A. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employment for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated below, (i) each individual has held his or her positions
with Parent for more than the past five years, (ii) the business address of each
person is One American Road, Cleveland, Ohio 44144 and (iii) all directors and
officers listed below are citizens of the United States. Directors are
identified by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
---- -------------------------------------------
<S> <C>
*Scott S. Cowen Dr. Cowen's principal occupation is President of Tulane
University. Prior to that Dr. Cowen served as Dean and
Albert J. Weatherhead, III Professor of Management,
Weatherhead School of Management at Case Western Reserve
University. Dr. Cowen serves as a director of JoAnn Stores,
Inc. (specialty store retailer), Forest City Enterprises,
Inc. (conglomerate corporation engaged in real estate
development, sales, investment, construction and lumber
wholesale) and Newell-Rubbermaid Incorporated (consumer home
products).
*Edward Fruchtenbaum Mr. Fruchtenbaum is President and Chief Operating Officer of
Parent, a position he has held for more than five years. Mr.
Fruchtenbaum is on the boards of INROADS/Northeast Ohio,
Inc., Gilmour Academy, Cleveland Playhouse and The National
Conference Board (non-profit organizations).
*Stephen R. Hardis Mr. Hardis' principal occupation is Chairman and Chief
Executive Officer of Eaton Corporation, (manufacturer of
highly engineered products that serve industrial, vehicle,
construction, commercial and semiconductor markets). Before
joining Easton in 1979, Mr. Hardis served as Executive Vice
president of Finance and Planning for Sybron Corporation
(health equipment supplies and services) and prior to that
he was associated with General Dynamics Corporation
(industrial) aerospace manufacturer). Mr. Hardis is a member
of the boards of KeyCorp (holding company for Key Bank),
Lexmark International Corporation (a spin-off of IBM's
printer business), Marsh & McLennon Companies, Inc. (holding
company providing services in the risk and insurance
services, investment and management consulting fields),
Nordson Corporation (industrial painting system
manufacturer) and Progressive Corporation (holding company
of Progressive Insurance Company and other companies). He
also serves as a director of the Cleveland Clinic Foundation
(hospital) and is a trustee of the Musical Arts Association
(Cleveland Orchestra), Leadership Cleveland, Playhouse
Square, Foundation, Greater Cleveland Roundtable and
Cleveland Tomorrow (non-profit organizations).
</TABLE>
I-1
<PAGE> 41
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
---- -------------------------------------------
<S> <C>
*Harriet Mouchly-Weiss Mrs. Mouchly-Weiss is founder and managing partner of
Strategy XXI (corporate communications). Before founding
Strategy XXI, she was President of the GCI Group
International, an international public relations and
marketing agency. She also served as Chairman of Ruder Finn
& Rotman International Partners, an independent public
relations firm. She is a director of Viisage Technology,
Inc. (developer of personal security and identification
systems), a division of LAU Technologies, Foundation of the
Committee of 200, Friends of the United Nations, American
Academy of Rome, Chinese Foundation of Culture and Arts for
Children, Abraham Fund and Israel Policy Forum
(professional, educational and charitable organizations.
*Albert B. Ratner Mr. Ratner's principal occupation is Co-Chairman of the
Board, Chief Executive Officer and President of Forest City
Enterprises, Inc. (conglomerate corporation engaged in real
estate development, sales, investment, construction and
lumber wholesale) and an officer of its various subsidiary
companies. He is also a director of RPM, Inc. (manufacturer
and marketer of protective coatings).
*James C. Spira Mr. Spira's principal occupation is managing partner and
director of Diamond Technology Partners, Inc., (technology
management consulting firm). Before joining Diamond
Technology Partners, he co-founded Cleveland Consulting
Associates, serving as President and Chief Executive Officer
from 1974 until 1989. Mr. Spira serves as a director of New
Media, Inc. (information technology consulting) and is a
member of the advisory board of Progressive Insurance
Company's National Accounts Division (specialty
property-casualty insurer).
*Harry H. Stone Mr. Stone's principal occupation is President of the
Courtland Group, Inc. (investments, property and business
development and management) and a general partner in
partnerships that own and manage The Residence Inn by
Marriott Cleveland at Beachwood, Middleburg Heights,
Rockside and Westlake, Ohio locations. He is a trustee of
the Cleveland Rotary Foundation and is Trustee Emeritus of
Educational Television Association of Metropolitan
Cleveland, Jewish Community Federation of Cleveland and
Brandeis University (non-profit organizations).
*Irving I. Stone Mr. Stone's principal occupation is Founder-Chairman of
Parent, a position he has held for more than five years, and
Chairman of the Executive Committee. He also serves as a
director for Liberty Mutual Insurance Company (health and
life insurance company).
*Morry Weiss Mr. Weiss' principal occupation is Chairman and Chief
Executive Officer of Parent, a position he has held for more
than five years. He also serves as a director of National
City Corporation (holding company of National City
Bank -- Cleveland and other banks) and is a member of the
advisory board of Primus Venture Partners (equity investor
in companies requiring growth capital).
Michael B. Birkholm Vice President, Manufacturing from 1994 until becoming
Senior Vice President in 1998.
Dale A. Cable Vice President and Treasurer.
</TABLE>
I-2
<PAGE> 42
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
---- -------------------------------------------
<S> <C>
Mary Ann Corrigan-Davis President of Carlton Cards Retail, Inc. from 1992 until
1996, and Group Managing Director of the John Sands Group
from 1996 until becoming Senior Vice President in 1997.
Jon Groetzinger, Jr. Senior Vice President, General Counsel and Secretary.
John M. Klipfell Senior Vice President. Mr. Klipfell also serves as President
and Chief Executive Officer of americangreetings.com (a
subsidiary of Parent).
William R. Mason Senior Vice President.
William S. Meyer Senior Vice President and Chief Financial Officer.
Patricia A. Papesh Vice President, Creative of the U.S. Greeting Card Division
from 1992 until becoming Senior Vice President in 1995.
Patricia L. Ripple Executive Director, Tax and Financial Reporting from 1993
until becoming Vice President and Corporate Controller in
1996.
Erwin Weiss Senior Vice President.
Jeffrey M. Weiss Vice President, Materials Management of Parent's U.S.
Greeting Card Division from 1996 until 1997; and Vice
President, Product Management of Parent's U.S. Greeting Card
Division from 1997 until becoming Senior Vice President in
1998.
George A. Wenz Vice President, National Accounts from 1984 before becoming
Senior Vice President in 1997.
Thomas T. Zinn, Sr. Principal with Ernst & Young LLP before joining Parent in
1995 as Vice President, Information Services. He became
Senior Vice President in 1998.
</TABLE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The director of Purchaser is Morry Weiss. The executive officers of
Purchaser are Morry Weiss, President, Edward Fruchtenbaum, Vice President, Jon
Groetzinger, Jr., Secretary, and Dale Cable, Treasurer. Messrs. Weiss,
Fruchtenbaum, Groetzinger and Cable are also executive officers of Parent.
Information concerning the present principal occupation or employment and
material occupation, positions, offices or employment for the past five years of
Messrs. Weiss, Fruchtenbaum, Groetzinger and Cable is set forth in the table of
the directors and executive officers of Parent. The business address of each
director and officer of Purchaser is One American Road, Cleveland, Ohio 44144,
and all directors and officers of Purchaser are citizens of the United States.
I-3
<PAGE> 43
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly signed, will be accepted. The Letter of Transmittal,
certificates for Shares and any other required documents should be sent or
delivered by each Stockholder or his broker dealer, commercial bank, trust
company or other nominee to the Depositary, at one of the addresses set forth
below:
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
<S> <C> <C>
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Corporate Actions, Suite 4660 Corporate Actions, Suite 4680 c/o Securities Transfer and
P.O. Box 2569 14 Wall Street, 8th Floor Reporting Services Inc.
Jersey City, NJ 07303-2569 New York, NY 10005 Attn: Corporate Actions
100 William Street, Galleria
New York, New York 10038
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer To Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent and Dealer Manager as set forth below and will be furnished
promptly at Purchaser's expense. You may also contact your broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road - Carlstadt, New Jersey 07072-2586
Banks and Brokers call: (800) 346-7885
All Others Call Toll Free: (877) 842-2411
THE DEALER MANAGER FOR THE OFFER IS:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, New York 10019
Call Collect (212) 969-2700
I-4
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING ASSOCIATED SERIES B PREFERRED STOCK PURCHASE RIGHTS)
OF
GIBSON GREETINGS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 9, 1999
BY
GRANITE ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN GREETINGS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON DECEMBER 8, 1999, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
<S> <C> <C>
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Corporate Actions, Suite 4660 Corporate Actions, Suite 4680 c/o Securities Transfer and
P.O. Box 2569 14 Wall Street, 8th Floor Reporting Services Inc.
Jersey City, NJ 07303-2569 New York, NY 10005 Attn: Corporate Actions
100 William Street,
Galleria
New York, New York 10038
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSIONS OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE
DEPOSITARY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE
THEREFOR PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares
("Stockholders") either if certificates for Shares (as defined in the Offer To
Purchase, dated November 9, 1999 (the "Offer To Purchase")) are to be forwarded
herewith or, unless an Agent's Message (as defined in the Offer To Purchase) is
utilized, if tenders of Shares are to be made by book-entry transfer to an
account maintained by First Chicago Trust Company of New York (the "Depositary")
at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to
the procedures set forth in Section 3 of the Offer To Purchase. Stockholders who
tender Shares by book-entry transfer are referred to herein as "Book-Entry
Stockholders."
Stockholders whose certificates for such Shares (the "Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other required documents to the Depositary on or prior to the Expiration
Date (as defined in the Offer To Purchase) or who cannot complete the procedures
for book-entry transfer on a timely basis, must tender their Shares according to
the guaranteed delivery procedures set forth in Section 3 of the Offer To
Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY
DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
NOTE: SIGNATURES MUST BE PROVIDED ON THE INSIDE AND REVERSE BACK COVER. PLEASE
READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Account Number:
Transaction Code Number:
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED
DELIVERY.
Name(s) of Registered Holder(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution that Guaranteed Delivery:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s)
(Please Fill In, If Blank, Exactly as Name(s) Share Certificate(s) and Share(s) Tendered
Appear(s) on Share Certificate(s)) (Attach Additional List, If Necessary)
- ----------------------------------------------------------------------------------------------------
Total Number
of Shares
Certificate Represented Number of
Number(s)* by Certificate(s)* Shares Tendered**
----------------------------------------------------
<C> <S> <C> <C>
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
Total Shares
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, it will be assumed that all
Shares represented by Share Certificates delivered to the
Depositary are being tendered. See Instruction 4.
[ ] CHECK HERE IF CERTIFICATES HAVE BEEN LOST OR MUTILATED. SEE
INSTRUCTION 11.
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to Granite Acquisition Corp. ("Purchaser"), a
wholly owned subsidiary of American Greetings Corporation ("Parent"), the
above-described shares of common stock (the "Shares") of Gibson Greetings, Inc.
(the "Company") pursuant to Purchaser's offer to purchase all outstanding Shares
and the associated Series B Preferred Stock Purchase Rights (the "Rights"),
issued pursuant to the Rights Agreement, dated September 8, 1999, between the
Company and The Bank of New York, as Rights Agent (as the same may be amended,
the "Rights Agreement"), at a purchase price of $10.25 per Share and associated
Rights (subject to possible upward adjustment as described below, the "Offer
Price"), net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer To Purchase, dated November 9,
1999, receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which, together with any amendments or supplements hereto or thereto,
collectively constitute the "Offer"). The undersigned understands that Purchaser
reserves the right to transfer or assign, in whole or from time to time in part,
to one or more of its subsidiaries or affiliates the right to purchase all or
any portion of the Shares tendered pursuant to the Offer. Unless the context
otherwise requires, all references to Shares in this Letter of Transmittal shall
include the associated Rights and all references to the Rights shall include all
benefits that may inure to holders of the Rights pursuant to the Rights
Agreement, including the right to receive any payment due upon redemption of the
Rights.
The Offer Price will be increased by an amount equal to 30% of any after-tax
gain realized by the Company in any sale or disposition for cash by the Company
or its subsidiaries, prior to the Expiration Date (as defined in the Offer To
Purchase), of all or any part of the Company's investment in E-Greetings Network
("EGN"), divided by the total number of Shares then outstanding on a fully
diluted basis, assuming for this purpose the exercise only of outstanding
options, whether or not such options are then vested, that are (or, giving
effect to the adjustment in the Offer Price contemplated hereby, would be)
in-the-money. The price used to compute any after-tax gain on any sale or
disposition will be the cash received by the Company, but only if such cash is
for an aggregate amount in excess of the Company's then net book value of its
interest in EGN. See Sections 2 and 12 of the Offer To Purchase.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby sells, assigns, and transfers
to, or upon the order of, Purchaser all right, title and interest in and to all
of the Shares that are being tendered hereby and any and all dividends on the
Shares (including, without limitation, the issuance of additional Shares
pursuant to a stock dividend or stock split, the issuance of other securities,
the issuance of rights for the purchase of any securities, or any cash
dividends) that are declared or paid by the Company on or after the date of the
Offer To Purchase and are payable or distributable to Stockholders of record on
a date prior to the transfer into the name of Purchaser or its nominees or
transferees on the Company's stock transfer records of the Shares purchased
pursuant to the Offer (collectively "Distributions"), and constitutes and
irrevocably appoints the Depositary the true and lawful agent, attorney-in-fact
and proxy of the undersigned to the full extent of the undersigned's rights with
respect to such Shares (and Distributions) with full power of substitution (such
power of attorney and proxy being deemed to be an irrevocable power coupled with
an interest), to (a) deliver Share Certificates (and Distributions), or transfer
ownership of such Shares on the account books maintained by the Book-Entry
Transfer Facility, together in either such case with all accompanying evidences
of transfer and authenticity, to or upon the order of Purchaser upon receipt by
the Depositary, as the undersigned's agent, of the purchase price, (b) present
such Shares (and Distributions) for transfer on the books of the Company and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares (and Distributions), all in accordance with the terms of the
Offer.
The undersigned hereby irrevocably appoints designees of Purchaser, and each
of them, the attorneys-in-fact and proxies of the undersigned, each with full
power of substitution, to vote in such manner as each such attorney and proxy or
his or her substitute shall, in his or her sole discretion, deem proper, and
otherwise act (including pursuant to written consent) with respect to all of the
Shares tendered hereby which have been accepted for payment by Purchaser prior
to the time of such vote or action (and Distributions) which the undersigned is
entitled to vote at any meeting of Stockholders of the Company (whether annual
or special and whether or not an adjourned meeting), or by written consent in
lieu of such meeting, or otherwise. This power of attorney and proxy is coupled
with an interest in the Company and in the Shares tendered hereby and is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by Purchaser in accordance with the terms
of the Offer. Such acceptance for payment shall revoke, without further action,
any other power of attorney or proxy granted by the undersigned at any time with
respect to such Shares (and Distributions) and no subsequent powers of attorney
or proxies will be given (and if given will be deemed not to be effective) with
respect thereto by the undersigned. The undersigned understands that Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares,
Purchaser is able to exercise full voting rights with respect to such Shares and
Distributions, including voting at any meeting of stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and Distributions) and that when the same are accepted for payment by
Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
the same will not be subject to any adverse claim. The undersigned, upon
request, will execute and deliver any additional documents deemed by the
Depositary or Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby (and Distributions). In
addition, the undersigned shall promptly remit and transfer to the Depositary
for the account of Purchaser any and all other Distributions in respect of the
Shares tendered hereby, accompanied by appropriate documentation of transfer
and, pending such remittance or appropriate assurance thereof, Purchaser shall
be entitled to all rights and privileges as owner of such Distributions and may
withhold the entire purchase price or deduct from the purchase price of Shares
tendered hereby the amount or value thereof, as determined by Purchaser in its
sole discretion.
All authority herein conferred or herein agreed to be conferred shall not be
affected by, and shall survive, the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of the
undersigned. Tenders of Shares pursuant to the Offer are irrevocable, except
that Shares tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer To Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer To Purchase, Purchaser may not be required to accept for payment any
of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
Certificates not tendered or accepted for payment in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificates not tendered or accepted for payment (and accompanying
documents as appropriate) to the undersigned at the address shown below the
undersigned's signature. In the event that both the "Special Delivery
Instructions" and the "Special Payment Instructions" are completed, please issue
the check for the purchase price and/or return any Share Certificates not
tendered or accepted for payment in the name(s) of, and deliver said check
and/or return certificates to, the person or persons so indicated. Stockholders
tendering Shares by book-entry transfer may request that any Shares not accepted
for payment be returned by crediting such account maintained at the Book-Entry
Transfer Facility. The undersigned recognizes that Purchaser has no obligation
pursuant to the "Special Payment Instructions" to transfer any Shares from the
name of the registered holder thereof if Purchaser does not accept for payment
any of such Shares.
<PAGE> 4
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificates not tendered or not purchased
and/or the check for the purchase price of Shares purchased are to be issued in
the name of someone other than the undersigned, or if Shares tendered by
book-entry transfer which are not purchased are to be returned by credit to an
account maintained at the Book-Entry Transfer Facility other than that
designated on the front cover.
Issue check and/or certificates to:
Name:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(Please Type or Print)
Address:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(Include Zip Code)
-----------------------------------------------------------------------
(Taxpayer Identification or Social Security No.)
(See Substitute Form W-9)
[ ] Credit unpurchased Shares tendered by book-entry transfer to the Book-Entry
Transfer Facility
-----------------------------------------------------------------------
(ACCOUNT NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificates not tendered or not purchased
and/or the check for the purchase price of Shares purchased are to be sent to
someone other than the undersigned, or to the undersigned at an address other
than that shown on the front cover.
Mail check and/or certificate to:
Name:
---------------------------------------------------------------------------
(Please Type or Print)
Address:
------------------------------------------------------------------------
(Include Zip Code)
-----------------------------------------------------------------------
(Taxpayer Identification or Social Security No.)
(See Substitute Form W-9)
<PAGE> 5
IMPORTANT
STOCKHOLDER: SIGN HERE AND COMPLETE
SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signatures(s) of Owner(s)
Dated: ____________________________
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
the Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the necessary
information. See Instruction 5.)
Name(s):
----------------------------------------------------------------------
------------------------------------------------------------------------------
(Please Print)
Capacity (full title):
--------------------------------------------------------
Address:
----------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
-----------------------------------------------
Tax Identification or Social Security No:
-------------------------------------
(See Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
---------------------------------------------------------
Name (Please print):
----------------------------------------------------------
Title:
------------------------------------------------------------------------
Name of Firm:
-----------------------------------------------------------------
Address:
----------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
-----------------------------------------------
Dated: ____________________________
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder(s) of the Shares tendered herewith (which term, for purposes
of this document, includes any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares),
unless such holder(s) has completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on the inside
front cover hereof or (ii) if such Shares are tendered for the account of a firm
that is a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of the Securities Transfer Agents
Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5. If the Certificates are registered in the name
of a person other than the signer of this Letter of Transmittal or if payment is
to be made or Certificates for Shares not tendered or not accepted for payment
are to be returned to a person other than the registered holder of the
Certificates tendered, then the tendered Certificates must be endorsed or
accompanied by duly executed stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the Certificates, with
the signatures on the Certificates or stock powers guaranteed by an Eligible
Institution as provided in this Letter of Transmittal. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if tenders are to be made
pursuant to the procedures for tender by book-entry transfer set forth in
Section 3 of the Offer To Purchase. Share Certificates, or timely confirmation
of a book-entry transfer (a "Book-Entry Confirmation") of such Shares into the
Depositary's account at the Book-Entry Transfer Facility, as well as this Letter
of Transmittal (or a facsimile hereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in the case of a
book-entry delivery, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date. Stockholders whose Share Certificates
are not immediately available or who cannot deliver their Share Certificates and
all other required documents to the Depositary prior to the Expiration Date or
who cannot complete the procedures for delivery by book-entry transfer on a
timely basis may tender their Shares by properly completing and duly executing a
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set
forth in Section 3 of the Offer To Purchase. Pursuant to such procedure: (i)
such tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form made available by Purchaser, must be received by the Depositary on or prior
to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for transfer
together with a properly completed and duly executed Letter of Transmittal (or a
facsimile hereof), with any required signature guarantees (or in the case of a
book-entry delivery an Agent's Message) and any other documents required by this
Letter of Transmittal, must be received by the Depositary within three Nasdaq
trading days after the date of execution of such Notice of Guaranteed Delivery.
A "Nasdaq trading day" is any day on which The Nasdaq Stock Market, Inc.'s
Nasdaq National Market is open for business. If Share Certificates are forwarded
separately to the Depositary, a properly completed and duly executed Letter of
Transmittal (or facsimile hereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. 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.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering Stockholders, by execution of
this Letter of Transmittal or facsimile hereof, waive any right to receive any
notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares that are to be tendered in the
box entitled "Number of Shares Tendered." In such case, new certificate(s) for
the remainder of the Shares that were evidenced by your old certificate(s) will
be sent to you, unless otherwise provided in the appropriate box marked "Special
Payment Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to
Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or purchased are to be issued in the name
of a person other than the registered owner(s). Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution.
<PAGE> 7
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner(s) appear(s) on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or purchased are to be registered in the
name of, any person other than the registered holder(s), or if tendered
certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder(s) or such person) payable on account
of the transfer to such person will be deducted from the purchase price received
by such holder(s) pursuant to this Offer (i.e., such purchase price will be
reduced) unless satisfactory evidence of the payment of such taxes or exemption
therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If (i) a check is to be issued
in the name of and/or (ii) certificates for unpurchased Shares are to be
returned to a person other than the signer of this Letter of Transmittal or if a
check is to be sent and/or such certificates are to be returned to someone other
than the signer of this Letter of Transmittal or to an address other than that
shown on the front cover hereof, the appropriate boxes on this Letter of
Transmittal should be completed. Stockholders tendering Shares by book-entry
transfer (i.e., Book-Entry Stockholders) may request that Shares not purchased
be credited to such account maintained at the Book-Entry Transfer Facility as
such Book-Entry Stockholder may designate hereon. If no such instructions are
given, such Shares not purchased will be returned by crediting the account at
the Book-Entry Transfer Facility designated above. See Instruction 1.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may
be directed to the Information Agent at its addresses set forth below. Requests
for additional copies of the Offer To Purchase and this Letter of Transmittal
may be directed to the Information Agent or to brokers, dealers, commercial
banks or trust companies. Such materials will be furnished at Purchaser's
expense.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by
Purchaser (subject to certain limitations in the Merger Agreement (as defined in
the Offer To Purchase)), in whole or in part, at any time or from time to time,
in Purchaser's sole discretion.
10. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a Stockholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such Stockholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary is
not provided with the correct TIN, or an adequate basis for exemption, the
Internal Revenue Service may subject the Stockholder or other payee to a $50
penalty, and the gross proceeds of any payments that are made to such
Stockholder or other payee with respect to Shares purchased pursuant to the
Offer may be subject to 31% backup withholding. If withholding results in an
overpayment of taxes, a refund may be obtained.
Certain Stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the Stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any such payments made to the Stockholder or other payee. Backup withholding is
not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
To prevent backup withholding on payments that are made to a Stockholder
with respect to Shares purchased pursuant to the Offer, the Stockholder is
required to notify the Depositary of such Stockholder's correct TIN by
completing a Substitute Form W-9 certifying (i) that the TIN provided on
Substitute Form W-9 is correct (or that such Stockholder is awaiting a TIN), and
(ii) that (a) such Stockholder is exempt from backup withholding or (b) such
Stockholder has not been notified by the Internal Revenue Service that such
Stockholder is subject to backup withholding as a result of a failure to report
all interest or dividends or (c) the Internal Revenue Service has notified such
Stockholder that such Stockholder is no longer subject to backup withholding.
Exempt holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. To prevent possible erroneous backup withholding, an exempt holder
must enter its correct TIN in Part 1 of Substitute Form W-9, write "Exempt" in
Part 2 of such form, and sign and date the form. See the enclosed Guidelines for
Certification of Taxpayer Identification Number of Substitute Form W-9 (the "W-9
Guidelines") for additional instructions. In order for a nonresident alien or
foreign entity to qualify as exempt, such person must submit a completed Form
W-8, "Certificate of Foreign Status" signed under penalties of perjury attesting
to such exempt status. Such forms may be obtained from the Payor.
If you do not have a TIN, consult the W-9 Guidelines for instructions on
applying for a TIN, write "Applied For" in the space for the TIN in Part 1 of
the Substitute Form W-9, and sign and date the Substitute Form W-9 and the
Certificate of Awaiting Taxpayer Identification Number set forth herein. If you
do not provide your TIN to the Payor within 60 days, backup withholding will
begin and continue until you furnish your TIN to the Payor. NOTE: WRITING
"APPLIED FOR" ON THE FORM MEANS THAT YOU HAVE ALREADY APPLIED FOR A TIN OR THAT
YOU INTEND TO APPLY FOR ONE IN THE NEAR FUTURE.
The Stockholder is required to give the Depositary the TIN of the record
owner of the Shares or of the last transferee appearing on the transfers
attached to, or endorsed on, the Shares. If the Shares are in more than one name
or are not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the Stockholder should
promptly notify the Information Agent. The Stockholder will then be instructed
as to the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE COPY HEREOF) OR AN AGENT'S
MESSAGE TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF
BOOK-ENTRY TRANSFER OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE
OF GUARANTEED DELIVERY AND ALL OTHER REQUIRED DOCUMENTS MUST BE
RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.
<PAGE> 8
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS OF SECURITIES
(SEE INSTRUCTION 9)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PAYOR'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- ---------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT TIN -----------------------------
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. (Social Security Number
or Employer
Identification Number)
------------------------------------------------------------------------------------------
DEPARTMENT OF PART 2 -- FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING
THE TREASURY (SEE INSTRUCTIONS)
INTERNAL
REVENUE SERVICE
------------------------------------------------------------------------------------------
PAYER'S REQUEST FOR PART 3 -- CERTIFICATIONS -- UNDER PENALTIES OF PERJURY. I CERTIFY THAT: (1) The number
TAXPAYER'S IDENTIFICATION shown on this form is my correct Taxpayer Identification Number (or I am waiting for a
NUMBER ("TIN") AND number to be issues to me) and (2) I am not subject to backup withholding either because:
CERTIFICATION (a) I am exempt from backup withholding; or (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding as a result of failure
to report all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
Signature _____________________________________ Date_____________________
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
You must cross out item (2) above if you have been notified by the IRS that you
are subject to backup withholding because of underreporting interest or
dividends on your tax return.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR"
IN PART 1 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number to the
payor within 60 days, 31% of all reportable payments made to me will be
withheld.
Signature:______________________________________ Date: ____________________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE> 9
MANUALLY SIGNED FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL, PROPERLY
COMPLETED AND DULY EXECUTED, WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL,
CERTIFICATES FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR
DELIVERED BY EACH STOCKHOLDER OF THE COMPANY OR HIS BROKER, DEALER, COMMERCIAL
BANK, TRUST COMPANY OR OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES
SET FORTH BELOW:
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Corporate Actions, Suite 4660 Corporate Actions, Suite 4680 c/o Securities Transfer and
P.O. Box 2569 14 Wall Street, 8th Floor Reporting Services Inc.
Jersey City, NJ 07303-2569 New York, NY 10005 Attn: Corporate Actions
100 William Street, Galleria
New York, New York 10038
</TABLE>
By Facsimile Transmission:
(201) 324-3402
(201) 324-3403
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of the Offer To Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent or the Dealer Manager as set forth below, and will be
furnished promptly at Purchaser's expense. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road - Carlstadt, New Jersey 07072-2586
Banks and Brokers call: (800) 346-7885
All Others Call Toll Free: (877) 842-2411
THE DEALER MANAGER FOR THE OFFER IS:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, New York 10019
Call Collect (212) 969-2700
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING ASSOCIATED SERIES B PREFERRED STOCK PURCHASE RIGHTS)
OF
GIBSON GREETINGS, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Offer (as defined below) if certificates
representing shares of common stock (the "Shares") of Gibson Greetings, Inc.
(the "Company") and the associated Rights (as defined in the Offer To Purchase)
are not immediately available or time will not permit all required documents to
reach First Chicago Trust Company of New York (the "Depositary") on or prior to
the Expiration Date (as defined in the Offer to Purchase), or the procedures for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile
transmission or mailed to the Depositary. See Section 3 of the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
<S> <C> <C>
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Corporate Actions, Suite 4660 Corporate Actions, Suite 4680 c/o Securities Transfer and
P.O. Box 2569 14 Wall Street, 8th Floor Reporting Services Inc.
Jersey City, NJ 07303-2569 New York, NY 10005 Attn: Corporate Actions
100 William Street,
Galleria
New York, New York 10038
</TABLE>
By Facsimile Transmission:
(201) 324-3402
(201) 324-3403
Confirmation by Telephone:
(201) 222-4707
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Granite Acquisition Corp., a wholly owned
subsidiary of American Greetings Corporation, upon the terms and subject to the
conditions set forth in the Offer To Purchase, dated November 9, 1999 (the
"Offer To Purchase"), and in the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of each of which is hereby acknowledged, the number of Shares
indicated below pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer To Purchase.
Number of Shares:
---------------------------------
Certificate No(s). (if available):
---------------------
If Share(s) will be tendered by book-entry transfer, check the box. [ ]
Account Number:
-----------------------------------
Date: Area Code and Telephone Number(s):
--------------- -------------
Name(s) of Record Holder(s):
----------------------------------------
(PLEASE PRINT)
Signature(s):
-------------------------------------------------------
Address(es):
---------------------------------------------------------
(ZIP CODE)
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(Not to Be Used for Signature Guarantee)
The undersigned, a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, hereby guarantees to deliver to
the Depositary at one of its addresses set forth above either the certificates
representing all tendered Shares, in proper form for transfer, a Book-Entry
Confirmation (as defined in the Offer To Purchase), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or, in the case of book-entry delivery of
Shares, an Agent's Message (as defined in the Offer To Purchase), and any other
documents required by the Letter of Transmittal within three Nasdaq trading days
after the date of execution of this Notice of Guaranteed Delivery. A "Nasdaq
trading day" is any day on which The Nasdaq Stock Market, Inc.'s Nasdaq National
Market is open for business.
<TABLE>
<S> <C>
Name of Firm:
----------------------------------
AUTHORIZED SIGNATURE
Address: Name:
--------------------------------------- -----------------------------------
PRINT TYPE OR PRINT
ZIP CODE Title:
--------------------------- -------------------------------------
Area Code and Tel. No: Dated
---------------------- -------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY.
CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
</TABLE>
<PAGE> 1
Offer To Purchase for Cash
All Outstanding Shares of Common Stock
(Including Associated Series B Preferred Stock Purchase Rights)
of
GIBSON GREETINGS, INC.
at
$10.25 Net Per Share
(Subject to Possible Upward Adjustment)
by
Granite Acquisition Corp.,
a wholly owned subsidiary
of
AMERICAN GREETINGS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 8, 1999, UNLESS THE OFFER IS EXTENDED.
November 9, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Granite Acquisition Corp. ("Purchaser"), a wholly
owned subsidiary of American Greetings Corporation ("Parent"), to act as Dealer
Manager in connection with Purchaser's offer to purchase all outstanding shares
of common stock (together with the associated Rights (as defined in the Offer To
Purchase), the "Shares") of Gibson Greetings, Inc. (the "Company") at a purchase
price of $10.25 per Share (subject to possible upward adjustment as described
below, the "Offer Price"), net to the seller in cash, without interest, on the
terms and subject to the conditions set forth in the Offer To Purchase and the
related Letter of Transmittal (which together constitute the "Offer"). Please
furnish copies of the enclosed materials to those of your clients for whose
accounts you hold Shares in your name or in the name of your nominee.
Enclosed herewith for your information and for forwarding to your clients
are copies of the following documents:
1. Offer To Purchase, dated November 9, 1999.
2. Letter of Transmittal to tender Shares for your use and for the
information of your clients, together with Guidelines of the Internal
Revenue Service for Certification of Taxpayer Identification Number on
Substitute Form W-9, which provides information relating to backup federal
income tax withholding. Manually signed facsimile copies of the Letter of
Transmittal may be used to tender Shares.
3. A letter to holders of Shares ("Stockholders") from Frank J.
O'Connell, Chairman, Chief Executive Officer and President of the Company,
together with a Solicitation/Recommendation Statement on Schedule 14D-9.
4. Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if neither of the two procedures for tendering Shares set forth in
the Offer To Purchase can be completed on a timely basis.
5. A form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
6. Return envelope addressed to the Depositary (as defined in the
Offer To Purchase).
<PAGE> 2
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 8, 1999,
UNLESS THE OFFER IS EXTENDED.
Please note the following:
1. The Offer Price is $10.25 per Share. The Offer Price will be
increased by an amount equal to 30% of any after-tax gain realized by the
Company in any sale or disposition for cash by the Company or its
subsidiaries, prior to the Expiration Date (as defined in the Offer To
Purchase), of all or any part of the Company's investment in E-Greetings
Network ("EGN"), divided by the total number of Shares then outstanding on
a fully diluted basis, assuming for this purpose the exercise only of
outstanding options, whether or not such options are then vested, which are
(or, giving effect to the adjustment in the Offer Price contemplated
hereby, would be) in-the-money. The price used to compute any after-tax
gain on any sale or disposition will be the cash received by the Company,
but only if such cash is for an aggregate amount in excess of the Company's
then net book value of its interest in EGN. See Sections 2 and 12 of the
Offer To Purchase.
2. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date that number
of Shares that, together with the Shares then owned by Parent, represents
at least a majority of the Shares then outstanding on a fully-diluted basis
(assuming the exercise of all outstanding options which are exercisable and
in-the-money at the Offer Price). The Offer is also subject to certain
other conditions contained in the Offer To Purchase. See the Introduction
and Sections 1, 14 and 15 of the Offer To Purchase.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering Stockholders will not be obligated to pay brokerage fees
or commissions to the Dealer Manager, the Depositary or the Information
Agent (as defined below) or, except as set forth in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by
Purchaser pursuant to the Offer. However, federal income tax backup
withholding at a rate of 31% may be required, unless an exemption is
provided or unless the required tax identification information is provided.
See Instruction 10 of the Letter of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Wednesday, December 8, 1999, unless the Offer is
extended.
6. The Board of Directors of the Company, has unanimously (i)
determined that the Merger Agreement (as defined in the Offer To Purchase)
and the transactions contemplated thereby, including the Offer and the
Merger (as defined in the Offer To Purchase), are fair to and in the best
interests of the Stockholders, (ii) approved and adopted the Merger
Agreement and the transactions contemplated thereby, including the Offer
and the Merger and (iii) resolved to recommend that Stockholders accept the
Offer and tender their Shares pursuant to the Offer.
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) certificates for Shares
(the "Certificates") or a timely Book-Entry Confirmation (as defined in the
Offer To Purchase) with respect to such Shares pursuant to the procedures
set forth in Section 3 of the Offer To Purchase, (b) the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed
and duly executed with any required signature guarantees (or, in the case
of book-entry transfers, an Agent's Message), and (c) any other documents
required by the Letter of Transmittal. Accordingly, payment may not be made
to all tendering Stockholders at the same time depending upon when
Certificates for or confirmations of book-entry transfer of such Shares are
actually received by the Depositary.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) and any
required signature guarantees (or, in the case of book-entry transfers, an
Agent's Message) and any other required documents should be sent to the
Depositary and (ii) either Certificates representing the tendered Shares or a
timely Book-Entry Confirmation (as defined in the Offer To Purchase) should be
delivered to the Depositary in accordance with the instructions set forth in the
Letter of Transmittal and the Offer To Purchase.
<PAGE> 3
If Stockholders wish to tender their Shares, but it is impracticable for
them to forward the Certificates for such Shares or other required documents or
complete the procedures for book-entry transfer prior to the Expiration Date, a
tender may be effected by following the guaranteed delivery procedures specified
in Section 3 of the Offer To Purchase.
Neither Purchaser nor Parent will pay any fees or commissions to any broker
or dealer or other person (other than the Dealer Manager, the Information Agent
or the Depositary, as described in the Offer To Purchase) for soliciting tenders
of Shares pursuant to the Offer. Purchaser will, however, upon request,
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients. Purchaser will pay or
cause to be paid any stock transfer taxes payable on the transfer of the Shares
to it, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Wasserstein Perella & Co., Inc., the Dealer Manager, or Corporate Investor
Communications, Inc., the Information Agent, at their respective addresses and
telephone numbers set forth on the back cover of the Offer To Purchase.
Additional copies of the enclosed materials may be obtained from the Information
Agent or the Dealer Manager or from brokers, dealers, commercial banks or trust
companies.
Very truly yours,
Wasserstein Perella & Co., Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF PURCHASER, PARENT, THE COMPANY, THE DEALER
MANAGER, THE INFORMATION AGENT, THE DEPOSITARY OR ANY AFFILIATE OF ANY OF THEM
OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT
ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
Offer To Purchase for Cash
All Outstanding Shares of Common Stock
(Including Associated Series B Preferred Stock Purchase Rights)
of
GIBSON GREETINGS, INC.
at
$10.25 Net Per Share
(Subject to Possible Upward Adjustment)
by
Granite Acquisition Corp.,
a wholly owned subsidiary
of
AMERICAN GREETINGS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 8, 1999, UNLESS THE OFFER IS EXTENDED.
November 9, 1999
To Our Clients:
Enclosed for your consideration are the Offer To Purchase, dated November
9, 1999 (the "Offer To Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") and other materials relating to the offer by Granite Acquisition Corp.
("Purchaser"), a wholly owned subsidiary of American Greetings Corporation
("Parent"), to purchase all outstanding shares of common stock (together with
the associated Rights (as defined in the Offer To Purchase), the "Shares") of
Gibson Greetings, Inc. (the "Company") at a purchase price of $10.25 per Share
(subject to possible upward adjustment as described below, the "Offer Price"),
net to the seller in cash, without interest, on the terms and subject to the
conditions set forth in the Offer To Purchase and the related Letter of
Transmittal (which together constitute the "Offer"). Holders of Shares
("Stockholders") whose certificates for such Shares (the "Certificates") are not
immediately available or who cannot deliver their Certificates and all other
required documents to the Depositary (as defined in the Offer To Purchase) or
complete the procedures for book-entry transfer on or prior to the Expiration
Date (as defined in the Offer To Purchase) must tender their Shares according to
the guaranteed delivery procedures set forth in Section 3 of the Offer To
Purchase.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL ACCOMPANYING
THIS LETTER IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY
YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The Offer Price is $10.25 per Share. The Offer Price will be
increased by an amount equal to 30% of any after-tax gain realized by the
Company in any sale or disposition for cash by the Company or its
subsidiaries, prior to the Expiration Date, of all or any part of the
Company's investment in E-Greetings Network ("EGN"), divided by the total
number of Shares then outstanding on a fully diluted basis, assuming for
this purpose the exercise only of outstanding options, whether or not such
options are then vested, which are (or, giving effect to the adjustment in
the Offer Price contemplated hereby, would be) in-the-money. The price used
to compute any after-tax gain on any sale or disposition will be the cash
received
<PAGE> 2
by the Company, but only if such cash is for an aggregate amount in excess
of the Company's then net book value of its interest in EGN. See Sections 2
and 12 of the Offer To Purchase.
2. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date that number
of Shares that, together with the Shares then owned by Parent, represents
at least a majority of the Shares then outstanding on a fully-diluted basis
(assuming the exercise of all outstanding options which are exercisable and
in-the-money at the Offer Price). The Offer is also subject to certain
other conditions contained in the Offer To Purchase. See the Introduction
and Sections 1, 14 and 15 of the Offer To Purchase.
3. The Offer is being made for all outstanding Shares.
4. Tendering Stockholders will not be obligated to pay brokerage fees
or commissions to the Dealer Manager (as defined in the Offer To Purchase),
the Depositary or the Information Agent (as defined in the Offer To
Purchase) or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant
to the Offer. However, federal income tax backup withholding at a rate of
31% may be required, unless an exemption is provided or unless the required
taxpayer identification information is provided. See Instruction 10 of the
Letter of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Wednesday, December 8, 1999, unless the Offer is
extended.
6. The Board of Directors of the Company, has unanimously (i)
determined that the Merger Agreement (as defined in the Offer To Purchase)
and the transactions contemplated thereby, including the Offer and the
Merger (as defined in the Offer To Purchase), are fair to and in the best
interests of the Stockholders, (ii) approved and adopted the Merger
Agreement and the transactions contemplated thereby, including the Offer
and the Merger and (iii) resolved to recommend that Stockholders accept the
Offer and tender their Shares pursuant to the Offer.
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) Certificates for Shares
or a timely Book-Entry Confirmation (as defined in the Offer To Purchase)
with respect to such Shares pursuant to the procedures set forth in Section
3 of the Offer To Purchase, (b) the Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed with any
required signature guarantees (or, in the case of book-entry transfers, an
Agent's Message (as defined in the Offer To Purchase)), and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment may
not be made to all tendering Stockholders at the same time depending upon
when Certificates for or confirmations of book-entry transfer of such
Shares are actually received by the Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth on the back page of this letter. Please
forward your instructions to us in ample time to permit us to submit a tender on
your behalf prior to the Expiration Date. An envelope to return your
instructions to us is enclosed. IF YOU AUTHORIZE THE TENDER OF YOUR SHARES, ALL
SUCH SHARES WILL BE TENDERED UNLESS OTHERWISE SPECIFIED ON THE INSTRUCTION FORM
SET FORTH BELOW.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Purchaser by one or more registered brokers or
dealers licensed under the laws of such jurisdictions.
<PAGE> 3
Instructions with Respect to the
Offer To Purchase for Cash
All Outstanding Shares of Common Stock
(Including Associated Series B Preferred Stock Purchase Rights)
of
GIBSON GREETINGS, INC.
by
Granite Acquisition Corp.
a wholly owned subsidiary
of
AMERICAN GREETINGS CORPORATION
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
To Purchase, dated November 9, 1999, and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") in connection with the offer by Granite Acquisition
Corp. (the "Purchaser"), a wholly owned subsidiary of American Greetings
Corporation, to purchase all outstanding shares of common stock (together with
the associated Rights (as defined in the Offer To Purchase), the "Shares") of
Gibson Greetings, Inc. at a purchase price of $10.25 per Share (subject to
possible upward adjustment as described in the Offer To Purchase), net to the
seller in cash, without interest, on the terms and subject to the conditions set
forth in the Offer To Purchase.
This will instruct you to tender to Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares to be Tendered:* Shares
----------------------
Date:
-----------------
SIGN HERE
Signature(s):
-------------------------------------------------------------------
Print Name(s):
------------------------------------------------------------------
Print Address(es):
--------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone Number(s):
----------------------------------------------
Taxpayer Identification or Social Security Number(s)
----------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
THIS FORM MUST BE RETURNED TO THE BROKERAGE FIRM MAINTAINING YOUR ACCOUNT.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.
The taxpayer identification number for an individual is the individual's Social
Security number. Social Security numbers have nine digits separated by two
hyphens: e.g., 000-00-0000. The taxpayer identification number for an entity is
the entity's Employer Identification number. Employer Identification numbers
have nine digits separated by only one hyphen: e.g., 00-0000000. The table below
will help determine the number to give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
GIVE THE NAME AND
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- -----------------------------------------------------------------
<S> <C> <C>
1. Individual The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the
minor is the only
contributor, the
minor(1)
6. Account in the name guardian or The ward, minor, or
committee for a designated ward, incompetent person(3)
minor, or incompetent person
7. a. The usual revocable savings The grantor-trustee(1)
trust (grantor is also trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust under
state law
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
GIVE THE NAME AND
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- -----------------------------------------------------------------
<S> <C> <C>
8. Sole proprietorship The owner(4)
9. A valid trust, estate, or pension The legal entity (Do
trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
10. Corporate The corporation
11. Association, club, religious, The organization
charitable, educational or other
tax-exempt organization
12. Partnership The partnership
13. A broker or registered nominee The broker or nominee
14. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state or
local government, school district,
or prison) that receives
agriculture program payments
</TABLE>
- ---------------------------------------------------------------
---------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
Section references are to the Internal Revenue Code.
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service (the "IRS") and
apply for a number.
To complete the Substitute Form W-9, if you do not have a taxpayer
identification number, write "Applied For" in the space for the taxpayer
identification number in Part 1, sign and date the Form, and give it to the
requester. If the requester does not receive your taxpayer identification number
within 60 days, backup withholding, if applicable, will begin and will continue
until you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in (1)
through (13) and a person registered under the Investment Advisers Act of 1940
who regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except that a corporation
that provides medical and health care services or bills and collects payments
for such services is not exempt from backup withholding or information
reporting. Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends, and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under 403(b)(7), if the
account satisfies the requirements of section 401(f)(2).
(3) The United States or any of its agencies or instrumentalities.
(4) A State, the District of Columbia, a possession of the United States,
or any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the
United States, the District of Columbia, or a possession of the United
States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends generally not subject to backup
withholding also include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest generally not subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details see sections 6041, 6041A(a), 6042, 6044, 6045,
6049, 6050A and 6050N, and the regulations under such sections.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. ENTER YOUR TAXPAYER IDENTIFICATION NUMBER. WRITE "EXEMPT" ON
THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
PRIVACY ACT NOTICE
Section 6109 requires you to give your correct taxpayer identification number to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. You must provide
your taxpayer identification number whether or not you are qualified to file a
tax return. Payers must generally withhold 31% of taxable interest, dividend,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE> 1
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation
of an offer to sell Shares. The Offer is made solely by the Offer
To Purchase, dated November 9, 1999, and the related Letter of Transmittal,
and any amendments or supplements thereto, and is being made to all
holders of Shares. The Offer, however, is not being made to (nor will
tenders be accepted from or on behalf of) holders of Shares residing in any
jurisdiction in which the making of the Offer or acceptance thereof would not
be in compliance with the laws of such jurisdiction. In any jurisdiction where
the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf
of Granite Acquisition Corp. by Wasserstein Perella & Co., Inc. or one or more
registered brokers or dealers licensed under the laws of such jurisdictions.
Notice of Offer To Purchase for Cash
All Outstanding Shares of Common Stock
(Including Associated Series B Preferred Stock Purchase Rights)
of
GIBSON GREETINGS, INC.
at
$10.25 Net Per Share
(Subject to Possible Upward Adjustment)
by
Granite Acquisition Corp.,
a wholly owned subsidiary
of
AMERICAN GREETINGS CORPORATION
Granite Acquisition Corp. ("Purchaser"), a wholly owned subsidiary of
American Greetings Corporation ("Parent"), is offering to purchase all
outstanding shares of common stock (the "Shares") of Gibson Greetings, Inc.
("Company") and the associated Series B Preferred Stock Purchase Rights (the
"Rights"), issued pursuant to the Rights Agreement, dated September 8, 1999,
between the Company and The Bank of New York, as Rights Agent (as the same may
be amended, the "Rights Agreement"), at a purchase price of $10.25 per Share and
associated Right (subject to possible upward adjustment as described below, the
"Offer Price"), net to the seller in cash, without interest, on the terms and
subject to the conditions set forth in the Offer To Purchase, dated November 9,
1999 (the "Offer To Purchase"), and in the related Letter of Transmittal (which
together constitute the "Offer"). Holders of Shares ("Stockholders") who have
Shares registered in their name and who tender directly will not be charged
brokerage fees or commissions or, subject to Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
Following the Offer, Purchaser intends to effect the merger described below.
Unless the context otherwise requires, all references to Shares herein and in
the Offer To Purchase will include the associated Rights and all references to
the Rights will include all benefits that may inure to holders of the Rights
pursuant to the Rights Agreement, including the right to receive any payment due
upon redemption of the Rights.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, DECEMBER 8, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer Price will be increased by an amount equal to 30% of any
after-tax gain realized by the Company in any sale or disposition for cash by
the Company or its subsidiaries, prior to the Expiration Date (as defined
below), of all or any part of the Company's investment in E-Greetings Network
("EGN"), divided by the total number of Shares then outstanding on a fully
diluted basis, assuming for this purpose the exercise only of outstanding
options, whether or not such options are then vested, which are (or, giving
effect to the adjustment in the Offer Price contemplated hereby, would be)
in-the-money. The price used to compute any after-tax gain on any sale or
disposition will be the cash received by the Company, but only if such cash is
for an aggregate amount in excess of the Company's then net book value of its
interest in EGN. See Sections 2 and 12 of the Offer To Purchase.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
THAT, TOGETHER WITH THE SHARES THEN OWNED BY PARENT, REPRESENTS AT LEAST A
MAJORITY OF THE SHARES THEN OUTSTANDING ON A FULLY-DILUTED BASIS (ASSUMING THE
EXERCISE OF ALL OUTSTANDING OPTIONS WHICH ARE EXERCISABLE AND IN-THE-MONEY AT
THE OFFER PRICE) (THE "MINIMUM CONDITION"). THE OFFER IS
<PAGE> 2
ALSO SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THE OFFER TO PURCHASE. SEE
THE INTRODUCTION AND SECTIONS 1, 14 AND 15 OF THE OFFER TO PURCHASE.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 2, 1999 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides that, among other things, Purchaser will
make the Offer and that following the purchase of Shares pursuant to the Offer,
subject to the satisfaction or waiver of certain conditions set forth in the
Merger Agreement and in accordance with relevant provisions of Delaware law,
Purchaser will be merged with and into the Company (the "Merger"). Following
consummation of the Merger, the Company will continue as the surviving
corporation and will be a wholly owned subsidiary of Parent. At the effective
time of the Merger (the "Effective Time"), each Share (excluding Shares held by
the Company as treasury stock, Shares owned by Parent or any subsidiary of
Parent and any Shares owned by Stockholders who have properly exercised their
dissenters' rights under Delaware law) issued and outstanding immediately prior
to the Effective Time will be converted into the right to receive cash in an
amount equal to the price per Share paid pursuant to the Offer, without interest
(and less any required withholding taxes). The Merger Agreement is more fully
described in Section 12 of the Offer To Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY, HAS UNANIMOUSLY (i) DETERMINED THAT
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS,
(ii) APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER AND (iii) RESOLVED TO RECOMMEND THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary of its
acceptance of such Shares for payment pursuant to the Offer. In all cases, on
the terms and subject to the conditions of the Offer, payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering Stockholders
for the purpose of receiving payment from Purchaser and transmitting payment to
validly tendering Stockholders. Payment for Shares accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company), (ii) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) or, in the case of book-entry transfer, an Agent's Message (as defined
in the Offer To Purchase), and (iii) any other documents required by the Letter
of Transmittal.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions set forth in the Merger Agreement, including, if required,
the approval of the Merger by the requisite vote of the Stockholders of the
Company. The Stockholder vote necessary to approve the Merger is the affirmative
vote of the holders of a majority of the issued and outstanding Shares, voting
as a single class, at the Company Stockholders' Meeting. If the Minimum
Condition is satisfied and Purchaser purchases Shares pursuant to the Offer,
Purchaser will be able to effect the Merger without the affirmative vote of any
other Stockholder. If Purchaser acquires at least 90% of the outstanding Shares
pursuant to the Offer or otherwise, Purchaser will be able to effect the Merger
pursuant to the "short-form" merger provisions of Delaware law, without prior
notice to, or any action by, any other Stockholder. In that event, Purchaser
intends to effect the Merger as promptly as practicable following the purchase
of Shares in the Offer.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE
PAID FOR THE SHARES PURSUANT TO THE OFFER, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. NO INTEREST WILL BE PAID ON THE
CONSIDERATION TO BE PAID IN THE MERGER TO STOCKHOLDERS WHO FAIL TO TENDER THEIR
SHARES PURSUANT TO THE OFFER, REGARDLESS OF ANY DELAY IN EFFECTING THE MERGER OR
MAKING SUCH PAYMENT.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Wednesday, December 8, 1999, unless and until Purchaser (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" means the
latest time and date at which the Offer, as so extended by Purchaser, shall
expire.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission, Purchaser may, under
certain circumstances, (i) extend the period of time during which the Offer is
open and thereby delay acceptance for payment of and the payment for any Shares,
by giving oral or written notice of such extension to the Depositary and (ii)
amend the Offer in any other respect by giving oral or written notice
<PAGE> 3
of such amendment by the Depositary. Any extension, delay, waiver, amendment or
termination of the Offer will be followed as promptly as practicable by a public
announcement thereof, the announcement in the case of an extension to be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the right of a tendering Stockholder to withdraw such Stockholder's
Shares.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn at any time after January 8, 2000 (or such later date
as may be applicable if the Offer is extended), unless theretofore accepted for
payment as provided in the Offer To Purchase. For a withdrawal to be effective,
a written, telegraphic, telex or facsimile transmission notice of withdrawal
must be timely received by the Depositary at one of its addresses set forth in
the Offer To Purchase and must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holders of the Shares, if different from the person who tendered the
Shares. If the Shares to be withdrawn have been delivered to the Depositary, a
signed notice of withdrawal with (except in the case of Shares tendered by an
Eligible Institution (as defined in the Offer To Purchase)) signatures
guaranteed by an Eligible Institution must be submitted prior to the release of
such Shares. In addition, such notice must specify, in the case of Shares
tendered by delivery of certificates, the name of the registered holder (if
different from that of the tendering Stockholder) and the serial numbers shown
on the particular certificates evidencing the Shares to be withdrawn or, in the
case of Shares tendered by book-entry transfer, the name and number of the
account at The Depository Trust Company to be credited with the withdrawn
Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934 is contained in the Offer To Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to
Stockholders. The Offer To Purchase and the related Letter of Transmittal will
be mailed to record holders of Shares and will be furnished to brokers, banks
and similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
Stockholders.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance and copies of the Offer To Purchase,
the related Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager as set forth below, and
copies will be furnished promptly at Purchaser's expense. Purchaser will not pay
any fees or commissions to any broker or dealer or any other person (other than
the Dealer Manager and the Information Agent) for soliciting tenders of Shares
pursuant to the Offer.
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road C Carlstadt, New Jersey 07072-2586
Banks and Brokers call: (800) 346-7885
All Others Call Toll Free: (877) 842-2411
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, New York 10019
Call Collect (212) 969-2700
November 9, 1999
<PAGE> 1
EXHIBIT (A)(8)
AMERICAN GREETING ANNOUNCES PLANS
TO ACQUIRE GIBSON GREETINGS INC.
COMPANY EXPECTS $10.25 PER SHARE OFFER TO BE
ADDITIVE TO EARNINGS AFTER TAKEOVER
CLEVELAND, Ohio (November 3, 1999) -- American Greetings (NYSE: AM) today
announced plans to acquire Gibson Greetings Inc. (Nasdaq: GIBG) in a cash
transaction that is expected to produce ongoing synergies and be additive to
earnings for American Greetings in the upcoming fiscal year.
"This acquisition marks our most important step yet in implementing our
long-term strategic plan by providing ongoing growth to our US and international
greeting card business and our electronic marketing unit," said Morry Weiss,
chairman and chief executive officer of American Greetings. He said the
companies signed a definitive agreement yesterday and the respective boards of
directors approved the transaction. The acquisition still requires regulatory
approval.
American Greetings expects the acquisition to generate ongoing revenue of about
$225 million and ongoing annual cost savings of at least $50 million. American
Greetings expects the acquisition to be slightly accretive to earnings in the
first 12 months after the transaction is complete. Once the integration is
complete, the transaction is expected to add about 30 cents per share to
earnings.
American Greetings has agreed to pay $10.25 for each share of Gibson stock upon
completion of the transaction. Weiss said American Greetings is in a unique
position to realize the full value of Gibson. Terms of the transaction reflect
the value from the following three distinct business segments:
- - Gibson's US greeting card division will provide ongoing sales opportunities
for American Greetings from several new retail partners, making American
Greetings a stronger and more effective competitor across all channels of
distribution.
- - Gibson's UK greeting card division will add incremental growth to American
Greetings current UK units -- Carlton Cards, Camden Graphics and Hanson
White -- generating significant synergies.
- - Gibson's creative content and investment in electronic commerce will
enhance the electronic marketing division of American Greetings.
"After integration, Gibson should enhance our already strong cash flow to help
us to fund possible additional opportunities in several other product
categories," Weiss said. "Our commitment is as strong as ever to continue
growing our party goods, candles, stationery and educational products."
Additionally, American Greetings plans to continue to use the Gibson name to
extend its current branding strategy into other emerging retail channels. This
means consumers can select from a broader and more relevant selection of
greeting cards from American Greetings. The acquisition also should result in
improved productivity for the current retail partners of Gibson Greetings.
"This is an exciting opportunity to expand our greeting card business into
another channel with a proven brand name, Gibson. This will benefit our
consumers, retailers, shareholders and
<PAGE> 2
associates," said Ed Fruchtenbaum, president and chief operating officer. "We
expect the acquisition to create substantial ongoing synergies that add economic
value for our shareholders. Those synergies will help us compete more
effectively and efficiently in an increasingly competitive marketplace."
Frank O'Connell, chairman and chief executive officer of Gibson Greetings, said
the sale to American Greetings "represent the best opportunity for Gibson to
enhance shareholder value."
"We also are happy that American Greetings values the 150-year heritage of
Gibson and the value of our brand in the marketplace," O'Connell said. "Our key
accounts should welcome the opportunity to partner with American Greetings with
its greater array of products and services and we expect our customers to
benefit from this transaction."
Weiss said the acquisition of Gibson is another example of American Greetings
commitment to its long-term strategic plan and its goal to enhance shareholder
value.
"Since we unveiled our strategic plan in 1997, we have taken a series of steps
to grow all of our businesses," Weiss said. "We also have introduced innovative
greeting card lines and signed important licensing agreements that have enhanced
our entire product offering. Those factors, coupled with an improved focus on
managing our capital resources continues to allow American Greetings to grow
while adding value to all of our key audiences.
American Greetings is the world's largest publicly held creator, manufacturer
and distributor of greeting cards and social expression products. With
headquarters in Cleveland, Ohio, American Greetings employs more than 21,000
associates around the world and has one of the largest creative studios in the
world. For more information on the Company, visit our site on the World Wide Web
at www.americangreetings.com.
Gibson Greetings, Inc., an industry innovator in the greeting card business.
Gibson distributes more than 24,000 individual relationship communication
products, including greeting cards, gift wrap, party goods and licensed
products. E-mail greetings featuring Gibson content are available through the
privately held Egreetings Network (www.egreetings.com), in which Gibson holds a
minority equity interest. Gibson cards are also available through the Internet
from Sparks.com (www.sparks,com). For more information on Gibson Greetings,
visit our web site at www.gibsongreetings.com.
<PAGE> 3
Forward looking statements contained in this press release involve risks and
uncertainties that could cause actual results to differ materially from those
contemplated. Factors that could cause such differences include this risks
associated with the businesses of American Greetings and Gibson Greetings
generally, transactional effects, integration risks and other investment
considerations described from time to time by companies in their filings with
the Securities and Exchange Commission.
AMERICAN GREETINGS CONTACT:
Dale A. Cable Jim King
Vice President, Treasurer Manager, Investor & Media Relations
(216) 252-7300 (216) 252-4864
GIBSON GREETINGS CONTACT:
James T. Wilson Adam Friedman
Chief Financial Officer Adam Friedman Associates
(513) 841-6926 (212) 391-7596
<PAGE> 1
Exhibit (c)(1)
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
dated as of
November 2, 1999
among
GIBSON GREETINGS, INC.
AMERICAN GREETINGS CORPORATION
and
GRANITE ACQUISITION CORP.
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
ARTICLE 1
- ---------
DEFINITIONS
-----------
SECTION 1.01. Definitions.....................................................2
ARTICLE 2
- ---------
THE OFFER
---------
SECTION 2.01. The Offer.......................................................6
SECTION 2.02. Company Action..................................................8
SECTION 2.03. Directors.......................................................9
ARTICLE 3
- ---------
THE MERGER
----------
SECTION 3.01. The Merger.....................................................11
SECTION 3.02. Conversion of Shares...........................................11
SECTION 3.03. Surrender and Payment..........................................12
SECTION 3.04. Dissenting Shares..............................................13
SECTION 3.05. Stock Options..................................................13
SECTION 3.06. Adjustments....................................................14
SECTION 3.07. Withholding Rights.............................................14
SECTION 3.08. Lost Certificates..............................................15
SECTION 3.09. Adjustments to Price...........................................15
ARTICLE 4
- ---------
THE SURVIVING CORPORATION
-------------------------
SECTION 4.01. Certificate of Incorporation...................................16
SECTION 4.02. Bylaws.........................................................16
SECTION 4.03. Directors and Officers.........................................16
ARTICLE 5
- ---------
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
SECTION 5.01. Corporate Existence and Power..................................16
SECTION 5.02. Corporate Authorization........................................17
SECTION 5.03. Governmental Authorization.....................................17
SECTION 5.04. Non-contravention..............................................17
SECTION 5.05. Capitalization.................................................18
SECTION 5.06. Subsidiaries...................................................18
SECTION 5.07. SEC Filings....................................................19
SECTION 5.08. Financial Statements...........................................20
SECTION 5.09. Absence of Certain Changes.....................................20
SECTION 5.10. No Undisclosed Material Liabilities............................21
SECTION 5.11. Compliance with Laws and Court Order...........................22
SECTION 5.12. Litigation.....................................................22
SECTION 5.13. Finders'Fees...................................................22
i
<PAGE> 3
SECTION 5.14. Taxes..........................................................22
SECTION 5.15. Employee Benefit Plans.........................................23
SECTION 5.16. Environmental Matters..........................................24
SECTION 5.17. Antitakeover Statutes, Rights Agreement and
Standstill Agreement ..........................................25
SECTION 5.18. Intellectual Property..........................................25
SECTION 5.19. Year 2000 Compliance...........................................26
ARTICLE 6
- ---------
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
--------------------------------------------------------------
SECTION 6.01. Corporate Existence and Power..................................27
SECTION 6.02. Corporate Authorization........................................27
SECTION 6.03. Governmental Authorization.....................................27
SECTION 6.04. Non-contravention..............................................28
SECTION 6.05. Finders'Fees...................................................28
SECTION 6.06. Financing......................................................28
ARTICLE 7
- ---------
COVENANTS OF THE COMPANY
------------------------
SECTION 7.01. Conduct of the Company.........................................29
SECTION 7.02. Stockholder Meeting; Proxy Material............................31
SECTION 7.03. Access to Information..........................................32
SECTION 7.04. No Solicitation; Other Offers..................................32
SECTION 7.05. Notices of Certain Events......................................34
SECTION 7.06. Disclosure Documents...........................................34
SECTION 7.07. Standstill Agreements: Confidentiality Agreements..............35
SECTION 7.08. Rights Agreement; Anti-takeover Provisions.....................35
ARTICLE 8
- ---------
COVENANTS OF PARENT
-------------------
SECTION 8.01. Confidentiality................................................36
SECTION 8.02. Obligations of Merger Subsidiary...............................37
SECTION 8.03. Voting of Shares...............................................37
SECTION 8.04. Director and Officer Liability.................................37
SECTION 8.05. Employee Benefits..............................................38
SECTION 8.06. Disclosure Documents...........................................39
ARTICLE 9
- ---------
COVENANTS OF PARENT AND THE COMPANY
-----------------------------------
SECTION 9.01. Best Efforts...................................................39
SECTION 9.02. Certain Filings................................................42
SECTION 9.03. Public Announcements...........................................42
SECTION 9.04. Further Assurances.............................................42
ii
<PAGE> 4
ARTICLE 10
- ----------
CONDITIONS TO THE MERGER
------------------------
SECTION 10.01. Conditions to Obligations of Each Party.......................43
SECTION 10.02. Conditions to Obligations of Parent and Merger
Subsidiary to Effect the Merger...............................43
ARTICLE 11
- ----------
TERMINATION
-----------
SECTION 11.01. Termination...................................................43
SECTION 11.02. Effect of Termination.........................................45
ARTICLE 12
- ----------
MISCELLANEOUS
-------------
SECTION 12.01. Notices.......................................................46
SECTION 12.02. Survival of Representations and Warranties....................47
SECTION 12.03. Amendments; No Waivers........................................47
SECTION 12.04. Expenses......................................................47
SECTION 12.05. Successors and Assigns........................................49
SECTION 12.06. Governing Law.................................................49
SECTION 12.07. Dispute Resolution; Jurisdiction..............................49
SECTION 12.08. WAIVER OF JURY TRIAL..........................................50
SECTION 12.09. Counterparts; Effectiveness; Benefit..........................50
SECTION 12.10. Entire Agreement..............................................50
SECTION 12.11. Captions......................................................50
SECTION 12.12. Severability..................................................50
SECTION 12.13. Specific Performance..........................................50
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 2, 1999 among Gibson
Greetings, Inc., a Delaware corporation (the "COMPANY"), American Greetings
Corporation, an Ohio corporation ("PARENT"), and Granite Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("MERGER
SUBSIDIARY").
The parties hereto agree as follows:
<PAGE> 5
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms, as used herein,
have the following meanings:
"ACQUISITION PROPOSAL" means any offer or proposal for, or any
indication of interest in, a merger, consolidation, tender offer, share
exchange, business combination, reorganization, recapitalization or other
similar transaction involving the Company or any of its Subsidiaries or any
proposal or offer to acquire, directly or indirectly, any equity interest in,
any voting securities of, or a substantial portion of the assets of, the Company
or any of its Subsidiaries, other than (A) the transactions contemplated by this
Agreement and (B) any transaction involving EGN.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY BALANCE SHEET" means the condensed consolidated balance sheet
of the Company as of June 30, 1999 as read in conjunction with the footnotes
thereto set forth in the Company 10-K.
"COMPANY BALANCE SHEET DATE" means June 30, 1999.
"COMPANY 10-K" means the Company's annual report on Form 10-K for the
fiscal year ended December 31, 1998.
"COMPANY'S KNOWLEDGE" or any other similar knowledge qualification in
this Agreement means the actual knowledge of: Frank J. O'Connell, Chairman,
Chief Executive Officer and President of the Company, James T. Wilson, Executive
Vice President-Finance and Operations and Chief Financial Officer of the Company
or James E. Thaxton, Vice President-Business Affairs and Counsel of the Company.
"DELAWARE LAW" means the General Corporation Law of the State of
Delaware.
"EGN" means E-Greetings Network, a California corporation.
"ENVIRONMENTAL CLAIM" means any written claim, demand, suit, action,
proceeding, investigation or notice to the Company or any of its Subsidiaries by
any Person or entity alleging any potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response
2
<PAGE> 6
costs, natural resource damages, or penalties) arising out of, based on, or
resulting from the presence, or Release into the environment, of any Hazardous
Substance at any location, whether owned, leased, operated or used by the
Company or its Subsidiaries.
"ENVIRONMENTAL LAWS" means all Laws as currently in effect, which
regulate the threatened Releases of Hazardous Substances, or otherwise relating
to the manufacture, generation, processing, distribution, use, storage,
disposal, transport or handling of Hazardous Substances, including the
Comprehensive Environmental Response, Compensation and Liability Act and the
Resource Conservation and Recovery Act.
"EMPLOYEE PLAN" means any material, written "employee benefit plan," as
defined in Section 3(3) of ERISA, or employment, severance or similar contract
or other plan providing for severance benefits, bonuses, profit-sharing, stock
option or other stock related rights or other forms of incentive or deferred
compensation, health, medical or disability benefits which is maintained,
administered or contributed to by the Company or any ERISA Affiliate and covers
any employee or former employee of the Company or any Subsidiary, or with
respect to which the Company or any Subsidiary has any liability.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" of any entity means any other entity that, together
with such entity, would be treated as a single employer under Section 414 of the
Code.
"HAZARDOUS SUBSTANCE" means (1) pollutants, contaminants, hazardous
wastes, toxic substances, and oil and petroleum products, (2) any substance that
is or contains friable asbestos, urea formaldehyde foam insulation,
polychorinated biphenyls, petroleum or petroleum-derived substances or wastes,
radon gas or related materials, (3) any substance that requires removal or
remediation under any Environmental Law, or is defined, listed or identified as
a "hazardous waste" or "hazardous substance" thereunder, or (4) any substance
that is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous; in each case in clauses (1)-(4)
above which is regulated under any Environmental Law.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
"LIEN" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired
3
<PAGE> 7
or holds subject to the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention agreement relating to
such property or asset.
"MATERIAL ADVERSE EFFECT" means, with respect to the Company, a
material adverse effect (i) on the business, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole or (ii) on the
ability of the Company to perform its obligations under or to consummate the
transactions contemplated by this Agreement.
"MINIMUM CONDITION" means that number of Shares that are validly
tendered in accordance with the terms of the Offer, prior to the expiration date
of the Offer and not withdrawn, that, together with the Shares then owned by
Parent, represents at least a majority of the Shares then outstanding on a
fully-diluted basis (assuming the exercise of all outstanding options which are
exercisable and in-the-money at the Offer Price).
"1933 ACT" means the Securities Act of 1933.
"1934 ACT" means the Securities Exchange Act of 1934.
"OPERATING SUBSIDIARY" shall mean a subsidiary of the Company that is
not a material Subsidiary.
"PARENT MATERIAL ADVERSE EFFECT" means a material adverse effect on the
ability of Parent or Merger Subsidiary to perform its obligations under or to
consummate the transactions contemplated by this Agreement.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"RABBI TRUST" means the trust established by the Company to fund the
compensation and benefits to be provided to employees of the Company and its
Subsidiaries under incentive arrangements designed and adopted by the Company.
"RELEASE" means any releasing, disposing, discharging, injecting,
spilling, leaking, pumping, dumping, emitting, escaping, emptying, migration,
transporting, placing and the like, including into or upon, any land, soil,
surface water, ground water or air, or otherwise entering into the environment.
"SEC" means the Securities and Exchange Commission.
"SHARES" means the shares of common stock, $0.01 par value, of the
Company.
4
<PAGE> 8
"SUBSIDIARY" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such Person.
"TITLE IV PLAN" means an Employee Plan subject to Title IV of ERISA
other than any "multiemployer plan", as defined in Section 3(37) of ERISA.
Any reference in this Agreement to a statute shall be to such statute,
as amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
---- -------
Antitrust Law........................................... 9.01(b)(iii)
Certificates............................................ 3.03(a)
Closing................................................. 3.01(b)
Closing Date............................................ 3.01(b)
Company Disclosure Documents............................ 7.06(a)
Company Proxy Statement................................. 7.06(a)
Company SEC Documents................................... 5.07(a)(iv)
Company Securities...................................... 5.05(b)(iii)
Company Stockholder Meeting............................. 7.02(a)
Company Subsidiary Securities........................... 5.06(b)(ii)
Confidentiality Agreement............................... 7.03
Continuing Directors.................................... 2.03(a)(ii)
DOJ..................................................... 9.01(b)(ii)
Disclosure Schedule..................................... 5
Effective Time.......................................... 3.01(c)
Escrow Agent............................................ 12.04(d)
Exchange Agent.......................................... 3.03(a)
FTC..................................................... 9.01(b)(ii)
GAAP.................................................... 5.08
Indemnified Person...................................... 8.04(a)(i)
Liquidation Event....................................... 3.09
Merger.................................................. 3.01(a)
Merger Consideration.................................... 3.02(a)
Offer ............................................... 2.01(a)
Offer Documents......................................... 2.01(b)(i)(A)
Offer Price............................................. 2.01(a)
Option Holder........................................... 3.05(a)
Option Spread........................................... 3.05(a)(ii)
5
<PAGE> 9
Rights Agreement........................................ 5.17(b)(i)
Schedule 14D-1.......................................... 2.01(b)(i)(A)
Schedule 14D-9.......................................... 2.02(b)
Standstill Agreement.................................... 5.17(b)(ii)
Successor Plan.......................................... 8.05(b)
Superior Proposal....................................... 7.04(b)(iii)
Surviving Corporation................................... 3.01(a)
Tax Return.............................................. 5.14(f)
Taxes................................................... 5.14(f)
Taxing Authority........................................ 5.14(f)
Transferred Employee.................................... 8.05(a)
ARTICLE 2
THE OFFER
SECTION 2.01. The Offer. (a) Provided this Agreement shall not have
been terminated, as promptly as practicable after the date hereof, but in no
event later than five business days following the public announcement of the
terms of this Agreement, Parent shall cause Merger Subsidiary to commence, and
Merger Subsidiary shall commence, an offer (as amended or supplemented in
accordance with this Agreement, the "OFFER") to purchase for cash any and all of
the outstanding Shares at a price of $10.25 per Share (the "OFFER PRICE"),
subject to adjustment as set forth in Section 3.06 and Section 3.09, net to the
seller in cash. The Offer shall be subject only to the conditions set forth in
Annex I hereto. Merger Subsidiary expressly reserves the right to waive the
condition to the Offer relating to the representations and warranties and
covenants of the Company, provided that no other change in the conditions to the
Offer may be made without the prior written consent of the Company.
Notwithstanding the foregoing, without the consent of the Company, Merger
Subsidiary shall have the right to extend the Offer (i) from time to time if, at
the scheduled or extended expiration date of the Offer, any of the conditions to
the Offer shall not have been satisfied or waived, until such conditions are
satisfied or waived or (ii) for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to the
Offer or any period required by applicable law, provided that, each such
extension shall be for such period (not to exceed 20 business days without the
consent of Parent) as may be specified by the Company. If all of the conditions
to the Offer are satisfied or waived on any scheduled expiration date of the
Offer, the Company shall have the right to require Merger Subsidiary to extend
the Offer on one or more occasions for an aggregate period of not more than 20
business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of the previous sentence, if, on such
expiration date, the number of Shares tendered (and not withdrawn) pursuant to
the Offer,
6
<PAGE> 10
together with the Shares then owned by Parent, represents less than 90% of the
then outstanding Shares on a fully-diluted basis (assuming the exercise of all
outstanding options which are exercisable and in-the-money at the Offer Price),
and Merger Subsidiary shall have the right to extend the Offer on one occasion
for a period of not more than 5 business days pursuant to the provisions of this
sentence, provided that, the Company may prevent such extension by Merger
Subsidiary if the Company, in its reasonable judgment, determines that such an
extension could threaten in any way the consummation of the Offer. If all of the
conditions to the Offer are not satisfied or waived on any scheduled expiration
date of the Offer, Merger Subsidiary shall extend the Offer from time to time
until such conditions are satisfied or waived, provided that, each such
extension shall be for such period (not to exceed 20 business days without the
consent of Parent) as may be specified by the Company and, provided further
that, Merger Subsidiary shall not be required to extend the Offer if this
Agreement is terminable pursuant to Sections 11.01(b)(i) or 11.01(b)(ii) hereof
(except that the time periods referenced in Sections 11.01(b)(i) or 11.01(b)(ii)
shall be extended for the time period equal to the time period beyond ten
business days during which either the Company or Parent shall fail to make an
HSR Filing pursuant to Section 9.01(a)). Merger Subsidiary shall, and Parent
shall cause it to, accept for payment and pay for, as promptly as practicable
after the expiration of the Offer, all Shares properly tendered and not
withdrawn pursuant to the Offer that Merger Subsidiary is obligated to purchase.
(b) As soon as practicable on the date of commencement of the Offer,
Parent and Merger Subsidiary shall file with (A) the SEC a Tender Offer
Statement on Schedule 14D-1 (the "SCHEDULE 14D-1") with respect to the Offer,
which will contain the offer to purchase and form of the related letter of
transmittal and summary advertisement (such Schedule 14D-1 and such documents
included therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "OFFER DOCUMENTS") and (B) the Ohio
Division of Securities and the Company such documents as may be required in
accordance with Section 1707.041 of the General Corporation Law of Ohio (the
"OHIO LAW"). Parent and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect. Parent and Merger Subsidiary agree to take all steps necessary to cause
the Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws. The Company
and its counsel shall be given an opportunity to review and approve the Offer
Documents prior to their being filed with the SEC or disseminated to the holders
of Shares. Parent and Merger Subsidiary shall provide the Company and its
counsel with any comments or other communications, whether written or oral, that
Parent, Merger Subsidiary or their counsel may receive from time to time
7
<PAGE> 11
from the SEC or its staff with respect to the Offer Documents promptly after
receipt of such comments or other communications.
SECTION 2.02. Company Action. (a) The Company hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called and
held has (i) unanimously determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are fair to and in the
best interests of the Company's stockholders, (ii) unanimously approved and
adopted this Agreement and the transactions contemplated hereby, including the
Offer and the Merger (such approval being sufficient to render Section 203 of
Delaware Law, Articles V and VI of the Company's Certificate of Incorporation
and the Rights Agreement inapplicable to this Agreement and the transactions
contemplated hereby, including the Offer and the Merger), (iii) unanimously
resolved to recommend acceptance of the Offer and approval and adoption of this
Agreement and the Merger by its stockholders, provided that, subject to and in
accordance with the provisions of Section 7.04(c), the Board of Directors of the
Company may withdraw, modify or amend such recommendation and (iv) amended the
Rights Agreement as described in Section 5.17 hereof. The Company further
represents that J.P. Morgan Securities Inc. has delivered to the Company's Board
of Directors its opinion that the consideration to be received in the Offer and
the Merger is fair to the holders of Shares from a financial point of view. The
Company will promptly furnish Parent with a list of its stockholders, mailing
labels and any available listing or computer file containing the names and
addresses of all record holders of Shares and lists of securities positions of
Shares held in stock depositories, in each case true and correct as of the most
recent practicable date, and will provide to Parent such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent may
reasonably request in connection with the Offer. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Parent and Merger Subsidiary and each of their Affiliates, associates,
employees, agents and advisors shall hold in confidence the information
contained in any such lists, labels, listings or files, shall use such
information only in connection with the Offer and the Merger and, if this
Agreement shall be terminated and if the Company so requests, shall deliver, and
shall use their reasonable efforts to cause their Affiliates, associates,
employees, agents and advisors to deliver, to the Company all copies and any
extracts or summaries from such information then in their possession or control.
(b) Simultaneously with the filing by Merger Subsidiary of the Schedule
14D-1 or as promptly thereafter as practicable, the Company shall file with the
SEC and disseminate to holders of Shares, in each case as and to the extent
required by applicable federal securities laws, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any amendments or supplements
8
<PAGE> 12
thereto, the "SCHEDULE 14D-9") that, subject to the provisions of Section
7.04(c), shall reflect the recommendations of the Company's Board of Directors
referred to above. The Company and Parent each agree promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false or misleading in any material respect. The
Company agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. Parent and its counsel shall be given an opportunity to review and comment
on the Schedule 14D-9 prior to its being filed with the SEC. The Company shall
provide Parent and its counsel with any comments or other communications,
whether written or oral, that the Company or its counsel may receive from time
to time from the SEC or its staff with respect to the Schedule 14D-9 promptly
after receipt of such comments or other communications.
SECTION 2.03. Directors. (a) Effective upon the acceptance for payment
pursuant to the Offer of a number of Shares that satisfies the Minimum
Condition, Parent shall be entitled to designate the number of directors,
rounded up to the next whole number, on the Company's Board of Directors that
equals the product of (i) the total number of directors on the Company's Board
of Directors (giving effect to the election of any additional directors pursuant
to this Section) and (ii) the percentage that the number of Shares beneficially
owned by Parent (including Shares accepted for payment) bears to the total
number of Shares outstanding, and the Company shall take all action necessary to
cause Parent's designees to be elected or appointed to the Company's Board of
Directors, including, without limitation, increasing the number of directors,
and seeking and accepting resignations of incumbent directors. At such time, the
Company will also use its best efforts to cause individuals designated by Parent
to constitute the number of members, rounded up to the next whole number, on (i)
each committee of the Board other than the Executive Committee or any committee
of the Board established to take action under this Agreement and (ii) each board
of directors of each Subsidiary of the Company (and each committee thereof) that
represents the same percentage as such individuals represent on the Board of
Directors of the Company. Notwithstanding the foregoing, the Company shall use
its reasonable best efforts to ensure that at least three members of the Board
of Directors and such committees and boards as of the date hereof who are not
employees of the Company (the "CONTINUING DIRECTORS") shall remain members of
the Board of Directors and such committees and boards until the Effective Time,
provided that, if the number of Continuing Directors is reduced below three
prior to the Effective Time, the remaining such Directors shall be entitled to
designate to fill the vacancy a person who is not an officer, director or
designee of Parent or any of its Affiliates and who shall be deemed to be a
Continuing Director for all purposes of this Agreement.
9
<PAGE> 13
(b) The Company's obligations to appoint Parent's designees to the
Board of Directors shall be subject to Section 14(f) of the 1934 Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all actions, and
shall include in the Schedule 14D-9 such information with respect to the Company
and its officers and directors, as Section 14(f) and Rule 14f-1 require in order
to fulfill its obligations under this Section. Parent shall supply to the
Company in writing and be solely responsible for any information with respect to
itself and its nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees
pursuant to Section 2.03(a) and until the Effective Time, the approval of a
majority of the Continuing Directors of the Company then in office who were not
designated by Parent shall be required to authorize (and such authorization
shall constitute the authorization of the Board of Directors and no other action
on the part of the Company, including any action by any other director of the
Company, shall be required to authorize) any termination of this Agreement by
the Company, any amendment of this Agreement requiring action by the Board of
Directors, any extension of time for performance of any obligation or action
hereunder by Parent or Merger Subsidiary and any waiver of compliance with any
of the agreements or conditions contained herein for the benefit of the Company.
ARTICLE 3
THE MERGER
SECTION 3.01. The Merger. (a) At the Effective Time, Merger Subsidiary
shall be merged (the "MERGER") with and into the Company in accordance with
Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease,
and the Company shall be the surviving corporation (the "SURVIVING
CORPORATION").
(b) Upon the terms and subject to the conditions of this Agreement, the
closing of the Merger (the "CLOSING") shall take place at 10:00 a.m. on a date
to be specified by the parties (the "CLOSING DATE") that shall be no later than
the second business day after satisfaction of the conditions set forth herein,
other than those conditions that are to be satisfied at the Closing, but subject
to the satisfaction of such conditions, at the offices of Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, unless the parties hereto agree
in writing to another time, date or place.
(c) Upon the Closing, the Company and Merger Subsidiary shall file a
certificate of merger with the Delaware Secretary of State and make all other
filings or recordings required by Delaware Law in connection with the Merger.
10
<PAGE> 14
The Merger shall become effective at such time (the "EFFECTIVE TIME") as the
certificate of merger is duly filed with the Delaware Secretary of State or at
such later time as is specified in the certificate of merger.
(d) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Merger Subsidiary, all as provided under Delaware Law.
SECTION 3.02. Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Subsidiary or
the Company or the holders of any of the following securities:
(a) except as otherwise provided in Section 3.02(c), Section 3.04,
Section 3.06 or Section 3.09, each Share outstanding immediately prior to the
Effective Time shall be converted into the right to receive $10.25 in cash or
any higher price paid for each Share in the Offer, without interest (the "MERGER
CONSIDERATION");
(b) each Share held by the Company as treasury stock or owned by Parent
or any of its Subsidiaries immediately prior to the Effective Time shall be
canceled, and no payment shall be made with respect thereto; and
(c) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
SECTION 3.03. Surrender and Payment. (a Prior to the Effective Time,
Parent shall appoint Bank One Corporation as agent (the "EXCHANGE AGENT") for
the purpose of exchanging certificates representing Shares (the "CERTIFICATES")
for the Merger Consideration. Parent will make available to the Exchange Agent,
as needed, the Merger Consideration to be paid in respect of the Shares.
Promptly after the Effective Time, Parent will send, or will cause the Exchange
Agent to send, to each holder of Shares at the Effective Time a letter of
transmittal and instructions (which shall specify that the delivery shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
the Certificates to the Exchange Agent) for use in such exchange.
(b) Each holder of Shares that have been converted into the right to
receive the Merger Consideration will be entitled to receive, upon surrender to
the Exchange Agent of a Certificate, together with a properly completed letter
of transmittal, the Merger Consideration payable for each Share represented by
such Certificate. Until so surrendered, each such Certificate shall represent
after the
11
<PAGE> 15
Effective Time for all purposes only the right to receive such Merger
Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the Person in whose name the surrendered Certificate is
registered, it shall be a condition to such payment that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such payment shall pay to the Exchange
Agent any transfer or other taxes required as a result of such payment to a
Person other than the registered holder of such Certificate or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, Certificates are presented to
the Surviving Corporation, they shall be canceled and exchanged for the Merger
Consideration provided for, and in accordance with the procedures set forth, in
this Article.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 3.03(a) (and any interest or other income
earned thereon) that remains unclaimed by the holders of Shares six months after
the Effective Time shall be returned to Parent, and any such holder who has not
exchanged them for the Merger Consideration in accordance with this Section
prior to that time shall thereafter look only to Parent for payment of the
Merger Consideration in respect of such Shares without any interest thereon.
Notwithstanding the foregoing, Parent shall not be liable to any holder of
Shares for any amount paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. Any amounts remaining unclaimed by holders of
Shares six years after the Effective Time (or such earlier date immediately
prior to such time when the amounts would otherwise escheat to or become
property of any governmental authority) shall become, to the extent permitted by
applicable law, the property of Parent free and clear of any claims or interest
of any Person previously entitled thereto.
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 3.03(a) to pay for Shares for which appraisal
rights have been perfected shall be returned to Parent, upon demand.
SECTION 3.04. Dissenting Shares. Notwithstanding Section 3.02, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with Delaware Law shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect, withdraws or otherwise loses its right to appraisal. If, after
the Effective Time, such holder fails to perfect, withdraws or loses its right
to
12
<PAGE> 16
<PAGE> 17
appraisal, such Shares shall be treated as if they had been converted as of the
Effective Time into a right to receive the Merger Consideration. The Company
shall give Parent prompt notice of any demands received by the Company for
appraisal of Shares, and Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. Except with the prior
written consent of Parent, the Company shall not make any payment with respect
to, or settle or offer to settle, any such demands.
SECTION 3.05. Stock Options. (a) The Company shall take all actions
necessary (which include, but are not limited to, satisfying the requirements of
Rule 16b-3(e) promulgated under Section 16 of the Exchange Act, without
incurring any liability in connection therewith, and seeking any consents
required of holders of Options) to provide that at or immediately prior to the
Effective Time, each stock option to purchase Shares (the "OPTIONS") outstanding
under any employee or director stock option or compensation plan or arrangement
of the Company (the "OPTION PLANS"), whether or not vested or exercisable, shall
be canceled, and the Company shall pay each holder of any such Option (an
"OPTION HOLDER") at or promptly after the Effective Time for each such Option
surrendered an amount in cash determined by multiplying (i) the excess, if any,
of the Merger Consideration over the applicable exercise price of such Option by
(ii) the number of Shares such holder could have purchased (assuming full
vesting of all options) had such holder exercised such Option in full
immediately prior to the Effective Time (the "OPTION SPREAD").
(b) Prior to the Effective Time, the Company shall make any amendments
to the terms of such stock option or compensation plans or arrangements deemed
necessary by the Company or Parent to give effect to the transactions
contemplated by Section 3.05(a).
(c) Except as provided herein or as otherwise agreed to by the parties,
(i) the Company shall cause the Option Plans to terminate as of the Effective
Time and (ii) the Company shall ensure that following the Effective Time, no
holder of Options or any participant in the Option Plans will have any right to
acquire any equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof.
SECTION 3.06. Adjustments. If, during the period between the date of
this Agreement and the Effective Time, any change in the outstanding Shares
shall occur, including by reason of any reclassification, recapitalization,
stock split or combination, exchange or readjustment of Shares, or stock
dividend thereon with a record date during such period, the cash payable
pursuant to the Offer, the Merger Consideration and any other amounts payable
pursuant to this Agreement shall be appropriately adjusted.
13
<PAGE> 18
SECTION 3.07. Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this Article such amounts as it is required to
deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign tax law. If the Surviving
Corporation or Parent, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which the Surviving Corporation or Parent, as
the case may be, made such deduction and withholding.
SECTION 3.08. Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will pay, in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration to be paid in respect of the Shares
represented by such Certificate, as contemplated by this Article 3.
SECTION 3.09. Adjustments to Price. A "LIQUIDATION EVENT" shall mean
any sale or disposition for cash (including, without limitation, a sale or
disposition by EGN of all or substantially all of its assets followed by a
distribution of the cash proceeds thereof to shareholders of EGN, a merger or
consolidation involving EGN, a purchase of all or substantially all of the stock
of EGN by a third party or the repurchase by EGN of any of its capital stock
from the Company or its Subsidiaries) by the Company or its Subsidiaries of all
or any part of its investment in EGN prior to the expiration date of the Offer.
In the event of a Liquidation Event (or if more than one such Liquidation Event
occurs, with respect to each Liquidation Event), each of the Merger
Consideration, the Offer Price and the Option Spread shall be increased by an
amount equal to 30% of any after-tax gain (after giving full effect to any
capital loss carry-forward available to the Company, the availability of which
is confirmed by the Company's independent accountants) on such Liquidation
Event, calculated in accordance with GAAP, divided by the total number of Shares
then outstanding on a fully diluted basis, assuming for this purpose the
exercise only of outstanding Options, whether or not such Options are then
vested, which are (or, giving effect to the adjustment in the Merger
Consideration contemplated hereby, would be) in-the-money. Parent and Merger
Subsidiary shall make such changes in the Offer Documents necessary to reflect
any increase in the price per Share of the Offer pursuant to this provision,
including extending the expiration date of the Offer as required by applicable
Federal securities laws. The price used to compute any after-tax gain on a
Liquidation Event shall be the cash received by the Company in such sale or
disposition (net of any underwriting discounts and other amounts paid by the
Company in connection with such sale), but only if
14
<PAGE> 19
such cash is for an aggregate amount in excess of the Company's then net book
value of its interest in EGN.
ARTICLE 4
THE SURVIVING CORPORATION
SECTION 4.01. Certificate of Incorporation. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, provided that, at the Effective Time, Article I
of such certificate of incorporation shall be amended to read as follows: "The
name of the corporation is Gibson Greetings, Inc."
SECTION 4.02. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 4.03. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (i) the directors of Merger Subsidiary at the
Effective Time shall be the directors of the Surviving Corporation and (ii) the
officers of [Merger Subsidiary] at the Effective Time shall be the officers
of the Surviving Corporation.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that, except (A) as would
not have, individually or in the aggregate, a Material Adverse Effect on the
Company, (B) as disclosed in the Company SEC Documents filed prior to the date
of this Agreement or (C) as set forth (including an identification by section
reference to the representations and warranties to which such exceptions relate)
on the Disclosure Schedule to this Agreement (the "DISCLOSURE SCHEDULE"):
SECTION 5.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate powers and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each material
15
<PAGE> 20
jurisdiction where such qualification is necessary. The Company has heretofore
delivered to Parent true and complete copies of the certificate of incorporation
and bylaws of the Company as currently in effect.
SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby are within the Company's corporate powers and,
except for the affirmative vote of the holders of a majority of the outstanding
Shares in connection with the consummation of the Merger (if required by law),
have been duly authorized by all necessary corporate action on the part of the
Company. The affirmative vote of the holders of a majority of the outstanding
Shares (if required by law) is the only vote of the holders of any of the
Company's capital stock necessary in connection with the consummation of the
Merger. This Agreement constitutes a valid and binding agreement of the Company.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no material action by or in
respect of, or material filing with, any governmental body, agency, official or
authority, domestic or foreign, other than (i) the filing of a certificate of
merger with respect to the Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (ii) compliance with any applicable
requirements of the HSR Act and other Antitrust Laws, (iii) compliance with any
applicable requirements of the 1933 Act, the 1934 Act and any other applicable
securities or takeover laws, whether federal, state or foreign, and (iv)
compliance with Section 1707.041 of the Ohio Law.
SECTION 5.4. Non-contravention. The execution, delivery and performance
by the Company of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene, conflict with, or result
in any violation or breach of any material provision of the certificate of
incorporation or bylaws of the Company, (ii) assuming compliance with the
matters referred to in Section 5.03, contravene, conflict with, or result in a
violation or breach of any material provision of any applicable law, statute,
ordinance, rule, regulation, judgment, injunction, order or decree, (iii) to the
Company's Knowledge, require any consent by any Person under, or result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
termination or cancellation of, any provision of any contract, license, lease or
loan binding upon the Company or any of its Subsidiaries that (A) provides for
annual rentals or payments by or to the Company of $100,000 or more and (B) is
not terminable by the Company or the other party to such agreement on less than
90 days notice or (iv) result in the creation or imposition of any Lien on any
material asset of the Company or any of its Subsidiaries.
16
<PAGE> 21
SECTION 5.05. Capitalization. (a) The authorized capital stock of the
Company consists of 50,000,000 Shares and 5,300,000 shares of preferred stock,
par value $1.00. As of October 29, 1999, there were outstanding (i) 15,846,663
Shares and (ii) no shares of preferred stock. As of October 29, 1999, there were
reserved for issuance, (i) 931,773 Shares under the Company's employee stock
option plans listed on Section 5.15 of the Disclosure Schedule in the amounts
and for the exercise prices stated in such schedule and (ii) no shares of Series
B Preferred Stock, par value $1.00 per share, pursuant to the Rights Agreement.
As of October 29, 1999, 1,291,601 Shares were held in the treasury of the
Company. As of October 29, 1999, there were outstanding compensatory employee
and director stock options to purchase an aggregate of 2,303,085 Shares. All
outstanding shares of capital stock of the Company have been, and all shares
that may be issued pursuant to the compensatory employee and director stock
option plans of the Company will be, when issued in accordance with the
respective terms thereof, duly authorized and validly issued and are fully paid
and nonassessable.
(b) Except for changes since October 29, 1999 resulting from the
exercise of employee stock options outstanding on such date, there are no
outstanding (i) shares of capital stock or voting securities of the Company,
(ii) securities of the Company convertible into or exchangeable for shares of
capital stock or voting securities of the Company or (iii) options or other
rights to acquire from the Company or other obligation of the Company to issue,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company (the items in
clauses (i), (ii) and (iii) being referred to collectively as the "COMPANY
SECURITIES"). There are no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any of the Company
Securities.
SECTION 5.06. Subsidiaries. (a) Each material Subsidiary of the Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, has all corporate powers and all
material governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted. Each such Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in
each material jurisdiction where such qualification is necessary. All material
Subsidiaries of the Company and their respective jurisdictions of incorporation
are identified in the Company 10-K.
(b) All of the outstanding capital stock of, or other voting securities
or ownership interests in, each material Subsidiary and, to the Company's
Knowledge, each Operating Subsidiary of the Company, is owned by the Company,
directly or indirectly, free and clear of any material Lien and free of any
other material limitation or restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other voting
securities or
17
<PAGE> 22
ownership interests). There are no outstanding (i) securities of the Company or
any of its Subsidiaries convertible into or exchangeable for shares of capital
stock or other voting securities or ownership interests in any material
Subsidiary or, to the Company's Knowledge, any Operating Subsidiary of the
Company or (ii) options or other rights to acquire from the Company or any of
its Subsidiaries, or other obligation of the Company or any of its Subsidiaries
to issue, any capital stock or other voting securities or ownership interests
in, or any securities convertible into or exchangeable for any capital stock or
other voting securities or ownership interests in, any material Subsidiary of
the Company (the items in clauses (i) and (ii) being referred to collectively as
the "COMPANY SUBSIDIARY Securities"). There are no outstanding obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any of the Company Subsidiary Securities.
SECTION 5.07. SEC Filings. (a) The Company has delivered to Parent (i)
the Company's annual reports on Form 10-K for its fiscal years ended December
31, 1996, 1997 and 1998, (ii) its quarterly reports on Form 10-Q for its fiscal
quarters ended March 31, 1999 and June 30, 1999, (iii) its proxy or information
statements relating to meetings of, or actions taken without a meeting by, the
stockholders of the Company held since December 31, 1998, and (iv) all of its
other reports, statements, schedules and registration statements filed with the
SEC since December 31, 1998 (the documents referred to in this Section 5.07(a),
collectively, the "COMPANY SEC DOCUMENTS".) The Company has filed all forms,
reports and documents required to be filed with the SEC since January 1, 1996
(the "FILED SEC DOCUMENTS").
(b) As of the filing date, each Filed SEC Document complied as to form
in all material respects with the applicable requirements of the 1933 Act and
the 1934 Act, as the case may be.
(c) As of its filing date (or, if amended or superceded by a filing
prior to the date hereof, on the date of such filing), each Filed SEC Document
filed pursuant to the 1934 Act did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(d) Each Filed SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading.
SECTION 5.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
18
<PAGE> 23
Company included in the Filed SEC Documents fairly present in all material
respects, in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements), except
that the notes and disclosures therein in the Company's quarterly reports on
Form 10-Q have not been prepared in accordance with GAAP.
SECTION 5.09. Absence of Certain Changes. Since the Company Balance
Sheet Date, the business of the Company and its material Subsidiaries and, to
the Company's Knowledge, its Operating Subsidiaries has been conducted in the
ordinary course consistent with past practices and, except as disclosed to
Parent prior to the date of this Agreement, there has not been:
(a) any event, occurrence, development or state of circumstances or
facts that has had individually or in the aggregate, a Material Adverse Effect
on the Company, except any such event, occurrence, development or state of
circumstances or facts resulting from or arising in connection with (A) changes,
circumstances or conditions affecting the greeting cards industry in general or
(B) changes in general economic, regulatory or political conditions;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of its material
Subsidiaries;
(c) any amendment of any material term of any outstanding security of
the Company or any of its material Subsidiaries;
(d) any incurrence, assumption or guarantee by the Company, or any of
its Subsidiaries of any indebtedness for borrowed money, including capitalized
leases, other than in the ordinary course of business and in amounts and on
terms consistent with past practices;
(e) any making of any loan, advance or capital contributions to or
investment in any Person, exceeding, individually or in the aggregate, $1
million, other than loans, advances or capital contributions to or investments
in its Subsidiaries made in the ordinary course of business consistent with past
practices or loans or advances to employees of the Company or any of its
Subsidiaries made in the ordinary course of business consistent with past
practice;
19
<PAGE> 24
(f) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its material Subsidiaries and to the
Company's Knowledge, its Operating Subsidiaries relating to its assets or
business (including the acquisition or disposition of any material assets) or
any relinquishment by the Company or any of its material Subsidiaries and to the
Company's Knowledge, its Operating Subsidiaries of any contract or other right,
in either case, material to the Company and its Subsidiaries, taken as a whole,
other than transactions and commitments in the ordinary course of business
consistent with past practices and those contemplated by this Agreement;
(g) any material change in any method of accounting, method of tax
accounting or accounting principles or practice by the Company or any of its
Subsidiaries, except for any such change required by reason of a concurrent
change in GAAP or Regulation S-X under the 1934 Act;
(h) any (i) increase in benefits payable under any existing severance
or termination pay policies or employment agreements exceeding $100,000, (ii)
any entering into any employment, severance deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
director, officer or employee of the Company or any of its Subsidiaries , with
payments thereunder exceeding $100,000, (iii) establishment, adoption or
amendment (except as required by applicable law) of any profit-sharing, thrift,
pension, retirement, deferred compensation, stock option, restricted stock or
other benefit plan or arrangement covering any director, officer or employee of
the Company or any of its Subsidiaries, or (iv) increase in compensation, bonus
or other benefits payable to any director, officer or employee of the Company or
any of its subsidiaries exceeding $100,000, other than in the ordinary course of
business consistent with past practice.
SECTION 5.10. No Undisclosed Material Liabilities. There are no
liabilities or obligations of the Company or any of its Subsidiaries other than:
(a) liabilities or obligations disclosed or provided for in the Company
Balance Sheet or in the notes thereto or in the Company SEC Documents filed
prior to the date of this Agreement;
(b) liabilities or obligations incurred in the ordinary course
consistent with past practice; and
(c) liabilities or obligations under this Agreement or incurred in
connection with the transactions contemplated hereby.
SECTION 5.11. Compliance with Laws and Court Orders. The Company and,
to the Company's Knowledge, each of its Subsidiaries is in compliance with, and
is not under investigation with respect to any violation of, any applicable
20
<PAGE> 25
material law, statute, ordinance, rule, regulation, judgment, injunction, order
or decree.
SECTION 5.12. Litigation. There is no material action, suit,
investigation or proceeding pending against or affecting, the Company, any of
its Subsidiaries, or any of their respective properties before any court or
arbitrator or before or by any governmental body, agency or official, domestic
or foreign.
SECTION 5.13. Finders' Fees. Except for J.P. Morgan Securities Inc., a
copy of whose engagement agreement has been provided to Parent, there is no
investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of the Company or any of its Subsidiaries
who might be entitled to any material fee or commission from the Company or any
of its Subsidiaries in connection with the transactions contemplated by this
Agreement.
SECTION 5.14. Taxes. (a) The Company and each of its Subsidiaries have
timely filed or will file or cause to be timely filed all material Tax Returns
required by applicable law to be filed by them prior to or as of the Effective
Time, and all such material Tax Returns are, or will be at the time of filing,
true and complete in all material respects.
(b) The Company and each of its Subsidiaries have paid, or withheld and
remitted to the appropriate taxing authority all taxes shown as due and payable
on the Tax Returns that have been filed.
(c) No federal, state, local or foreign audits, administrative
proceedings or court proceeding are pending with regard to any Taxes or Tax
Returns of the Company and there are no outstanding deficiencies or assessments
asserted or proposed.
(d) There are no outstanding agreements, consents or waivers extending
the statutory period of limitations applicable to the assessment of any Taxes or
deficiencies against the Company, and the Company is not a party to any
agreement providing for the allocation or sharing of Taxes.
(e) Since January 1, 1990, the Company has not been a member of an
affiliated group filing consolidated or combined Tax Returns other than a
federal income tax group the common parent of which is the Company.
(f) "TAXES" shall mean any and all taxes, charges, fees, levies or
other assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, service use, license, value added, capital,
net worth, payroll, profits, withholding, franchise, transfer and recording
taxes, fees and charges, and
21
<PAGE> 26
any other taxes, assessment or similar charges imposed by the Internal Revenue
Service or any taxing authority (whether domestic or foreign including any
state, county, local or foreign government or any subdivision or taxing agency
thereof (including a United States possession)) (a "TAXING AUTHORITY"), whether
computed on a separate, consolidated, unitary, combined or any other basis; and
such term shall include any interest whether paid or received, fines, penalties
or additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments. "TAX RETURN" shall mean
any report, return, document, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction (foreign or
domestic) with respect to Taxes, including information returns, any documents
with respect to or accompanying payments of estimated Taxes, or with respect to
or accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.
SECTION 5.15. Employee Benefit Plans. (a) Section 5.15 of the
Disclosure Schedule contains a true and complete list of the Employee Plans.
The Company has made available to Parent copies of each Employee Plan and all
amendments thereto and, where applicable, the most recent annual reports (Form
5500, including Schedule B thereto), the most recent actuarial valuation report
and the most recent determination letter of the Internal Revenue Service
relating to each Employee Plan.
(b) No "accumulated funding deficiency," as defined in Section 412 of
the Code, has been incurred with respect to any Title IV Plan. No "reportable
event," within the meaning of Section 4043 of ERISA, other than a "reportable
event" that will not have a Material Adverse Effect on the Company, and no event
described in Section 4062 or 4063 of ERISA, has occurred in connection with any
Employee Plan. Neither the Company nor any ERISA Affiliate of the Company has
(i) engaged in, or is a successor or parent corporation to an entity that has
engaged in, a transaction described in Sections 4069 or 4212(c) of ERISA or (ii)
incurred any liability under Title IV of ERISA arising in connection with the
termination of, or a complete or partial withdrawal from, any plan covered or
previously covered by Title IV of ERISA that could become a liability of the
Company, any Subsidiary of the Company, Parent or any of their ERISA Affiliates
after the Effective Time.
(c) Each Employee Plan that is intended to be qualified under Section
401(a) of the Code is the subject of a favorable qualification determination
letter issued by the Internal Revenue Service and to the Company's Knowledge
nothing has occurred that would adversely affect that determination.
(d) Each Employee Plan has been maintained in substantial compliance
with its terms and with the requirements prescribed by any and all applicable
22
<PAGE> 27
statutes, orders, rules and regulations, including but not limited to ERISA and
the Code.
(e) (i) No Employee Plan provides any benefits or compensation which
would be triggered by the transactions contemplated herein and (ii) no
compensation or benefits payable in connection with the transactions
contemplated herein will constitute an "excess parachute payment" within the
meaning of Section 280G(b)(1) of the Code.
(f) Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement. To the Company's Knowledge there is no
organizing effort or representation dispute with respect to any employee of the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is involved in or, to the Company's Knowledge, threatened with any
labor dispute (other than individual grievances arising in the ordinary course),
work stoppage, labor strike or slowdown.
SECTION 5.16. Environmental Matters. (a) (i) No written notice, order,
complaint or penalty has been received by the Company or any Subsidiary arising
out of any Environmental Laws and there are no Environmental Claims pending or,
to the Company's Knowledge, threatened.
(ii) The Company and each Subsidiary have all environmental
permits necessary for their operations to comply with all applicable
Environmental Laws and are in compliance with the terms of such
permits.
(iii) The operations of the Company and each Subsidiary are in
compliance with the terms of applicable Environmental Laws.
(b) Except as set forth in this Section 5.16, no representations or
warranties are being made with respect to matters arising under or relating to
environmental matters.
SECTION 5.17. Antitakeover Statutes, Rights Agreement and Standstill
Agreement. (a) The Company has taken all action necessary to exempt the Offer,
the Merger, this Agreement, and the transactions contemplated hereby from the
provisions of Section 203 of Delaware Law and Articles V and VI of the Company's
Certificate of Incorporation, and, accordingly, neither such provisions nor
other antitakeover or similar statute or regulation applies or purports to apply
to any such transactions.
(b) The Company will take all action necessary to (i) render the Rights
Agreement dated as of September 8, 1999 between the Company and The Bank of New
York (the "RIGHTS AGREEMENT") inapplicable to the Offer, the Merger and
23
<PAGE> 28
the other transactions contemplated hereby, (ii) ensure that (y) neither Parent
nor any of its Subsidiaries nor any of its permitted assignees or transferees is
an Acquiring Person (as defined in the Rights Agreement) pursuant to the Rights
Agreement and (z) a Stock Acquisition Date, Triggering Event or Distribution
Date (in each case as defined in the Rights Agreement) does not occur by reason
of the execution of this Agreement, the commencement or completion of the Offer,
the consummation of the Merger or the other transactions contemplated hereby and
(iii) render the provisions of the Standstill Agreement dated as of October 26,
1998, between Parent and the Company (the "STANDSTILL AGREEMENT") inapplicable
to the Offer, the Merger, this Agreement and the transactions contemplated
hereby. If this Agreement is terminated for any reason, then the provisions of
the Rights Agreement and the Standstill Agreement will apply to Parent in full
force and effect as if the provisions of this Section 5.17(b) had never been
agreed to, with the provisions of the Standstill Agreement remaining in full
force and effect for a period of two years after such termination.
SECTION 5.18. Intellectual Property.
(a) The Company or its Subsidiaries own or have the valid right to use
all material intellectual property used by it in connection with its business,
including: (i) trademarks and service marks (registered or unregistered) and
trade names, and all goodwill associated therewith; (ii) patents, patentable
inventions, discoveries, improvements, ideas, know-how, processes and computer
programs, software and databases (including source code); (iii) trade secrets
and the right to limit the use or disclosure thereof; and (iv) copyrights in all
works, including software programs and mask works (collectively "INTELLECTUAL
PROPERTY").
(b) To the Company's Knowledge, the conduct of the businesses of the
Company as currently conducted does not conflict with or infringe in any
material respect any proprietary right of any third party. There is no claim,
suit, action or proceeding pending or, to the Company's Knowledge, threatened
against the Company (i) alleging any such conflict or infringement with any
third party's proprietary rights, or (ii) challenging the ownership or use of
the Intellectual Property.
SECTION 5.19. Year 2000 Compliance. (a) To the Company's Knowledge, the
material Subsidiaries of the Company are Year 2000 Compliant. Section 5.19 of
the Disclosure Schedule contains, to the Company's Knowledge, the current status
of the Company's Year 2000 readiness.
(b) The term "YEAR 2000 COMPLIANCE" means, with respect to the material
Subsidiaries of the Company,
(i) the functions, calculations and other computer processes
of all equipment, computer hardware, software and systems of the
material
24
<PAGE> 29
Subsidiaries of the Company, including, but not limited to, internal
and outsourced systems and embedded computer features within other
systems and equipment of the material Subsidiaries of the Company
(collectively, "PROCESSES"), perform properly in an accurate and
consistent manner regardless of the date in time on which the Processes
are actually performed and regardless of the date of input, whether
before, on or after January 1, 2000 and whether or not the dates are
affected by leap years;
(ii) the equipment, computer hardware, software and systems
accept, calculate, compare, sort, extract, sequence and otherwise
process data inputs and date values, and return and display date
values, in an accurate and consistent manner regardless of the dates
used, whether before, on or after January 1, 2000;
(iii) the equipment, computer hardware, software and systems
will function properly without interruptions or manual interventions
caused by the date in time on which the Processes are actually
performed or by the date of input to the software, whether before, on
or after January 1, 2000;
(iv) the equipment, computer hardware, software and systems
accept and respond to two-digit year data input in the Processes in a
manner that resolves any ambiguities as to the century in a defined,
predetermined and appropriate manner; and
(v) the equipment, computer hardware, software and systems
store and display data information in the Processes in ways that are
accurate and unambiguous as to the determination of the century.
Notwithstanding any other provision of this Agreement to the contrary,
to the extent the Company is able to show that Parent knows of facts as of the
date hereof that constitute an inaccuracy or breach of the representations and
warranties made by the Company not to be true as of the date given, Parent shall
have no right or remedy with respect to such inaccuracy and such facts shall be
deemed to be exceptions to such representations and warranties.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
Parent and Merger Subsidiary represent and warrant to the Company that:
SECTION 6.01. Corporate Existence and Power. Each of Parent and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
25
<PAGE> 30
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all material governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as now
conducted, except for those licenses, authorizations, permits, consents and
approvals the absence of which would not have, individually or in the aggregate,
a Parent Material Adverse Effect. Since the date of its incorporation, Merger
Subsidiary has not engaged in any activities other than in connection with or as
contemplated by this Agreement or in connection with arranging any financing
required to consummate the transactions contemplated hereby.
SECTION 6.02. Corporate Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Parent and Merger Subsidiary and have
been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of each of Parent and Merger
Subsidiary.
SECTION 6.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby require no material action by or in respect of, or material filing with,
any governmental body, agency, official or authority, domestic or foreign, other
than (i) the filing of a certificate of merger with respect to the Merger with
the Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which Parent is qualified to do business, (ii)
compliance with any applicable requirements of the HSR Act, (iii) compliance
with any applicable foreign antitrust, requirements of the 1933 Act, the 1934
Act and any other applicable securities or takeover laws, whether federal, state
or foreign, or (iv) compliance with Section 1707.041 of the Ohio Law.
SECTION 6.04. Non-contravention. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby do not and will not (i) contravene, conflict with, or result in any
violation or breach of any material provision of the certificate of
incorporation or bylaws of Parent or Merger Subsidiary, (ii) assuming
compliance with the matters referred to in Section 6.03, contravene, conflict
with, or result in any violation or breach of any provision of any law, rule,
regulation, judgment, injunction, order or decree or (iii) require any consent
by any Person under any provision of any agreement binding upon Parent or
Merger Subsidiary, except in the case of clauses (ii) and (iii) for conflicts,
violations, breaches or defaults, or the failure to obtain such consents, that
individually or in the aggregate would not be reasonably expected to have a
Parent Material Adverse Effect.
26
<PAGE> 31
SECTION 6.05. Finders' Fees. Except for Wasserstein & Perella, whose
fees will be paid by Parent, there is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Parent who might be entitled to any material fee or commission from the
Company or any of its Subsidiaries upon consummation of the transactions
contemplated by this Agreement.
SECTION 6.06. Financing. Parent has and will make available to Merger
Subsidiary, sufficient cash, available lines of credit or other sources of
immediately available funds necessary to purchase all of the Shares outstanding
on a fully-diluted basis and to pay all related fees and expenses pursuant to
the Offer.
ARTICLE 7
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 7.01. Conduct of the Company. From the date hereof until the
Effective Time, the Company and its Subsidiaries shall conduct their business
and affairs in the ordinary course consistent with past practice and shall use
their reasonable best efforts to preserve intact their business organizations
and relationships with third parties. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time, except as set forth in
Schedule 7.01 (including an identification by section reference to the covenants
to which such exceptions relate):
(a) The Company will not amend its certificate of incorporation or
bylaws;
(b) The Company will not declare, set aside or pay any dividend or
other distribution payable in cash, stock or property with respect to its
capital stock; and neither the Company nor any of its Subsidiaries will (i)
issue, sell, transfer, pledge, dispose of or encumber any additional shares of,
or securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class of the Company or any of its Subsidiaries, other than issuances of Shares
pursuant to securities, options, warrants, calls, commitments or rights that
have been granted at the date hereof and are or become exercisable prior to the
Effective Time and previously disclosed to Parent in writing or as set forth in
the Company SEC Documents or (ii) redeem, purchase or otherwise acquire directly
or indirectly any of its capital stock; provided that, this subsection (b) shall
not prohibit the Company from (A) issuing shares, options or warrants to acquire
up to 100,000 shares of capital stock
27
<PAGE> 32
of any class of the Company pursuant to its 1999 Incentive Stock Option Plan for
a period of 10 business days following the date of this Agreement, provided
that, no such issuances shall be made to the Chief Executive Officer or Chief
Financial Officer of the Company or (B) taking any action pursuant to the
Company's obligations to The Ink Group NZ Limited or The Ink Group Publishers
PTY Limited regarding any put rights held by such entities;
(c) The Company will not (i) incur any long-term indebtedness (whether
evidenced by a note or other instrument, pursuant to a financing lease,
sale-leaseback transaction, or otherwise) or incur short-term indebtedness other
than under lines of credit existing on the date hereof other than, in each case,
to operate the Company's business in the ordinary course or (ii) except in the
ordinary course of business consistent with past practice, enter into, amend,
terminate, renew or fail to use reasonable efforts to renew in any material
respect any material contract;
(d) Except pursuant to employment contracts in effect on the date
hereof, neither the Company nor any of its Subsidiaries will (i) grant any
increase in the compensation or benefits payable or to become payable by the
Company or any of its Subsidiaries to any employee; (ii) adopt, enter into,
amend or otherwise increase, or accelerate the payment or vesting of the
amounts, benefits or rights payable or accrued or to become payable or accrued
under any bonus, incentive compensation, deferred compensation, severance,
termination, change in control, retention, hospitalization or other medical,
life, disability, insurance or other welfare, profit sharing, stock option,
stock appreciation right, restricted stock or other equity based, pension,
retirement or other employee compensation or benefit plan, program agreement or
arrangement; or (iii) enter into or amend in any material respect any employment
or collective bargaining agreement or, except in accordance with the existing
written policies of the Company or existing contracts or agreements, grant any
severance or termination pay to any officer, director or employee of the Company
or any of its Subsidiaries, provided that clauses (i), (ii) and (iii) shall not
prohibit the Company from taking any action hereunder pursuant to its program
established by the Rabbi Trust and the related plan;
(e) Neither the Company nor its Subsidiaries will change the accounting
principles used by it unless required by GAAP (or, if applicable with respect to
Subsidiaries, foreign generally accepted accounting principles);
(f) Neither the Company nor any of its Subsidiaries will acquire by
merging or consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof,
otherwise acquire any assets of any other Person (other than the purchase of
assets from suppliers or vendors in the ordinary course of business consistent
with past practice) for an amount in excess of $10 million, individually or in
the aggregate,
28
<PAGE> 33
other than (A) any investment by the Company in EGN necessary to maintain the
Company's pro rata investment in EGN or (B) any exercise by the Company of its
warrants in EGN;
(g) Neither the Company nor any of its Subsidiaries will sell, lease,
exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange,
transfer or otherwise dispose of, any of its assets except (i) pursuant to
existing contracts or commitments and (ii) in the ordinary course of business
consistent with past practice, except that the Company may dispose of in any
manner and at any time all or a portion of its interest in EGN, provided that,
if the Company disposes of EGN and such disposition is (A) for an aggregate
amount less than $30 million or (B) to an Affiliate of the Company, then such
disposition shall be for an amount at least equal to fair market value of the
Company's interest in EGN that is disposed;
(h) The Company and its Subsidiaries will not mortgage, pledge,
hypothecate, grant any security interest in, or otherwise subject to any other
lien on any of its properties or assets, except in connection with the
incurrence of indebtedness permitted under Section 7.01(c);
(i) Neither the Company nor its Subsidiaries will compromise, settle,
grant any waiver or release relating to or otherwise adjust any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), including any Litigation, except for any such
compromise, settlement, waiver, release or adjustment in the ordinary course of
business consistent with past practice and involving a payment by the Company or
any of its Subsidiaries not in excess of $250,000 in the aggregate following
prior notice to and consultation with Parent; and
(j) Neither the Company nor any of its Subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing.
SECTION 7.02. Stockholder Meeting; Proxy Material. (a) The Company
shall cause a meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING")
to be duly called and held as soon as reasonably practicable after consummation
of the Offer for the purpose of voting on the approval and adoption of this
Agreement and the Merger, unless Delaware Law does not require a vote of
stockholders of the Company for consummation of the Merger. Subject to Section
7.04(c), the Board of Directors of the Company shall recommend approval and
adoption of this Agreement and the Merger by the Company's stockholders. In
connection with such meeting, the Company will (i) promptly prepare and file
with the SEC, will use its best efforts to have cleared by the SEC and will
thereafter mail to its stockholders as promptly as practicable the Company
Proxy Statement, which shall contain the recommendation of the Board of
Directors, and all other proxy materials for such meeting, (ii) use its best
efforts
29
<PAGE> 34
to obtain the necessary approvals by its stockholders of this Agreement and the
transactions contemplated hereby and (iii) otherwise comply with all legal
requirements applicable to such meeting.
(b) If Parent, Merger Subsidiary or any other Subsidiary of Parent
shall acquire at least 90% of the outstanding Shares pursuant to the Offer or
otherwise, the parties hereto agree, at the request of Parent, to take all
necessary and appropriate action to cause the Merger to be effective as soon as
practicable after the acceptance for payment and purchase of Shares pursuant to
the Offer without a meeting of stockholders of the Company in accordance with
Delaware Law.
SECTION 7.03. Access to Information. From the date hereof until the
Effective Time and subject to applicable law and the Confidentiality Agreement
dated as of October 28, 1998 between the Company and Parent (the
"CONFIDENTIALITY AGREEMENT"), the Company shall (i) furnish on a periodic basis
to Parent, its counsel, financial advisors, auditors and other authorized
representatives financial and operating data, (ii) give Parent reasonable access
to Frank J. O'Connell, Chairman, Chief Executive Officer and President of the
Company, James T. Wilson, Executive Vice President-Finance and Operations and
Chief Financial Officer of the Company and James E. Thaxton, Vice
President-Business Affairs and Counsel of the Company, (iii) furnish Parent with
all documents and analyses relating to the requirements of and approvals needed
under the HSR Act to effect a closing of the transaction and (iv) update Parent
on any material changes that develop with respect to information or documents
previously provided to Parent, provided that, except as otherwise provided in
this Agreement, including without limitation Section 9.01(b) hereof, in no event
shall the Company be required to provide information or documents that (A) it
deems to be of a competitively sensitive nature and (B) are subject to any
attorney-client, work product or other privilege that the Company or any
Subsidiary may have. Any action taken pursuant to this Section shall be
conducted in such manner as not to interfere unreasonably with the conduct of
the business of the Company and its Subsidiaries.
SECTION 7.04. No Solicitation; Other Offers. (a) From the date hereof
until the acceptance for payment by Merger Subsidiary of the Shares tendered
into the Offer or the earlier termination hereof, the Company will not, and will
cause its Subsidiaries and the officers, directors, investment bankers,
attorneys, accountants, consultants or other agents or advisors of the Company
and its Subsidiaries not to (i) take any action (y) to solicit or (z) for the
primary purpose of initiating or encouraging the submission of any Acquisition
Proposal, (ii) engage in substantive discussions or negotiations with, or
disclose any material nonpublic information relating to the Company or any of
its Subsidiaries or afford access to the properties, books or records of the
Company or any of its Subsidiaries to, any Person who the Company should
reasonably be expected to know is considering making, or has made, an
Acquisition Proposal or (iii)
30
<PAGE> 35
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage any effort or attempt by any other Person, in each case, for the
primary purpose of making any Acquisition Proposal or enter into any agreement,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the Offer, the Merger or any other transaction contemplated by this
Agreement. The Company will notify Parent promptly after receipt by the Company
(or any of its advisors) of any Acquisition Proposal, or any request for
nonpublic information relating to the Company or any of its Subsidiaries or for
access to the properties, books or records of the Company or any of its
Subsidiaries by any Person who the Company should reasonably be expected to know
is considering making, or has made, an Acquisition Proposal. The Company shall,
and shall cause its Subsidiaries and the directors, officers and other agents of
the Company and its Subsidiaries to, cease immediately and cause to be
terminated all discussions and negotiations with any Persons conducted prior to
the date hereof with respect to any Acquisition Proposal. Nothing contained in
this Agreement shall prevent the Board of Directors of the Company from
complying with Rule 14e-2 under the 1934 Act with respect to any Acquisition
Proposal.
(b) Notwithstanding the foregoing, prior to the acceptance for payment
by Merger Subsidiary of the Shares tendered in the Offer the Company may, if it
gives Parent notice of its intention to do so, negotiate or otherwise engage in
substantive discussions with, and furnish nonpublic information to, any Person
who delivers an unsolicited Superior Proposal if (i) the Company has complied
with the terms of this Section 7.04, including, without limitation, the
requirement in Section 7.04(a) that it notify Parent promptly after its receipt
of any Acquisition Proposal, (ii) the Board of Directors of the Company
determines in its good faith, reasonable judgment, after consultation with and
the receipt of advice from its financial advisor and outside counsel, that
failure to take such action could create a reasonable possibility of a breach of
the fiduciary duties of the Board of Directors under applicable law, and (iii)
such Person executes a confidentiality agreement with the Company not more
favorable to the recipient of such information than the Confidentiality
Agreement. For purposes of this Agreement, "SUPERIOR PROPOSAL" means any bona
fide, unsolicited written Acquisition Proposal for at least a majority of the
outstanding Shares on terms that the Board of Directors of the Company
determines in good faith by a majority vote, on the basis of the advice of a
financial advisor of nationally recognized reputation and taking into account
all the terms and conditions of the Acquisition Proposal, including any break-up
fees, expense reimbursement provisions and conditions to consummation, (A) is
more favorable to all the Company's stockholders than as provided hereunder, (B)
is reasonably capable of obtaining any required financing and (C) is reasonably
capable of being completed.
(c) The Board of Directors of the Company shall be permitted to
withdraw, or modify in a manner adverse to Parent, its recommendation to its
31
<PAGE> 36
stockholders referred to in Sections 2.02 and 7.02 hereof if the Board of
Directors determines in its good faith, reasonable judgment, after consultation
with and the receipt of advice from its financial advisor and outside counsel,
that an Acquisition Proposal is a Superior Proposal and that failure to take
such action could create a reasonable possibility of a breach of the fiduciary
duties of the Board of Directors under applicable law.
SECTION 7.05. Notices of Certain Events. (a) The Company shall promptly
notify Parent of:
(i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement; and
(ii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement.
(b) The Company shall give prompt notice to Parent at any time the
Company has Knowledge that any representation or warranty contained in this
Agreement was inaccurate in any material respect as of the date made.
SECTION 7.06. Disclosure Documents. (a) Each document required to be
filed by the Company with the SEC or required to be distributed or otherwise
disseminated to the Company's stockholders in connection with the transactions
contemplated by this Agreement (the "COMPANY DISCLOSURE DOCUMENTS"), including,
without limitation, the Schedule 14D-9, the proxy or information statement of
the Company (the "COMPANY PROXY STATEMENT"), if any, to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto, when
filed, distributed or disseminated, as applicable, will comply as to form in all
material respects with the applicable requirements of the 1934 Act.
(b) (i) The Company Proxy Statement, as supplemented or amended, if
applicable, at the time such Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement, and (ii) any Company
Disclosure Document (other than the Company Proxy Statement), at the time of the
filing of such Company Disclosure Document or any supplement or amendment
thereto and at the time of any distribution or dissemination thereof, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties contained in this Section 7.06(b) will not apply to statements or
omissions included in the Company Disclosure Documents based upon information
furnished to the Company by Parent.
32
<PAGE> 37
(c) The information with respect to the Company or any of its
Subsidiaries that the Company furnishes to Parent for use in the Offer
Documents, at the time of the filing thereof, at the time of any distribution or
dissemination thereof and at the time of the consummation of the Offer, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 7.07. Standstill Agreements: Confidentiality Agreements .
During the period from the date of this Agreement through the Effective Time,
the Company will not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement for the benefit of the Company or any of
its Subsidiaries, other than the Confidentiality Agreement pursuant to its terms
or by written Agreement of the parties thereto, provided that, the Company may
take such action if the Board of Directors determines in its good faith,
reasonable judgment, after consultation with and the receipt of advice from its
financial advisor and outside counsel, that failure to do so would create a
reasonable possibility of a breach of the fiduciary duties of the Board of
Directors under applicable law, and provided further that this Section 7.07
shall not apply to any confidentiality agreement that is not related to, or does
not arise from, an Acquisition Proposal.
SECTION 7.08. Rights Agreement; Anti-takeover Provisions. The Company's
Board of Directors will take all further action (in addition to that referred to
in Section 5.17 hereof) reasonably requested in writing by Parent (including
redeeming the Rights immediately prior to the Effective Time or further amending
the Rights Agreement) in order to render the Rights Agreement inapplicable to
the Offer and the Merger and the other transactions contemplated hereby to the
extent provided herein and in the Rights Agreement. Except as provided above
with respect to the Offer, the Merger and the other transactions contemplated
hereby or approved in writing by Parent, the Board of Directors of the Company
will not (i) amend the Rights Agreement, (ii) redeem the Rights or (iii) take
any action with respect to, or make any determination under, the Rights
Agreement to facilitate an Acquisition Proposal, provided that, the Company may
take such action if the Board of Directors determines in its good faith,
reasonable judgment, after consultation with and the receipt of advice from its
financial advisor and outside counsel, that failure to do so would create a
reasonable possibility of a breach of its fiduciary duties under applicable law.
In addition, except as otherwise provided in this Agreement, the Company will
not approve an Acquisition Proposal, other than the Offer, the Merger and the
other transactions contemplated by this Agreement, for purposes of Section 203
of Delaware Law or Article VI of the Company's Certificate of Incorporation,
provided that, the Company may take such action if the Board of Directors
determines in its good faith, reasonable judgment, after consultation with and
the receipt of advice from
33
<PAGE> 38
its financial advisor and outside counsel, that failure to do so would create a
reasonable possibility of a breach of its fiduciary duties under applicable law.
ARTICLE 8
COVENANTS OF PARENT
Parent agrees that:
SECTION 8.01. Confidentiality. Prior to the Effective Time and after
any termination of this Agreement and for two years thereafter, Parent will
hold, and will use its best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents (including, without
limitation, any economists employed by Parent to assist in its antitrust review
of the Offer, the Merger and the transactions contemplated thereby) to hold, in
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of law, all confidential documents and information
concerning the Company or any of its Subsidiaries furnished to Parent or its
Affiliates in connection with the transactions contemplated by this Agreement,
including, without limitation, the stockholder lists furnished by the Company
pursuant to Section 2.02, except to the extent that such information can be
shown to have been (i) previously known on a nonconfidential basis by Parent,
(ii) in the public domain through no fault of Parent or (iii) later lawfully
acquired by Parent from sources other than the Company, provided that Parent may
disclose such information to its officers, directors, employees, accountants,
counsel, consultants, advisors and agents in connection with the transactions
contemplated by this Agreement so long as Parent informs such Persons of the
confidential nature of such information and directs them to treat it
confidentially. Parent and its Affiliates shall satisfy their obligation to hold
any such information in confidence if they exercise the same care with respect
to such information as a reasonable Person would take to preserve the
confidentiality of their own similar information under similar circumstances. If
this Agreement is terminated, Parent and its Affiliates will, and will use their
best efforts to cause their officers, directors, employees, accountants,
counsel, consultants, advisors and agents to, destroy or deliver to the Company,
upon request, all documents and other materials, and all copies thereof, that
Parent or its Affiliates obtained, or that were obtained on their behalf, from
the Company or any of its Subsidiaries in connection with this Agreement and
that are subject to such confidence. Notwithstanding anything herein to the
contrary, the terms of the Confidentiality Agreement executed by Parent shall
remain in full force and effect.
SECTION 8.02. Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this
34
<PAGE> 39
Agreement and to consummate the Merger on the terms and conditions set forth in
this Agreement.
SECTION 8.03. Voting of Shares. Parent agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement at the Company
Stockholder Meeting.
SECTION 8.04. Director and Officer Liability. (a) Parent shall cause
the Surviving Corporation, and the Surviving Corporation hereby agrees, to do
the following:
(i) For six years after the Effective Time, the Surviving
Corporation shall indemnify and hold harmless the present and former
officers and directors of the Company (each an "INDEMNIFIED PERSON") in
respect of acts or omissions occurring at or prior to the Effective
Time to the fullest extent permitted by Delaware Law or any other
applicable laws or provided under the Company's certificate of
incorporation and bylaws in effect on the date hereof, provided that
such indemnification shall be subject to any limitation imposed from
time to time under applicable law.
(ii) For six years after the Effective Time, the Surviving
Corporation shall provide officers' and directors' liability insurance
in respect of acts or omissions occurring prior to the Effective Time
covering each such Indemnified Person currently covered by the
Company's officers' and directors' liability insurance policy on terms
with respect to coverage and amount no less favorable than those of
such policy in effect on the date hereof.
(iii) If Parent, the Surviving Corporation or any of its
successors or assigns (A) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger, or (B) transfers or conveys all
or substantially all of its properties and assets to any Person, then,
and in each such case, to the extent necessary, proper provision shall
be made so that the successors and assigns of Parent or the Surviving
Corporation, as the case may be, shall assume the obligations set forth
in this Section 8.04.
(iv) The rights of each Indemnified Person under this Section
8.04 shall be in addition to any rights such Person may have under the
certificate of incorporation or bylaws of the Company or any of its
Subsidiaries, or under Delaware Law or any other applicable laws. These
rights shall survive consummation of the Merger and are intended to
benefit, and shall be enforceable by, each Indemnified Person.
35
<PAGE> 40
(b) Parent shall, prior to the Effective Time, provide the Company with
pre-paid, irrevocable officers' and directors' liability insurance with a
nationally recognized insurance provider with an A.M. Best rating of at least
"A", in amounts and for such periods of time as specified in Section
8.04(a)(ii).
SECTION 8.05. Employee Benefits. (a) For a period of one year after the
Effective Time, Parent will maintain or cause to be maintained employee
compensation and benefit plans and arrangements for the benefit of each
individual who is an employee of the Company or its Subsidiaries as of the
Effective Time (each a "TRANSFERRED EMPLOYEE") that are no less favorable to
such Transferred Employee than the compensation and benefits provided to the
Transferred Employee by the Company and its Subsidiaries immediately prior to
the Effective Time. Without limiting the generality of the foregoing, (i) for a
period of one year after the Effective Time, Parent will maintain or cause to be
maintained severance and employment termination benefits no less favorable to
each Transferred Employee than the severance and employment termination benefits
provided under the plans, policies and practices of the Company and its
Subsidiaries, immediately prior to the Effective Time, and (ii) for a period of
one year after the Effective Time Parent will maintain or cause to be maintained
for the benefit of each eligible current and former employee of the Company and
its Subsidiaries (and his or her eligible domestic partner) the post-retirement
medical and life insurance benefits maintained by the Company and its
Subsidiaries immediately prior to the Effective Time and shall make such
benefits available to each such individual on a basis no less favorable to such
individual than the basis on which such benefits were provided to similarly
situated individuals immediately prior to the Effective Date.
(b) If Transferred Employees or former employees of the Company or its
Subsidiaries are included in any benefit plan, policy, or arrangement of Parent
or its Affiliates such individuals shall receive credit for service prior to the
Effective Time with the Company and its Subsidiaries and their respective
predecessors for all purposes to the same extent such service was recognized
under any similar Employee Plan of the Company or its Subsidiaries, except that
such service shall not be counted for purposes of benefit accruals under any
defined benefit pension plan to the extent that it would result in a duplication
of vested benefits accrued by any such individual under any Employee Plan of the
Company or its Subsidiaries. If Transferred Employees or former employees of the
Company or its Subsidiaries (or their domestic partners or dependents) are
included in any medical, dental or health plan other than the plans they
participated in at the Effective Time (a "SUCCESSOR PLAN"), any such Successor
Plan shall waive pre-existing conditions, to the extent such conditions were not
applicable under the Employee Plans of the Company and its Subsidiaries, and
shall provide that any expenses incurred prior to such change shall be taken
into account under the deductible and out-of-pocket maximums under such
Successor Plan.
36
<PAGE> 41
SECTION 8.06. Disclosure Documents. (a) The information with respect to
Parent and any of its Subsidiaries that Parent furnishes to the Company in
writing specifically for use in any Company Disclosure Document will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading (i) in the case of the
Company Proxy Statement, as supplemented or amended, if applicable, at the time
such Company Proxy Statement or any amendment or supplement thereto is first
mailed to stockholders of the Company and at the time such stockholders vote on
adoption of this Agreement, and (ii) in the case of any Company Disclosure
Document other than the Company Proxy Statement, at the time of the filing of
such Company Disclosure Document or any supplement or amendment thereto and at
the time of any distribution or dissemination thereof.
(b) The Offer Documents, when filed, distributed or disseminated, as
applicable, will comply as to form in all material respects with the applicable
requirements of the 1934 Act and, at the time of the filing thereof, at the time
of any distribution or dissemination thereof and at the time of consummation of
the Offer, will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, provided
that this representation and warranty will not apply to statements or omissions
included in the Offer Documents based upon information furnished to Parent or
Merger Subsidiary by the Company.
ARTICLE 9
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
SECTION 9.01. Best Efforts. (a) Subject to the terms and conditions of
this Agreement, Company and Parent will use their 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 applicable laws and regulations to consummate the
transactions contemplated by this Agreement including, without limitation, using
their best efforts to cause the conditions to the Offer to be satisfied as soon
as reasonably possible and, subject to the terms and conditions of this
Agreement, consummating the Offer as soon as possible after such conditions are
satisfied or waived. In furtherance and not in limitation of the foregoing, each
of Parent and Company agrees to make an appropriate filing of a Notification and
Report Form pursuant to the HSR Act (an "HSR FILING") with respect to the
transactions contemplated hereby as promptly as practicable and in any event
within ten
37
<PAGE> 42
business days of the date hereof and to supply as promptly as practicable any
additional information and documentary material that may be requested pursuant
to the HSR Act and to take all other actions necessary to cause the expiration
or termination of the applicable waiting periods under the HSR Act as soon as
practicable.
(b) In connection with the efforts referenced in Section 9.01(a) to
obtain all requisite approvals and authorizations for the transactions
contemplated by this Agreement under the HSR Act or any other Antitrust Law,
each of Parent and Company shall use its reasonable best efforts to (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party, (ii) keep the other party informed
in all material respects of any material communication received by such party
from, or given by such party to, the Federal Trade Commission (the "FTC"), the
Antitrust Division of the Department of Justice (the "DOJ") or any other
governmental authority and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any of
the transactions contemplated hereby and (iii) permit the other party to review
any material communication given by it to, and consult with each other in
advance of any meeting or conference with, the FTC, the DOJ or any such other
governmental authority or, in connection with any proceeding by a private party.
Subject to the Confidentiality Agreement, Section 8.01 of this Agreement, and
any attorney-client, work product or other privilege, each of the parties hereto
will coordinate and cooperate fully with the other parties hereto in exchanging
such information and providing such assistance as such other parties may
reasonably request in connection with the foregoing and in seeking early
termination of any applicable waiting periods under the HSR Act. Any
competitively sensitive information that is disclosed pursuant to this Section
9.01 will be limited to each of Parent's and the Company's respective counsel
and economists pursuant to a separate customary confidentiality agreement. For
purposes of this Agreement, "ANTITRUST LAW" means the Sherman Act, as amended,
the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal, state and foreign, if any, 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 or
lessening of competition through merger or acquisition.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Section 9.01(a) and 9.01(b), each of Parent and the Company
shall use its best efforts to resolve such objections if any, as may be asserted
with respect to the transactions contemplated hereby under any Antitrust Law. In
connection with the foregoing, if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
38
<PAGE> 43
Agreement as violative of any Antitrust Law, each of Parent and the Company
shall cooperate in all respects with each other and use its respective best
efforts to contest and resist any such action or proceeding and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order,
whether temporary, preliminary or permanent, that is in effect and that
prohibits, prevents or restricts consummation of the transactions contemplated
by this Agreement, including, without limitation, vigorously defending in
litigation on the merits any claim asserted in any court by any party through a
final and nonappealable judgment.
(d) If any objections are asserted with respect to the transactions
contemplated hereby under any Antitrust Law or if any suit is instituted by any
government authority or any private party challenging any of the transactions
contemplated hereby as violative of any Antitrust Law, each of Parent and the
Company shall use its best efforts to resolve such objections or challenge as
such governmental authority or private party may have to such transactions under
such Antitrust Law so as to permit consummation of the transactions contemplated
by this Agreement. In furtherance and not in limitation of the foregoing, each
of Parent and the Company (and, to the extent required by any governmental
authority, its respective Subsidiaries and Affiliates over which it exercises
control) shall be required to pursue a resolution with any governmental
authority and, if acceptable to any governmental authority, enter into a
settlement, undertaking, consent decree, stipulation or other agreement with
such governmental authority regarding antitrust matters in connection with the
transactions contemplated by this Agreement (each, a "SETTLEMENT").
Notwithstanding anything else contained in this Agreement, neither Parent nor
the Company shall be required to enter into any Settlement that requires Parent
and/or the Company to sell or otherwise dispose of assets of Parent and its
Subsidiaries and/or the Company and its Subsidiaries (any such action, a
"DIVESTITURE") if such Divestiture would have a material adverse effect on the
pro forma combined business of Parent and the Company.
(e) The Company hereby acknowledges that Parent will lead the process
to obtain all necessary waivers, consents and approvals, and to effect all
necessary filings under the Antitrust Law, and that Parent's reasonable
determination after consultation with the Company as to the appropriate course
of action to obtain such waivers, consents and approvals will be final, provided
that, the foregoing shall not limit in any respect any of the parties'
obligations under this Agreement.
SECTION 9.02. Certain Filings. The Company and Parent shall cooperate
with one another (i) in connection with the preparation of the Company
Disclosure Documents and the Offer Documents, (ii) in determining whether any
action by or in respect of, or filing with, any governmental body, agency,
official, or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with
39
<PAGE> 44
the consummation of the transactions contemplated by this Agreement and (iii) in
taking such actions or making any such filings, furnishing information required
in connection therewith or with the Company Disclosure Documents or the Offer
Documents and seeking timely to obtain any such actions, consents, approvals or
waivers.
SECTION 9.03. Public Announcements. Parent and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement or the transactions contemplated hereby and,
except as may be required by applicable law or any listing agreement with any
national securities exchange, will not issue any such press release or make any
such public statement prior to such consultation.
SECTION 9.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
ARTICLE 10
CONDITIONS TO THE MERGER
SECTION 10.01. Conditions to Obligations of Each Party. The obligations
of the Company, Parent and Merger Subsidiary to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) if required by Delaware Law, this Agreement shall have been
approved and adopted by the stockholders of the Company in accordance with such
law;
(b) no injunction shall have been issued and remain in effect which
restrains consummation of the Offer; and
(c) the number of Shares tendered pursuant to the Offer and not
withdrawn, together with the Shares then owned by Parent, satisfies the Minimum
Condition and the Merger Subsidiary has accepted for payment and paid for such
Shares.
40
<PAGE> 45
SECTION 10.02. Conditions to Obligations of Parent and Merger
Subsidiary to Effect the Merger. The obligations of Parent and Merger
Subsidiary to effect the Merger are further subject to the satisfaction or
waiver of the following condition prior to the Effective Time:
(a) The Company shall have performed in all material respects its
obligations under Section 2.03(a) with respect to the election or appointment of
Parent's designees to the Company's Board of Directors.
ARTICLE 11
TERMINATION
SECTION 11.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Offer has not been consummated on or before 18 months
after the date hereof, provided that (A) the right to terminate this
Agreement pursuant to this Section 11.01(b)(i) shall not be available
to any party whose breach of any provision of this Agreement results in
the failure of the Offer to be consummated by such time and (B) such 18
month period shall be extended for the time period equal to the time
period beyond ten business days during which either the Company or
Parent shall fail to make an HSR Filing pursuant to Section 9.01(a);
(ii) within 10 days following satisfaction of all other
conditions to the Offer, the Minimum Condition shall not have been
satisfied, provided that, such 10 day period shall be extended for a
period to allow for the extension of the expiration date of the Offer
pursuant clause (ii) of the fourth sentence of Section 2.01(a) or
pursuant to Section 3.09 to allow for an increase in the Offer Price;
(iii) a permanent injunction which is final and nonappealable
shall have been issued restraining or otherwise prohibiting
consummation of the Merger or any of the other transactions
contemplated by this Agreement, provided that the party seeking to
terminate this Agreement pursuant to this Section 11.01(b)(iii) shall
have used all efforts to prevent the entry of such permanent
injunction; or
41
<PAGE> 46
(iv) the other party shall have breached or failed to perform
in all material respects any of its obligations pursuant to Section
9.01 hereof on or prior to such time, provided that, such party shall
have failed to substantially cure such failure to perform within a
reasonable time after being notified of such failure to perform;
(c) by Parent, if, after the date hereof and prior to the acceptance
for payment of the Shares under the Offer:
(i) the Board of Directors of the Company shall have
withdrawn, or modified in a manner materially adverse to Parent, its
approval or recommendation of this Agreement, the Offer or the Merger,
or shall have recommended an Acquisition Proposal other than by Parent
or its Affiliates;
(ii) the Board of Directors of the Company shall have (i)
amended the Rights Agreement to facilitate an Acquisition Proposal or
(ii) terminated or redeemed the Rights, except in each case (A) as
shall be necessary to render the Rights Agreement inapplicable to the
Offer and the Merger and the other transactions contemplated hereby (or
any other Acquisition Proposal by Parent or its Affiliates) or (B) as
directed by Parent pursuant to Section 7.08;
(iii) the Board of Directors of the Company shall take action
under Section 203 of Delaware Law or Article VI of the Company's
Certificate of Incorporation to approve any transaction other than the
Offer and the Merger and the other transactions contemplated hereby (or
any other Acquisition Proposal by Parent or its Affiliates); or
(iv) the Company shall have breached or failed to perform any
of its obligations under this Agreement required to be performed on or
prior to such time or any of the representations and warranties of the
Company under this Agreement shall fail to be accurate as of the date
made, provided that, in each such case, (A) the Company shall have
failed to substantially cure such breach, failure to perform or
inaccuracy within a reasonable time after being notified by Parent of
such breach, failure to perform or inaccuracy and (B) such breach,
failure to perform or inaccuracy would have, individually or in the
aggregate, a Material Adverse Effect on the Company;
(d) by the Company, if, prior to the acceptance for payment of the
Shares under the Offer the Board of Directors of the Company shall have
recommended, or entered into an agreement with respect to a Superior Proposal
pursuant to Section 7.04.
42
<PAGE> 47
The party desiring to terminate this Agreement pursuant to this Section 11.01
(other than pursuant to Section 11.01(a)) shall give notice of such termination
to the other party. Termination by the Company pursuant to Section 11.01(d)
shall not be effective unless and until the Company shall have paid to Parent
the fee described in Section 12.04(c) hereof. Termination by Parent pursuant to
Sections 11.01(a), 11.01(b)(i), 11.01(b)(iii), 11.01(b)(iv) or 11.01(c)(iv)
shall not be effective unless and until Parent shall have paid, or caused the
Escrow Agent to pay, to Company the fee described in Section 12.04(d).
SECTION 11.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 11.01, this Agreement shall become void and of no effect
with no liability on the part of any party (or any stockholder, director,
officer, employee, agent, consultant or representative of such party) to the
other party hereto, provided that, if such termination shall result from the (i)
failure of either party to fulfill a condition to the performance of the
obligations of the other party or (ii) failure of either party to perform a
covenant hereof, such party shall be fully liable for any and all liabilities
and damages incurred or suffered by the other party as a result of such failure
or breach. The provisions of Sections 8.01, 12.04, 12.06, 12.07 and 12.08 shall
survive any termination hereof pursuant to Section 11.01.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Parent or Merger Subsidiary, to:
American Greetings Corporation
One American Road
Cleveland, Ohio 44144
Fax: (216) 252-6777
Attn: General Counsel
with a copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, OH 44144
43
<PAGE> 48
Fax: (216) 579-0212
Attn: Lyle G. Ganske
if to the Company, to:
Gibson Greetings, Inc.
2100 Section Road
Cincinnati, Ohio 45237
Fax: (513) 841-6921
Attn: Chief Executive Officer
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Fax: (212) 450-4800
Attn: Phillip R. Mills
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
SECTION 12.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement, except for the agreements
set forth in Article 3, Sections 8.01, 8.04 (which shall only survive the
Effective Time),11.02, 12.04, 12.06, 12.07 and 12.08.
SECTION 12.03. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement or, in the case of a waiver, by each
party against whom the waiver is to be effective, provided that, after the
adoption of this Agreement by the stockholders of the Company and without their
further approval, no such amendment or waiver shall reduce the amount or change
the kind of consideration to be received in exchange for the Shares.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial
44
<PAGE> 49
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 12.04. Expenses. (a) Except as otherwise provided in this
Section, all costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.
(b) Whether or not the transactions contemplated by this Agreement are
consummated, subject to the last sentence of this Section 12.04(b), Parent
agrees to pay all costs and expenses incurred by the Company or its Subsidiaries
in connection with this Agreement arising from the Hart-Scott-Rodino review and
the Company's obligations contained in Section 9.01 hereof, including, without
limitation, all costs and expenses related to prior antitrust analyses
undertaken by the Company and its advisors in connection with the transactions
contemplated hereby since October 1, 1998, preparing and filing the Notification
and Report Form pursuant to the HSR Act, responding to a Second Request issued
under the HSR Act, preventing the entry of any injunction, appealing any such
injunction, obtaining all necessary consents, approvals or waivers from any
government authorities, opposing vigorously any litigation or administrative
proceeding relating primarily to antitrust aspects of this Agreement or the
transactions contemplated hereby or otherwise complying with any Antitrust Law.
Parent shall promptly pay such costs and expenses as they are incurred by the
Company, provided that, Parent's obligation to pay such costs and expenses shall
not exceed in the aggregate $2.5 million.
(c) The Company agrees to pay Parent a fee in immediately available
funds equal to $7 million concurrently with the termination of this Agreement by
Parent pursuant to the provisions of Section 11.01(c)(i), 11.01(c)(ii) or
11.01(c)(iii) or by the Company pursuant to the provisions of Section 11.01(d),
provided that Parent or Merger Subsidiary is not in breach of its
representations and warranties under this Agreement and shall not have failed to
perform in all material respects each of its obligations under this Agreement.
(d) Parent agrees to pay, or cause to be paid to, the Company a fee in
immediately available funds equal to $20 million simultaneously with the
termination of this Agreement as a result of the occurrence of any of the events
set forth in Sections11.01(a), 11.01(b)(i), 11.01(b)(iii), 11.01(b)(iv) or
11.01(c)(iv), provided that, at the time of such termination, the applicable
waiting period under the HSR Act shall not have expired or been terminated and
the FTC, DOJ or any other Person shall not be challenging by litigation or
otherwise any of the transactions contemplated hereby. Concurrently with the
signing of this Agreement, Parent shall deliver such $20 million termination fee
to The Bank of New York (the "ESCROW AGENT") to be held, invested and disbursed
by the
45
<PAGE> 50
Escrow Agent as provided in the Escrow Agreement dated as of November 2, 1999
between the Company and the Escrow Agent.
(e) Concurrently with the signing of this Agreement, Parent agrees to
contribute cash in the amount of $10 million to the Rabbi Trust.
SECTION 12.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Parent or Merger
Subsidiary may transfer or assign, in whole or from time to time in part, to one
or more of its Affiliates, the right to purchase all or a portion of the Shares
pursuant to the Offer, but no such transfer or assignment will relieve Parent or
Merger Subsidiary of its obligations under the Offer or prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
SECTION 12.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without regard to
the conflicts of law rules of such state.
SECTION 12.07. Dispute Resolution; Jurisdiction. (a) If a dispute
relating to this Agreement arises between the parties, the following procedure
shall be implemented before either party pursues other available remedies
(except that such procedure shall not apply to any equitable remedy). The
parties shall hold a meeting promptly, attended by the persons with
decision-making authority regarding the dispute, to attempt in good faith to
negotiate a resolution of the dispute. If not resolved at such meeting, the
parties shall continue to attempt in good faith to negotiate a resolution of the
dispute for 30 days after such meeting. The parties agree to participate in good
faith in such negotiations related thereto. If within 30 days after such meeting
the parties have not succeeded in negotiating a resolution of the dispute, then
the parties may seek to resolve the dispute by litigation in an appropriate
court of jurisdiction.
(b) Any suit, action or proceeding seeking to enforce any provision of,
or based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby may be brought in any federal court located
in the State of Delaware or any Delaware state court, and each of the parties
hereby consents to the jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient form. Process in
any such suit, action or proceeding
46
<PAGE> 51
may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 12.01 shall
be deemed effective service of process on such party.
SECTION 12.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 12.09. Counterparts; Effectiveness; Benefit. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Except as provided in Section 8.04, no provision of this Agreement is intended
to confer any rights, benefits, remedies, obligations, or liabilities hereunder
upon any Person other than the parties hereto and their respective successors
and assigns.
SECTION 12.10. Entire Agreement. This Agreement, the Confidentiality
Agreement, the Escrow Agreement, the Rabbi Trust and the Standstill Agreement
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersedes all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
this Agreement.
SECTION 12.11. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 12.12. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
SECTION 12.13. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
47
<PAGE> 52
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
48
<PAGE> 53
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
GIBSON GREETINGS, INC.
By: /s/ Frank O'Connell
----------------------------------------
Name: Frank O'Connell
Title: Chairman, President and Chief
Executive Officer
AMERICAN GREETINGS CORPORATION
By: /s/ Morry Weiss
----------------------------------------
Name: Morry Weiss
Title: Chairman and Chief
Executive Officer
GRANITE ACQUISITION CORP.
By: /s/ Morry Weiss
----------------------------------------
Name: Morry Weiss
Title: President
<PAGE> 54
ANNEX I
Notwithstanding any other provision of the Offer or this Agreement,
Parent and Merger Subsidiary shall not be required to accept for payment any
Shares if prior to the expiration date of the Offer, any of the following
conditions exist:
(a) an injunction shall have been issued and remain in effect which
restrains consummation of the Offer;
(b) the Company shall have breached or failed to perform in all
material respects any of its obligations under this Agreement required to be
performed on or prior to such time or any of the representations and warranties
of the Company under this Agreement shall fail to be accurate as of the date
made, provided that, such breach, failure to perform or inaccuracy would have,
individually or in the aggregate, a Material Adverse Effect on the Company;
(c) the applicable waiting period under the HSR Act relating to the
Merger shall not have expired or been terminated;
(d) the number of Shares tendered pursuant to the Offer and not
withdrawn, together with the Shares then owned by Parent, represents less than a
majority of the Shares outstanding on a fully-diluted basis (assuming the
exercise of all outstanding options which are exercisable and in-the-money at
the Offer Price); or
(e) this Agreement shall have been terminated in accordance with its
terms.
<PAGE> 1
EXHIBIT (c)(2)
GIBSON GREETINGS, INC.
2100 Section Road
Cincinnati, OH 45237
October 29, 1998
American Greetings Corporation
1 American Road
Cleveland, OH 44144
Attention: Mr. Morry Weiss
Dear Sirs:
In connection with your consideration of a possible business
combination with Gibson Greetings, Inc. (together with its subsidiaries, the
"COMPANY"), we may furnish you with certain nonpublic information about the
business and operations of the Company. Such information, written or oral,
together with analyses, compilations, studies or other documents prepared by you
or your affiliates, officers, directors, employees, agents or representatives
(collectively, "REPRESENTATIVES") which contain or otherwise reflect such
information, is hereinafter referred to as "CONFIDENTIAL".
In consideration of your being provided with the Confidential
Information, you agree that the Confidential Information will be kept
confidential and shall not be disclosed, in whole or in part, to any person
other than your Representatives who need to know such Confidential Information
for the purpose of evaluating the proposed combination. You agree to inform each
of your Representatives of the nonpublic nature of the Confidential Information
and to direct such persons to treat such Confidential Information in accordance
with the terms of this agreement.
You will not use or allow the use of the Confidential Information for
any purpose except to evaluate the proposed combination. Without the prior
written consent of the Company, neither you nor your Representatives will
disclose to any person the fact that the Confidential Information has been made
available to you, except as otherwise required by law.
<PAGE> 2
American Greetings Corporation 2 October 29, 1998
The Confidential Information, except for that portion which consists of
analyses, compilations, studies or other documents prepared by you or your
Representatives, will be returned to the Company immediately upon the Company's
request. That portion of the Confidential Information which consists of
analyses, compilations, studies or other documents prepared by you or your
Representatives will be destroyed immediately upon the Company's request.
In the event you or anyone to whom you transmit the Confidential
Information is requested or required (by oral questions, interrogatories,
requests for information or documents, subpoenas, civil investigative demand or
similar process) to disclose any of the Confidential Information, you will
provide the Company with prompt notice so that the Company may seek a protective
order or other appropriate remedy and/or waive your compliance with the
provisions of this agreement. In the event that such protective order or other
remedy is not obtained, or the Company waives your compliance with the
provisions of this agreement, you will furnish only that portion of the
Confidential Information which is legally required, in the reasonable opinion of
your counsel, and will exercise your best efforts to obtain a protective order
or other reliable assurance that confidential treatment will be accorded the
Confidential Information.
You also agree that for a period of two years from the date of this
agreement, neither you nor any of your affiliates will, without the prior
written consent of the Company, directly or indirectly solicit for employment or
hire any officer, director, or employee of the Company, except that you shall
not be precluded from hiring any such officer, director or employee who (i)
responds to any public advertisement placed by you, (ii) initiates the request
for employment with you, or (iii) has been terminated by the Company prior to
commencement of employment discussions between you and such officer, director or
employee.
The term "Confidential Information" does not include any information
(i) that was publicly available prior to the date of this agreement or
thereafter becomes publicly available without any violation of this agreement on
the part of you or any of your Representatives, (ii) that was available to you
on a non-confidential basis prior to its disclosure to you by the Company or its
Representatives or becomes available to you from a person other than the Company
and its Representatives who is not, to the best of your knowledge, subject to
any legally binding obligation to keep such information confidential, or (iii)
that was independently developed by you as evidenced by your records.
No failure or delay by the Company in exercising any right, power or
privilege hereunder shall operate as a waiver thereof or preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder.
2
<PAGE> 3
American Greetings Corporation 3 October 29, 1998
You agree that the Company would be irreparably injured by a breach of
this agreement by you or your Representatives and that, in such event, the
Company shall be entitled, in addition to any and all other remedies, to
injunctive relief and specific performance.
The Company and its Representatives make no representations or
warranties, express or implied, with respect to the Confidential Information,
except for any particular representations and warranties which may be made to a
purchaser in a definitive purchase agreement when, as, and if finally executed,
and subject to such limitations and restrictions as may be specified in such
agreement. You agree that neither the Company nor any of its Representatives
shall have any liability to you or your Representatives resulting from the
selection or use of the Confidential Information by you or your Representatives.
Except as otherwise provided, this agreement will be binding upon you
and your Representatives for a period of three years from the date hereof. This
agreement shall be governed by, and construed in accordance with, the laws of
the State of Ohio.
Very truly yours,
GIBSON GREETINGS, INC.
By: /s/ Frank O'Connell
--------------------------------
Name: Frank O'Connell
Title: Chairman, President and
Chief Executive Officer
Accepted and agreed:
AMERICAN GREETINGS CORPORATION
By: /s/ Morry Weiss
---------------------------------
Name: Morry Weiss
Title: Chairman & CEO
3
<PAGE> 1
EXHIBIT (c)(3)
GIBSON GREETINGS, INC.
2100 Section Road
Cincinnati, OH45237
October 26, 1998
American Greetings Corporation
10500 American Road
Cleveland, OH 44144
Attention: Mr. Morry Weiss
Dear Sirs:
You have asked to meet with us to in order to explore your views on a
possible business combination between Gibson Greetings, Inc. (the "COMPANY") and
American Greetings Corporation ("AMERICAN GREETINGS"). Our willingness to
consider and respond to your proposal is premised on your assurance that your
intentions with respect to the Company are entirely friendly and that you do not
intend to take any action in furtherance of any business combination proposal
with the Company, without the prior written approval of the Company.
Accordingly, American Greetings agrees that without the prior written
consent of the Company, it will not, and will not permit any of its affiliates
to (i) purchase or otherwise acquire, or agree or offer to purchase or otherwise
acquire, beneficial ownership of any securities of the Company: (ii) make,
disclose or encourage public speculation about any offer or proposal for, or any
indication of interest in, a merger or other business combination involving the
Company or any subsidiary of the Company or the acquisition of any equity
interest in, or a substantial portion of the assets of, the Company or any
subsidiary of the Company; (iii) solicit, or become a participant in any
solicitation of, any proxy from any holder of securities of the Company or agree
or announce its intention to vote with any person undertaking a solicitation;
(iv) form, join or in any way participate in a group with respect to any
securities of the Company; or (v) propose any amendment to this Agreement that
is or may be required to be publicly disclosed.
<PAGE> 2
2 October 25, 1998
This Agreement shall be binding on American Greetings for a period of
two years from the date hereof. However, American Greetings and the Company each
agree that it will not at anytime, whether during or after such two-year period,
disclose the existence and contents of this letter or the fact of or contents of
any discussions between the Company and its representatives and American
Greetings and its representatives, except as may be required by law.
This letter agreement shall be governed by, and construed in accordance
with, the laws of the State of New York. American Greetings agrees that the
Company would be irreparably injured by a breach of this agreement and that, in
such event, the Company shall be entitled, in addition to any and all other
remedies, to injunctive relief and specific performance.
If the foregoing reflects our mutual understanding, please sign and
return the duplicate copy of this letter.
Very truly yours,
Gibson Greetings, Inc.
By: /S/ Frank O'Connell
---------------------------------
Name: Frank O'Connell
Title: President & CEO
Accepted and agreed:
American Greetings Corporation
By: /s/ Morry Weiss
---------------------------
Name: Morry Weiss
Title: Chairman & CEO
