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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
SCHEDULE TO
(Rule 14D-100)
Tender Offer Statement Under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
--------------------------
SHOREWOOD PACKAGING CORPORATION
(Name of Subject Company (Issuer))
INTERNATIONAL PAPER-37, INC.
INTERNATIONAL PAPER COMPANY
(Names of Filing Persons (Offerors))
COMMON STOCK, $.01 PAR VALUE PER SHARE
(INCLUDING ASSOCIATED RIGHTS)
(Title of Class of Securities)
825229107
(CUSIP Number of Class of Securities)
James W. Guedry, Esq.
Vice President and Secretary
International Paper Company
Two Manhattanville Road
Purchase, New York 10577
(914) 397-1500
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications on behalf of Filing Persons)
COPY TO:
JEFFREY J. ROSEN, ESQ.
O'MELVENY & MYERS LLP
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022-4611
(212) 326-2000
CALCULATION OF FILING FEE
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Transaction Valuation*: $655,939,977 Amount of Filing Fee: $131,188.00
</TABLE>
* Estimated for purposes of calculating the amount of the filing fee only.
This calculation assumes the purchase of all outstanding shares of common
stock, par value $.01 per share of Shorewood Packaging Corporation, (the
"Common Stock") including associated rights to purchase preferred stock (the
"Rights" and together with the Common Stock, the "Shares"), at a price per
Share of $21.00 in cash. As of February 15, 2000, there were (i) 27,375,771
Shares outstanding and (ii) 3,859,466 Shares reserved for issuance under
stock incentive plans and outstanding options, warrants and other rights to
acquire Shares from the Company. The amount of the filing fee, calculated in
accordance with Rule 0-11 of the Securities Exchange Act of 1934, as
amended, equals 1/50(th) of one percent of the value of the transaction.
/ / Check the 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.
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Amount previously paid: Not applicable Filing Party: Not applicable
Form or registration no.: Not applicable Date Filed: Not applicable
</TABLE>
/ / Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
/X/ third-party tender offer subject to Rule 14d-1.
/ / issuer tender offer subject to Rule 13e-4.
/ / going-private transaction subject to Rule 13e-3.
/ / amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: / /
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This Tender Offer Statement on Schedule TO relates to the third-party tender
offer by International Paper-37, Inc., a Delaware corporation ("Purchaser") and
a wholly owned subsidiary of International Paper Company, a New York corporation
("Parent"), to purchase all of the issued and outstanding shares of common
stock, par value $.01 per share (the "Common Stock"), of Shorewood Packaging
Corporation, a Delaware corporation (the "Company") and the associated rights to
purchase preferred stock (the "Rights" and, together with the Common Stock, the
"Shares"), at a purchase price of $21.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated February 29, 2000 (the "Offer to Purchase"), a
copy of which is attached hereto as Exhibit (a)(1)(A), and in the related Letter
of Transmittal (the "Letter of Transmittal"), a copy of which is attached hereto
as Exhibit (a)(1)(B) (which, together with the Offer to Purchase, as amended or
supplemented from time to time, constitute the "Offer").
The information in the Offer to Purchase, including all schedules and
annexes thereto, is hereby expressly incorporated herein by reference in
response to all the items of this Schedule TO, except as otherwise set forth
below.
ITEM 1. SUMMARY TERM SHEET.
The information set forth in the Summary Term Sheet in the Offer to Purchase
is incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) The name of the subject company is Shorewood Packaging Corporation, a
Delaware corporation. The Company's executive offices are located at 277 Park
Avenue, New York, New York 10172, telephone, (212) 371-1500.
(b) The class of securities to which this statement relates is the Common
Stock, par value $.01 per share, including the associated Rights, of the
Company, of which 27,375,771 shares were issued and outstanding as of
February 15, 2000. The information set forth on the cover page and in the
"Introduction" of the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) This Tender Offer Statement is filed by Parent and Purchaser. The
information set forth in Section 8 ("Certain Information Concerning Parent and
Purchaser") of the Offer to Purchase and on Schedule I thereto is incorporated
herein by reference.
(b) The information set forth in Section 8 ("Certain Information Concerning
Parent and Purchaser") of the Offer to Purchase and on Schedule I thereto is
incorporated herein by reference.
(c) The information set forth in Section 8 ("Certain Information Concerning
Parent and Purchaser") of the Offer to Purchase and on Schedule I thereto is
incorporated herein by reference. During the last five years, none of Purchaser
or Parent or, to the best knowledge of Purchaser or Parent, any of the persons
listed on Schedule I to the Offer to Purchase (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to any judicial or administrative proceeding (except for
matters that were dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of such laws. All of the persons listed on Schedule I
to the Offer to Purchase are citizens of the United States.
ITEM 4. TERMS OF THE TRANSACTION.
The information set forth in the Offer to Purchase is incorporated herein by
reference.
2
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ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(a) Parent is the principal supplier of solid bleached sulfate ("SBS") board
to the Company. The Company purchased approximately 68,800 tons of SBS board
from Parent during the calendar year ended December 31, 1999 for an aggregate
price of approximately $62,700,000. Except as disclosed above in this
Item 5(a), during the past two years, there have been no transactions that would
be required to be disclosed under this Item 5(a) between any of Purchaser or
Parent or, to the best knowledge of Purchaser and Parent, any of the persons
listed on Schedule I to the Offer to Purchase, and the Company or any of its
executive officers, directors or affiliates.
(b) The information set forth in the Introduction, Section 10 ("Background
of the Offer and the Merger; Past Contacts or Negotiations with the Company")
and Section 11 ("The Merger Agreement; Stockholders Agreement; Employment
Agreements") of the Offer to Purchase is incorporated herein by reference.
Except as set forth in the Introduction, Section 10 and Section 11 of the Offer
to Purchase, there have been no material contacts, negotiations or transactions
during the past two years which would be required to be disclosed under this
Item 5(b) between any of Purchaser or Parent or any of their respective
subsidiaries or, to the best knowledge of Purchaser and Parent, any of those
persons listed on Schedule I to the Offer to Purchase and the Company or its
affiliates 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.
ITEM 6. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a), (c)(1), (4)-(7) The information set forth in the Introduction,
Section 10 ("Background of the Offer and the Merger; Past Contacts or
Negotiations with the Company"), Section 11 ("The Merger Agreement; Stockholders
Agreement; Employment Agreements"), Section 12 ("Purpose of the Offer and the
Merger; Plans for the Company"), Section 13 ("Certain Effects of the Offer") and
Section 14 ("Dividends and Distributions") of the Offer to Purchase is
incorporated herein by reference.
(c)(2)-(3) Not applicable.
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information set forth in Section 9 ("Source and Amount of Funds") of the
Offer to Purchase is incorporated herein by reference.
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction and Section 8
("Certain Information Concerning Parent and Purchaser") of the Offer to Purchase
is incorporated herein by reference.
ITEM 9. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 10. FINANCIAL STATEMENTS.
Not applicable.
ITEM 11. ADDITIONAL INFORMATION.
(a) The information set forth in Section 11 ("The Merger Agreement;
Stockholders Agreement; Employment Agreements"), Section 13 ("Certain Effects of
the Offer") and Section 16 ("Certain Legal Matters") of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth in the Offer to Purchase and Letter of
Transmittal is incorporated herein by reference.
3
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ITEM 12. EXHIBITS.
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(a)(1)(A) Offer to Purchase dated February 29, 2000.
(a)(1)(B) Letter of Transmittal.
(a)(1)(C) Notice of Guaranteed Delivery.
(a)(1)(D) Letter from the Dealer Manager to Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees.
(a)(1)(E) Letter to clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.
(a)(1)(F) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(1)(G) Summary Advertisement as published on February 29, 2000.
(a)(1)(H) Press Release dated February 17, 2000.
(b) None.
(d)(1) Agreement and Plan of Merger dated as of February 16, 2000,
by and among International Paper Company, International
Paper-37, Inc. and Shorewood Packaging Corporation.
(d)(2) Stockholders Agreement dated as of February 16, 2000 by and
among International Paper Company, International
Paper-37, Inc. and the individuals and other parties listed
on Schedule A attached thereto.
(d)(3) Letter Agreement between Marc P. Shore and International
Paper Company dated as of February 16, 2000 and Exhibit A
Form of Employment Agreement.
(d)(4) Letter Agreement between Howard M. Liebman and International
Paper Company dated as of February 16, 2000 and Exhibit A
Form of Employment Agreement.
(g) None.
(h) None.
</TABLE>
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
Not applicable.
4
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
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INTERNATIONAL PAPER COMPANY
By: /s/ JAMES W. GUEDRY
-----------------------------------------
Name: James W. Guedry
Title: Vice President and Secretary
INTERNATIONAL PAPER-37, INC.
By: /s/ JAMES W. GUEDRY
-----------------------------------------
Name: James W. Guedry
Title: President
</TABLE>
Date: February 29, 2000
5
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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(a)(1)(A) Offer to Purchase dated February 29, 2000.
(a)(1)(B) Letter of Transmittal.
(a)(1)(C) Notice of Guaranteed Delivery.
(a)(1)(D) Letter from the Dealer Manager to Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees.
(a)(1)(E) Letter to clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.
(a)(1)(F) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(1)(G) Summary Advertisement as published on February 29, 2000.
(a)(1)(H) Press Release dated February 17, 2000.
(d)(1) Agreement and Plan of Merger dated as of February 16, 2000,
by and among International Paper Company, International
Paper-37, Inc. and Shorewood Packaging Corporation.
(d)(2) Stockholders Agreement dated as of February 16, 2000 by and
among International Paper Company, International Paper-37,
Inc. and the individuals and other parties listed on
Schedule A attached thereto.
(d)(3) Letter Agreement between Marc P. Shore and International
Paper Company dated as of February 16, 2000 and Exhibit A
Form of Employment Agreement.
(d)(4) Letter Agreement between Howard M. Liebman and International
Paper Company dated as of February 16, 2000 and Exhibit A
Form of Employment Agreement.
</TABLE>
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Rights to Purchase Preferred Stock)
of
SHOREWOOD PACKAGING CORPORATION
at
$21.00 Net Per Share
by
INTERNATIONAL PAPER-37, INC.
a wholly owned subsidiary of
INTERNATIONAL PAPER COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MARCH 27, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER (AS HEREINAFTER DEFINED) IS BEING MADE IN CONNECTION WITH THE
AGREEMENT AND PLAN OF MERGER, DATED AS OF FEBRUARY 16, 2000 (THE "MERGER
AGREEMENT"), BY AND AMONG SHOREWOOD PACKAGING CORPORATION (THE "COMPANY"),
INTERNATIONAL PAPER COMPANY ("PARENT") AND INTERNATIONAL PAPER-37, INC.
("PURCHASER"). THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY (I) DETERMINED
THAT THE OFFER, THE MERGER (AS HEREINAFTER DEFINED) AND THE MERGER AGREEMENT ARE
ADVISABLE, FAIR TO, AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS,
(II) APPROVED THE MERGER, THE OFFER, THE MERGER AGREEMENT AND THE OTHER
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND (III) RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES (AS HEREINAFTER
DEFINED) PURSUANT THERETO AND APPROVE AND ADOPT THE MERGER AGREEMENT.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER A
NUMBER OF SHARES OF COMMON STOCK OF THE COMPANY, INCLUDING THE ASSOCIATED RIGHTS
(THE "RIGHTS") TO PURCHASE PREFERRED STOCK (COLLECTIVELY, THE "SHARES"), WHICH
REPRESENTS NOT LESS THAN FIFTY-ONE PERCENT OF THE TOTAL ISSUED AND OUTSTANDING
SHARES ON A FULLY DILUTED BASIS (EXCLUDING ANY SHARES HELD BY THE COMPANY OR ANY
OF ITS SUBSIDIARIES) AND (II) THE EXPIRATION OR TERMINATION OF ANY AND ALL
WAITING PERIODS APPLICABLE TO THE TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, THE COMPETITION ACT (CANADA), THE INVESTMENT CANADA ACT AND ANY SIMILAR
LEGAL REGIME IN ANY OTHER COUNTRY APPLICABLE TO SIGNIFICANT OPERATIONS OF PARENT
OR ANY OF ITS SUBSIDIARIES OR THE COMPANY OR ANY OF ITS SUBSIDIARIES. THE OFFER
IS ALSO SUBJECT TO OTHER CONDITIONS. SEE SECTION 15.
THE OFFER IS NOT CONDITIONED UPON PARENT OR PURCHASER OBTAINING FINANCING.
CERTAIN STOCKHOLDERS OF THE COMPANY WHO IN THE AGGREGATE OWN APPROXIMATELY
17% OF THE SHARES OUTSTANDING (APPROXIMATELY 15% ON A FULLY DILUTED BASIS) HAVE
AGREED, AMONG OTHER THINGS, TO TENDER PURSUANT TO THE OFFER, AND NOT TO
WITHDRAW, THEIR SHARES.
The Dealer Manager for the Offer is:
[LOGO]
February 29, 2000
<PAGE>
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, mail or deliver it and any other required documents to the
Depositary indicated thereon and either deliver the certificate(s) for such
tendered Shares to the Depositary along with the Letter of Transmittal or tender
such Shares pursuant to the procedures for book-entry transfer set forth in
Section 2 of this Offer to Purchase, or (2) request such stockholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for the stockholder. Stockholders having Shares registered in the
name of a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other nominee if
they desire to tender such Shares. Unless the context requires otherwise, all
references to Shares herein shall include the associated Rights.
The Rights are presently evidenced by the certificates for the Common Stock
and a tender by a stockholder of such stockholder's shares of Common Stock will
also constitute a tender of the associated Rights. A stockholder who desires to
tender Shares and whose certificate(s) for Shares is not immediately available,
or who cannot comply with the procedures for book-entry transfer on a timely
basis, may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 2 of this Offer to Purchase.
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 the Notice of
Guaranteed Delivery may also be directed to the Information Agent or the Dealer
Manager. Purchaser will not pay any fee or commission to any broker or dealer or
to any other person (other than to the Dealer Manager, the Depositary and the
Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer.
<PAGE>
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SUMMARY TERM SHEET.......................................... 1
INTRODUCTION................................................ 5
THE TENDER OFFER............................................ 7
1. Terms of the Offer....................................... 7
2. Procedure for Accepting the Offer and Tendering Shares... 9
3. Withdrawal Rights........................................ 11
4. Acceptance for Payment and Payment for Shares............ 12
5. Certain United States Federal Income Tax Consequences.... 13
6. Price Range of Shares; Dividends......................... 13
7. Certain Information Concerning the Company............... 14
8. Certain Information Concerning Parent and Purchaser...... 16
9. Source and Amount of Funds............................... 17
10. Background of the Offer and the Merger; Past Contacts or
Negotiations with the Company............................. 17
11. The Merger Agreement; Stockholders Agreement; Employment
Agreements................................................ 20
12. Purpose of the Offer and the Merger; Plans for the
Company................................................... 33
13. Certain Effects of the Offer............................ 34
14. Dividends and Distributions............................. 35
15. Certain Conditions of the Offer......................... 35
16. Certain Legal Matters................................... 37
17. Fees and Expenses....................................... 40
18. Miscellaneous........................................... 40
Schedule I INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF PARENT AND PURCHASER....... I-1
</TABLE>
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SUMMARY TERM SHEET
International Paper-37, Inc. is offering to purchase all of the outstanding
shares of common stock of Shorewood Packaging Corporation and the rights to
purchase preferred stock associated with the shares for $21.00 per share in
cash. The following are some of the questions that you, as a stockholder of
Shorewood Packaging Corporation, may have and the answers to those questions. We
urge you to read carefully the remainder of this offer to purchase and the
letter of transmittal because the information in this summary term sheet is not
complete. Additional important information is contained in the remainder of this
offer to purchase and the letter of transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
Our name is International Paper-37, Inc. We are a Delaware corporation and
have carried on no business other than in connection with the merger agreement.
We are a wholly owned subsidiary of International Paper Company, a New York
corporation. See the "Introduction" and Section 8.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are offering to purchase all of the outstanding common stock of Shorewood
Packaging Corporation and the rights to purchase preferred stock associated with
such shares. See the "Introduction" and Section 1.
HOW MUCH ARE YOU OFFERING TO PAY, WHAT IS THE FORM OF PAYMENT AND WILL I HAVE TO
PAY ANY FEES OR COMMISSIONS?
We are offering to pay $21.00 per share, net to you, in cash. If you are the
record owner of your shares and you tender your shares to us in the offer, you
will not have to pay brokerage fees or similar expenses. If you own your shares
through a broker or other nominee, and your broker tenders your shares on your
behalf, your broker or nominee may charge you a fee for doing so. You should
consult your broker or nominee to determine whether any charges will apply. See
the "Introduction."
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
International Paper Company, our parent company, will provide us with
sufficient funds from its own resources to purchase all shares validly tendered
and not withdrawn in the offer and to provide funding for the merger which is
expected to follow the successful completion of the offer. We anticipate that
all of these funds will be obtained from the existing resources and internally
generated funds of International Paper Company including short-term borrowings
in the ordinary course of its business. The offer is not conditioned upon any
financing arrangements. See Section 9.
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision whether
to tender in the offer because the form of payment consists solely of cash and
we have already arranged for all of our funding to come from the existing
resources and internally generated funds of International Paper Company
including short-term borrowings in the ordinary course of its business.
Additionally, the offer is not subject to any financing condition. See
Section 9.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, New York City time, on Monday,
March 27, 2000 to tender your shares in the offer. Further, if you cannot
deliver everything that is required in order to make a valid tender by that
time, you may be able to use a guaranteed delivery procedure, which is described
later in this offer to purchase. See Section 1 and Section 2.
1
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CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Subject to the terms of the merger agreement, we can extend the offer. We
have agreed in the merger agreement that we may extend the offer without
Shorewood Packaging Corporation's consent in the following circumstances:
- If any of the conditions to the offer, other than the condition that not
less than 51% of the outstanding shares of Shorewood Packaging Corporation
on a fully diluted basis (excluding shares held by Shorewood Packaging
Corporation or any of its subsidiaries) be validly tendered and not
properly withdrawn, have not been satisfied or waived, we can extend the
offer until such time as they are satisfied or waived;
- We may extend the offer for any period required by any rule, regulation,
interpretation or position of the SEC or its staff or as required by
applicable law;
- If all conditions to the offer, other than the condition that not less
than 51% of the outstanding shares of Shorewood Packaging Corporation on a
fully diluted basis (excluding shares held by Shorewood Packaging
Corporation or any of its subsidiaries) be validly tendered and not
properly withdrawn, have been satisfied or waived, we may extend the offer
for up to 30 business days (for all such extensions); or
- If all conditions to the offer have been satisfied or waived but less than
90% of the outstanding shares of Shorewood Packaging Corporation on a
fully diluted basis have been validly tendered and not properly withdrawn,
we may extend the offer for up to 20 business days (for all such
extensions) but only if we pay for all shares that have been validly
tendered and not properly withdrawn at the time of such extension. As
permitted by the merger agreement, we intend to extend the offer for one
or more periods if all conditions to the offer have been satisfied or
waived but less than 90% of the outstanding shares of Shorewood Packaging
Corporation on a fully diluted basis have been validly tendered and not
properly withdrawn. Such an extension pursuant to the merger agreement
shall constitute a "subsequent offering period," which is an additional
period of time, beginning after we have purchased shares tendered in the
offer, during which stockholders may tender, but not withdraw, their
shares and receive the offer consideration.
In addition, we have agreed to extend the offer, if requested by Shorewood
Packaging Corporation, in the following circumstances:
- If at the expiration date of the offer any condition to the offer, other
than (or in addition to) the condition that not less than 51% of the
outstanding shares of Shorewood Packaging Corporation on a fully diluted
basis (excluding shares held by Shorewood Packaging Corporation or any of
its subsidiaries) be validly tendered and not properly withdrawn, has not
been waived or satisfied, we have agreed to extend the offer until the
earlier of June 30, 2000 or the date upon which such unsatisfied condition
shall not be reasonably capable of being satisfied; and
- If at the expiration date of the offer all conditions to the offer, other
than the condition that not less than 51% of the outstanding shares of
Shorewood Packaging Corporation on a fully diluted basis (excluding shares
held by Shorewood Packaging Corporation or any of its subsidiaries) be
validly tendered and not properly withdrawn, have been waived or satisfied
we have agreed to extend the offer until the earlier of 10 business days
after such expiration date or June 30, 2000.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform ChaseMellon Shareholder Services,
L.L.C. (which is the depositary for the offer) of that fact and will make a
public announcement of the extension, not later than 9:00 a.m., New York City
time, on the next business day after the day on which the offer was scheduled to
expire. See Section 1.
2
<PAGE>
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
- We are not obligated to purchase any shares which are validly tendered
unless the number of shares validly tendered and not properly withdrawn
before the expiration date of the offer represents not less than 51% of
the outstanding shares of Shorewood Packaging Corporation on a fully
diluted basis (excluding shares held by Shorewood Packaging Corporation or
any of its subsidiaries).
- We are not obligated to purchase shares which are validly tendered if
there is a material adverse change in Shorewood Packaging Corporation or
its business or if the applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, the Competition Act (Canada),
the Investment Canada Act or any similar legal regime in any other country
applicable to significant operations of International Paper Company or any
of its subsidiaries or Shorewood Packaging Corporation or any of its
subsidiaries has not expired or been waived before we accept the shares
which have been validly tendered.
The offer is also subject to a number of other conditions. We can waive any
of the conditions to the offer without Shorewood Packaging Corporation's consent
other than the condition that not less than 51% of the outstanding shares of
Shorewood Packaging Corporation on a fully diluted basis (excluding shares held
by Shorewood Packaging Corporation or any of its subsidiaries) be validly
tendered and not properly withdrawn. See Section 15.
HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed letter of transmittal, to ChaseMellon
Shareholder Services, L.L.C., the depositary for the offer, not later than the
time the tender offer expires. If your shares are held in street name, the
shares can be tendered by your nominee through The Depository Trust Company. If
you cannot get any document or instrument that is required to be delivered to
the depositary by the expiration of the tender offer, you may get a little extra
time to do so by having a broker, a bank or other fiduciary which is a member of
the Securities Transfer Agents Medallion Program or other eligible institution
guarantee that the missing items will be received by the depositary within three
New York Stock Exchange trading days. For the tender to be valid, however, the
depositary must receive the missing items within that three trading day period.
See Section 2.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw shares at any time until the offer has expired and, if we
have not agreed by April 28, 2000 (or such later date as may apply if the offer
is extended) to accept your shares for payment, you can withdraw them at any
time after such time until we accept shares for payment. This right to withdraw
will not apply to any subsequent offering period discussed in Section 1. See
Section 3.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. See Section 3.
WHAT DOES SHOREWOOD PACKAGING CORPORATION'S BOARD OF DIRECTORS THINK OF THE
OFFER?
We are making the offer pursuant to the merger agreement, which has been
unanimously approved by the board of directors of Shorewood Packaging
Corporation. The board of directors of Shorewood Packaging Corporation
unanimously (1) determined that the offer, the merger and the merger agreement
are advisable, fair to, and in the best interests of, its stockholders,
(2) approved the merger, the offer, the merger agreement and the other
transactions contemplated by the merger agreement and (3) recommends that its
stockholders accept the offer and tender their shares pursuant thereto and
approve and adopt the merger agreement. See the "Introduction."
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HAVE ANY STOCKHOLDERS AGREED TO TENDER THEIR SHARES?
Yes. Stockholders who own shares representing approximately 17% of the
outstanding common stock of Shorewood Packaging Corporation (approximately 15%
after taking into consideration unexercised options and warrants and other
securities convertible into common stock) have agreed to tender their shares in
the offer.
IF A MAJORITY OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL
SHOREWOOD PACKAGING CORPORATION CONTINUE AS A PUBLIC COMPANY?
No. Following the purchase of shares in the offer we expect to consummate
the merger, and following the merger, Shorewood Packaging Corporation no longer
will be publicly owned. Even if for some reason the merger does not take place,
if we purchase all the tendered shares, there may be so few remaining
stockholders and publicly held shares that Shorewood Packaging Corporation
common stock will no longer be eligible to be traded on the New York Stock
Exchange or on any other securities exchange, there may not be a public trading
market for Shorewood Packaging Corporation stock, and Shorewood Packaging
Corporation may cease making filings with the SEC or otherwise cease being
required to comply with SEC rules relating to publicly held companies. See
Section 13.
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL THE SHOREWOOD PACKAGING
CORPORATION SHARES ARE NOT TENDERED IN THE OFFER?
Yes. If we accept for payment and pay for at least 51% of the outstanding
shares of Shorewood Packaging Corporation, we will be merged with and into
Shorewood Packaging Corporation. If that merger takes place, International Paper
Company will own all of the shares of Shorewood Packaging Corporation and all
remaining stockholders of Shorewood Packaging Corporation (other than us and
stockholders properly exercising dissenters' rights) will receive $21.00 per
share in cash. See the "Introduction" and Section 11.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described above takes place, stockholders not tendering in the
offer will receive the same amount of cash per share that they would have
received had they tendered their shares in the offer, subject to any rights of
appraisal properly exercised under Delaware law. Therefore, if the merger takes
place, the only difference to you between tendering your shares and not
tendering your shares is that you will be paid earlier and will not have
appraisal rights if you tender your shares. However, if for some reason the
merger does not take place, the number of stockholders of Shorewood Packaging
Corporation and the number of shares of Shorewood Packaging Corporation which
are still in the hands of the public may be so small that there no longer will
be an active public trading market (or, possibly, there may not be any public
trading market) for Shorewood Packaging Corporation common stock. Also, as
described above, Shorewood Packaging Corporation may cease making filings with
the SEC or otherwise being required to comply with the SEC rules relating to
publicly held companies. See the "Introduction" and Section 13.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On February 16, 2000, the last trading day before we announced the tender
offer and the possible subsequent merger, the closing price of Shorewood
Packaging Corporation common stock reported on the New York Stock Exchange was
$18.875 per share. On February 28, 2000, the last trading day before we
commenced the tender offer, the closing price of Shorewood Packaging Corporation
common stock reported on the New York Stock Exchange was $20.8125 per share. We
advise you to obtain a recent quotation for shares of Shorewood Packaging
Corporation common stock in deciding whether to tender your shares. See
Section 6.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call Georgeson Shareholder Communications Inc. at (800) 223-2064
(toll free) or Credit Suisse First Boston Corporation at (800) 881-8320 (toll
free). Georgeson Shareholder Communications Inc. is acting as the information
agent and Credit Suisse First Boston Corporation is acting as the dealer manager
for our tender offer. See the back cover of this offer to purchase.
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To the Holders of Common Stock of
Shorewood Packaging Corporation:
INTRODUCTION
International Paper-37, Inc. ("Purchaser"), a Delaware corporation and a
wholly owned subsidiary of International Paper Company, a New York corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $.01 per share (the "Common Stock"), of Shorewood Packaging
Corporation, a Delaware corporation (the "Company"), together with the
associated rights to purchase preferred stock issued pursuant to the Rights
Agreement, dated as of June 12, 1995 (the "Rights Agreement"), between the
Company and The Bank of New York, as Rights Agent (the "Rights" and, together
with the Common Stock, the "Shares"), at a price of $21.00 per Share (the "Offer
Price"), net to the selling stockholder in cash, upon the terms and subject to
the conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer").
Stockholders of record who hold Shares registered in their own name and
tender their Shares directly to the Depositary (as defined below) will not be
obligated to pay brokerage fees, commissions, solicitation fees or, subject to
Instruction 6 of the Letter of Transmittal, stock transfer taxes, if any, on the
purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold
their Shares through a bank or broker should check with such institution as to
whether they will be charged any service fees. However, any tendering
stockholder or other payee who fails to complete and sign the Substitute
Form W-9 that is included in the Letter of Transmittal may be subject to a
required federal backup withholding tax of 31% of the gross proceeds payable to
such stockholder or other payee pursuant to the Offer. See Section 2. Purchaser
will pay all charges and expenses of Credit Suisse First Boston Corporation, as
Dealer Manager ("Credit Suisse First Boston" or the "Dealer Manager"), Georgeson
Shareholder Communications Inc., as Information Agent (the "Information Agent"),
and ChaseMellon Shareholder Services, L.L.C., as Depositary (the "Depositary"),
incurred in connection with the Offer. See Section 17.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not properly withdrawn prior to the expiration date of the Offer
that number of Shares which represents not less than fifty-one percent of the
total issued and outstanding Shares on a fully diluted basis (excluding any
Shares held by the Company or any of its subsidiaries) (the "Minimum Condition")
and (ii) the expiration or termination of any and all waiting periods applicable
to the transactions contemplated by the Merger Agreement under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the
Competition Act (Canada) (the "Competition Act"), the Investment Canada Act and
any similar legal regime in any other country applicable to significant
operations of Parent or any of its subsidiaries or the Company or any of its
subsidiaries. The Offer is also subject to other terms and conditions. See
Section 15.
For purposes of the Offer, "on a fully diluted basis" means, as of any time,
on a basis that includes the number of Shares that are actually issued and
outstanding plus the maximum number of Shares that the Company may be required
to issue pursuant to obligations under stock options, warrants and other rights
or securities convertible into shares of Common Stock, whether or not currently
exercisable.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 16, 2000 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. The Merger Agreement provides, among other things, that, upon
the terms and subject to the conditions therein, as soon as practicable after
the consummation of the Offer, Purchaser will be merged with and into the
Company (the "Merger"), with the Company being the corporation surviving the
Merger (the "Surviving Corporation"). At the effective time of the Merger (the
"Effective Time"), each outstanding Share (other than Shares held in the
Company's treasury immediately before the Effective Time, and each Share held by
Parent, Purchaser, any other subsidiary of Parent or any subsidiary of the
Company immediately before the Effective Time, all of which will be cancelled,
and other than Shares ("Dissenting Shares") with respect to which appraisal
rights are properly exercised under the Delaware General Corporation Law (the
"DGCL")) will be converted into and represent the right to receive the Offer
Price, subject to any applicable withholding taxes, without interest. See
Section 11.
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The Board of Directors of the Company (the "Board") unanimously
(i) determined that the Offer, the Merger and the Merger Agreement are
advisable, fair to and in the best interests of, the Company's stockholders,
(ii) approved the Merger, the Offer, the Merger Agreement and the other
transactions contemplated by the Merger Agreement and (iii) recommends that the
Company's stockholders accept the Offer, and tender their Shares pursuant
thereto and approve and adopt the Merger Agreement.
A special committee of the Board (the "Special Committee") and the Board
have received the written opinion of Greenhill & Co., LLC ("Greenhill"), and the
Board has received the written opinion of Bear, Stearns & Co. Inc. ("Bear
Stearns"), in each case stating that the proposed consideration to be received
by the holders of shares of Common Stock pursuant to the Offer and the Merger is
fair to such holders from a financial point of view. A copy of the written
opinions of Greenhill and Bear Stearns, which set forth the assumptions made,
procedures followed, matters considered and limitations on the reviews
undertaken, are included as annexes to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Securities and Exchange Commission
(the "SEC") in connection with the Offer, a copy of which is being furnished to
stockholders concurrently herewith. Stockholders are urged to read the full text
of such opinions carefully.
The Company has represented to Parent that as of February 15, 2000, there
were 27,375,771 Shares outstanding and there were options and warrants to
acquire 3,859,466 Shares outstanding. Neither Parent, Purchaser nor any person
listed on Schedule I hereto beneficially owns any Shares. Accordingly, the
Minimum Condition will be satisfied if 15,929,971 Shares are tendered in the
Offer. Holders of 4,652,145 Shares have agreed to tender their Shares in the
Offer pursuant to the Stockholders Agreement. See Section 11.
The Merger Agreement provides that, promptly following the purchase of and
payment for a number of Shares that satisfies the Minimum Condition, and from
time to time thereafter, Purchaser shall be entitled to designate the number of
directors, rounded up to the next whole number, on the Board that equals the
product of (i) the total number of directors on the Board (giving effect to any
additional directors elected by Purchaser) and (ii) the percentage that the
number of Shares beneficially owned by Parent and Purchaser following the Offer
bears to the total number of outstanding Shares, and the Company will take all
action within its power to cause Purchaser's designees to be elected or
appointed to the Board, including, without limitation, increasing the number of
directors, and seeking and accepting resignations of incumbent directors;
PROVIDED, HOWEVER, that before the Effective Time, the Board will have at least
two directors who are directors on February 16, 2000 and who are not officers of
the Company. In addition, at such time, the Company will also use its best
efforts to cause individual directors designated by Purchaser to constitute the
number of members, rounded up to the next whole number, on (i) each committee of
the Board other than any such 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 Board. See Section 11. The designation of
directors by Parent is subject to compliance with the requirements of
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
In connection with the Offer and the Merger, the Board has approved an
amendment to the Company's Rights Agreement to assure that the Rights are not
exercisable as a result of the Offer or the Merger.
The information contained herein concerning or attributed to the Company has
been supplied by the Company, and all other information contained herein has
been supplied by Parent and Purchaser. Although neither the Company nor Parent
or Purchaser have any knowledge that would indicate that any statements
contained herein based on the information provided by the other are untrue,
neither the Company nor Parent or Purchaser take any responsibility for the
accuracy or completeness of any information provided by the other or for any
failure by the other to disclose events that may have occurred and may affect
the significance or accuracy of such information but which are unknown to the
Company or Parent and Purchaser, respectively.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND YOU SHOULD READ THEM IN THEIR ENTIRETY BEFORE MAKING
ANY DECISION WITH RESPECT TO THE OFFER.
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THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment and pay for all Shares which are
validly tendered and not properly withdrawn on or prior to the Expiration Date,
as soon as practicable after the Expiration Date. The term "Expiration Date"
means 12:00 midnight, New York City time, on Monday, March 27, 2000, unless and
until Purchaser (subject to the terms and conditions of the Merger Agreement)
shall have extended the period of time for which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by Purchaser, shall expire prior to the purchase of
any Shares by Purchaser.
The Offer is conditioned upon the satisfaction of the Minimum Condition and
the other conditions set forth in Section 15 (collectively, the "Offer
Conditions"). Subject to the provisions of the Merger Agreement, Purchaser may
waive any or all of the conditions to its obligation to purchase Shares pursuant
to the Offer other than the Minimum Condition. If by the initial Expiration Date
or any subsequent Expiration Date any or all of the conditions to the Offer have
not been satisfied or waived, subject to the provisions of the Merger Agreement,
Purchaser may elect to (i) terminate the Offer and return all tendered Shares to
tendering stockholders, (ii) waive all of the unsatisfied conditions and,
subject to any required extension, purchase all Shares validly tendered by the
Expiration Date and not properly withdrawn or (iii) extend the Offer and,
subject to the right of stockholders to withdraw Shares until the new Expiration
Date, retain the Shares that have been tendered until the expiration of the
Offer as extended.
Under the terms of the Merger Agreement, neither Parent nor Purchaser may,
without the prior written consent of the Company, (i) decrease the Offer Price
or change the form of consideration payable in the Offer, (ii) decrease the
number of Shares subject to the Offer, (iii) impose conditions to the Offer in
addition to the Offer Conditions, (iv) except as provided in the Merger
Agreement or as required by any rule, regulation, interpretation or position of
the SEC, change the Expiration Date or (v) otherwise amend any term of the Offer
in a manner adverse to the holders of Shares. In addition, Purchaser may not,
without the prior written consent of the Company, waive or amend the Minimum
Condition.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, extend the Offer beyond the initial Expiration Date in the following
events: (i) from time to time if, at the initial Expiration Date (or any
subsequent Expiration Date), any of the Offer Conditions (other than the Minimum
Condition) shall not have been satisfied or waived, until such conditions are
satisfied or waived; (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; (iii) if all the Offer
Conditions (other than the Minimum Condition) are satisfied or waived, but the
Minimum Condition has not been satisfied, for one or more periods not to exceed
thirty (30) business days (for all such extensions); or (iv) if all of the Offer
Conditions are satisfied or waived but the number of Shares validly tendered and
not withdrawn is less than 90% of the number of then-outstanding Shares on a
fully diluted basis, for an aggregate period not to exceed twenty (20) business
days (for all such extensions), PROVIDED that, in the case of an extension
pursuant to clause (iv), Purchaser must accept and promptly pay for all
securities tendered prior to the date of such extension and otherwise meet the
requirements of Rule 14d-11 under the Exchange Act in connection with each such
extension. Such an extension pursuant to clause (iv) will constitute a
Subsequent Offering Period (as defined below).
Pursuant to Rule 14d-11 under the Exchange Act, Purchaser may, subject to
certain conditions, provide a subsequent offering period following the
expiration of the Offer on the Expiration Date (a "Subsequent Offering Period").
A Subsequent Offering Period is an additional period of time from three (3)
business days to twenty (20) business days in length, beginning after Purchaser
purchases Shares tendered in the Offer, during which stockholders may tender,
but not withdraw, their Shares and receive the Offer Price.
Purchaser intends to include a Subsequent Offering Period in the event that
all the Offer Conditions have been satisfied or waived but less than 90% of the
outstanding Shares on a fully diluted basis have been validly tendered
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and not properly withdrawn as of the Expiration Date. Pursuant to Rule 14d-7
under the Exchange Act, no withdrawal rights apply to Shares tendered during a
Subsequent Offering Period and no withdrawal rights apply during the Subsequent
Offering Period with respect to Shares tendered in the Offer and accepted for
payment. During a Subsequent Offering Period, Purchaser will promptly purchase
and pay for any Shares tendered at the same price paid in the Offer.
Parent and Purchaser have also agreed that Purchaser shall from time to time
extend the Offer, if requested by the Company, (i) if at the initial Expiration
Date (or any subsequent Expiration Date), any of the Offer Conditions other than
(or in addition to) the Minimum Condition shall not have been waived or
satisfied, until (taking into account all such extensions) the earlier of
June 30, 2000 or such earlier date upon which any such condition (other than the
Minimum Condition) shall not be reasonably capable of being satisfied prior to
June 30, 2000; or (ii) if at the initial Expiration Date (or any subsequent
Expiration Date), all of the Offer Conditions other than the Minimum Condition
shall have been waived or satisfied and the Minimum Condition shall not have
been satisfied, until the earlier of ten (10) business days after such
Expiration Date or June 30, 2000.
Subject to the applicable rules and regulations of the SEC and the
provisions of the Merger Agreement, Purchaser also expressly reserves the right,
in its sole discretion, at any time or from time to time, (i) to terminate the
Offer if any of the Offer Conditions have not been satisfied and (ii) to waive
any Offer Condition (other than the Minimum Condition) or otherwise amend the
Offer in any respect, in each case by giving oral or written notice of such
extension, termination, waiver or amendment to the Depositary and by making a
public announcement thereof. If Purchaser accepts for payment any Shares
pursuant to the Offer, it will accept for payment all Shares validly tendered
prior to the Expiration Date and not properly withdrawn, and will promptly pay
for all Shares so accepted for payment.
The rights reserved by Purchaser in the preceding paragraph are in addition
to Purchaser's rights pursuant to Section 15. Any extension, delay, termination
or amendment of the Offer will be followed as promptly as practicable by public
announcement thereof, such announcement in the case of an extension to be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date, in accordance with the public announcement
requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(d) and 14d-6(c) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which Purchaser may choose to make
any public announcement, Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
making a release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer materials (including
by public announcement as set forth above) and extend the Offer to the extent
required by Rules 14d-4(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, percentage of securities sought or
inclusion of or change to a dealer's soliciting fee, will depend upon the facts
and circumstances, including the materiality, of the changes. In the SEC's view,
an offer should remain open for a minimum of five (5) business days from the
date the material change is first published, sent or given to stockholders, and,
if material changes are made with respect to information that approaches the
significance of price and share levels, a minimum of ten (10) business days may
be required to allow for adequate dissemination and investor response. With
respect to a change in price or, subject to certain limitations, a change in the
percentage of securities sought or inclusion of or change to a dealer's
soliciting fee, a minimum ten (10) business day period from the date of such
change is generally required to allow for adequate dissemination to
stockholders. Accordingly, if, prior to the Expiration Date, Purchaser decreases
the number of Shares being sought or increases or decreases the consideration
offered pursuant to the Offer, and if the Offer is scheduled to expire at any
time earlier than the tenth business day from the date that notice of such
increase
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or decrease is first published, sent or given to stockholders, the Offer will be
extended at least until the expiration of such tenth business day. For purposes
of the Offer, a "business day" means any day other than a Saturday, Sunday or a
federal holiday and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time.
In connection with the Offer, the Company has provided Purchaser with the
names and addresses of all record holders of Shares and security position
listings of Shares held in stock depositories. This Offer to Purchase, the
related Letter of Transmittal and other relevant materials will be mailed to
registered 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 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. PROCEDURE FOR ACCEPTING THE OFFER AND TENDERING SHARES.
VALID TENDERS. Except as set forth below, in order for Shares to be validly
tendered pursuant to the Offer, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message (as hereinafter defined) in
connection with a book-entry transfer of Shares, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase on or
prior to the Expiration Date, and either (i) certificates representing tendered
Shares must be received by the Depositary, or such Shares must be tendered
pursuant to the procedure for book-entry transfer set forth below (and
confirmation of receipt of such delivery must be received by the Depositary), in
each case on or prior to the Expiration Date, or (ii) the guaranteed delivery
procedures set forth below must be complied with. No alternative, conditional or
contingent tenders will be accepted.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal (i) if such Letter of Transmittal is signed by the registered holder
of the Shares tendered therewith, unless such holder has completed either the
box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" in the Letter of Transmittal, or (ii) if Shares are
tendered for the account of a firm that is a member in good standing of the
Security Transfer Agent's Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program (each being
hereinafter referred to as an "Eligible Institution"). In all other cases, all
signatures on a Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 1 of the Letter of Transmittal.
If a certificate representing Shares is registered in the name of a person
other than the signatory of the Letter of Transmittal (or a facsimile thereof),
or if payment is to be made, or Shares not accepted for payment or not tendered
are to be registered in the name of a person other than the registered holder,
the certificate must be endorsed or accompanied by an appropriate stock power,
in either case signed exactly as the name(s) of the registered holder(s) appears
on the certificate, with the signature(s) on the certificate or stock power
guaranteed by an Eligible Institution. If the Letter of Transmittal or stock
powers are signed or any certificate is endorsed 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, unless waived by Purchaser, proper evidence
satisfactory to Purchaser of their authority to so act must be submitted. See
Instruction 5 of the Letter of Transmittal.
BOOK-ENTRY TRANSFER. The Depositary will establish accounts with respect to
the Shares at The Depository Trust Company ("DTC") for purposes of the Offer
within two (2) business days after the date of this Offer to Purchase, and any
financial institution that is a participant in DTC's system may make book-entry
delivery of the Shares by causing DTC to transfer such Shares into the
Depositary's account in accordance with DTC's procedure for such transfer.
However, although delivery of Shares may be effected through book-entry transfer
at DTC, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), 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 guaranteed
delivery procedures described below must be complied with. The term "Agent's
Message" means a message transmitted through electronic means by DTC to, and
received by, the Depositary and
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forming a part of a book-entry confirmation, which states that DTC has received
an express acknowledgment from the participant in DTC tendering the Shares that
such participant has received, and agrees to be bound by, the terms of the
Letter of Transmittal. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates representing Shares are not
immediately available (or the procedures for book-entry transfer cannot be
completed on a timely basis) or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such Shares may nevertheless
be tendered, PROVIDED that all of the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives, prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form provided by Purchaser; and
(c) the certificates representing all tendered Shares in proper form for
transfer (or confirmation of a book-entry transfer of such Shares into the
Depositary's account at DTC), together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees (or, in connection with a book-entry transfer, an
Agent's Message) and any other documents required by the Letter of
Transmittal are received by the Depositary within three trading days after
the date of such Notice of Guaranteed Delivery. A "trading day" is any day
on which the New York Stock Exchange is open for business.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by facsimile transmission or mail, to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND 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.
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 tendered Shares will be determined by Purchaser in its sole discretion,
and its determination shall be final and binding on all persons. Purchaser
reserves the absolute right to reject any or all tenders of any Shares that it
determines are not in appropriate form or the acceptance for payment of or
payment for which may, in the opinion of Purchaser's counsel, be unlawful.
Purchaser also reserves the absolute right to waive any defect or irregularity
in any tender with respect to any particular Shares or any particular
stockholder, and Purchaser's interpretation of the terms and conditions of the
Offer will be final and binding on all persons. No tender of Shares will be
deemed to have been validly made until all defects or irregularities relating
thereto have been expressly waived or cured to the satisfaction of Purchaser.
None of Purchaser, Parent, the 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, nor shall any of them incur any liability
for failure to give any such notification.
OTHER REQUIREMENTS. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's proxy, in the manner set forth in the Letter of Transmittal,
with full power of substitution, to the full extent of such stockholder's rights
with respect to the Shares tendered by such stockholder and accepted for payment
by Purchaser (and any and all other Shares or other securities or rights issued
or issuable in respect of such Shares on or after the date of this Offer to
Purchase), effective if, when and to the extent that Purchaser accepts such
Shares for payment pursuant to the Offer. Upon such acceptance for payment, all
prior proxies given by such stockholder with respect to such Shares or other
securities accepted for payment will, without further action, be revoked, and no
subsequent proxies may be given by such stockholder nor any subsequent written
consents executed (and, if given or executed, will not be deemed effective).
Such designees of Purchaser will, with respect to such Shares and other
securities or rights issuable in respect
10
<PAGE>
thereof, be empowered to exercise all voting and other rights of such
stockholder as it, in its sole discretion, may deem proper in respect of any
annual, special or adjourned meeting of the Company's stockholders, action by
written consent in lieu of any such meeting or otherwise. Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
Purchaser must be able to exercise full voting rights with respect to the Shares
accepted by Purchaser for payment immediately upon such acceptance.
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.
To prevent federal backup withholding tax on payments made to stockholders
with respect to Shares purchased pursuant to the Offer, each stockholder must
provide the Depositary with his correct taxpayer identification number ("TIN")
and certify that he is not subject to backup withholding by completing the
Substitute Form W-9 included in the Letter of Transmittal. Non-United States
holders must submit a completed Form W-8 or Form W-8BEN to avoid backup
withholding. These forms may be obtained from the Depositary. See Instructions
10 and 11 of the Letter of Transmittal.
3. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer will be irrevocable, except
that Shares tendered may be withdrawn at any time prior to the Expiration Date,
and, unless theretofore accepted for payment by Purchaser as provided herein,
may also be withdrawn on or after April 28, 2000 (or such later date as may
apply if the Offer is extended).
For a withdrawal of Shares tendered 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 on the back cover of this Offer
to Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name(s) in which the certificate(s) representing such Shares are registered,
if different from that of the person who tendered such Shares. If certificates
for Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, the name of the registered holder and the serial numbers shown on
the particular certificates evidencing such Shares to be withdrawn must also be
furnished to the Depositary prior to the physical release of the Shares to be
withdrawn. The signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution (except in the case of Shares tendered by an Eligible
Institution). If Shares have been tendered pursuant to the procedures for
book-entry transfer set forth in Section 2, any notice of withdrawal must
specify the name and number of the account at DTC to be credited with such
withdrawn Shares and must otherwise comply with DTC's procedures.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
any Shares tendered, or is unable to accept for payment or pay for Shares
tendered pursuant to the Offer, for any reason whatsoever, then, without
prejudice to Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent that the tendering stockholder is
entitled to and duly exercises withdrawal rights as described in this Section.
Any such delay will be accompanied by an extension of the Offer to the extent
required by law.
Withdrawals of tenders of Shares may not be rescinded, and Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following the
procedures described in Section 2 at any time prior to the Expiration Date or
during a Subsequent Offering Period.
No withdrawal rights will apply to Shares tendered into a Subsequent
Offering Period and no withdrawal rights apply during the Subsequent Offering
period with respect to Shares tendered in the Offer and accepted for payment.
See Section 1.
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,
and its determination will be final and binding on all persons. None
11
<PAGE>
of Parent, Purchaser, the 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 any notice of withdrawal, nor shall any of them incur any
liability for failure to give any such notification.
4. 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 extension or
amendment), Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn, as
soon as practicable after the Expiration Date. Purchaser expressly reserves the
right to delay acceptance for payment of, or payment for, Shares in order to
comply in whole or in part with any applicable law. If Purchaser desires to
delay payment for Shares accepted for payment pursuant to the Offer, and such
delay would otherwise be in contravention of Rule 14e-1(c) of the Exchange Act,
Purchaser will extend the Offer. See Section 1.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
representing such Shares (or a timely confirmation of a book-entry transfer of
such Shares into the Depositary's account at DTC, as described in Section 2),
(ii) a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees (or, in connection with a
book-entry transfer, an Agent's Message), and (iii) any other documents required
by the Letter of Transmittal.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares tendered prior to the Expiration Date
when, as and if Purchaser gives oral or written notice to the Depositary, as
agent for the tendering stockholders, of Purchaser's acceptance for payment of
such Shares. Payment for Shares so accepted for payment will be made by the
deposit of the purchase price therefor with the Depositary, which will act as
agent for the tendering stockholders for the purpose of receiving such payment
from Purchaser and transmitting such payment to tendering stockholders. If, for
any reason whatsoever, 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
under Section 1, the Depositary may, nevertheless, on behalf of Purchaser,
retain 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 3 and as otherwise required by Rule 14e-1(c) under the
Exchange Act. Under no circumstances will interest be paid on the purchase price
by reason of any delay in making such payments.
If Purchaser has accepted for payment and paid for all Shares tendered prior
to the Expiration Date but Purchaser has not reached 90% on a fully diluted
basis, Purchaser intends to extend the Offer for an aggregate period not to
exceed twenty (20) business days which period shall constitute a "Subsequent
Offering Period." See Section 1. During the Subsequent Offering Period,
Purchaser will accept for payment and promptly pay for all Shares validly
tendered. The procedures for tendering Shares and guaranteed delivery set forth
in Section 2 will apply during the Subsequent Offering Period.
If any tendered Shares are not accepted for payment and paid for,
certificates representing such Shares will be returned (or, in the case of
Shares delivered by book-entry transfer with DTC as permitted by Section 2, such
Shares will be credited to an account maintained with DTC) without expense to
the tendering stockholder as promptly as practicable following the expiration or
termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid for Shares pursuant to the Offer, Purchaser will pay such increased
consideration for all Shares accepted for payment or paid for pursuant to the
Offer, whether or not such Shares have been tendered, accepted for payment or
paid for prior to such increase in the consideration.
Purchaser reserves the right to transfer or assign in whole or in part to
one or more affiliates of Purchaser the right of Purchaser to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
12
<PAGE>
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer (or in the Merger) will
be a taxable transaction for United States federal income tax purposes (and may
also be a taxable transaction under applicable state, local or other tax laws).
In general, a stockholder will recognize gain or loss for such purposes equal to
the difference between the amount of cash received and such stockholder's
adjusted tax basis in the Shares. Gain or loss must be determined separately for
each block of Shares (i.e., Shares acquired at the same cost in a single
transaction) sold pursuant to the Offer or converted to cash in the Merger. Such
gain or loss will be capital gain or loss if the Shares are a capital asset in
the hands of the stockholder and will be long term capital gain or loss if the
Shares were held for more than one year on the date of sale (in the case of the
Offer) or the effective time of the Merger (in the case of the Merger). The
receipt of cash for Shares pursuant to the exercise of dissenters' rights, if
any, will generally be taxed in the same manner as described above.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31%. Backup withholding generally applies if
the stockholder (a) fails to furnish such stockholder's TIN, (b) furnishes an
incorrect TIN, or (c) under certain circumstances, fails to provide a certified
statement, signed under penalties of perjury, that the TIN provided is such
stockholder's correct number and that such stockholder 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 overpayment of
tax. Certain persons generally are entitled to exemption from backup
withholding, including corporations, non-United States persons and financial
institutions, provided they properly establish their status when required to do
so by completing and providing the appropriate IRS forms. Certain penalties
apply for failure to furnish correct information and for failure to include
reportable payments in income. Each stockholder should consult with his own tax
advisor as to such stockholder's qualification for exemption from backup
withholding and the procedure for obtaining such exemption. Tendering
stockholders may be able to prevent backup withholding by properly completing
the Substitute Form W-9 included in the Letter of Transmittal.
The foregoing discussion may not be applicable to a stockholder who acquired
Shares pursuant to the exercise of employee stock options or otherwise as
compensation, to a stockholder who is related to Purchaser for purposes of
Section 302 of the Internal Revenue Code or to a stockholder who is not a United
States person or who is otherwise subject to special tax treatment under the
Internal Revenue Code (for example, brokers, dealers in securities, banks,
insurance companies, tax-exempt organizations and financial institutions). For
these purposes, a United States person means a person who or which is (i) an
individual who is a citizen or resident of the United States for United States
federal income tax purposes, (ii) a corporation or other entity taxable as a
corporation created or organized under the laws of the United States or any
state thereof (including the District of Columbia), (iii) an estate the income
of which is subject to United States federal income tax regardless of its
source, or (iv) a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of the
trust. In addition, the foregoing discussion does not address the tax treatment
of holders of options to acquire Shares.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE
URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX
CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND
EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL OR NON-UNITED STATES
INCOME AND OTHER TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Company's Common Stock is listed and traded on the New York Stock
Exchange ("NYSE") under the symbol "SWD" and, prior to January 28, 1998, the
Company's Common Stock was traded in the over-the-counter market on the Nasdaq
National Market System under the symbol "SHOR." The following table sets forth,
for the fiscal periods indicated, the high and low sales prices for the Common
Stock on the NYSE and the Nasdaq National Market System with respect to periods
occurring in fiscal years 1998, 1999 and 2000 as reported by published
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<PAGE>
financial sources. The Company has not paid any cash dividends on its Common
Stock during either of its two most recent fiscal years, and the Merger
Agreement prohibits the Company from declaring or paying any cash dividends
prior to the earlier of the termination of the Merger Agreement or the Offer
Completion Date.
<TABLE>
<CAPTION>
FISCAL YEAR HIGH LOW
- ----------- -------- --------
<S> <C> <C>
FISCAL 1998
First Quarter............................................... $15.33 $11.92
Second Quarter.............................................. $17.67 $12.92
Third Quarter............................................... $18.58 $15.17
Fourth Quarter.............................................. $18.92 $15.75
FISCAL 1999
First Quarter............................................... $16.19 $13.00
Second Quarter.............................................. $16.38 $12.13
Third Quarter............................................... $20.63 $13.13
Fourth Quarter.............................................. $19.94 $16.56
FISCAL 2000
First Quarter............................................... $20.00 $17.00
Second Quarter.............................................. $17.94 $12.38
Third Quarter............................................... $19.25 $11.75
Fourth Quarter (through February 28, 2000).................. $21.00 $14.00
</TABLE>
The Rights trade together with the Common Stock. On February 16, 2000, the
last full trading day prior to the public announcement of the execution of the
Merger Agreement, the closing price per Share reported on the NYSE was $18.875.
On February 28, 2000, the last full trading day before the commencement of the
Offer, the closing price per Share reported on the NYSE was $20.8125.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or is based upon
reports and other documents on file with the SEC or otherwise publicly
available. Although neither Purchaser nor Parent have any knowledge that would
indicate that any statements contained herein based upon such reports and
documents are untrue, neither Purchaser nor Parent takes any responsibility for
the accuracy or completeness of the information contained in such reports and
other documents or for any failure by the Company to disclose events that may
have occurred and may affect the significance or accuracy of any such
information but that are unknown to Purchaser or Parent.
GENERAL. The Company is a Delaware corporation with its principal executive
offices located at 277 Park Avenue, New York, New York 10172 where its telephone
number is (212) 371-1500. The Company produces high quality specialized
packaging, principally folding cartons and set up boxes, for its customers in
the United States, Canada and China that require sophisticated precision graphic
packaging for their products, including customers in the music and home
entertainment industries, the tobacco industry, the software industry, the
personal care, cosmetic and toiletries industries and in consumer markets such
as the food, liquor, film, hosiery, consumer electronics and pharmaceutical
industries.
FINANCIAL INFORMATION. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the audited financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal year ended May 1, 1999 and
for the quarters ended October 30, 1999 and October 31, 1998, as contained in
the Company's Quarterly Report on Form 10-Q for the quarter ended October 30,
1999 and October 31, 1998, which are incorporated by reference herein. More
comprehensive financial information is included in such reports and other
documents filed by the Company with the SEC. The financial information that
follows is qualified in its entirety by reference to such reports and other
documents, including the financial statements and related notes contained
therein. Such reports and other documents may be examined and copies may be
obtained from the offices of the SEC in the manner set forth below.
14
<PAGE>
SHOREWOOD PACKAGING CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(In millions, except per share amounts)
<TABLE>
<CAPTION>
26 WEEK PERIOD ENDED 52 WEEK PERIOD ENDED
------------------------- ------------------------------
OCTOBER 30, OCTOBER 31, MAY 1, MAY 2, MAY 3,
1999 1998 1999 1998 1997(1)
----------- ----------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Income Statement Data (2):
Net sales........................................... $309.0 $260.7 $552.2 $415.4 $425.3
Earnings from continuing operations................. 36.1 31.6 57.1 49.2 48.2
Earnings from continuing operations before
extraordinary item and cumulative effect of a
change in accounting principle.................... 28.1 27.4 34.3 26.3 24.9
Net earnings........................................ 19.3 13.4 31.0 26.3 23.4
Per Share Data:
Basic Earnings Per Share Information:
Earnings from continuing operations before
extraordinary item and cumulative effect of a
change in accounting principle per common share... $ .71 $ .63 $ 1.28 $ .97 $ .91
Net earnings per common share....................... .71 .51 1.16 .97 .85
Diluted Earnings Per Share Information:
Earnings from continuing operations before
extraordinary item and cumulative effect of a
change in accounting principle per common share... $ .69 $ .62 $ 1.25 $ .95 $ .89
Net earnings per common share....................... .69 .49 1.13 .95 .83
Weighted average number of common shares............ 27.1 26.5 26.8 27.1 27.4
Weighted average number of common shares, assuming
dilution.......................................... 27.9 27.1 27.6 27.7 28.1
Balance Sheet Data:
Current assets...................................... $152.5 $134.7 $123.9 $ 95.8 $ 94.5
Net property, plant and equipment................... 247.2 244.9 243.4 200.3 156.2
Total assets........................................ 561.5 502.1 515.5 326.0 277.9
Current liabilities................................. 101.7 98.1 100.4 64.9 52.9
Long-term debt excluding current maturities......... 261.8 258.8 227.7 126.4 106.9
Stockholders' equity................................ 156.8 120.6 146.5 109.8 96.4
</TABLE>
- ------------------------
(1) 53 week period.
(2) The operations of the Company's transportation business have been reflected
as discontinued operations for the period ended May 3, 1997, and for all
prior periods.
OTHER FINANCIAL INFORMATION. During the course of discussions between
Parent and the Company, the Company provided Parent with certain projections,
set forth below, showing estimated sales, net income and earnings per share for
the Company for the fiscal years ending 2001, 2002, 2003 and 2004.
<TABLE>
<CAPTION>
FISCAL YEAR ENDING 2001 2002 2003 2004
- ------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Sales........................................... $ 648 $ 695 $ 745 $ 798
Net Income...................................... $ 43 $ 49 $ 56 $ 63
Earnings Per Share.............................. $1.54 $1.74 $1.99 $2.27
</TABLE>
The Company also informed Parent that the Company expected its revenues for
its third quarter ended January 31, 2000 to be approximately $134 million
compared to the $141 million reported for the comparable period last year. The
Company also stated that its operating and net earnings would be lower than
those reported in the comparable period last year.
15
<PAGE>
AVAILABLE INFORMATION. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational filing requirements of
the Exchange Act and, in accordance therewith, is obligated to file periodic
reports, proxy statements and other information with the SEC relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning the Company's directors and officers, their remuneration,
stock options granted to them, the principal holders of the Company's securities
and any material interest of such persons in transactions with the Company is
required to be disclosed in such proxy statements and distributed to the
Company's stockholders and filed with the SEC. Such reports, proxy statements
and other information should be available for inspection at the public reference
facilities at the SEC's principal office at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549, and at the regional offices of the SEC located at
7 World Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. The SEC maintains a site on the
World Wide Web, and the reports, proxy statements and other information filed by
the Company with the SEC may be accessed electronically on the World Wide Web at
http://www.sec.gov. Copies of such material may also be obtained by mail, upon
payment of the SEC's customary fees, from the SEC's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549.
8. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
GENERAL. Parent is a New York corporation incorporated in 1941 as the
successor to the New York corporation of the same name organized in 1898, with
its principal offices located at Two Manhattanville Road, Purchase, New York
10577. The telephone number of Parent is (914) 397-1500. Parent is a global
paper and forest products company that produces printing and writing papers,
pulp, tissue, paperboard and packaging and wood products. It also manufactures
specialty chemicals and specialty panels and laminated products. Parent's
primary markets and manufacturing and distribution operations are in the United
States, Europe and the Pacific Rim.
Parent distributes printing, packaging, graphic arts and industrial supply
products, primarily manufactured by other companies, through over 250
distribution branches located primarily in the United States, and also engages
in oil and gas and real estate activities in the United States. Parent has
operations in nearly 50 countries, employs nearly 100,000 people and exports its
products to more than 130 nations.
Purchaser is a Delaware corporation with its principal offices located at
Two Manhattanville Road, Purchase, New York 10577. The telephone number of
Purchaser is (914) 397-1500. Purchaser is a wholly owned subsidiary of Parent.
Purchaser has not carried on any activities other than in connection with the
Merger Agreement.
The name, citizenship, business address, business phone number, principal
occupation or employment and five-year employment history for each of the
directors and executive officers of Parent and Purchaser are set forth in
Schedule I hereto.
Except as described in this Offer to Purchase, (1) none of Parent, Purchaser
nor, to the best knowledge of Parent and Purchaser, any of the persons listed in
Schedule I to this Offer to Purchase or any associate or majority-owned
subsidiary of Parent or Purchaser or any of the persons so listed, beneficially
owns or has any right to acquire, directly or indirectly, any Shares and
(2) none of Parent, Purchaser nor, to the best knowledge of Parent and
Purchaser, any of the persons or entities referred to above nor any director,
executive officer or subsidiary of any of the foregoing has effected any
transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement, the Stockholders Agreement or as
otherwise described in this Offer to Purchase, none of Parent, Purchaser nor, to
the best knowledge of Parent and Purchaser, any of the persons listed in
Schedule I to this Offer to Purchase, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, finder's fees, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies.
Parent is the principal supplier of solid bleached sulfate ("SBS") board to
the Company. The Company purchased approximately 68,800 tons of SBS board from
Parent during the calendar year ended December 31, 1999 for an aggregate price
of approximately $62,700,000. Except as set forth in this Offer to Purchase,
none of Parent, Purchaser nor, to the best knowledge of Parent and Purchaser,
any of the persons listed on Schedule I hereto, has
16
<PAGE>
had any business relationship or transaction with the Company or any of its
executive officers, directors or affiliates that is required to be reported
under the rules and regulations of the SEC applicable to the Offer. Except as
set forth in this Offer to Purchase, there have been no contacts, negotiations
or transactions between Parent or any of its subsidiaries or, to the best
knowledge of Parent, any of the persons listed in Schedule I to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets. None of the persons listed in Schedule I have,
during the past five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors). None of the persons listed in
Schedule I have, during the past five years, been a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to federal or state securities, laws, or a finding of any violation of
federal or state securities laws.
9. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by Purchaser to purchase Shares pursuant
to the Offer and the Merger is estimated to be approximately
$655,939,977 million. Purchaser will obtain such funds from Parent who will
obtain such funds from internally generated funds including short-term
borrowings in the ordinary course of its business. The Offer is not conditioned
on any financing arrangements.
10. BACKGROUND OF THE OFFER AND THE MERGER; PAST CONTACTS OR NEGOTIATIONS WITH
THE COMPANY.
Prior to November 1999, executives of Parent were familiar with the business
and operations of the Company because the Company was a significant customer of
Parent and its subsidiaries and because Parent and its subsidiaries, on the one
hand, and the Company and its subsidiaries, on the other, were in certain
overlapping markets and shared certain customers.
On November 18, 1999, the Company issued a press release disclosing that it
had made a proposal to acquire Chesapeake Corporation ("Chesapeake") and that it
had received a counterproposal from Chesapeake pursuant to which Chesapeake
offered to purchase the Company at a price of $16.50 per Share in cash, which
counterproposal the Company rejected. Shortly thereafter, executives of Parent
began exploring the possibility of a business combination with the Company.
During the week of November 22, 1999, Mr. David W. Oskin, an executive vice
president of Parent, contacted Mr. Marc P. Shore, Chairman of the Board and
Chief Executive Officer of the Company, to express an interest in a possible
combination of the Company and Parent, as an alternative to the offer made by
Chesapeake. Mr. Shore returned the telephone call the following week and
expressed a willingness to meet with representatives of Parent.
Parent has an ongoing relationship with Credit Suisse First Boston whereby
Credit Suisse First Boston provides Parent with certain financial advisory
services. Representatives of Parent first discussed the possible acquisition of
the Company with Credit Suisse First Boston on November 18, 1999.
On November 30, 1999, Chesapeake filed a Schedule 13D with the SEC
disclosing that, on November 26, 1999, it entered into a stock purchase
agreement to purchase 4,106,440 Shares, or approximately 14.9% of the
outstanding Shares, from clients of Ariel Capital Management, Inc. for $17.25
per Share. On December 3, 1999, Chesapeake, through its wholly owned subsidiary,
Sheffield, Inc. ("Sheffield"), commenced a tender offer to purchase the Company
at a price of $17.25 per Share in cash (the "Chesapeake Offer").
In the Schedule 14D-1 filed by Chesapeake with respect to the Chesapeake
Offer (the "Chesapeake Schedule 14D-1"), Chesapeake indicated that the purpose
of the Chesapeake Offer was to facilitate the acquisition of a majority of the
outstanding Shares as a first step in the acquisition of the Company. Chesapeake
also disclosed in the Chesapeake Schedule 14D-1 that it was seeking to enter
into negotiations with the Company with respect to a merger with Sheffield (the
"Proposed Chesapeake Merger"), which it intended to consummate as soon as
practicable after consummation of the Chesapeake Offer or in lieu of the
Chesapeake Offer. According to the Chesapeake Schedule 14D-1, upon consummation
of the Proposed Chesapeake Merger, each then outstanding Share (other than
Shares held (1) by Sheffield or any other directly or indirectly owned
subsidiary of Chesapeake, (2) in the Company's treasury and (3) by stockholders
who properly exercised appraisal rights under the DGCL)
17
<PAGE>
would be converted into the right to receive in cash and the price per Share
paid by Sheffield pursuant to the Chesapeake Offer. Chesapeake indicated in the
Chesapeake Schedule 14D-1 that it was willing to enter into negotiations with
the Company's Board of Directors regarding the possibility of increasing its
offer price after appropriate due diligence and access to the Company's business
plan.
In connection with the Chesapeake Offer, Chesapeake also filed a preliminary
consent solicitation statement (the "Consent Solicitation Statement") with the
SEC to, among other things, remove the current members of the Company's Board of
Directors and replace them with Chesapeake's nominees and to repeal each
provision of the Company's bylaws or amendments thereto adopted subsequent to
November 22, 1999 (which date was later changed by Chesapeake to January 5,
2000).
In addition, on December 3, 1999, Chesapeake and Sheffield commenced a
lawsuit in the Delaware Court of Chancery (the "Court of Chancery") against the
Company and each of the members of the Company's Board of Directors seeking,
among other things, (i) an order declaring that the Company's Board of Directors
breached its fiduciary duties by adopting certain amendments to the Company's
bylaws, (ii) an order declaring that failure to redeem the Rights, or to render
the Rights inapplicable to the Chesapeake Offer and the Proposed Chesapeake
Merger, or to approve the Chesapeake Offer and the Proposed Chesapeake Merger
would constitute a breach of the Company's Board of Directors' fiduciary duties
under Delaware law, and (iii) an order compelling the Company's Board of
Directors to approve the Chesapeake Offer and the Proposed Chesapeake Merger for
purposes of Section 203 of the DGCL. Also on December 3, 1999, Chesapeake and
Sheffield commenced litigation against the Company in the United States District
Court for the District of Delaware seeking, among other things, a declaratory
judgment that Chesapeake and Sheffield have disclosed all information required
by, and are otherwise in full compliance with, the Exchange Act, and any other
federal securities laws, rules or regulations deemed applicable to the
Chesapeake Offer and the Consent Solicitation Statement.
On December 7, 1999, Mr. Oskin, Mr. C. Cato Ealy, Vice President-Business
Development and Planning of Parent, Mr. James Kennedy, an executive of Parent,
and representatives of Credit Suisse First Boston met with Mr. Shore and
Mr. Timothy O'Donnell, a director of the Company and the President of Jefferson
Capital Group, Ltd., one of the Company's financial advisors, at the Company's
offices to discuss the Company's situation and the possibility of a transaction
involving Parent and the Company.
On December 10, 1999, the Company and Parent entered into a Confidentiality
Agreement in which Parent agreed, among other things, to keep information it
obtained from the Company confidential, to refrain from soliciting employees of
the Company, and not to make an unsolicited offer to acquire the Company. The
next day, representatives of Parent and the Company discussed the Company's
business plan and the possible synergies that would result from a combination of
Parent and the Company during meetings at Parent's offices. At the December 14,
1999 meeting of the Parent's Board of Directors, the directors were apprised of
the status of discussions with the Company but no recommendation was made to the
Board of Directors and no action was taken.
On December 15, 1999, the Company filed an answer and counterclaim to
Chesapeake's complaint in the Court of Chancery and to Chesapeake's complaint in
the United States District Court for the District of Delaware.
On December 21, 1999, Mr. Oskin met with Mr. Shore to discuss a possible
business combination. During their meeting, Mr. Shore informed Mr. Oskin that
the Company was in the process of reviewing strategic alternatives to enhance
stockholder value. Mr. Oskin then indicated that Parent would consider acquiring
the Company at a price of $20.00 per Share, a price which Mr. Shore indicated
was not, in his view, sufficiently preemptive to cause the Company to suspend
its exploration of strategic alternatives. On December 22 and 23, 1999,
Mr. Ealy and Mr. O'Donnell had several further discussions relating to Parent's
interest in the Company and the methodology used by Parent to reach its
indication of value. During a December 29, 1999 conference call with
representatives of the Company, representatives of Parent reiterated the $20.00
per Share indication of value, which the Company again indicated was not
sufficiently preemptive.
On January 8, 2000, Mr. Oskin and Mr. Shore met and further discussed
Parent's previous indication of value with respect to the Company. Throughout
January 2000, the Company and Parent had intermittent conversations to
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discuss ongoing developments although there were no revised proposals during
this time period. During this period, the Chesapeake Offer remained outstanding
and the Company and Chesapeake pursued the Delaware court litigation.
Prior to February 1, 2000, the Company hired Greenhill & Co., LLC
("Greenhill") to act as financial advisor to the Special Committee of the
Company's Board of Directors. On February 1, representatives of Greenhill and
Mr. Shore met with Mr. Ealy, Mr. Oskin and representatives of Credit Suisse
First Boston at Parent's offices. During that meeting, representatives of
Greenhill informed Parent that the Company's Board of Directors would be meeting
on February 8 and would be considering alternatives at such time.
On February 7, 2000, the Chancery Court issued its decision in the
Chesapeake litigation holding in favor of Chesapeake on the major issues. On
February 8, 2000, Chesapeake requested that the Company set a record date for
the Consent Solicitation Statement.
Also on February 8, 2000, Parent's Board of Directors held a telephonic
meeting and authorized Parent's management to proceed with an offer to acquire
the Company for not more than $21.00 per Share. In the course of the Board
meeting, several members of Parent's Board stressed the importance of ensuring
that Parent and the Company had access, following an acquisition of the Company,
to the services of Mr. Shore and other members of the Company's management. That
afternoon, Mr. Oskin called representatives of Greenhill and informed them that
Parent's valuation of the Company had not changed since December and that Parent
was willing to pay a price of $20.50 per Share provided that the Company would
agree to a termination fee equal to $1.00 per Share which would be payable to
Parent if the Merger Agreement was terminated under certain circumstances.
Mr. Oskin informed representatives of Greenhill that Parent was still
considering whether it would prefer to pay the consideration all in cash or part
in cash and part in Parent stock. Mr. Oskin informed representatives of the
Company that, if Parent's indication of value was acceptable to the Company,
Parent would promptly meet with rating agencies to discuss the possibility of an
all-cash offer to acquire the Company.
A representative of Greenhill contacted a representative of Credit Suisse
First Boston on February 9, 2000 to discuss certain conditions and issues that,
in the Company's view, would need to be resolved in order for the Company to
proceed with a transaction with Parent. Representatives of the Company, Credit
Suisse First Boston and Greenhill discussed those conditions, which included the
Company's request for some improvement in the proposed price per Share, for
consideration consisting solely of cash and for a reduction in the proposed
termination fee. On February 10, 2000, following meetings with Moody's Investors
Services, Inc. and Standard & Poor's Ratings Group, Parent made an internal
decision that it would agree to an all-cash offer.
Parent, Parent's counsel, the Company, the Company's counsel and
representatives of Greenhill and Credit Suisse First Boston met on February 12,
2000, at Parent's headquarters to discuss the terms of a possible transaction
between the Company and Parent. During this meeting, Parent indicated to the
Company that, on the express condition that it receive a termination fee and
expense reimbursement totaling $28 million, it would be willing to increase its
previous indication of value of $20.50 per Share and, subject to the negotiation
of the definitive form of the Merger Agreement and related agreements, including
employment and non-competition agreements with Mr. Shore and Mr. Howard Liebman,
President and Chief Financial Officer of the Company, Parent would be prepared
to acquire all of the outstanding Shares for $21.00 per Share in cash through a
tender offer for all of the Shares followed by a second-step merger. They
agreed, over the next several days, to commence negotiation of a definitive
Merger Agreement and to begin discussion of the terms on which Mr. Shore and
Mr. Liebman would agree to work for the Company following its acquisition by
Parent.
On February 13, 2000, Parent's legal counsel distributed the first draft of
the Merger Agreement to Company's legal counsel. In the days that followed,
representatives of Parent and representatives of the Company spoke on several
occasions and continued negotiating the terms of the Merger Agreement as well as
the Stockholders Agreement and the employment and non-competition agreements for
Mr. Shore and Mr. Liebman.
During the afternoon of February 16, 2000, the Board of Directors of the
Company met to consider the Merger Agreement, the Stockholders Agreement and the
transactions contemplated thereby. Following that meeting, Parent was informed
that the Company's Board of Directors had unanimously approved the Merger
Agreement, the Offer
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and the Merger, determined that the Offer and the Merger were advisable, fair
to, and in the best interest of, the holders of Shares and unanimously resolved
to recommend that the Company's stockholders accept the Offer and tender their
Shares pursuant thereto and approve and adopt the Merger Agreement.
The night of February 16, 2000, Parent, Purchaser and the Company executed
and delivered the Merger Agreement and Parent, Purchaser and certain
stockholders of the Company executed and delivered the Stockholders Agreement.
In addition, Parent, Mr. Shore and Mr. Liebman executed and delivered
documentation relating to their employment following the closing of the Offer.
On February 17, 2000, prior to the opening of trading on the NYSE, each of
Parent and the Company issued a press release announcing the execution of the
Merger Agreement.
A copy of the press release issued by Parent is filed as an exhibit to the
Schedule TO referred to in Section 18 and is incorporated herein by reference.
Later that day, Chesapeake issued a press release announcing that it would
permit the Chesapeake Offer to expire at midnight, New York City time, on
February 18, 2000 in accordance with its terms. Chesapeake also announced that
it was withdrawing its request that the Company's Board of Directors set a
record date in connection with the Consent Solicitation Statement. On February
29, 2000, Purchaser commenced the Offer.
11. THE MERGER AGREEMENT; STOCKHOLDERS AGREEMENT; EMPLOYMENT AGREEMENTS.
THE MERGER AGREEMENT
The following summary of certain provisions of the Merger Agreement is
qualified in its entirety by reference to the complete text of the Merger
Agreement, a copy of which has been filed as an exhibit to the Schedule TO
referred to in Section 18 and is incorporated herein by reference. The following
summary may not contain all of the information important to you. The Merger
Agreement may be examined and copies may be obtained from the SEC in the same
manner as set forth in Section 7. Capitalized terms used in the following
summary and not otherwise defined in this Offer to Purchase shall have the
meanings set forth in the Merger Agreement.
THE OFFER. The Merger Agreement contemplates the commencement of the Offer.
The obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer is subject to the satisfaction or waiver of the Minimum
Condition and the other Offer Conditions. For a description of the Offer
Conditions, see Section 15.
Under the terms of the Merger Agreement, neither Parent nor Purchaser may,
without the prior written consent of the Company, (i) decrease the Offer Price,
(ii) decrease the number of Shares sought in the Offer, (iii) change the form of
consideration payable in the Offer, (iv) impose conditions to the Offer in
addition to the Offer Conditions, (v) except as provided in the Merger Agreement
or required by any rule, regulation, interpretation or position of the SEC,
change the Expiration Date (as defined in the Merger Agreement), or
(vi) otherwise amend any term of the Offer in a manner adverse to the holders of
Shares. In addition, Purchaser may not, without the prior written consent of the
Company, waive or amend the Minimum Condition.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, extend the Offer beyond the initial Expiration Date in the following
events: (i) from time to time if, at the initial Expiration Date (or any
subsequent Expiration Date), any of the Offer Conditions (other than the Minimum
Condition) shall not have been satisfied or waived, until such conditions are
satisfied or waived; (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; (iii) if all the Offer
Conditions (other than the Minimum Condition) are satisfied or waived, but the
Minimum Condition has not been satisfied, for one or more periods not to exceed
thirty (30) business days (for all such extensions); or (iv) if all of the Offer
Conditions are satisfied or waived but the number of Shares validly tendered and
not withdrawn is less than 90% of the number of then outstanding Shares on a
fully diluted basis, for a period not to exceed twenty (20) business days (for
all such extensions), PROVIDED that, in the case of an extension pursuant to
clause (iv), Purchaser must accept and promptly pay for all securities tendered
prior to the date of such extension and otherwise meet the requirements of
Rule 14d-11 under the Exchange Act in connection with each such extension. Such
an extension pursuant to clause (iv) would constitute a Subsequent Offering
Period. See Section 1.
In addition, Parent and Purchaser have agreed that Purchaser will from time
to time extend the Offer, if requested by the Company, (i) if at the initial
Expiration Date (or any subsequent Expiration Date), any of the Offer
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Conditions other than (or in addition to) the Minimum Condition shall not have
been waived or satisfied, until (taking into account all such extensions) the
earlier of June 30, 2000 or such earlier date upon which any such condition
(other than the Minimum Condition) shall not be reasonably capable of being
satisfied prior to June 30, 2000; or (ii) if at the initial Expiration Date (or
any subsequent Expiration Date), all of the Offer Conditions other than the
Minimum Condition shall have been waived or satisfied and the Minimum Condition
shall not have been satisfied, until the earlier of ten (10) business days after
such expiration date or June 30, 2000.
DIRECTORS. The Merger Agreement provides that promptly following the
purchase of and payment for a number of Shares that satisfies the Minimum
Condition, and from time to time thereafter, Purchaser will be entitled to
designate the number of directors, rounded up to the next whole number, on the
Board that equals the product of (i) the total number of directors on the Board
(giving effect to the election of any additional directors by Purchaser) and
(ii) the percentage that the number of Shares beneficially owned by Parent and
Purchaser (including Shares paid for pursuant to the Offer), upon such
acceptance for payment, bears to the total number of Shares outstanding, and the
Company has agreed to take all action within its power to cause Purchaser's
designees to be elected or appointed to the 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 individual directors designated by Purchaser to constitute
the number of members, rounded up to the next whole number, on (i) each
committee of the Board other than any committee 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 Board. Notwithstanding the foregoing, until the
Effective Time the Board must have at least two directors who are directors on
the date of the Merger Agreement and who are not officers of the Company (the
"Continuing Directors"). The Company's obligations to appoint Purchaser's
designees to the Board is subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder.
Following the election or appointment of Purchaser's designees and until the
Effective Time, the approval of the Continuing Directors is required to
authorize (and such authorization shall constitute the authorization of the
Board 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 the Merger Agreement by the Company, any amendment of the Merger
Agreement requiring action by the Board, any amendment of the certificate of
incorporation or bylaws of the Company, any extension of time for performance of
any obligation or action under the Merger Agreement by Parent or Purchaser, any
waiver of compliance with any of the agreements or conditions in the Merger
Agreement for the benefit of the Company and any material transaction with
Parent, Purchaser or any affiliate thereof.
THE MERGER. The Merger Agreement provides that, following the consummation
of the Offer and subject to the terms and conditions thereof, at the Effective
Time Purchaser will be merged with and into the Company and, as a result of the
Merger, the separate corporate existence of Purchaser will cease, and the
Company will continue as the Surviving Corporation and a direct wholly owned
subsidiary of Parent.
CONDITIONS TO THE MERGER. The obligation of Purchaser to effect the Merger
is subject to the satisfaction or waiver of the following conditions:
(i) Purchaser shall have completed the purchase of the Shares pursuant to the
Offer, (ii) the Merger Agreement shall have been adopted by the requisite vote
of the stockholders of the Company in accordance with the DGCL, (iii) no order,
statute, rule, regulation, executive order, stay, decree, judgment or injunction
which prohibits or prevents the consummation of the Merger shall have been
entered, enacted, promulgated or enforced by any court or other governmental
entity which prohibits or prevents the consummation of the Merger and which has
not been vacated, dismissed or withdrawn prior to the Effective Time, and the
Company and Parent have agreed to use all reasonable best efforts to have any of
the foregoing vacated, dismissed or withdrawn by the Effective Time and
(iv) all consents of any governmental entity required for the consummation of
the Merger and the transactions contemplated by the Merger Agreement shall have
been obtained, other than where the failure to obtain such consents will not
have a material adverse effect on the business, assets, condition (financial or
other), liabilities or results of operations of the Surviving Corporation and
its subsidiaries taken as a whole.
CONVERSION OF SHARES. At the Effective Time and without any action on the
part of the holder thereof (i) each issued and outstanding Share (other than
Shares that are held by stockholders properly exercising dissenters' rights
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under the DGCL and Shares to be cancelled pursuant to clause (iii) below) will
convert into the right to receive the Offer Price in cash payable to the holder
thereof, without interest, upon surrender of the certificate representing such
Share, (ii) each issued and outstanding share of common stock of Purchaser will
be converted into and become one fully paid and non-assessable share of common
stock of the Surviving Corporation, and (iii) each Share issued and held in the
Company's treasury immediately before the Effective Time, and each Share held by
Parent, Purchaser, any other subsidiary of Parent or any subsidiary of the
Company immediately before the Effective Time, will be cancelled and retired
without payment of any consideration therefor.
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 Offer Price and any other amounts payable pursuant to the
Merger Agreement shall be appropriately adjusted.
TREATMENT OF OPTIONS AND STOCK UNITS. The Company has agreed to take, prior
to the initial Expiration Date, all actions necessary and appropriate to provide
that at the Effective Time, each outstanding option to purchase Shares or other
similar interest (collectively, the "Options") granted under any of the
Company's stock option plans or under any other plan or arrangement (the "Option
Plans") and outstanding warrant to purchase Shares (the "Warrants"), whether or
not then exercisable or vested, shall be cancelled and, in exchange therefor,
each holder of such Option or Warrant shall receive an amount in cash in respect
thereof, if any, equal to the product of (i) the excess, if any, of the Offer
Price over the per share exercise price thereof and (ii) the number of Shares
subject thereto (such payment to be net of applicable withholding taxes). The
Company has agreed to take, prior to the initial Expiration Date, all actions
necessary and appropriate to provide that at the Effective Time, each
outstanding stock unit granted pursuant to the Company's Incentive Program for
Canadian Employees shall become vested and shall be cancelled, and in exchange
therefor, each holder thereof shall be entitled to receive the Offer Price (such
payment to be net of applicable withholding taxes). The Company has agreed to
use its reasonable best efforts to obtain all necessary waivers, consents or
releases from holders of Options, Warrants and stock units and has agreed to
take any action as may be reasonably necessary give effect to, and to accomplish
such transactions.
STOCKHOLDERS' MEETING. Pursuant to the Merger Agreement, if required by
applicable law to consummate the Merger, the Company has agreed to duly call,
give notice of, convene and hold a special meeting of its stockholders as soon
as practicable following the date on which Purchaser completes the purchase of
shares of Common Stock pursuant to the Offer (the "Offer Completion Date") to
vote on the Merger Agreement. Subject to its fiduciary duties under applicable
law, the Board has agreed to include in the proxy statement relating to the
Merger Agreement and the Merger its recommendation that stockholders of the
Company vote in favor of the approval and adoption of the Merger Agreement and
the Merger. Parent and Purchaser and any of their respective subsidiaries have
agreed to vote, or cause to be voted, all Shares owned by them in favor of the
Merger Agreement at the meeting. If Purchaser acquires at least a majority of
the outstanding Shares in the Offer, it will have sufficient voting power to
approve the Merger, even if no other stockholder votes in favor of the Merger.
The Company is not required to take the foregoing actions if Parent or Purchaser
may consummate the Merger without the vote or approval of the Company's
stockholders in accordance with the short term merger provisions of Section 253
of the DGCL.
REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Parent and
Purchaser with respect to, among other things: its existence, good standing and
corporate authority; the authorization, validity and effect of agreements;
capitalization; subsidiaries; other interests; no conflicts; required filings
and consents; compliance with law; SEC filings; financial statements and
undisclosed liabilities; absence of certain changes; material contracts;
litigation; taxes; employee benefit plans; labor and employment matters;
brokers; properties; environmental laws; related party transactions;
intellectual property; the inapplicability of state takeover laws; product
liability; opinions of financial advisors; the Rights Agreement; and accuracy of
certain disclosure.
Certain representations and warranties in the Merger Agreement made by the
Company are qualified as to "materiality" or "Company Material Adverse Effect."
For purposes of the Merger Agreement and this Offer to Purchase, the capitalized
term "Company Material Adverse Effect" means a material adverse effect on
(i) the
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business, properties, operations results of operations or condition (financial
or otherwise) of (x) the Company and the Company's subsidiaries taken as a whole
or (y), for purposes of the representations and warranties section only, any one
of the Company's plants; or (ii) the ability of the Company to perform its
obligations under the Merger Agreement; PROVIDED, HOWEVER, none of the following
are deemed, either alone or in combination, to constitute a "Company Material
Adverse Effect": (i) a change in the market price or trading volume of Common
Stock, (ii) any adverse change, event or effect that is caused by conditions
affecting the economy of the United States generally or the economy of any
nation or region in which the Company or any of its subsidiaries conducts
business that is material to the business of such entity and its subsidiaries,
taken as a whole or (iii) the Company's disclosure that its revenues and
earnings for its third quarter ended January 31, 2000 would be less than
previously anticipated.
Pursuant to the Merger Agreement, Parent and Purchaser have made customary
representations and warranties to the Company with respect to, among other
things: their existence, good standing and corporate authority; the
authorization, validity and effect of agreements; no conflicts; required filings
and consents; brokers; accuracy of certain disclosure; the prior activities of
Purchaser; and their ability to finance the transactions contemplated by the
Merger Agreement.
None of the representations and warranties made by Parent and Purchaser in
the Merger Agreement survive the Effective Time and none of the Company's
representations and warranties survive the Offer Completion Date.
COVENANTS. The Merger Agreement contains various customary covenants of the
parties. A description of these covenants follows.
INTERIM OPERATIONS. The Company has agreed that, during the period from the
date of the Merger Agreement and continuing until the earlier of the termination
of the Merger Agreement or the Offer Completion Date, unless Parent shall
otherwise agree in writing or as set forth in Section 5.1 of the disclosure
letter delivered prior to the execution of the Merger Agreement to Parent, (the
"Company Disclosure Letter") or as contemplated by the Merger Agreement, it will
conduct its business and cause the businesses of its subsidiaries to be
conducted only in the ordinary course of business and in a manner consistent
with past practice; and use reasonable commercial efforts to preserve
substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers, employees
and consultants of the Company and its subsidiaries and to preserve the present
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has significant
business relations.
The Merger Agreement provides that, except as contemplated thereby or as
required by applicable law or rule of any stock exchange or over-the-counter
market, neither the Company nor any of its subsidiaries can, during the period
from the date of the Merger Agreement and continuing until the earlier of the
termination of the Merger Agreement or the Offer Completion Date, and except as
set forth in Section 5.1 of the Company Disclosure Letter, directly or
indirectly do, or propose to do, any of the following without the prior written
consent of Parent:
(a) Amend or otherwise change its certificate of incorporation or
by-laws, or amend the Rights Agreement or reduce the Rights issued
thereunder;
(b) Issue, sell, pledge, dispose of or encumber or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of capital stock or any other
ownership interest (including, without limitation, any phantom interest) in
the Company, any of its subsidiaries or affiliates (except for the issuance
of shares of Common Stock issuable pursuant to Options under the Option
Plans, which options were outstanding on the date of the Merger Agreement);
PROVIDED that the occurrence of a separation of the Rights under the Rights
Agreement, and the related issuance of shares of Common Stock to the
Company's stockholders thereunder shall not be deemed a breach of the Merger
Agreement to the extent that (i) the occurrence of such separation occurred
as a result of an unsolicited acquisition of Common Stock by a third party,
and (ii) such acquisition did not occur as a result of the Company breaching
its covenants discussed under "No Solicitation" below;
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(c) Sell, pledge, dispose of or encumber any assets of the Company or
any of its subsidiaries (except for (i) sales of inventory in the ordinary
course of business and in a manner consistent with past practice,
(ii) dispositions of obsolete or worthless assets and (iii) sales of assets
not in excess of $1,000,000 in the aggregate);
(d) (i) Declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof)
in respect of any of its capital stock, except that a wholly owned
subsidiary of the Company may declare and pay a dividend to its parent,
(ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, (iii) except as
required by the terms of any security as in effect on the date of the Merger
Agreement or expressly permitted under the Merger Agreement, amend the terms
or change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, or permit any subsidiary to amend the terms or change the
period of exercisability of, purchase, repurchase, redeem or otherwise
acquire, any of its securities or any securities of its subsidiaries,
including, without limitation, shares of Common Stock, or any option,
warrant or right, directly or indirectly, to acquire any such securities, or
propose to do any of the foregoing, or (iv) settle, pay or discharge any
claim, suit or other action brought or threatened against the Company with
respect to or arising out of a stockholder equity interest in the Company;
(e) (i) Acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money, except in
the ordinary course of business or issue any debt securities or assume,
guarantee (other than guarantees of the Company's subsidiaries entered into
in the ordinary course of business) or endorse or otherwise as an
accommodation become responsible for, the obligations of any person, make
any loans or advances, except in the ordinary course of business consistent
with past practice; or (iii) commit to make any capital expenditures or
purchases of fixed assets which are, in the aggregate, in excess of
$7,000,000; provided that the Company will consult with Parent with respect
to any such commitment in excess of $1,000,000; or (iv) enter into or
materially amend any contract, agreement, commitment or arrangement to
effect any of the matters prohibited in this paragraph;
(f) Except as set forth in the Company Disclosure Letter, increase the
compensation or severance payable or to become payable to its directors,
officers or employees, except for increases in salary or wages of employees
of the Company or its subsidiaries (who are not directors or executive
officers of the Company) in accordance with past practices, or grant any
severance or termination pay (except payments required to be made under
obligations existing on the date of the Merger Agreement in accordance with
the terms of such obligations) to, or enter into any employment or severance
agreement with, any employee of the Company or any of its subsidiaries,
except for agreements with new employees entered into in the ordinary course
of business and providing for annual base and bonus compensation not to
exceed $150,000, or establish, adopt, enter into or amend any collective
bargaining agreement, Plan (as defined in the Merger Agreement), trust,
fund, policy or arrangement for the benefit of any current or former
directors, officers or employees or any of their beneficiaries, except, in
each case, as may be required by law or as would not result in a material
increase in the cost of maintaining such collective bargaining agreement,
Plan, trust, fund, policy or arrangement;
(g) Take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable), except as required by a change in generally accepted accounting
principles or SEC position occurring after the date of the Merger Agreement;
(h) Except in the ordinary course of business, make any tax election or
settle or compromise any material United States federal, state, local or
non-United States tax liability;
(i) Pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) in
excess of $1,000,000 in the aggregate, other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of liabilities reflected or reserved against in the financial
statements contained in the Company's SEC filings or incurred in the
ordinary course of business and consistent with past practice; or
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(j) Take, or agree in writing or otherwise to take, any of the
aforementioned actions, or any action which would make any of the
representations or warranties of the Company contained in the Merger
Agreement untrue or incorrect or prevent the Company from performing or
cause the Company not to perform its covenants under the Merger Agreement.
NO SOLICITATION. In the Merger Agreement, the Company has agreed to not,
directly or indirectly, or through any officer, director, employee,
representative or agent of the Company or any of its subsidiaries, and to not
permit any such officer, director, employee, representative or agent to, solicit
or encourage the initiation of (including by way of furnishing information) any
inquiries or proposals regarding, or participate in negotiations or discussions
concerning any merger, sale of assets, sale of shares of capital stock
(including without limitation by way of a tender offer) or similar transactions
involving the Company or any subsidiaries of the Company that if consummated
would constitute an Alternative Transaction (as defined below) (any of the
foregoing inquiries or proposals being referred to herein as an "Acquisition
Proposal"). Upon the execution of the Merger Agreement, the Company agreed to
immediately cease any discussions or negotiations with any person, entity or
group (other than Parent or any of its affiliates or representatives) concerning
any such transaction or any Acquisition Proposal that were continuing on the
date of the Merger Agreement and agreed to seek to have returned to the Company
any confidential information that had been provided in any such discussions or
negotiations. The foregoing will not prevent the Board from (i) furnishing
information to a third person which has made a BONA FIDE Acquisition Proposal
that the Board reasonably determines is likely to lead to a Superior Proposal
(as defined below) not solicited in violation of the Merger Agreement, PROVIDED
THAT, with respect to any person that was not party to a confidentiality
agreement with the Company as of the date of the Merger Agreement, such person
has executed an agreement with confidentiality, standstill and other provisions
substantially similar to those then in effect between the Company and Parent, or
(ii) subject to compliance with the other terms of this provision, considering
and negotiating a bona fide Acquisition Proposal that is a Superior Proposal not
solicited in violation of the Merger Agreement; PROVIDED, HOWEVER, that, as to
each of clauses (i) and (ii), (x) such actions occur at a time prior to the
consummation (or, if the Offer is consummated and extended, the initial
consummation) of the Offer and (y) the Board determines in good faith (based on
the advice of its financial advisor and counsel) that it is required to take
such actions in order to discharge properly its fiduciary duties. The term
"Superior Proposal" is defined in the Merger Agreement to mean any proposal made
by a third person to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, all of the equity securities of the
Company entitled to vote generally in the election of directors or all or
substantially all the assets of the Company, if, and only if, the Board
reasonably determines (after consultation with its financial advisor and
counsel) (i) that the proposed transaction would be more favorable from a
financial point of view to its stockholders than the Offer and the Merger and
the transactions contemplated by the Merger Agreement taking into account at the
time of determination any changes to the terms of the Merger Agreement which as
of that time had been proposed by Parent and (ii) that the person or entity
making such Acquisition Proposal is capable of consummating such Acquisition
Proposal (based upon, among other things, the availability of financing and the
degree of certainty of obtaining financing, the expectation of obtaining
required regulatory approvals and the identity and background of such person).
The Company has agreed to notify Parent promptly upon receipt of any
Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request for nonpublic information relating to the Company or
any of its subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any subsidiary by any
person or entity that informs the Board or such subsidiary that it is
considering making, or has made, an Acquisition Proposal. Such notice to Parent
shall be made orally and in writing, and shall indicate the identity of the
person making the Acquisition Proposal or intending to make an Acquisition
Proposal or requesting non-public information or access to the books and records
of the Company, the terms of any such Acquisition Proposal or modification or
amendment to an Acquisition Proposal, and whether the Company is providing or
intends to provide the person making the Acquisition Proposal with access to
information concerning the Company as provided in this section. The Company
shall also promptly notify Parent, orally and in writing, if it enters into
negotiations concerning any Acquisition Proposal.
Except as provided in the following sentence, the Company has agreed that
neither it nor the Board will withdraw or modify in a manner adverse to Parent
or Purchaser, or propose to withdraw or modify in a manner
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adverse to Parent or Purchaser, or fail at Parent's request to reaffirm the
approval by such Board of the Merger Agreement, the Offer or the Merger or the
favorable recommendation of the Board with respect thereto. The foregoing
notwithstanding, in the event that, after the Company has received a BONA FIDE
Acquisition Proposal not solicited in violation of the Merger Agreement, the
Board determines (based on the advice of its counsel), prior to the consummation
(or, if the Offer is consummated and extended, the initial consummation) of the
Offer, that it is required to do so in order to discharge properly its fiduciary
duties, the Board may (x) withdraw or modify its approval or recommendation of
the Merger Agreement, the Offer or the Merger and disclose to the Company's
stockholders a position contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated
under the Exchange Act or otherwise make disclosure to them, or (y) approve or
recommend such an Acquisition Proposal that is a Superior Proposal; PROVIDED,
HOWEVER, that in no event may the Board take either such action earlier than the
second full business day following Parent's receipt of written notice of the
intention of the Board to do so.
The Company and the Board have agreed not to (i) redeem the Rights under the
Rights Agreement, or waive or amend any provision of the Rights Agreement, in
any such case to permit or facilitate the consummation of any Acquisition
Proposal or Alternative Transaction, or (ii) enter into any agreement with
respect to, or otherwise approve or recommend to stockholders, or publicly
propose to approve or recommend, any Acquisition Proposal or Alternative
Transaction, unless the Merger Agreement has been terminated in accordance with
its terms. In addition, the Company has agreed to not release any third party
from the confidentiality and standstill provisions of any agreement to which the
Company is a party.
INDEMNIFICATION AND INSURANCE. The Merger Agreement provides that the
certificate of incorporation and by-laws of the Surviving Corporation will
contain provisions with respect to indemnification substantially to the same
effect as those set forth in the certificate of incorporation and the by-laws of
the Company on the date of the Merger Agreement, which provisions shall not be
amended, modified or otherwise repealed for a period of six (6) years after the
Effective Time in any manner that would adversely affect the rights thereunder
as of the Effective Time of individuals who at the Effective Time were
directors, officers, employees or agents of the Company, unless such
modification is required after the Effective Time by law.
In addition, Parent has agreed to cause the Surviving Corporation, to the
fullest extent permitted under applicable law or under the Surviving
Corporation's certificate of incorporation or by-laws, to indemnify and hold
harmless, each present and former director, officer or employee of the Company
or any of its subsidiaries (the "Indemnified Parties") against any costs or
expenses (including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, (x) arising out of or pertaining to the transactions contemplated
by the Merger Agreement or (y) otherwise with respect to any acts or omissions
occurring at or prior to the Effective Time, to the same extent as provided in
the Company's certificate of incorporation or by-laws or any applicable contract
or agreement as in effect on the date of the Merger Agreement, in each case for
a period of six (6) years after the date of the Merger Agreement.
In addition, Parent has agreed to provide, or cause the Surviving
Corporation to provide, for a period of not less than six (6) years after the
Effective Time, the Company's current directors and officers an insurance and
indemnification policy that provides coverage for events occurring at or prior
to the Effective Time (the "D&O Insurance") that is no less favorable than the
policy existing on the date of the Merger Agreement or, if substantially
equivalent insurance coverage is unavailable, the best available coverage;
PROVIDED, HOWEVER, that Parent and the Surviving Corporation will not be
required to pay an annual premium for the D&O Insurance in excess of one and
one-half of the annual premium currently paid by the Company for such insurance,
but in such case will purchase as much such coverage as possible for such
amount.
The Merger Agreement provides that these indemnification and insurance
provisions will survive the consummation of the Merger at the Effective Time and
are intended to benefit the Company, the Surviving Corporation and the
Indemnified Parties and will be binding on all successors and assigns of the
Surviving Corporation and enforceable by the Indemnified Parties.
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EMPLOYEE BENEFITS. For the one-year period following the Effective Time,
Parent has agreed to provide, or cause the Surviving Corporation and its
subsidiaries and successors to provide, those persons who, immediately prior to
the Effective Time, were employees of the Company and its subsidiaries and who
continue in such employment ("Continuing Employees"), with benefits and
compensation that are substantially comparable, in the aggregate, to the
compensation and benefits provided to such employees as of the date of the
Merger Agreement; PROVIDED, that such agreement will not restrict Parent or the
Surviving Corporation from terminating the employment of any such employees in
accordance with applicable laws and contractual rights, if any, of such
employees.
Except with respect to accruals under any defined benefit pension plan,
Parent has agreed to, or to cause the Surviving Corporation and its subsidiaries
to, give Continuing Employees full credit for purposes of eligibility, vesting
and determination of the level of benefits under any employee benefit plans or
arrangements maintained by Parent, the Surviving Corporation or any subsidiary
of Parent or the Surviving Corporation for such Continuing Employees' service
with the Company or any subsidiary of the Company to the same extent recognized
by the Company for similar purposes immediately prior to the Effective Time.
Parent has agreed to, or to cause the Surviving Corporation and its subsidiaries
to, (i) waive all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Continuing Employees under any welfare plan that such
employees may be eligible to participate in after the Effective Time, other than
limitations or waiting periods that are already in effect with respect to such
employees and that have not been satisfied as of the Effective Time under any
welfare plan maintained for the Continuing Employees immediately prior to the
Effective Time, and (ii) provide each Continuing Employee with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
applicable deductible or out-of-pocket requirements under any welfare plans that
such employees are eligible to participate in after the Effective Time to the
same extent as if those deductibles or co-payments had been paid under the
welfare plans for which such employees are eligible after the Effective Time.
For purposes of the Plans, the Offer Completion Date will constitute a
"Change in Control" of the Company (as such term or similar term is defined in
an applicable Plan). The Parent has agreed to (i) cause the Surviving
Corporation after the Offer Completion Date to pay all amounts provided under
all Plans in accordance with their terms and (ii) honor and cause the Surviving
Corporation to honor all rights, privileges and modifications to or with respect
to any such Plans which become effective as a result of such Change in Control.
FINANCIAL INFORMATION. The Company has agreed to deliver to Parent, as soon
as reasonably practicable such financial information as Parent may request to
the extent such financial information is regularly prepared by the Company for
the Board or for management.
TERMINATION. The Merger Agreement may be terminated at any time prior to
the Effective Time, notwithstanding approval thereof by the stockholders of the
Company:
(a) by mutual written consent of Parent and the Company; or
(b) by either Parent or the Company if the initial consummation of the
Offer does not occur on or prior to June 30, 2000; PROVIDED, HOWEVER, that
the right to terminate under this clause is not available to any party whose
failure to fulfill any obligation under the Merger Agreement has been the
cause of, or resulted in, the failure of the Offer to be consummated on or
prior to such date; or
(c) by either Parent or the Company if, as the result of the failure of
any of the Offer Conditions, the Offer shall have terminated or expired in
accordance with its terms without Purchaser having purchased any Shares
pursuant to the Offer, PROVIDED that if the failure to satisfy any of the
Offer Conditions shall be a basis for termination of the Merger Agreement
under any other termination provision, a termination pursuant to this clause
shall be deemed a termination under such other provision; or
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(d) by either Parent or the Company if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall
have issued a nonappealable final order, decree or ruling or taken any other
nonappealable final action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger; or
(e) by Parent, if, whether or not permitted to do so by the Merger
Agreement, the Board or the Company shall (x) (i) withdraw, modify or change
its approval or recommendation of the Offer, the Merger Agreement or the
Merger in a manner adverse to Parent, (ii) approve or recommend to the
stockholders of the Company an Acquisition Proposal or Alternative
Transaction or (iii) approve or recommend that the stockholders of the
Company tender their shares in any tender or exchange offer that is an
Alternative Transaction or (y) take any public position or make any
disclosures to the Company's stockholders, whether or not permitted pursuant
to the Merger Agreement, which has the effect of any of the foregoing; or
(f) by Parent or the Company, if any representation or warranty of the
Company or Parent, respectively, set forth in the Merger Agreement shall be
untrue when made, if such failure to be true and correct, individually or in
the aggregate, is reasonably likely to cause the failure of the condition to
the Offer discussed under clause 3(e) of Section 15 of this Offer to
Purchase ("Certain Conditions of the Offer"); PROVIDED that, if such failure
is curable prior to the initial Expiration Date (or any subsequent
Expiration Date) by the Company or Parent, as the case may be, through the
exercise of its reasonable best efforts and for so long as the Company or
Parent, as the case may be, continues to exercise such reasonable best
efforts, neither Parent nor the Company, respectively, may terminate the
Merger Agreement under this clause until such initial Expiration Date (or
subsequent Expiration Date); or
(g) by Parent or the Company, if any representation or warranty of the
Company or Parent, respectively, set forth in the Merger Agreement, shall
have become untrue (without for this purpose giving effect to qualifications
of materiality contained in such representations and warranties) if such
failure to be true and correct, individually or in the aggregate, is
reasonably likely to cause the failure of the condition to the Offer
discussed under clause 3(e) of Section 15 of this Offer to Purchase
("Certain Conditions of the Offer"), other than by reason of a Terminating
Breach (as hereinafter defined); PROVIDED that, if any such failure is
curable prior to the initial Expiration Date (or any subsequent Expiration
Date) by the Company or Parent, as the case may be, through the exercise of
its reasonable best efforts, and for so long as the Company or Parent, as
the case may be, continues to exercise such reasonable best efforts, neither
Parent nor the Company, respectively, may terminate the Merger Agreement
under this clause until such initial Expiration Date (or subsequent
Expiration Date); or
(h) by Parent or the Company, upon a material breach of any covenant or
agreement on the part of the Company or Parent, respectively, set forth in
the Merger Agreement (a "Terminating Breach"); PROVIDED that, except for any
breach of the Company's obligations discussed under the heading "No
Solicitation" in this section, if such Terminating Breach is curable prior
to the initial Expiration Date (or any subsequent Expiration Date) by the
Company or Parent, as the case may be, through the exercise of its
reasonable best efforts and for so long as the Company or Parent, as the
case may be, continues to exercise such reasonable best efforts, neither
Parent nor the Company, respectively, may terminate the Merger Agreement
under this clause until such date; or
(i) by the Company, in order to accept a Superior Proposal; PROVIDED
that (A) the Offer shall not theretofore have been consummated (or, if the
Offer is consummated and extended, initially consummated); (B) the Board
determines (based on the advice of counsel) that it is required to accept
such proposal in order to discharge properly its fiduciary duties; (C) the
Company has given Parent two full business days' advance notice of the
Company's intention to accept such Superior Proposal; (D) the Company shall
have paid the Fee and the Expense Reimbursement (as defined below); and
(E) the Company shall have complied in all respects with provisions
discussed under the heading "No Solicitation" in this section.
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Notwithstanding the foregoing, the right to terminate the Merger Agreement
pursuant to clauses (e), (f), (g), (h) and (i) above shall not be available to
Parent if Purchaser or any other affiliate of Parent shall have acquired Shares
pursuant to the Offer.
As used in the Merger Agreement, "Alternative Transaction" means any of
(i) a transaction pursuant to which any person (or group of persons) (including
the shareholders of any party to such transaction) other than Parent or its
affiliates (a "Third Party") acquires or would acquire more than 30% of the
outstanding shares of any class of equity securities of the Company, whether
from the Company or pursuant to a tender offer or exchange offer or otherwise,
(ii) a merger or other business combination involving the Company pursuant to
which any Third Party acquires more than 30% of the outstanding equity
securities of the Company or the entity surviving such merger or business
combination, (iii) any transaction pursuant to which any Third Party acquires or
would acquire control of assets (including for this purpose the outstanding
equity securities of subsidiaries of the Company and securities of the entity
surviving any merger or business combination including any of the Company's
subsidiaries) of the Company, or any of its subsidiaries having a fair market
value (as determined by the Board in good faith) equal to more than 30% of the
fair market value of all the assets of the Company and its subsidiaries, taken
as a whole, immediately prior to such transaction or (iv) any other
consolidation, business combination, recapitalization or similar transaction
involving the Company or any of the Company's subsidiaries that are
"significant" under Regulation S-X at a level of 30% or more, other than the
transactions contemplated by the Merger Agreement; PROVIDED, HOWEVER, that the
term Alternative Transaction shall not include any acquisition of securities by
a broker dealer in connection with a bona fide public offering of such
securities.
FEES AND EXPENSES. Except as specified below, all fees and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated thereby will be paid by the party incurring such expenses, whether
or not the Merger is consummated.
The Company has agreed to pay Parent a fee of $25,000,000 (the "Fee") and to
also pay Parent $3,000,000 to reimburse Parent for its itemized out-of-pocket
expenses in connection with the transactions contemplated by the Merger
Agreement (the "Expense Reimbursement") upon the first to occur of any of the
following events:
(1) the termination of the Merger Agreement by Parent or the Company
pursuant to clause (b), (c), (f) or (g) above; PROVIDED that an Alternative
Transaction shall be publicly announced by the Company or any third party
within twelve months following the date of such termination and such
transaction shall at any time thereafter be consummated on substantially the
terms theretofore announced; PROVIDED FURTHER that if the termination of the
Merger Agreement is pursuant to clause (g) above, such Alternative
Transaction, if all cash, must be no less favorable from a financial point
of view to the stockholders of the Company than the transactions
contemplated by the Offer and Merger, unless the events giving rise to the
breach underlying such termination relate to the third party with whom the
Alternative Transaction was consummated;
(2) the termination of the Merger Agreement by Parent pursuant to
clause (e) or (h) above; or
(3) the termination of the Merger Agreement by the Company pursuant to
clause (i) above.
The Company has also agreed to pay to Parent the Expense Reimbursement (in
which case such payment shall be credited against any subsequent payment that
may become due to Parent under clause (1) above) under the following
circumstances: (a) upon termination of the Merger Agreement by Parent pursuant
to clause (c) above in the event of the failure of the Minimum Condition to be
satisfied or (b) upon termination of the Merger Agreement by Parent pursuant to
clause (f) above.
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STOCKHOLDERS AGREEMENT.
As an inducement to Parent to enter into the Merger Agreement with the
Company, Shore Family Partnership, L.P., Marc P. Shore, Paul Shore Estate
Marital Trust, Andrew N. Shore, Paul Shore Marital Trust, and Howard M. Liebman
(the "Stockholders"), who in the aggregate own approximately 17% of the
outstanding Shares (approximately 15% on a fully diluted basis), have each
entered into a stockholders agreement (the "Stockholders Agreement") with Parent
and Purchaser.
The following summary of certain provisions of the Stockholders Agreement is
qualified in its entirety by reference to the complete text of the Stockholders
Agreement, a copy of which is filed as an exhibit to the Schedule TO and is
incorporated herein by reference. You may examine or obtain copies of the
Stockholders Agreement in accordance with the procedures set forth in
Section 7.
Each Stockholder has agreed to tender all of his Shares into the Offer and
to not withdraw any Shares so tendered. In addition, each Stockholder has agreed
to enter into such agreements and take such actions as are necessary to provide
that all Options held by such Stockholder are cashed out in connection with the
Merger.
In addition, except as set forth in the Stockholders Agreement, each
Stockholder has agreed not to transfer any or all of such Stockholder's Shares
or any interest therein (except as contemplated by the Stockholders Agreement),
enter into any contract, option or other agreement or understanding with respect
to any transfer of any or all of his Shares or any interest therein, grant any
proxy, power-of-attorney or other authorization or consent in or with respect to
his Shares, deposit his Shares into a voting trust or enter into a voting
arrangement or agreement with respect to his Shares or take any other action
that would in any way restrict, limit or interfere with his obligations under
the Stockholders Agreement.
Each Stockholder has also agreed to vote (or cause to be voted) his Shares
in favor of the Merger, the Merger Agreement and each of the other transactions
contemplated by the Merger Agreement at any meeting of stockholders of the
Company called to vote upon the Merger and the Merger Agreement or at any
adjournment thereof or in any other circumstances upon which a vote, consent or
other approval (including by written consent) with respect to the Merger and the
Merger Agreement is sought, or initiate a written consent solicitation if
requested by Parent. Each Stockholder has also agreed to vote against or refrain
from giving any consent in favor of, and not to tender his Shares into any offer
relating to, (i) any merger agreement or merger (other than the Merger Agreement
and the Merger), consolidation, combination, sale of substantial assets,
reorganization, joint venture, recapitalization, dissolution, liquidation or
winding up of or by the Company and (ii) any amendment of the Company's
certificate of incorporation or by-laws or other proposal or transaction
including any consent solicitation to remove or elect any directors of the
Company) involving the Company or any of its subsidiaries which amendment or
other proposal or transaction would in any manner impede, frustrate, prevent or
nullify, or result in a breach of any covenant, representation or warranty or
any other obligation or agreement of the Company under or with respect to, the
Offer, the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement. Each Stockholder has granted to Parent an
irrevocable proxy with full power of substitution and resubstitution which shall
be deemed coupled with an interest to vote such Stockholder's Shares as
contemplated by this paragraph.
Each Stockholder has made certain representations and warranties in the
Stockholders Agreement, including with respect to (i) ownership of his Shares,
(ii) the authority to enter into and perform his obligations under such
Stockholders Agreement and the absence of required consents and statutory or
contractual conflicts or violations, (iii) the absence of liens, claims,
security interests, proxies, voting trusts or other arrangements or any other
encumbrances on or in respect of his Shares, except for those disclosed to
Purchaser, (iv) broker's and finder's fees and (v) an acknowledgment of Parent's
reliance upon the Stockholder's execution of the Stockholders Agreement in
entering into, and causing Purchaser to enter into, the Merger Agreement.
The Stockholders Agreement, and all rights and obligations thereunder,
terminate upon the earlier of (a) the date upon which the Merger Agreement is
terminated in accordance with its terms or (b) the date that Parent or
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Purchaser shall have purchased and paid for the Shares of such Stockholder
pursuant to the terms of the Stockholders Agreement; PROVIDED, HOWEVER, that the
termination of the Stockholders Agreement shall not relieve any party of
liability for breach of such agreement prior to its termination.
EMPLOYMENT AGREEMENTS WITH CERTAIN OFFICERS.
The following summaries of certain provisions of letter agreements relating
to the employment of Marc P. Shore and Howard M. Liebman are qualified in their
entirety by reference to the complete text of those letter agreements, copies of
which have been filed as exhibits to the Schedule TO referred to in Section 18
and are incorporated herein by reference. In connection with the Merger
Agreement, on February 16, 2000, Parent and each of Mr. Shore and Mr. Liebman
entered into letter agreements providing that the employment agreements
described below would become automatically effective upon execution by Parent
and the Company at the time of Purchaser's first purchase of Shares pursuant to
the Offer (the "First Purchase Date").
Mr. Shore's employment agreement (the "Shore Employment Agreement") will
supersede Mr. Shore's current employment agreement with the Company, except that
Mr. Shore's obligation to repay the unearned portion of the $1,000,000 signing
bonus he received in connection with the execution of his existing employment
agreement will survive if Mr. Shore terminates his employment without "Good
Reason" or if he is terminated for "Cause" (each as defined in the Shore
Employment Agreement). The Shore Employment Agreement provides that Mr. Shore
will serve as the President of the Company, on a full-time basis, for the period
commencing on the First Purchase Date and ending on December 31, 2004. The Shore
Employment Agreement further provides that Mr. Shore shall receive an annual
salary of $500,000, an annual bonus, not to exceed $450,000, based upon target
performance objectives established by a senior officer of Parent, a separate
guaranteed bonus of $112,000 for the period of service from the date of the
Shore Employment Agreement through December 31, 2000, and a separate guaranteed
bonus of $150,000 each subsequent year during the term of the Shore Employment
Agreement. Effective as of the First Purchase Date, Parent shall grant
Mr. Shore a nonqualified stock option to purchase 20,000 shares of Parent common
stock at a price per share equal to the fair market value of such stock on the
First Purchase Date. Thereafter Mr. Shore shall be eligible to receive such
additional stock option awards as the Board of Directors of Parent may
determine. In addition, on the First Purchase Date, Mr. Shore shall receive that
number of shares of common stock of Parent having a fair market value as of the
First Purchase Date of $1,000,000, which shares shall be nontransferable and
subject to forfeiture until vested. One-fifth of these restricted shares will
vest on December 31, 2000 and on December 31 of each of the four subsequent
years, provided that Mr. Shore achieves the target performance objectives for
each such year. Also pursuant to the terms of the Shore Employment Agreement,
for a one-year period following the effective date of the Merger, the Company
shall provide Mr. Shore with benefits substantially comparable in the aggregate
to the benefits provided to Mr. Shore as of the date of the Merger Agreement.
Notwithstanding this agreement to extend Mr. Shore's benefits for one year, the
Company has agreed to extend the split-dollar life insurance benefit and the
automobile lease allowance and expense reimbursement only until December 31,
2000.
Under the Shore Employment Agreement, Mr. Shore is entitled to certain
payments upon termination of his employment. If Mr. Shore's employment is
terminated because of his death, or if the Company terminates his employment
based on a good faith determination that he has become disabled, the employment
agreement shall terminate without further obligations, except that the Company
shall pay to Mr. Shore or his legal representative: unpaid base salary through
the date of termination, any unpaid performance or guaranteed bonus for the
prior calendar year, any prorated bonus otherwise payable under the Shore
Employment Agreement for the year of termination, and unpaid accrued vacation
pay (collectively, the "Shore Accrued Obligations"). Likewise, if the Company
terminates Mr. Shore's employment for "Cause" (as defined in the Shore
Employment Agreement), the Company need only pay the Shore Accrued Obligations.
If the Company terminates Mr. Shore's employment other than for Cause or as a
result of his death or disability, or if Mr. Shore terminates his employment
with "Good Reason" (as defined in the Shore Employment Agreement), the Company
shall pay to Mr. Shore: the Shore Accrued Obligations, severance pay of not more
than one year of base salary, and the guaranteed bonus for the year his
employment terminates. In addition, the restricted stock options shall vest
immediately and become
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non-forfeitable, in the event that Mr. Shore's employment is terminated because
of his death or disability, or if Mr. Shore terminates his employment with Good
Reason, or if the Company terminates his employment without Cause.
Under the terms of the Shore Employment Agreement, Mr. Shore has agreed to
be bound by certain restrictive covenants that limit his ability to compete or
interfere with the Company, including a confidentiality agreement, a
non-solicitation agreement, and an agreement not to compete with the Company.
Mr. Shore has agreed, during the term of the employment agreement and for a
period of three years from the termination of his employment (other than a
termination by the Company without Cause or by Mr. Shore for Good Reason), that
he will not solicit any employees or clients of the Company or Parent or engage
in the business of printing or manufacturing paperboard packaging anywhere in
North America.
Mr. Shore's letter agreement also includes a provision by which Parent will
cause the Company to pay, on the First Purchase Date, a lump sum Severance
Payment (as defined in the Company's Employee Severance Plan) of $5,699,475.72
and the Gross-Up Payment (as defined in the Company's Employee Severance Plan),
which amounts are the amounts to which he would have been entitled under the
Company's Employee Severance Plan if he had terminated his employment in
connection with the Merger. In addition, Mr. Shore's letter agreement requires
that he repay $2,527,316 in outstanding loans, plus accrued interest, to the
Company on the First Purchase Date.
Mr. Liebman's employment agreement (the "Liebman Employment Agreement") will
supersede Mr. Liebman's existing employment agreement with the Company. The
Liebman Employment Agreement provides that Mr. Liebman will serve as the
Executive Vice-President of the Company, on a full-time basis, for the period
commencing on the First Purchase Date and ending on December 31, 2002. The
Liebman Employment Agreement further provides that Mr. Liebman shall receive an
annual salary of $350,000 and an annual bonus, not to exceed $215,000, based
upon target performance objectives established by a senior officer of Parent.
Effective as of the First Purchase Date, Parent shall grant Mr. Liebman a
nonqualified stock option to purchase 10,000 shares of Parent common stock at a
price per share equal to the fair market value of such stock on the First
Purchase Date. Thereafter Mr. Liebman shall be eligible to receive such
additional stock option awards as the Board of Directors of Parent may
determine. In addition, on the First Purchase Date, Mr. Liebman shall receive
that number of shares of common stock of Parent having a fair market value as of
the First Purchase Date of $100,000, which shares shall be nontransferable and
subject to forfeiture until vested. These restricted shares will vest on
December 31, 2002, provided that Mr. Liebman remains employed until that date.
Also pursuant to the terms of the Liebman Employment Agreement, for a one-year
period following the effective date of the Merger, the Company shall provide
Mr. Liebman with benefits substantially comparable in the aggregate to the
benefits provided to Mr. Liebman as of the date of the Merger Agreement.
Notwithstanding this agreement to extend Mr. Liebman's benefits for one year,
the Company has agreed to extend the split-dollar life insurance benefit and the
automobile lease allowance and expense reimbursement only until December 31,
2000. The employment agreement provides, however, that the Company will continue
to maintain the rabbi trust established for Mr. Liebman's retirement, in
accordance with its terms, even after the one-year period.
Under the Liebman Employment Agreement, Mr. Liebman is entitled to certain
payments upon termination of his employment. If Mr. Liebman's employment is
terminated because of his death, or if the Company terminates his employment
based on a good faith determination that he has become disabled, the employment
agreement shall terminate without further obligations, except that the Company
shall pay to Mr. Liebman or his legal representative: unpaid base salary through
the date of termination, any unpaid performance bonus for the prior calendar
year, any prorated bonus otherwise payable under the Liebman Employment
Agreement for the year of termination, and unpaid accrued vacation pay
(collectively, the "Liebman Accrued Obligations"). Likewise, if the Company
terminates Mr. Liebman's employment for "Cause" (as defined in the Liebman
Employment Agreement), the Company need only pay the Liebman Accrued
Obligations. If the Company terminates Mr. Liebman's employment other than for
Cause or as a result of his death or disability, or if Mr. Liebman terminates
his employment with "Good Reason" (as defined in the Liebman Employment
Agreement), the Company shall pay to Mr. Liebman: the Liebman Accrued
Obligations and severance pay of not more than one year of base salary. In
addition, the restricted
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stock options shall vest immediately and become non-forfeitable, in the event
that Mr. Liebman's employment is terminated because of his death or disability,
or if Mr. Liebman terminates his employment with Good Reason, or if the Company
terminates his employment without Cause.
Under the terms of the Liebman Employment Agreement, Mr. Liebman has agreed
to be bound by certain restrictive covenants that limit his ability to compete
or interfere with the Company, including a confidentiality agreement, a
non-solicitation agreement, and an agreement not to compete with the Company.
Mr. Liebman has agreed, during the term of the employment agreement and for a
period of two years from the termination of his employment (other than a
termination by the Company without Cause or by Mr. Liebman for Good Reason),
that he will not solicit any employees or clients of the Company or Parent or
engage in the business of printing or manufacturing paperboard packaging
anywhere in North America.
Mr. Liebman's letter agreement also includes a provision by which Parent
will cause the Company to pay, on the First Purchase Date, a lump sum Severance
Payment (as defined in the Company's Employee Severance Plan) of $1,820,499.00
and the Gross-Up Payment (also as defined in the Company's Employee Severance
Plan), which are the amounts he would have been entitled to under the Company's
Employee Severance Plan if he had terminated his employment in connection with
the Merger. In addition, Mr. Liebman's letter agreement requires that he repay
$1,262,521 in outstanding loans, plus accrued interest, to the Company on the
First Purchase Date.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY.
PURPOSE OF THE OFFER AND THE MERGER. The purpose of the Offer and the
Merger is for Parent to acquire the entire equity interest in the Company.
Through the Offer, Purchaser intends to acquire control of, and a majority
equity interest in, the Company. Following the completion of the Offer, Parent
intends to acquire any outstanding Shares not owned by Purchaser by consummating
the Merger.
Under the DGCL the approval of the Board and the affirmative vote of a
majority of the holders of outstanding Shares are required to adopt the Merger
Agreement. The Board has unanimously approved the transactions contemplated by
the Merger Agreement, including the Offer and the Merger, and, unless the Merger
is consummated pursuant to the short form merger provisions of the DGCL
described below, the only remaining required corporate action necessary to
consummate the Merger is the adoption of the Merger Agreement by the affirmative
vote of the holders of a majority of the then outstanding Shares. If the Minimum
Condition is satisfied, Purchaser will have sufficient voting power to cause the
adoption of the Merger Agreement by the requisite vote of stockholders of the
Company without the affirmative vote of any other stockholder.
Under the DGCL, if Purchaser acquires at least 90% of the outstanding
Shares, Purchaser will be able to adopt the Merger Agreement without a vote of
the Company's other stockholders. The Merger Agreement provides that if
Purchaser, or any other direct or indirect subsidiary of Parent, acquires at
least 90% of the outstanding Shares, Parent, Purchaser and the Company will take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the expiration of the Offer without action by the
other stockholders of the Company, in accordance with Section 253 of the DGCL.
In the event that all of the conditions to Purchaser's obligation to purchase
Shares in the Offer is satisfied or waived and the number of Shares tendered is
less than 90% of the outstanding Shares on a fully diluted basis, Purchaser will
accept for payment all Shares validly tendered, and Purchaser may extend the
Offer for the purpose of attempting to reach the 90% threshold required for a
short form merger. Under these circumstances, the Offer may be extended for up
to twenty (20) business days, and Purchaser will accept for payment and promptly
pay for all Shares validly tendered during the extension period. Such an
extension will constitute a Subsequent Offering Period. See Section 1. If
Purchaser is unable to satisfy the requirements for a short form merger, a
significantly longer period of time may be required to effect the Merger,
because a vote of the Company's stockholders would be required under the DGCL.
PLANS FOR THE COMPANY. Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business and
operations of the Company will be continued by the Surviving Corporation
substantially as they are currently being conducted. The directors of Purchaser
will be the initial directors of the Surviving Corporation, and the officers of
the Company will be the initial officers of the Surviving Corporation.
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Upon completion of the Offer and the Merger, Parent intends to conduct a
detailed review of the Company and its assets, corporate structure,
capitalization, operations, 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.
Except as described in this Offer to Purchase, neither Parent nor Purchaser
has any present plans or proposals that would relate to or result in (i) any
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries, (ii) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries, (iii) any change in the Board or management, (iv) any material
change in the Company's capitalization or dividend policy, (v) any other
material change in the Company's corporate structure or business, (vi) a class
of securities of the Company being delisted from a national securities exchange
or ceasing to be authorized to be quoted in an inter-dealer 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) of the Exchange Act.
APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company may
have certain rights under the DGCL to dissent, and demand appraisal of, and to
obtain payment for the fair value of their Shares. Such rights, if the statutory
procedures are complied with, could lead to a judicial determination of the fair
value of the Shares (excluding any element of value arising from the
accomplishment or expectation of the Merger) required to be paid in cash to such
dissenting stockholders for their Shares. 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, a
Delaware court would be 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 value and earning capacity. In WEINBERGER V. UOP, INC., the
Delaware Supreme Court stated, among other things, that "proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in an
appraisal proceeding. Therefore, the value so determined in any appraisal
proceeding could be higher or lower than the Offer Price.
13. CERTAIN EFFECTS OF THE OFFER.
EFFECT ON THE MARKET FOR THE SHARES. The purchase of Shares pursuant to the
Offer will reduce the number of holders of Shares and the number of Shares that
might otherwise trade publicly. Consequently, depending upon the number of
Shares purchased and the number of remaining holders of Shares, the purchase of
Shares pursuant to the Offer may adversely affect the liquidity and market value
of the remaining Shares held by the public. 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.
STOCK QUOTATIONS. The Shares are currently listed and traded on the NYSE,
which constitutes the principal trading market for the Shares. Depending upon
the aggregate market value and the number of Shares not purchased pursuant to
the Offer, the Shares may no longer meet the standards for continued listing on
the NYSE. According to its published guidelines, the NYSE would give
consideration to delisting the Shares if, among other things, the number of
publicly held Shares falls below 600,000, the number of holders of round lots of
Shares falls below 400 (or below 1,200 if the average monthly trading volume is
below 100,000 for the last twelve months) or the aggregate market value of such
publicly held Shares falls below $8,000,000. Shares held by officers or
directors of the Company or their immediate families, or by any beneficial owner
of more than 10% or more of the Shares, ordinarily will not be considered as
being publicly held for this purpose.
If, as a result of the purchase of Shares pursuant to the Offer, the Shares
no longer meet the requirements for continued listing on the NYSE, the market
for the Shares could be adversely affected. In the event the Shares are no
longer eligible for listing on the NYSE, quotations might still be available
from other sources. The extent of the
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public market for the Shares and the availability of such quotations would,
however, depend upon the number of holders of such Shares 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.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the SEC if such Shares are not listed on a national securities
exchange and there are fewer than 300 holders of record of the Shares. The
termination of the registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
its stockholders and to the SEC, and would make certain of the 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 and the related requirement of an annual report to
stockholders, and the requirements of Rule 13e-3 with respect to going private
transactions, no longer applicable with respect to the Shares or to the Company.
Furthermore, if registration of the Shares under the Exchange Act were
terminated, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended, may be
impaired or, with respect to certain persons, eliminated. If the Shares were no
longer registered under the Exchange Act, the Shares would no longer be eligible
for NYSE listing. Parent and Purchaser intend to cause the Company to make an
application for termination of registration of the Shares as soon as possible
after consummation of the Offer if the Shares are then eligible for such
termination.
MARGIN SECURITIES. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on such Shares as collateral. Depending on factors
similar to those described above regarding listing and market quotations, it is
possible the Shares would no longer constitute "margin securities" for purposes
of the Federal Reserve Board's margin regulations and therefore 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."
14. DIVIDENDS AND DISTRIBUTIONS.
As discussed in Section 11, pursuant to the Merger Agreement, without the
prior approval of Parent or as otherwise contemplated in the Merger Agreement,
the Company has agreed to not (i) declare, set aside, make or pay any dividend
or other distribution in respect of any of its capital stock, except that a
wholly owned subsidiary of the Company may declare and pay a dividend to its
parent, (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (iii) except as
required by the terms of any security as in effect on the date of the Merger
Agreement or expressly permitted under the Merger Agreement, amend the terms or
change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, or permit any subsidiary to amend the terms or change the
period of exercisability of, purchase, repurchase, redeem or otherwise acquire,
any of its securities or any securities of its subsidiaries, including, without
limitation, shares of Common Stock or any option, warrant or right, directly or
indirectly, to acquire any such securities, or propose to do any of the
foregoing.
15. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, Purchaser will not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange
Act, pay for, and (subject to any such rules or regulations) may delay the
acceptance for payment of or the payment for any tendered Shares and (except as
provided in the Agreement) amend or terminate the Offer if:
(1) the Minimum Condition has not been satisfied prior to the expiration
of the Offer;
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(2) any applicable waiting period under the HSR Act, the Competition
Act, the Investment Canada Act or any similar legal regime in any other
country applicable to significant operations of Parent or any of its
subsidiaries or the Company or any of its subsidiaries has not expired or
been terminated prior to the expiration of the Offer; or
(3) at any time on or after the date of the Merger Agreement and before
the expiration of the Offer, any of the following conditions exists:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a governmental entity of competent jurisdiction or
a law, rule or regulation shall have been promulgated or enacted by a
governmental entity of competent jurisdiction which in any such case
(i) restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger, or (ii) prohibits or restricts the ownership
or operation by Parent (or any of its affiliates or subsidiaries) of any
portion of the Company's business or assets or which would substantially
deprive Parent and/or its affiliates or subsidiaries of the benefit of
ownership of the Company's business or assets, or compels Parent (or any
of its affiliates or subsidiaries) to dispose of or hold separate any
portion of the Company's business or assets, or of its business or
assets, or which would substantially deprive Parent and/or its affiliates
or subsidiaries of the benefit of ownership of the Company's business or
assets, or (iii) imposes material limitations on the ability of Purchaser
or Parent effectively to acquire or to hold or to exercise full rights of
ownership of the shares of Common Stock, including, without limitation,
the right to vote shares of Common Stock purchased by Purchaser pursuant
to the Offer or acquired by Parent in the Merger on all matters properly
presented to the stockholders of the Company, or (iv) imposes any
material limitations on the ability of Parent and/or its affiliates or
subsidiaries effectively to control in any material respect the business
and operations of the Company (other than, prior to the Effective Time,
by reason of there being minority stockholders in the Company); or
(b) there shall have been instituted, pending or threatened (in
writing or by public announcement) an action by a governmental entity
seeking (i) to restrain or prohibit the making or consummation of the
Offer or the consummation of the Merger or (ii) to impose any other
restriction, prohibition or limitation referred to in the foregoing
paragraph (a); or
(c) the Merger Agreement shall have been terminated by the Company or
Parent in accordance with its terms; or
(d) Parent and the Company shall have agreed in writing that
Purchaser shall amend the Offer to terminate the Offer or postpone the
payment for shares of Common Stock pursuant thereto; or
(e) the representations and warranties of the Company set forth in
the Agreement shall not be true and accurate in all respects as of the
date of consummation of the Offer as though made on or as of such date
(except for those representations and warranties that address matters
only as of a particular date or only with respect to a specific period of
time which need only be true and accurate as of such date or with respect
to such period) (in each case without for this purpose giving effect to
qualifications or limitations as to materiality or the absence of a
Company Material Adverse Effect contained in such representations and
warranties, but reading each such representation and warranty as though
the Company Disclosure Letter included information plainly disclosed in
the Company's SEC filings filed subsequent to May 2, 1999 and prior to
February 16, 2000), except for such failures to be true and correct as
could not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect, or the Company shall have
breached or failed to perform or comply in any material respect with any
obligation, agreement or covenant required by the Merger Agreement to be
performed or complied with by it; PROVIDED, HOWEVER, that such breach or
failure to perform is incapable of being cured or has not been cured
prior to the initial Expiration Date (or such later date upon which the
Offer shall expire); or
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(f) the Company or Purchaser shall have failed to receive any or all
governmental or third party consents and approvals to consummate the
Offer which, if not received, would have a Company Material Adverse
Effect; or
(g) the Board shall have modified or amended its recommendation of
the Offer in any manner adverse to Parent or shall have withdrawn its
recommendation of the Offer, or shall have recommended acceptance of any
Acquisition Proposal or shall have resolved to do any of the foregoing;
or
(h) (i) any corporation, entity or "group" (as defined in
Section 13(d)(3) of the Exchange Act) ("person/group"), other than Parent
and Purchaser shall have acquired beneficial ownership of more than 21%
of the outstanding shares of Common Stock, or shall have been granted any
options or rights, conditional or otherwise, to acquire a total of more
than 21% of the outstanding shares of Common Stock and which, in each
case, does not tender the shares of Common Stock beneficially owned by it
in the Offer; (ii) any new group shall have been formed which
beneficially owns more than 15% of the outstanding shares of Common Stock
and which does not tender the shares of Common Stock beneficially owned
by it in the Offer; or (iii) any person/group (other than Parent or one
or more of its affiliates) shall have entered into an agreement in
principle or definitive agreement with the Company with respect to a
tender or exchange offer for any shares of Common Stock or a merger,
consolidation or other business combination with or involving the
Company; or
(i) any change, development, effect or circumstance shall have
occurred or be threatened that is reasonably likely to be a Company
Material Adverse Effect; or
(j) the Rights shall have become exercisable;
which in the reasonable judgment of Parent or the Purchaser, in any such case,
and regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment or
payments.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent and Purchaser regardless of the circumstances
giving rise to any such condition, and, subject to the terms of the Merger
Agreement, may be waived by Parent and Purchaser, in whole or in part, at any
time and from time to time, in the sole discretion of Parent and Purchaser. The
failure by Parent and Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any right, the waiver of such right with
respect to any particular facts or circumstances shall not be deemed a waiver
with respect to any other facts or circumstances, and each right shall be deemed
an ongoing right which may be asserted at any time and from time to time. Should
the Offer be terminated pursuant to the foregoing provisions, all tendered
Shares not theretofore accepted for payment pursuant thereto shall forthwith be
returned to the tendering stockholders.
16. CERTAIN LEGAL MATTERS.
GENERAL. Except as described in this Section 16, based on a review of
publicly available filings by the Company with the SEC and other publicly
available information concerning the Company, Purchaser is not aware of any
license or regulatory permit that appears to be material to the business of the
Company and that might be adversely affected by Purchaser's acquisition of
Shares pursuant to the Offer, or of any approval or other action by any
governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required for the acquisition or ownership of Shares by
Purchaser pursuant to the Offer. Should any such approval or other action be
required, it is presently contemplated that such approval or action would be
sought, except as described below under "--State Takeover Laws." While Purchaser
does not currently intend to delay acceptance for payment of Shares tendered
pursuant to the Offer pending the outcome of any such matter, there can be no
assurance that any such approval or other action, if required, would be obtained
without substantial conditions or that adverse consequences would not result to
the Company's business or that certain parts of the Company's business would not
have to be disposed of in the event that such approvals were not obtained or
such other actions were not taken or in
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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 may
decline to accept for payment or pay for any Shares tendered. See Section 15.
STATE TAKEOVER LAWS. The Company and certain of its subsidiaries conduct
business in a number of states throughout the United States, some of which have
adopted laws and regulations applicable to offers to acquire shares of
corporations that are incorporated or have substantial assets, stockholders
and/or a principal place of business in such states. In EDGAR V. MITE CORP., the
Supreme Court of the United States held that the Illinois Business Takeover
Statute, which involved state securities laws that made the takeover of certain
corporations more difficult, imposed a substantial burden on interstate commerce
and was therefore unconstitutional. In CTS CORP. V. DYNAMICS CORP. OF AMERICA,
however, the Supreme Court of the United States held that a state may, as a
matter of corporate law and, in particular, those laws concerning corporate
governance, constitutionally disqualify a potential acquiror from voting on the
affairs of a target corporation without prior approval of the remaining
stockholders, PROVIDED that such laws were applicable only under certain
conditions, in particular, that the corporation has a substantial number of
stockholders in and is incorporated under the laws of such state. Subsequently,
in TLX ACQUISITION CORP. V. TELEX CORP., a federal district court in Oklahoma
ruled that the Oklahoma statutes were unconstitutional insofar as they applied
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.
The Company is incorporated under the laws of the State of Delaware. In
general, Section 203 of the DGCL ("Section 203") prevents an "interested
stockholder" (including a person who owns or has the right to acquire 15% or
more of the corporation's outstanding voting stock) from engaging in a "business
combination" (defined to include mergers and certain other actions) with a
Delaware corporation for a period of three years following the date such person
became an interested stockholder. The Board has taken all appropriate action so
that neither Parent nor Purchaser is or will be considered an "interested
stockholder" pursuant to Section 203.
Neither Parent nor Purchaser has determined whether any other state takeover
laws and regulations will by their terms apply to the Offer or the Merger, and,
except as set forth above, neither Parent nor Purchaser has presently sought to
comply with any state takeover statute or regulation. Parent and Purchaser
reserve the right to challenge the applicability or validity of any state law or
regulation purporting to apply to the Offer or the Merger, and neither anything
in this Offer to Purchase nor any action taken in connection herewith is
intended as a waiver of such right. In the event it is asserted that one or more
state takeover statutes is applicable to the Offer or the Merger and an
appropriate court does not determine that such statute is inapplicable or
invalid as applied to the Offer or the Merger, Parent or Purchaser might be
required to file certain information with, or to receive approval from, the
relevant state authorities, and Purchaser might be unable to accept for payment
or pay for Shares tendered pursuant to the Offer, or be delayed in consummating
the Offer.
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The purchase of Shares pursuant to the Offer is subject to such
requirements.
Pursuant to the requirements of the HSR Act, Purchaser filed a Notification
and Report Form with respect to the Offer and Merger with the Antitrust Division
and the FTC on February 22, 2000. As a result, the waiting period applicable to
the purchase of Shares pursuant to the Offer is scheduled to expire at
11:59 p.m., New York City time, fifteen (15) days after such filing. However,
prior to such time, the Antitrust Division or the FTC may extend the waiting
period by requesting additional information or documentary material relevant to
the Offer from Purchaser. If such a request is made, the waiting period will be
extended until 11:59 p.m., New York City time, on the tenth day after
substantial compliance by Purchaser with such request. Thereafter, such waiting
period can be extended only by court order.
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A request is being made pursuant to the HSR Act for early termination of the
waiting period applicable to the Offer. There can be no assurance, however, that
the applicable 15-day HSR Act waiting period will be terminated early. Shares
will not be accepted for payment or paid for pursuant to the Offer until the
expiration or early termination of the applicable waiting period under the HSR
Act. See Section 15. Any extension of the waiting period will not give rise to
any withdrawal rights not otherwise provided for by applicable law. See
Section 3. If Purchaser's acquisition of Shares is delayed pursuant to a request
by the Antitrust Division or the FTC for additional information or documentary
material pursuant to the HSR Act, the Offer will be extended in certain
circumstances. See Section 1.
The Antitrust Division and the FTC scrutinize the legality under the
antitrust laws of transactions such as the acquisition of Shares by Purchaser
pursuant to the Offer. At any time before or after the consummation of any such
transactions, the Antitrust Division or the FTC could take such action under the
antitrust laws of the United States as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant to
the Offer or seeking divestiture of the Shares so acquired or divestiture of
substantial assets of Parent or the Company. Private parties (including
individual States) may also bring legal actions under the antitrust laws of the
United States. Purchaser does not believe that the consummation of the Offer
will result in a violation of any applicable antitrust laws. However, 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, what the result will be. See Section 15
for certain conditions to the Offer, including conditions with respect to
certain governmental actions and Section 11 for certain termination rights.
COMPETITION ACT. The merger provisions of the Competition Act permit the
Commissioner of Competition appointed thereunder (the "Commissioner"), to apply
to the Competition Tribunal (the "Tribunal") to seek relief in respect of a
merger which prevents or lessens, or is likely to prevent or lessen, competition
substantially. The relief that may be ordered by the Tribunal includes, in the
case of a completed merger, ordering a dissolution of the merger or a
disposition of assets or shares, and in the case of a proposed merger,
prohibiting completion of the transaction.
The Competition Act also requires parties to certain proposed mergers which
exceed specified size thresholds to provide the Commissioner with prior notice
of and information relating to the transaction and the parties thereto, and to
await the expiration of the prescribed waiting period, prior to completing the
transaction. In lieu of, or in addition to, filing a prescribed notification
form, which can be either short-form or long-form, and awaiting the expiration
of the prescribed waiting period, a party to a proposed merger may apply to the
Commissioner for an advance ruling certificate ("ARC") or some other form of
comfort letter, which may be issued by the Commissioner if he is satisfied he
would not have sufficient grounds on which to apply to the Tribunal for an order
under the merger provisions in respect of the transaction. Purchaser will be
filing a short-form pre-merger notification with the Commissioner and applying
for an ARC or some other form of comfort letter, as deemed appropriate.
INVESTMENT CANADA ACT. The Investment Canada Act is Canada's statute of
general application governing the acquisition of control of Canadian businesses
by non-Canadians. An investment governed by the Investment Canada Act is either
notifiable or reviewable. A notifiable investment is simply one for which the
acquiror must provide a two-page notice to the Investment Review Division of
Industry Canada ("Investment Canada") at any time prior to the closing of the
investment or within thirty (30) days thereafter.
A reviewable investment is one for which the acquiror must submit an
application for review with prescribed information to Investment Canada. With
certain limited exceptions relating to the type of business carried on by the
target company, an acquisition of a Canadian business by a non-Canadian that
qualifies as a "WTO investor" for purposes of the Act is reviewable if the value
of the assets acquired is equal to or greater than Cdn $184 million as set forth
in the audited financial statements of the target company for its most recently
completed fiscal period.
Before a reviewable investment may be completed, the Minister of the federal
Cabinet responsible for Investment Canada must determine that the investment is
likely to be of "net benefit to Canada."
39
<PAGE>
The Minister has an initial 45-day period to make his determination from the
date of receipt by the Investment Review Division of a completed application for
review. The Minister may, at his discretion, extend this initial 45-day period
for a further thirty (30) days by giving notice to the prospective acquiror. Any
further extensions require the consent of the acquiror. If at the end of the
75-day period the Minister is not satisfied that the investment is likely to be
of net benefit to Canada, he must send a notice to that effect to the
prospective acquiror, and the acquiror has thirty (30) days to make
representations and submit undertakings to the Minister in an attempt to change
his decision.
Purchaser does not believe that an application for review will be necessary
and believes that all that will be required is the filing of a notice thirty
(30) days following the closing of the investment.
OTHER FILINGS. There is a possibility that filings may have to be made with
other foreign governments under their pre-merger notification statutes. The
filing requirements of various nations are being analyzed by the parties and,
where necessary, such filings will be made.
17. FEES AND EXPENSES.
Credit Suisse First Boston is acting as the Dealer Manager in connection
with the Offer. Credit Suisse First Boston will receive reasonable and customary
compensation for its services relating to the Offer and will be reimbursed for
certain out-of-pocket expenses including reasonable expenses of counsel and
other advisors. Parent and Purchaser have agreed to indemnify Credit Suisse
First Boston and certain related persons against certain liabilities and
expenses in connection with its engagement, including certain liabilities under
the federal securities laws. Credit Suisse First Boston and its affiliates may
actively trade the debt and equity securities of the Company for their own
account and for the account of customers and, accordingly, may at any time hold
a long or short position in such securities.
Parent and Purchaser have retained Georgeson Shareholder Communications Inc.
to be the Information Agent and ChaseMellon Shareholder Services, L.L.C. to be
the Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telecopy, telegraph and personal interview
and may request banks, brokers, dealers and other nominees to forward materials
relating to the Offer to beneficial owners of Shares.
The Information Agent and the Depositary each will receive reasonable and
customary compensation for their respective services in connection with the
Offer, will be reimbursed for reasonable out-of-pocket expenses, and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under federal securities laws.
None of Parent or Purchaser will pay any fees or commissions to any broker
or dealer or to any other person (other than to the Dealer Manager, the
Depositary and the Information Agent) in connection with the solicitation of
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and
trust companies will, upon request, be reimbursed by Purchaser for customary
mailing and handling expenses incurred by them in forwarding offering materials
to their customers.
18. MISCELLANEOUS.
The Offer is being made to all holders of Shares. Purchaser is not aware of
any jurisdiction where the making of the Offer is prohibited by administrative
or judicial action pursuant to any valid state statute. If Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of Shares pursuant thereto, Purchaser will make a good faith effort
to comply with any such state statute or seek to have such statute declared
inapplicable to the Offer. If, after such good faith effort, Purchaser cannot
comply with any such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such state.
In any jurisdiction 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
licensed under the laws of such jurisdiction.
40
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE RELATED LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Parent and Purchaser have filed with the SEC a Tender Offer Statement on
Schedule TO, together with all exhibits thereto, pursuant to Rule 14d-3 of the
General Rules and Regulations under the Exchange Act (the "Exchange Act Rules"),
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed a Solicitation/Recommendation Statement on
Schedule 14D-9, together with all exhibits thereto, pursuant to Rule 14d-9 of
the Exchange Act Rules setting forth its recommendation with respect to the
Offer and the reasons for such recommendations and furnishing certain additional
related information. Such Schedules and any amendments thereto, including
exhibits, may be inspected and copies may be obtained from the offices of the
SEC in the manner set forth in Section 7 (except that they will not be available
at the regional offices of the SEC).
International Paper-37, Inc.
February 29, 2000
41
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth in the table below
are the name and the present principal occupations or employment and the name,
principal business and address of any corporation or other organization in which
such occupation or employment is conducted, and the five-year employment history
of each of the directors and executive officers of Parent. Each person
identified below is a United States citizen. The principal business address of
Parent and, unless otherwise indicated, the business address of each person
identified below is Two Manhattanville Road, Purchase, New York 10577.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- ------------------------------------------------------------
<S> <C>
Samir G. Gibara Director since March 9, 1999. Chairman of the board, chief
The Goodyear Tire & Rubber executive officer and president of The Goodyear Tire &
Company Rubber Company since 1996. Prior to that time he served in
1144 East Market Street various managerial posts and became vice president of
Akron, OH 44316-0001 finance and chief financial officer in 1992. He was elected
president and chief operating officer in 1995. He is a
member of The Business Roundtable.
James A. Henderson Director since February 1, 1999. Chairman and chief
301 Washington Avenue executive officer of Cummins Engine Company, Inc. until
P.O. Box 808 December 1999. He had been in that position since 1995. He
Columbus, IN 47202 is a director of SBC Communications Inc., Rohm and Haas
Company, Ryerson Tull, Inc. and Landmark Communications,
Inc. He is also a member of The Business Roundtable and The
Business Council.
Jane C. Pfeiffer Director since June 14, 1977. Management consultant. She is
1050 Beach Road a director of Ashland, Inc., J.C. Penney Company, Inc., and
Johns Island The MONY Group. She is a trustee of The Conference Board,
Vero Beach, FL 32963 the University of Notre Dame and the Overseas Development
Council and a member of The Council on Foreign Relations.
Jeremiah J. Sheehan Director since May 4, 1999. Chairman of the board and chief
Reynolds Metals Company executive officer of Reynolds Metals Company since 1996.
6601 West Broad Street Prior to that he was president and chief operating officer
Richmond, VA 23230 from 1994 until 1996. He is a director of Reynolds Metals
Company, Federal Reserve Bank of Richmond and Universal
Corporation.
C. Wesley Smith Director since December 12, 1995. Executive vice
International Paper Company president-operating group of International Paper since 1998.
6400 Poplar Avenue Prior thereto, he was executive vice president-printing
Memphis, TN 38197 papers from 1992.
W. Craig McClelland Director since May 4, 1999. Former chairman of the board and
50 Tice Boulevard chief executive officer of Union Camp Corporation until
Woodcliff Lake, NJ 07675 April 1999. Previously he served as president and chief
operating officer from 1989 to 1994. He is a director of
Allegheny Teledyne, Inc., WaterPik Technologies, Inc. and
PNC Financial Corporation and serves as co-chairman of the
Global Advisory Council an affiliate of The Conference
Board.
Robert D. Kennedy Director since May 4, 1999. Former chairman of the board and
UCAR International Inc. chief executive officer of Union Carbide Corporation from
39 Old Ridgebury Road 1986 to 1995. He was retired from 1995 until March 1998.
Section J-4 From March 1998 until September 1999, he was chairman of
UCAR International Inc. He is on the board of Union Carbide
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- ------------------------------------------------------------
<S> <C>
Danbury, CT 06817-0001 Corporation, Kmart Corporation, LionOre Mining International
Ltd., Sunoco Inc., UCAR International Inc. and Chase
Industries. He is also on the Advisory Board of The
Blackstone Group and RFE Investment Partners.
Peter I. Bijur Director since July 8, 1997. Chairman and chief executive
Texaco Inc. officer of Texaco Inc. He joined Texaco in 1966 and was
2000 Westchester Avenue elected senior vice president in May of 1992. He became vice
White Plains, NY 10650 chairman of the board in January 1996, and was elected to
his current position in July 1996. He is also chairman of
the American Petroleum Institute, a member of The Business
Council, the Business Council of New York State, Inc., The
Business Roundtable, the National Petroleum Council, and the
Council on Foreign Relations and serves on the Board of
Trustees of The Conference Board.
John T. Dillon Director since March 1, 1991. Chairman of the board and
chief executive officer of International Paper since 1996.
Prior thereto he was president and chief operating officer
in 1995. He is also a director of Caterpillar Inc. He is
chairman of the board of The National Council on Economic
Education and a member of The Business Roundtable.
John R. Kennedy Director since March 12, 1996. Retired president and chief
JRK Financial Corporation executive officer of Federal Paper Board Company, Inc. from
125 Elm Street 1975 to 1996. He is a director of DeVlieg Bullard, Inc.,
New Canaan, CT 06840 Chase Brass Industries, Inc., Holnam, Inc., Pioneer
Companies, Inc., Spartech Corporation and Modis Professional
Services. He is director and chairman of the board of
Georgetown University, on the board of governors of the
United Nations Association of the United States of America,
and one of the directors for the Foreign Policy Association.
Robert J. Eaton Director since January 10, 1995. Chairman of the board of
DaimlerChrysler AG management of DaimlerChrysler AG from 1999 through present,
1000 Chrysler Drive and chairman of Chrysler from 1993 to 1998. He is a fellow
Auburn Hills, MI 48326-2766 of both the Society of Automotive Engineers and the
Engineering Society of Detroit and chairman of the National
Academy of Engineering. He is a member of The Business
Roundtable and the Business Council.
Donald F. McHenry Director since April 14, 1981. Distinguished Professor of
The IRC Group LLC Diplomacy at Georgetown University since 1981. He is
1320 19th Street, N.W. president of the IRC Group LLC and a director of AT&T, The
Suite 410 Coca-Cola Company, Fleet Boston Financial, the First
Washington, DC 20016 National Bank of Boston, SmithKline Beecham plc, and the
Institute for International Economics. He is a trustee of
Columbia University and chairman of the board of Africare.
Patrick F. Noonan Director since December 14, 1993. Chairman of the board of
The Conservation Fund The Conservation Fund (a nonprofit organization dedicated to
Suite 1120 conserving America's land and water resources) and
1800 North Kent Street previously, also its chief executive officer since 1985.
Arlington, VA 22209 Prior thereto he was president of The Nature Conservancy. He
is a trustee of The National Geographic Society. He is also
a director of Ashland, Inc., the Fund for Government
Investors, Saul Centers REIT, and the American Gas
Association Index Fund. He is a member of the Board of
Visitors of Duke University School of the Environment.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- ------------------------------------------------------------
<S> <C>
Charles R. Shoemate Director since November 1, 1994. Chairman, president and
Bestfoods chief executive officer of Bestfoods. He was elected
International Plaza president and a member of its board of directors in 1988,
700 Sylvan Avenue chief executive officer in August 1990, and chairman in
P.O. Box 8000 September 1990. He is a director of CIGNA Corporation,
Englewood Cliffs, NJ 07632 Texaco, Inc., and the Grocery Manufacturers of America, Inc.
He is a member of the Business Roundtable and chairman of
The Conference Board.
James P. Melican Executive vice president-legal and external affairs. He
assumed his current position in 1991.
David W. Oskin Executive vice president-consumer packaging since 1995, and
was CEO and managing director of Carter Holt Harvey Limited
of New Zealand from 1992 to 1995.
Marianne M. Parrs Executive vice president-administration since March 9, 1999.
Prior thereto she was executive vice president and chief
financial officer from 1995 to 1999. She was staff vice
president-tax from 1993 to 1995.
Andrew R. Lessin Vice president and controller since 1995. Prior thereto he
was the controller from 1990.
William B. Lytton Senior vice president and general counsel since January
1999. Prior thereto he was vice president and general
counsel since 1996, and vice president and general counsel
for Lockheed Martin Electronics from 1995 to 1996.
John V. Faraci Senior vice president and chief financial officer since
1999. Prior thereto he was chief executive officer and
managing director of Carter Holt Harvey since 1995.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. Set forth in the table
below are the name and the present principal occupations or employment and the
name, principal business and address of any corporation or other organization in
which such occupation or employment is conducted, and the five-year employment
history of each of the directors and executive officers of Purchaser. Each
person identified below is a United States citizen. The principal business
address of Purchaser and, unless otherwise indicated, the business address of
each person identified below is Two Manhattanville Road, Purchase, New York
10577.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- ------------------------------------------------------------
<S> <C>
James W. Guedry Director and president of International Paper-37, Inc. since
August 3, 1999. Vice president, secretary and associate
general counsel of International Paper Company since 1993.
Barbara T. Batten Director of International Paper-37, Inc. since August 3,
1999. Assistant secretary of International Paper Company
since June 8, 1999. Prior to that she was a legal assistant
and paralegal with Union Camp Corporation.
Julius A. Weiss Treasurer of International Paper-37, Inc. since August 3,
1999. Assistant treasurer of International Paper Company
from January 1998 to the present. Previously at
International Paper Company he served as senior
controller-forest products and industrial packaging from
January 1996 through August 1998, and sector controller of
specialty, imaging and distribution from October 1993
through December 1995.
</TABLE>
I-3
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for Shares 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:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND:
ChaseMellon Shareholder Services, (FOR ELIGIBLE INSTITUTIONS ONLY) ChaseMellon Shareholder Services,
L.L.C. (201) 296-4293 L.L.C.
P.O. Box 3301 120 Broadway, 13th Floor
South Hackensack, NJ 07606 CONFIRM FACSIMILE BY TELEPHONE: New York, NY 10271
(201) 296-4860
(FOR CONFIRMATION ONLY)
BY OVERNIGHT COURIER:
ChaseMellon Shareholder Services,
L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth below. Requests for
additional copies of this Offer to Purchase and the Letter of Transmittal may be
directed to the Information Agent or the Depositary. Stockholders may also
contact their brokers, dealers, commercial banks, trust companies or other
nominees for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
Georgeson Shareholder Communications Inc.
17 State Street, 10th Floor
New York, NY 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, NY 10010-3629
Call Toll Free: (800) 881-8320
<PAGE>
Letter of Transmittal
to Tender Shares of Common Stock
(Including the Associated Rights to Purchase Preferred Stock)
of
SHOREWOOD PACKAGING CORPORATION
Pursuant to the Offer to Purchase dated February 29, 2000
by
INTERNATIONAL PAPER-37, INC.
a wholly owned subsidiary of
INTERNATIONAL PAPER COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MARCH 27, 2000, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND:
ChaseMellon Shareholder (FOR ELIGIBLE INSTITUTIONS ONLY) ChaseMellon Shareholder
Services, L.L.C. (201) 296-4293 Services, L.L.C.
P.O. Box 3301 CONFIRM FACSIMILE BY TELEPHONE: 120 Broadway, 13(th) Floor
South Hackensack, NJ 07606 (201) 296-4860 New York, NY 10271
(FOR CONFIRMATION ONLY)
BY OVERNIGHT COURIER:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660
</TABLE>
DELIVERY OF THIS INSTRUMENT 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 DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND
COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
(PLEASE FILL IN EXACTLY AS NAME(S) APPEARS ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
SHARES
REPRESENTED NUMBER OF
SHARE CERTIFICATE BY SHARE SHARES
NUMBER(S) * CERTIFICATE(S) * TENDERED**
<S> <C> <C> <C>
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
TOTAL SHARES
- -----------------------------------------------------------------------------------------------------------------------
*NEED NOT BE COMPLETED BY STOCKHOLDERS TENDERING BY BOOK-ENTRY TRANSFER.
**UNLESS OTHERWISE INDICATED, ALL SHARES REPRESENTED BY CERTIFICATES DELIVERED TO THE DEPOSITARY WILL BE DEEMED TO HAVE
BEEN TENDERED. SEE INSTRUCTION 4.
/ /CHECK HERE IF CERTIFICATES HAVE BEEN LOST, DESTROYED OR STOLEN. SEE INSTRUCTION 8.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
This Letter of Transmittal is to be completed by stockholders either if
certificates representing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in Instruction 2) is utilized, if
delivery is to be made by book-entry transfer to the account maintained by the
Depositary at The Depository Trust Company ("DTC") pursuant to the procedures
set forth in Section 2 of the Offer to Purchase dated February 29, 2000 (the
"Offer to Purchase"). Stockholders whose certificates are not immediately
available, or who cannot deliver their certificates or confirmation of the
book-entry transfer of their Shares into the Depositary's account at DTC
("Book-Entry Confirmation") and all other documents required hereby to the
Depositary on or prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase), must tender their Shares according to the guaranteed
delivery procedures set forth in Section 2 of the Offer to Purchase. See
Instruction 2. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY AT DTC AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution _____________________________________________
Account Number _________________ Transaction Code Number _________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holders(s): __________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution that Guaranteed Delivery: ______________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to International Paper-37, Inc., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of International Paper
Company, a New York corporation ("Parent"), the above-described shares of common
stock, par value $.01 per share, including the associated rights to purchase
shares of preferred stock (collectively, the "Shares"), of Shorewood Packaging
Corporation (the "Company"), pursuant to Purchaser's offer to purchase all of
the outstanding Shares at a price of $21.00 per Share, net to the tendering
stockholder in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated February 29, 2000 (the "Offer to Purchase"),
receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which, including any amendments or supplements thereto collectively constitute
the "Offer"). Purchaser reserves the right to transfer or assign, in whole or
from time to time in part, to one or more of its affiliates or subsidiaries, the
right to purchase Shares tendered pursuant to the Offer.
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, to and
under all of the Shares that are being tendered hereby (and any and all other
Shares or other securities or rights issued or issuable in respect thereof on or
after February 29, 2000) and irrevocably appoints the Depositary the true and
lawful agent and attorney-in-fact of the undersigned with respect to such Shares
(and any such other Shares or securities or rights), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (a) deliver certificates representing such Shares
(and any such other Shares or securities or rights), or transfer ownership of
such Shares (and any such other Shares or securities or rights) on the account
books maintained by DTC, 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
(adjusted, if appropriate, as provided in the Offer to Purchase), (b) present
such Shares (and any such other Shares or securities or rights) for registration
and transfer on the books of the Company, and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
such other Shares or securities or rights), all in accordance with the terms of
the Offer.
The undersigned hereby irrevocably appoints James W. Guedry, Julius A. Weiss
and any other designee of Purchaser, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution and resubstitution, to vote in
such manner as each such attorney-in-fact and proxy or his substitute shall, in
his sole discretion, deem proper, and otherwise act (including pursuant to
written consent) with respect to all the Shares tendered hereby which have been
accepted for payment by Purchaser prior to the time of such vote or action (and
any and all other Shares or securities or rights issued or issuable in respect
thereof on or after February 29, 2000), which the undersigned is entitled to
vote at any meeting of stockholders (whether annual or special and whether or
not an adjourned meeting) of the Company, or by consent in lieu of any such
meeting, or otherwise. This proxy and power of attorney is coupled with an
interest in the Shares tendered hereby, is irrevocable, is granted in
consideration of, and is effective upon, the acceptance for payment of such
Shares (and any such other Shares or securities or rights) by Purchaser in
accordance with the terms of the Offer. Such acceptance for payment shall revoke
all prior proxies granted by the undersigned at any time with respect to such
Shares (and any such other Shares or securities or rights) and no subsequent
proxies will be given (and if given will be deemed to be ineffective) with
respect thereto by the undersigned. The undersigned acknowledges that in order
for Shares to be deemed validly tendered, immediately upon the acceptance for
payment of such Shares, Purchaser or Purchaser's designee must be able to
exercise full voting and other rights of a record and beneficial holder with
respect to such Shares.
3
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any and all other Shares or securities or rights issued or issuable
in respect thereof on or after February 29, 2000), and that, when the same are
accepted for payment by Purchaser, Purchaser will acquire good 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 any such
other Shares or securities or rights).
No authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall be affected by, and all such authority shall survive, the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated in
the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 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 certificates
representing Shares not tendered or accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any certificates
representing Shares not tendered or accepted for payment (and accompanying
documents, as appropriate) to the registered holder(s) appearing under
"Description of Shares Tendered" at the address shown below such registered
holder(s) name(s). In the event that either or both the Special Delivery
Instructions and the Special Payment Instructions are completed, please issue
the check for the purchase price and/or return any certificates representing
Shares not tendered or accepted for payment in the name(s) of, and deliver such
check and/or return such 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 stockholder's account
maintained at DTC. 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(s) thereof if Purchaser does not accept for
payment any of the Shares so tendered hereby.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
(less the amount of any federal income and backup withholding tax required to be
withheld) or certificates for Shares not tendered or not purchased are to be
issued in the name of someone other than the undersigned.
Issue: / / check
/ / certificate(s) to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
(ZIP CODE)
________________________________________________________________________________
(TAXPAYER IDENTIFICATION NO.)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
(less the amount of any federal income and backup withholding tax required to be
withheld) or certificates for Shares not tendered or not purchased are to be
mailed to someone other than the undersigned or to the undersigned at an address
other than that shown below the undersigned's signature(s).
Mail: / / check
/ / certificate(s) to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
(ZIP CODE)
________________________________________________________________________________
(TAXPAYER IDENTIFICATION NO.)
5
<PAGE>
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
SIGNATURE(S) OF OWNERS
Dated ____________________________________, 2000
Name(s) ________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title) __________________________________________________________
Address ________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number ____________________________________
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
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 a trustee, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth full title and see
Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED; SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized Signature(s) ________________________________________________________
Name ___________________________________________________________________________
Name of Firm ___________________________________________________________________
Address ________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number ____________________________________
Dated ____________________________________, 2000
6
<PAGE>
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 (which term, for purposes of this document,
shall include any participant in DTC whose name appears on a security position
listing as the owner of Shares) tendered herewith, unless such holder has
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on this Letter of Transmittal, or
(ii) if such Shares are tendered for the account of a firm that is a member in
good standing of the Security Transfer Agent's Medallion Program, the New York
Stock Exchange Medallion Signature Program or the Stock Exchange Medallion
Program (each being hereinafter referred to as an "Eligible Institution"). In
all other cases, all signatures on this Letter of Transmittal must be guaranteed
by an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders either if certificates
representing Shares are to be forwarded herewith to the Depositary or, unless an
Agent's Message (as defined below) is utilized, if tenders of Shares are to be
made pursuant to the procedures for delivery by book-entry transfer set forth in
Section 2 of the Offer to Purchase. Certificates representing all physically
tendered Shares, or any book-entry confirmation of Shares, as the case may be,
together with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, (or, in connection
with a book-entry transfer, an Agent's Message) and any other documents required
by this Letter of Transmittal must be received by the Depositary at one of its
addresses set forth herein on or prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase). If a stockholder's certificate(s)
representing Shares are not immediately available (or the procedure for the
book-entry transfer cannot be completed on a timely basis) or time will not
permit all required documents to reach the Depositary on or prior to the
Expiration Date, such stockholder's Shares may nevertheless be tendered if the
procedures for guaranteed delivery set forth in Section 2 of the Offer to
Purchase are followed. 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 provided by
Purchaser, must be received by the Depositary on or prior to the Expiration
Date, and (iii) the certificates representing all tendered Shares, in proper
form for transfer, or Book-Entry Confirmation of Shares, as the case may be, in
each case together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees (or,
in connection with a book-entry transfer, an Agent's Message) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in Section 2 of
the Offer to Purchase. The term "Agent's Message" means a message transmitted
through electronic means by DTC to, and received by, the Depositary and forming
a part of a Book-Entry Confirmation, which states that DTC has received an
express acknowledgment from the DTC participant tendering the Shares that such
participant has received, and agrees to be bound by, this Letter of Transmittal.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATE(S)
REPRESENTING SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH
DTC, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER. THE DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF SUCH
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 thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule attached hereto.
7
<PAGE>
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER SHARES BY
BOOK-ENTRY TRANSFER). If fewer than all the Shares represented 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) representing the remainder of the Shares that were
represented by the old certificate(s) will be sent to the registered holder(s),
unless otherwise provided in the appropriate box on this Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares represented by
certificate(s) delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, 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(s) 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 is signed by the registered holder(s) of the
Shares listed and tendered hereby, no endorsements of certificates or separate
stock powers are required, unless payment or certificates for Shares not
tendered or accepted for payment are to be issued to a person other than the
registered holder(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificates or stock powers are signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
Purchaser of such person's authority so to act must be submitted.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution, unless the signature is that of 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 representing Shares not tendered or accepted for payment 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 other person) payable
on account of the transfer to such person will be deducted from the purchase
price, unless satisfactory evidence of the payment of such taxes or exemption
therefrom is submitted.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or
certificates representing Shares not tendered or accepted for payment are to be
issued in the name of a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to someone other than the signer of this Letter of Transmittal or to an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Stockholders tendering Shares by book-entry
transfer may request that Shares not accepted for payment be credited to such
account maintained at DTC as such stockholder may designate herein. If no such
instructions are given, such Shares not accepted for payment will be returned by
crediting the account at DTC designated above.
8. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly contact The Bank of New York, which is the Company's transfer agent, by
calling 1-800-524-4458. 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, destroyed or stolen certificates have been followed.
8
<PAGE>
9. WAIVER OF CONDITIONS. The conditions to the Offer may be waived by
Purchaser, in whole or in part, at any time and from time to time in Purchaser's
sole discretion (subject to the provisions of the Merger Agreement referred to
in the Offer to Purchase).
10. SUBSTITUTE FORM W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"), generally
the stockholder's social security or federal employer identification number, on
the Substitute Form W-9 which is provided below, and to certify whether the
stockholder is subject to backup withholding of United States federal income
tax. If a tendering stockholder is subject to federal backup withholding, the
stockholder must cross out item (2) of the "Certification" box of the Substitute
Form W-9. Failure to provide the information on the Substitute Form W-9 may
subject the tendering stockholder to a $50 penalty imposed by the Internal
Revenue Service ("IRS") and a 31% federal backup withholding tax on the payment
of the purchase price. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, check the box in Part III, and sign and date the Substitute
Form W-9. If "Applied For" is written in Part I and the Depositary is not
provided with a TIN within 60 days of its receipt of the Substitute Form W-9,
the Depositary will withhold 31% on all payments of the purchase price until a
TIN is provided to the Depositary.
11. NON-UNITED STATES HOLDERS. Non-United States holders must submit a
completed IRS Form W-8 or Form W-8BEN to avoid backup withholding. IRS Form W-8
or Form W-8BEN may be obtained by contacting the Depositary at one of the
addresses on the face of this Letter of Transmittal.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Information Agent at the address set forth below.
Additional copies of the Offer to Purchase, this Letter of Transmittal, the
Notice of Guaranteed Delivery and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 may be obtained from the
Information Agent or the Dealer Manager at their addresses set forth below or
from your broker, dealer, commercial bank, trust company or other nominee.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), TOGETHER
WITH CERTIFICATES REPRESENTING SHARES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND
ALL OTHER REQUIRED DOCUMENTS, OR THE NOTICE OF GUARANTEED DELIVERY, MUST BE
RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under United States federal income tax law, a stockholder whose tendered
Shares are accepted for payment is required to provide the Depositary (as payer)
with such stockholder's correct social security number, individual taxpayer
identification number, or employer identification number (each a Taxpayer
Identification Number or a "TIN") on Substitute Form W-9 provided below. If such
stockholder is an individual, the TIN is such person's social security number.
The TIN of a resident alien who does not have and is not eligible to obtain a
social security number is such person's IRS individual taxpayer identification
number. If a tendering stockholder is subject to federal backup withholding, the
stockholder must cross out item (2) of the Certification box on the Substitute
Form W-9. If the Depositary is not provided with the correct TIN, the
stockholder may be subject to a $50 penalty imposed by the IRS. In addition,
payments that are made to such stockholder with respect to Shares purchased
pursuant to the Offer may be subject to federal backup withholding.
Certain stockholders (including, among others, all corporations and certain
non-United States individuals) are not subject to federal backup withholding. In
order for a non-United States individual to qualify as an exempt recipient, that
stockholder must submit to the Depositary a properly completed IRS Form W-8 or
Form W-8BEN, signed under penalties of perjury, attesting to that individual's
exempt status. Such forms may be obtained from the Depositary. Exempt
stockholders, other than non-United States individuals, should furnish their
TIN, write "EXEMPT" on the face of the Substitute Form W-9 below, and sign, date
and return the Substitute Form W-9 to the Depositary. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If federal backup withholding applies, the Depositary is required to
withhold 31% of any payments made to the stockholder. Federal 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 IRS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent federal 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 the Substitute Form W-9 below certifying that the TIN provided
on such form is correct (or that such stockholder is awaiting a TIN) and that
(i) such holder is exempt from federal backup withholding, (ii) such holder has
not been notified by the IRS that such holder is subject to federal backup
withholding as a result of a failure to report all interest or dividends, or
(iii) the IRS has notified such holder that such holder is no longer subject to
federal backup withholding (see Part 2 of Substitute Form W-9).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the TIN of the record
owner of 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 guidelines
on which number to report. If the tendering stockholder has not been issued a
TIN and has applied for a number or intends to apply for a number in the near
future, such stockholder should write "Applied For" in the space provided for in
the TIN in Part I, check the box in Part III, and sign and date the Substitute
Form W-9. If "Applied For" is written in Part I and the Depositary is not
provided with a TIN within 60 days, the Depositary may withhold 31% on all
payments of the purchase price until a TIN is provided to the Depositary.
10
<PAGE>
<TABLE>
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
PAYER: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
---------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I TAXPAYER IDENTIFICATION NO.--FOR ALL ACCOUNTS PART II FOR PAYEES EXEMPT FROM
FORM W-9 BACKUP WITHHOLDING (SEE
ENCLOSED GUIDELINES)
----------------------------------------------
DEPARTMENT OF THE Enter your taxpayer --------------
TREASURY identification number in the SOCIAL SECURITY NUMBER PART III
INTERNAL REVENUE appropriate box. For most OR AWAITING TIN / /
SERVICE individuals and sole --------------
PAYER'S REQUEST FOR proprietors, this is your EMPLOYEE
TAXPAYER IDENTIFICATION Social Security Number. For IDENTIFICATION NUMBER
NO. other entities, it is your
Employer Identification
Number. If you do not have a
number, see "How to Obtain a
TIN" in the enclosed
GUIDELINES.
Note: If the account is in more than one name, see
the chart on page 2 of the enclosed GUIDELINES to
determine what number to enter.
---------------------------------------------------------------------------------------------------------------
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to
be issued to me);
(2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS has notified me that I no longer
subject to backup withholding; and
(3) Any information provided on this form is true, correct and complete.
YOU MUST CROSS OUT ITEM (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP
WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN AND YOU HAVE NOT RECEIVED A
NOTICE FROM THE IRS ADVISING YOU THAT BACKUP WITHHOLDING HAS TERMINATED.
---------------------------------------------------------------------------------------------------------------
SIGNATURE
---------------------------------------------------------------------------------------------------------------
DATE
- ---------------------------------------------------------------------------------------------------------------,
1999
---------------------------------------------------------------------------------------------------------------
</TABLE>
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
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<TABLE>
<S> <C>
-------------------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has not been
issued to me, and either (1) I have mailed or delivered an application to receive a
taxpayer identification number to the appropriate Internal Revenue Service Center or Social
Security Administration Office, or (2) I intend to mail or deliver an application in the
near future. I understand that if I do not provide a taxpayer identification number within
(60) days, 31% of all reportable payments made to me thereafter will be withheld until I
provide a number.
Signature: Date:---------------------------------, 2000
-----------------------------------
-------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
17 State Street, 10th Floor
New York, NY 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, NY 10010-3629
Call Toll Free: (800) 881-8320
<PAGE>
Notice of Guaranteed Delivery
for Tender of Shares of Common Stock
(Including the Associated Rights to Purchase Preferred Stock)
of
SHOREWOOD PACKAGING CORPORATION
by
INTERNATIONAL PAPER-37, INC.
a wholly owned subsidiary of
INTERNATIONAL PAPER COMPANY
(Not to be used for Signature Guarantees)
This form, or one substantially equivalent hereto, must be used to accept
the Offer (as defined below) if certificates representing shares of common
stock, par value $.01 per share, including the associated rights to purchase
shares of preferred stock (collectively, the "Shares"), of Shorewood Packaging
Corporation, a Delaware corporation (the "Company"), are not immediately
available (or if the procedure for book-entry transfer cannot be completed on a
timely basis), or if time will not permit all required documents to reach the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase (as defined below)). Such form may be delivered by hand, transmitted by
facsimile transmission or mailed to the Depositary at the addresses and
facsimile number set forth below. See Section 2 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND:
ChaseMellon Shareholder Services, (FOR ELIGIBLE INSTITUTIONS ONLY) ChaseMellon Shareholder Services,
L.L.C. (201) 296-4293 L.L.C.
P.O. Box 3301 120 Broadway, 13th Floor
South Hackensack, NJ 07606 CONFIRM FACSIMILE BY TELEPHONE: New York, NY 10271
(201) 296-4860
(FOR CONFIRMATION ONLY)
BY OVERNIGHT COURIER:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660
</TABLE>
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 DOES NOT CONSTITUTE A VALID DELIVERY.
This form 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 or an
Agent's Message (as defined in Section 2 of the Offer to Purchase) and
certificates representing the Shares to the Depositary within the time period
specified herein. Failure to do so could result in a financial loss to the
Eligible Institution.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to International Paper-37, Inc., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of International Paper
Company, a New York corporation ("Parent"), upon the terms and subject to the
conditions set forth in the Offer to Purchase dated February 29, 2000 (the
"Offer to Purchase") and the related Letter of Transmittal (which, including any
amendments or supplements thereto, collectively constitute the "Offer"), receipt
of which is hereby acknowledged, the number of Shares specified below pursuant
to the guaranteed delivery procedures set forth in Section 2 of the Offer to
Purchase.
Number of Shares: ______________________________________________________________
Name(s) of Record Holder(s): ___
Certificates No(s). (if available): ____________________________________________
________________________________
________________________________
________________________________
________________________________
Address(es): ___________________
Check box if Share(s) will be tendered by Book-Entry Transfer
________________________________
Area Code and Telephone
Number(s) ______________________________________________________________________
/ / The Depository Trust Company
________________________________
Account Number: ________________________________________________________________
Signatures: ____________________
Date: __________________________________________________________________________
________________________________
Dated: _________________________
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member in good standing of the Security Transfer Agent's
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchange Medallion Program (each, an "Eligible Institution"), (a)
represents that the above named person(s) own(s) the Shares tendered hereby
within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), (b) represents that such tender of
Shares complies with Rule 14e-4 under the Exchange Act, and (c) guarantees
delivery to the Depositary, at one of its addresses set forth above, of
certificates representing the Shares tendered hereby in proper form for
transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's accounts at The Depository Trust Company, in each case with
delivery of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees, or an Agent's Message
in the case of a book-entry transfer, and any other required documents, within
three New York Stock Exchange trading days after the date hereof.
Name of Firm: __________________________________________________________________
________________________________
(AUTHORIZED SIGNATURE)
Address: _______________________________________________________________________
Name: __________________________
(PLEASE TYPE OR PRINT)
________________________________________________________________________________
Title: _________________________
________________________________________________________________________________
Date: __________________________
________________________________________________________________________________
(ZIP CODE)
Area Code and Telephone Number: ________________________________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
<PAGE>
[LOGO]
[LOGO]
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Rights to Purchase Preferred Stock)
of
SHOREWOOD PACKAGING CORPORATION
by
INTERNATIONAL PAPER-37, INC.
a wholly owned subsidiary of
INTERNATIONAL PAPER COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MARCH 27, 2000, UNLESS THE OFFER IS EXTENDED.
February 29, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by International Paper-37, Inc., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of International Paper
Company, a New York corporation ("Parent") to act as Dealer Manager in
connection with Purchaser's offer to purchase all of the outstanding shares of
common stock, par value $.01 per share, including the associated rights to
purchase preferred stock (collectively, the "Shares"), of Shorewood Packaging
Corporation, a Delaware corporation (the "Company"), at a price of $21.00 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated February 29, 2000 (the "Offer to
Purchase") and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"), copies
of which are enclosed herewith. The Offer is being made in connection with the
Agreement and Plan of Merger, dated as of February 16, 2000 (the "Merger
Agreement"), among Parent, Purchaser and the Company. The Merger Agreement
provides, among other things, that Purchaser will be merged with and into the
Company (the "Merger") following the satisfaction or waiver of each of the
conditions to the Merger set forth in the Merger Agreement.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
For your information and for forwarding to your clients, we are enclosing
the following documents:
1. The Offer to Purchase.
2. The Letter of Transmittal to be used by stockholders of the Company
in accepting the Offer, including a Certification of Taxpayer Identification
Number on Substitute Form W-9. Facsimile copies of the Letter of Transmittal
(with manual signatures) may be used to tender Shares.
3. A letter to stockholders of the Company from Marc P. Shore, Chairman
of the Board and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9, dated February 29,
2000 filed by the Company with the Securities and Exchange Commission, which
includes the recommendation of the Board of Directors of the Company that
stockholders accept the Offer and tender their Shares to Purchaser pursuant
to the Offer.
4. A printed form of letter which may be sent to your clients for whose
account you hold Shares in your name or in the name of your nominee with
space provided for obtaining such clients' instructions with regard to the
Offer.
<PAGE>
5. The Notice of Guaranteed Delivery to be used to accept the Offer if
certificates representing Shares are not immediately available or if time
will not permit all required documents to reach the Depositary (as defined
below) prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) or if the procedures for book-entry transfer cannot be completed
on a timely basis.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9. Stockholders who fail
to complete and sign the Substitute Form W-9 may be subject to a required
federal backup withholding tax of 31% of the gross proceeds payable to such
stockholder or other payee pursuant to the Offer. See Section 2 of the Offer
to Purchase.
7. A return envelope addressed to ChaseMellon Shareholder Services,
L.L.C. (the "Depositary").
Your attention is directed to the following:
1. The tender price is $21.00 per Share, net to the seller in cash,
without interest, upon the terms and conditions set forth in the Offer to
Purchase.
2. The Board of Directors of the Company unanimously (i) determined that
the Offer, the Merger and the Merger Agreement are advisable, fair to, and
in the best interests of, the Company's stockholders, (ii) approved the
Merger, the Offer, the Merger Agreement and the other transactions
contemplated by the Merger Agreement and (iii) recommends that the Company's
stockholders accept the Offer and tender their Shares pursuant thereto, and
approve and adopt the Merger Agreement.
3. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Monday, March 27, 2000, unless the Offer is extended.
4. The Offer is being made for all of the outstanding Shares. The Offer
is conditioned upon, among other things, there being validly tendered and
not properly withdrawn prior to the expiration date of the Offer that number
of Shares which represents not less than fifty-one percent of the total
issued and outstanding Shares on a fully diluted basis (excluding Shares
held by the Company or any of its subsidiaries) and (ii) the expiration or
termination of any and all waiting periods applicable to the transactions
contemplated by the Merger Agreement under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, the Competition Act (Canada), the
Investment Canada Act and any similar legal regime in any other country
applicable to significant operations of Parent or any of its subsidiaries or
the Company or any of its subsidiaries. The Offer is also subject to other
terms and conditions. See Section 15 of the Offer to Purchase.
5. Stockholders who tender Shares will not be obligated to pay brokerage
fees or commissions to the Dealer Manager, the Information Agent or the
Depositary or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment and pay for all Shares which are
validly tendered on or prior to the Expiration Date and not theretofore properly
withdrawn pursuant to the Offer. In all cases, payment for Shares accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates representing such Shares (or a timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company, pursuant to the procedures described in
Section 2 of the Offer to Purchase), (ii) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) with any required signature
guarantees (or, in connection with a book-entry transfer, an Agent's Message (as
defined in Section 2 of the Offer to Purchase)), and (iii) all other documents
required by the Letter of Transmittal.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedures specified under Section 2 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker or dealer or to
any other person (other than the Depositary, the Information Agent and the
Dealer Manager) in connection with the solicitation of tenders of Shares
pursuant to the Offer. Purchaser will, however, upon request, reimburse you for
customary mailing and handling
<PAGE>
expenses incurred by you in forwarding the enclosed materials to your clients.
Purchaser will pay or cause to be paid any stock transfer taxes payable on the
transfer of Shares to it, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
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 MONDAY, MARCH 27, 2000, UNLESS
THE OFFER IS EXTENDED.
Any inquiries you may have with respect to the Offer should be directed to,
and additional copies of the enclosed materials may be obtained by contacting,
the undersigned at (800) 881-8320 (call toll free).
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF PURCHASER, PARENT, THE COMPANY, THE DEPOSITARY, THE
DEALER MANAGER OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THE
FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE
ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Rights to Purchase Preferred Stock)
of
SHOREWOOD PACKAGING CORPORATION
by
INTERNATIONAL PAPER-37, INC.
a wholly owned subsidiary of
INTERNATIONAL PAPER COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MARCH 27, 2000, UNLESS THE OFFER IS EXTENDED.
February 29, 2000
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated February 29,
2000 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to the offer by International Paper-37, Inc., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of International Paper
Company, a New York corporation ("Parent"), to purchase all of the outstanding
shares of common stock, par value $.01 per share, including the associated
rights to purchase preferred stock (collectively, the "Shares"), of Shorewood
Packaging Corporation, a Delaware corporation (the "Company"), at a price of
$21.00 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer. The Offer is being made in connection with
the Agreement and Plan of Merger, dated as of February 16, 2000 (the "Merger
Agreement"), among Parent, Purchaser and the Company. The Merger Agreement
provides, among other things, that Purchaser will be merged with and into the
Company (the "Merger") following the satisfaction or waiver of each of the
conditions to the Merger set forth in the Merger Agreement.
WE ARE THE HOLDER OF RECORD (DIRECTLY OR INDIRECTLY) OF SHARES FOR YOUR
ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US OR OUR NOMINEES AS THE
HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $21.00 per Share, net to the seller in cash,
without interest, upon the terms and conditions set forth in the Offer to
Purchase.
2. The Board of Directors of the Company unanimously (i) determined that
the Offer, the Merger and the Merger Agreement are advisable, fair to, and
in the best interests of, the Company's stockholders, (ii) approved the
Merger, the Offer, the Merger Agreement and the other transactions
contemplated by the Merger Agreement and (iii) recommends that the Company's
stockholders accept the Offer and tender their Shares pursuant thereto and
approve and adopt the Merger Agreement.
3. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Monday, March 27, 2000, unless the Offer is extended.
4. The Offer is being made for all of the outstanding Shares. The Offer
is conditioned upon, among other things, there being validly tendered and
not properly withdrawn prior to the expiration date of the Offer that number
of Shares which represents not less than fifty-one percent of the total
issued and outstanding Shares on a fully diluted basis (excluding Shares
held by the Company or any of its subsidiaries) and (ii) the expiration or
termination of any and all waiting periods applicable to the transactions
contemplated by the Merger
<PAGE>
Agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, the Competition Act (Canada), the Investment Canada Act and any
similar legal regime in any other country applicable to significant
operations of Parent or any of its subsidiaries or the Company or any of its
subsidiaries. The Offer is also subject to other terms and conditions. See
Section 15 of the Offer to Purchase.
5. Stockholders who tender Shares will not be obligated to pay brokerage
fees or commissions to the Dealer Manager, the Information Agent or the
Depositary or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please complete,
sign and return the instruction form set forth below. 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. Please forward your instructions to us as soon as possible to
allow us ample time to tender your Shares on your behalf prior to the expiration
of the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements and amendments thereto. Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If Purchaser becomes aware
of any valid state statute prohibiting the making of the Offer or the acceptance
of Shares pursuant thereto, Purchaser will make a good faith effort to comply
with any such state statute or seek to have such statute declared inapplicable
to the Offer. If, after such good faith effort, Purchaser cannot comply with any
such state statute, the Offer will not be made to (nor will tenders be accepted
from or on behalf of) the holders of Shares in such state. In any jurisdiction
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 Credit Suisse First Boston Corporation or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
<PAGE>
Instructions with Respect to the Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Rights to Purchase Preferred Stock)
of
SHOREWOOD PACKAGING CORPORATION
by
INTERNATIONAL PAPER-37, INC.
a wholly owned subsidiary of
INTERNATIONAL PAPER COMPANY
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated February 29, 2000, ("Offer to Purchase") and the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer") relating to the offer by
International Paper-37, Inc., a Delaware corporation ("Purchaser") and a wholly
owned subsidiary of International Paper Company, a New York corporation
("Parent") to act as Dealer Manager in connection with Purchaser's offer to
purchase all of the outstanding shares of common stock, par value $.01 per
share, including the associated rights to purchase preferred stock
(collectively, the "Shares"), of Shorewood Packaging Corporation (the
"Company"), at a price of $21.00 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer.
This will instruct you to tender to Purchaser the number of Shares indicated
below (or, if no number is indicated below, all Shares) held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
<TABLE>
<S> <C>
Number of Shares to be Tendered: SIGN HERE
Shares*
SIGNATURE(S)
Account Number:
Dated:, 2000
PLEASE PRINT NAME(S) AND ADDRESS(ES) HERE
AREA CODE AND PHONE NUMBER(S)
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY
NUMBER(S)
</TABLE>
* Unless otherwise indicated, it will be assumed that all of your Shares held
by us for your account are to be tendered.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 000-000000. The table below will help determine the number to
give the payer.
<TABLE>
<S> <C> <C>
- -----------------------------------------------
GIVE THE
SOCIAL SECURITY
NUMBER OF
FOR THIS TYPE OF ACCOUNT:
- -----------------------------------------------
1. An individual's The individual
account
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
5. Adult and minor The adult or, if the
(joint account) minor is the only
contributor, the
minor(1)
6. Account in the name The ward, minor, or
of guardian or incompetent
committee for a person(3)
designated ward,
minor, or
incompetent person
7. a. The usual The
revocable savings grantor-trustee(1)
trust account (in
which grantor is
also trustee)
b. So-called "trust" The actual owner(1)
account that is not
a legal or valid
trust under State
law
8. Sole proprietorship The owner(4)
account
- -----------------------------------------------
GIVE THE
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF
<S> <C> <C>
- -----------------------------------------------
9. A valid trust, Legal entity (do not
estate, or pension 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 account The corporation
11. Religious, The organization
charitable, or
educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, club or The organization
other tax-exempt
organization
14. A broker or The broker or
registered nominee nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments.
</TABLE>
- ---------------------------------------------
- ---------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner, or the business or "doing business as" name.
Either the social security number or the employer identification number of
the owner may be used.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't 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 and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer(1)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 covenants bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICES. Section 6109 requires most recipients of dividend
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. 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 NUMBERS.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION, CONTACT
YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated February 29, 2000, 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 in any jurisdiction
in which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. Purchaser (as defined below) may
in its discretion, however, take such action as it may deem necessary to make
the Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction. In jurisdictions whose laws require that the Offer be made by a
licensed broker or dealer, the Offer shall be deemed to be made on Purchaser's
behalf by Credit Suisse First Boston Corporation ("Credit Suisse First Boston"
or the "Dealer Manager") or by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Rights to Purchase Preferred Stock)
of
Shorewood Packaging Corporation
at
$21.00 Net Per Share
by
International Paper-37, Inc.
a wholly owned subsidiary of
International Paper Company
International Paper-37, Inc. ("Purchaser"), a Delaware corporation and a wholly
owned subsidiary of International Paper Company, a New York corporation
("Parent"), is offering to purchase all outstanding shares of common stock, par
value $.01 per share (the "Common Stock") of Shorewood Packaging Corporation
(the "Company"), together with the associated rights to purchase preferred stock
issued pursuant to the Rights Agreement, dated as of June 12, 1995 (the "Rights
Agreement"), between the Company and The Bank of New York, as Rights Agent (the
"Rights" and, together with the Common Stock, the "Shares"), at a price of
$21.00 per Share, net to the selling stockholder in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated February 29, 2000 (the "Offer to Purchase") and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer"). Stockholders
<PAGE>
of record who tender directly to the Depositary (as defined below) will not be
obligated to pay brokerage fees or commissions or, subject to Instruction 6 of
the Letter of Transmittal, stock transfer taxes, if any, on the purchase of
Shares by Purchaser pursuant to the Offer. Stockholders who hold their Shares
through a broker or bank should consult such institution as to whether it
charges any service fees. Purchaser will pay all charges and expenses of the
Dealer Manager, ChaseMellon Shareholder Services, L.L.C., which is acting as
depositary (the "Depositary"), and Georgeson Shareholder Communications Inc.,
which is acting as the information agent (the "Information Agent"), incurred in
connection with the Offer.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON
MONDAY, MARCH 27, 2000, UNLESS THE OFFER
IS EXTENDED.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not properly withdrawn prior to the Expiration Date of the Offer
that number of Shares which represents not less than fifty-one percent of the
total issued and outstanding Shares on a fully diluted basis (excluding any
shares held by the Company or any of its subsidiaries) (the "Minimum Condition")
and (2) the expiration or termination of any and all waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the
Competition Act (Canada), the Investment Canada Act and any similar legal regime
in any other country applicable to significant operations of Parent or any of
its subsidiaries or the Company or any of its subsidiaries. The Offer is also
subject to other conditions. See Section 15 of the Offer to Purchase. The Offer
is not conditioned upon Parent or Purchaser obtaining financing.
Certain stockholders of the Company who, in the aggregate, own approximately 17%
of the Shares outstanding (approximately 15% on a fully diluted basis) have
entered into a stockholders agreement with Parent and Purchaser pursuant to
which they have agreed, among other things, to tender pursuant to the Offer, and
not to withdraw, their Shares.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as of
February 16, 2000 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, that following the
completion of the Offer and the satisfaction or waiver, if permissible, of all
conditions set forth in the Merger Agreement and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), Purchaser will be merged
with and into the Company (the "Merger"), with the Company surviving the Merger
as a wholly owned subsidiary of Parent. At the effective time of the Merger (the
"Effective Time"), each outstanding Share (other than Shares held in the
Company's treasury immediately before the Effective Time, and each Share held by
Parent, Purchaser, any other subsidiary of Parent or any subsidiary of the
Company immediately before the Effective Time, all of which will be cancelled,
and other than Shares with respect to which
<PAGE>
appraisal rights are properly exercised under the DGCL) will be converted into
the right to receive $21.00 in cash, without interest thereon. The Merger
Agreement is more fully described in Section 11 of the Offer to Purchase.
The Board of Directors of the Company unanimously (1) determined that the Offer,
the Merger and the Merger Agreement are advisable, fair to, and in the best
interests of, the Company's stockholders, (2) approved the Merger, the Offer,
the Merger Agreement and the other transactions contemplated by the Merger
Agreement and (3) recommends that the Company's stockholders accept the Offer
and tender their Shares pursuant thereto and approve and adopt the Merger
Agreement.
For purposes of the Offer, Purchaser shall be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn when, as and if Purchaser gives oral or written notice to the
Depositary, as agent for the tendering stockholders, of its acceptance for
payment of such Shares. Payment for Shares so accepted 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. In all cases, payment
for Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates representing such Shares
(or timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company ("DTC")), (ii) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantees or an Agent's Message (as defined in the Offer
to Purchase) in connection with a book-entry transfer and (iii) any other
documents required by the Letter of Transmittal.
The term "Expiration Date" means 12:00 midnight, New York City time, on Monday,
March 27, 2000, unless and until Purchaser (subject to the terms and conditions
of the Merger Agreement) extends the period of time for which the Offer is open,
in which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by Purchaser, shall expire prior to the purchase
of any Shares.
Purchaser may, without the consent of the Company, extend the Offer beyond
the initial Expiration Date in the following events: (i) from time to time
if, at the initial Expiration Date (or any subsequent Expiration Date), any
of the conditions to the Offer (other than the Minimum Condition) shall not
have been satisfied or waived, until such conditions are satisfied or waived;
(ii) for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission or the staff thereof
applicable to the Offer or any period required by applicable law; (iii) if
all the conditions to the Offer (other than the Minimum Condition) are
satisfied or waived, but the Minimum Condition has not been satisfied, for
one or more periods not to exceed thirty (30) business days (for all such
extensions); or (iv) if all of the conditions to the Offer are satisfied or
waived but the number of Shares validly tendered and not withdrawn is less
than 90% of the number of then outstanding Shares on a fully diluted basis,
for an aggregate period not to exceed twenty (20) business days (for all such
extensions), provided that, in the case of an extension pursuant to clause
(iv), Purchaser must accept and promptly pay for all securities tendered
prior to the date of such extension and otherwise meet the requirements of
Rule 14d-11 under the Securities Exchange Act of 1934 (the
<PAGE>
"Exchange Act"), as amended, in connection with each such extension. Such an
extension pursuant to clause (iv) will constitute a subsequent offering period.
A subsequent offering period is an additional period of time from 3 to 20
business days in length, beginning after Purchaser purchases Shares tendered in
the Offer, during which stockholders may tender, but not withdraw, Shares and
receive the Offer Price. Purchaser intends to include a subsequent offering
period in the event that all conditions to the Offer have been satisfied or
waived but less than 90% of the outstanding Shares on a fully diluted basis have
been validly tendered and not withdrawn as of the Expiration Date. Pursuant to
Rule 14d-7 under the Exchange Act, no withdrawal rights apply to Shares tendered
during a subsequent offering period and no withdrawal rights apply during the
subsequent offering period with respect to Shares tendered in the Offer and
accepted for payment. During a subsequent offering period, Purchaser will
promptly purchase and pay for any Shares tendered at the same price paid in the
Offer. See Section 1 of the Offer to Purchase.
In addition, Parent and Purchaser have agreed that Purchaser shall from time to
time extend the Offer, if requested by the Company, (i) if at the initial
Expiration Date (or any subsequent Expiration Date), any of the conditions to
the Offer other than (or in addition to) the Minimum Condition shall not have
been waived or satisfied, until (taking into account all such extensions) the
earlier of June 30, 2000 or such earlier date upon which any such condition
(other than the Minimum Condition) shall not be reasonably capable of being
satisfied prior to June 30, 2000; or (ii) if at the initial Expiration Date (or
any subsequent Expiration Date), all of the conditions to the Offer other than
the Minimum Condition shall have been waived or satisfied and the Minimum
Condition shall not have been satisfied, until the earlier of 10 business days
after such Expiration Date or June 30, 2000.
Purchaser shall cause any such extension by giving oral or written notice of
such extension to the Depositary, which will be followed by public announcement
thereof 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, if any, of a tendering stockholder to withdraw such
stockholder's Shares. 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.
Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date, and unless theretofore accepted for payment pursuant to the
Offer, may also be withdrawn at any time after April 28, 2000 except as provided
with respect to any subsequent offering period. For a withdrawal of Shares
tendered 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 in the Offer to Purchase. Any notice of withdrawal must specify the name
of the person who tendered the Shares to be withdrawn, the number of Shares to
be withdrawn and the name(s) in which the certificate(s) representing such
Shares are registered, if different from that of the person who tendered such
Shares. If certificates for Shares to be withdrawn have been
<PAGE>
delivered or otherwise identified to the Depositary, the name of the registered
holder and the serial numbers shown on the particular certificate evidencing the
Shares to be withdrawn must also be furnished to the Depositary prior to the
physical release of the Shares to be withdrawn. The signature(s) on the notice
of withdrawal must be guaranteed by an Eligible Institution (as defined in the
Offer to Purchase) (except in the case of Shares tendered by an Eligible
Institution). If Shares have been tendered pursuant to the procedures for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at DTC to be credited with such withdrawn Shares and must
otherwise comply with DTC's procedures. 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, and its determination will be final and
binding on all parties.
The information required to be disclosed by paragraph (d)(1) of Rule 14d-6 of
the General Rules and Regulations under the Exchange Act is contained in the
Offer to Purchase and is incorporated herein by reference.
In connection with the Offer, the Company has provided Purchaser with the names
and addresses of all record holders of Shares and security position listings of
Shares held in stock depositories. The Offer to Purchase, the related Letter of
Transmittal and other related materials will be mailed to registered 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.
The 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.
Any questions or requests for assistance or for additional copies of the Offer
to Purchase, the related Letter of Transmittal and other related tender offer
materials may be directed to the Information Agent or the Dealer Manager at
their respective addresses and telephone numbers 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, the Depositary and the Information Agent) in connection with the
solicitation of tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
Georgeson Shareholder Communications Inc.
LOGO
17 State Street, 10th Floor
New York, New York 10004
Brokers and Bankers Call Collect (212) 440-9800
or
All Others Call Toll Free (800) 223-2064
<PAGE>
The Dealer Manager for the Offer is:
Credit Suisse First Boston
LOGO
Eleven Madison Avenue
New York, NY 10010-3629
Call Toll Free: (800) 881-8320
February 29, 2000
<PAGE>
News Release:
MEDIA CONTACTS: James Lee, 914-397-1565, or Jack Cox, 914-397-1952
ANALYST CONTACTS: Carol Tutundgy, 914-397-1632; Rochelle Weitzner, 914-397-1623
INTERNATIONAL PAPER REACHES AGREEMENT TO BUY SHOREWOOD PACKAGING
Thursday, February 17, 2000
Purchase, New York - International Paper (NYSE: IP) agreed to acquire Shorewood
Packaging Corporation (NYSE: SWD) in a move that will create the premiere retail
packaging company. The all cash transaction values Shorewood at $21 per share.
Shorewood produces premium packaging for entertainment, cosmetic, personal care
and other consumer products.
"Shorewood is the recognized leader in the fast growing, premium retail
packaging market," noted IP Chairman and Chief Executive Officer John Dillon.
"This acquisition complements our leading position in bleached board and
strengthens our existing retail packaging business. Shorewood is a premiere
franchise with a reputation for high quality, value added products and
outstanding customer service."
International Paper intends to launch a tender offer promptly for all shares of
Shorewood stock at $21 per share, or approximately $600 million. International
Paper would also assume approximately $275 million in Shorewood debt. The Boards
of Directors of both companies have unanimously approved the transaction.
For the 12-month period ended October 1999, Shorewood had sales of approximately
$600 million, operating cash flow of approximately $90 million and operating
income of approximately $62 million.
Retail Packaging is the largest segment of International Paper's Consumer
Packaging sector, including the sale of bleached board for packaging
applications and the manufacture of retail packaging products at 10 plants in
the United States. The companies will combine their premium retail packaging
operations into a single business to be operated under the Shorewood name. Sales
of the new business are projected to be in excess of $750 million.
Shorewood is well positioned in the entertainment segment, an area that is
presently growing faster than other retail packaging segments. One third of the
company's sales are in this segment, with growth driven by sales of computer
software and broader distribution of music, video and other software products.
"Consumer Packaging is a core business for International Paper. The acquisition
of Shorewood is a very significant step in our efforts to deliver more value to
our customers," noted William Slowikowski, Senior Vice President - Consumer
Packaging for International Paper.
"This combination also helps us meet our goals of improving our position in
premium packaging and capturing maximum value from our bleached board system.
With International Paper's world class bleached board system and Shorewood's
leadership in packaging, we will be well
3
<PAGE>
positioned to provide high quality products and services to customers within the
growing premium packaging segment."
"I look forward to the opportunity to lead the expansion of premium retail
packaging and to continue Shorewood's tradition of excellence at International
Paper," said Marc Shore, Chairman and CEO of Shorewood.
International Paper anticipates annual cost savings of $25 million from the
combination as a result of integrating operations, reductions in duplicate
overhead costs and improved purchasing efficiencies. Including the identified
cost savings, the acquisition of Shorewood is expected to be additive to
International Paper's earnings in the first year.
The acquisition is subject to regulatory approval. The transaction is expected
to close by the end of March.
International Paper (www.internationalpaper.com) is the world's largest paper
and forest products company. Businesses include printing papers, packaging,
building materials, chemical products and distribution. As the largest private
landowner in the U.S., the company manages its forest under the principles of
the Sustainable Forestry Initiative (SFISM) program, a system that ensures the
perpetual growing and harvesting of trees while protecting wildlife, plants,
soil, air and water quality. Headquartered in the United States at Purchase,
N.Y., International Paper has operations in nearly 50 countries, employs nearly
100,000 people and exports its products to more than 130 nations.
Shorewood Packaging Corporation is a leading value-added provider of high
quality printing and paperboard packaging for the computer software, cosmetics
and toiletries, food, home video, music, tobacco and general consumer markets in
North America and China, with 16 plants in the United States, Canada and China.
####
This release contains certain forward-looking statements relating to projections
of sales and savings. These projections might not materialize if combined sales
do not continue at about the same rate or greater than in 1999 or we are unable
to achieve the savings we presently anticipate.
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN
OFFER TO SELL SHARES OF THE COMPANY. AT THE TIME THE OFFER IS COMMENCED,
INTERNATIONAL PAPER WILL FILE A TENDER OFFER STATEMENT WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION AND SHOREWOOD PACKAGING WILL FILE A
SOLICITATION/RECOMMENDATION STATEMENT WITH RESPECT TO THE OFFER. THE TENDER
OFFER STATEMENT (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF
TRANSMITTAL AND OTHER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION
STATEMENT WILL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY
BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. THE OFFER TO
PURCHASE, THE RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER OFFER
DOCUMENTS, AS WELL AS THE SOLICITATION/RECOMMENDATION STATEMENT, WILL BE MADE
AVAILABLE TO ALL STOCK HOLDERS OF SHOREWOOD PACKAGING, AT NO EXPENSE TO THEM.
THE TENDER OFFER STATEMENT (INCLUDING THE OFFER TO PURCHASE, THE RELATED
LETTER OF TRANSMITTAL AND ALL OTHER OFFER DOCUMENTS FILED WITH THE
COMMISSION) AND THE SOLICITATION/RECOMMENDATION STATEMENT WILL ALSO BE
AVAILABLE AT NO CHARGE AT THE COMMISSION'S WEBSITE AT WWW.SEC.GOV.
4
<PAGE>
AGREEMENT AND
PLAN OF MERGER
BY AND AMONG
INTERNATIONAL PAPER COMPANY,
INTERNATIONAL PAPER - 37, INC.
AND
SHOREWOOD PACKAGING CORPORATION
DATED AS OF FEBRUARY 16, 2000
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER
<S> <C> <C>
1.1 The Offer.................................................................1
1.2 Company Action............................................................3
1.3 Directors.................................................................5
ARTICLE II
THE MERGER
2.1 The Merger................................................................6
2.2 Effective Time............................................................6
2.3 Closing of the Merger.....................................................7
2.4 Effects of the Merger.....................................................7
2.5 Certificate of Incorporation and By-laws..................................7
2.6 Directors.................................................................7
2.7 Officers..................................................................7
2.8 Conversion of Shares......................................................7
2.9 Delivery of Merger Consideration..........................................7
2.10 Dissenting Shares.........................................................9
2.11 Treatment of Company Options and Stock Units.............................10
2.12 Adjustments..............................................................10
2.13 Stockholders' Meeting....................................................10
2.14 Merger Without Meeting of Stockholders...................................11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Existence; Good Standing; Corporate Authority............................11
3.2 Authorization, Validity and Effect of Agreements.........................12
3.3 Capitalization...........................................................12
3.4 Subsidiaries.............................................................13
3.5 Other Interests..........................................................13
3.6 No Conflict; Required Filings and Consents...............................14
3.7 Compliance; Permits......................................................15
3.8 SEC Documents............................................................15
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
3.9 Financial Statements; Undisclosed Liabilities............................16
3.10 Absence of Certain Changes...............................................16
3.11 Material Contracts.......................................................17
3.12 Litigation...............................................................18
3.13 Taxes....................................................................18
3.14 Employee Benefit Plans...................................................19
3.15 Labor and Employment Matters.............................................21
3.16 No Brokers...............................................................21
3.17 Properties...............................................................21
3.18 Environmental Laws.......................................................22
3.19 Related Party Transactions...............................................24
3.20 Intellectual Property....................................................24
3.21 State Takeover Statutes Inapplicable.....................................25
3.22 Product Liability........................................................25
3.23 Opinions of Financial Advisors...........................................25
3.24 Rights Agreement.........................................................25
3.25 Full Disclosure..........................................................25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
4.1 Existence; Good Standing; Corporate Authority............................26
4.2 Authorization, Validity and Effect of Agreements.........................26
4.3 No Conflict; Required Filings and Consents...............................27
4.4 No Brokers...............................................................28
4.5 Full Disclosure..........................................................28
4.6 No Prior Activities......................................................28
4.7 Financing................................................................28
ARTICLE V
COVENANTS
5.1 Conduct of Business by the Company Pending the Merger....................29
5.2 No Solicitation..........................................................31
5.3 Access to Information; Confidentiality...................................33
</TABLE>
ii
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
5.4 Consents; Approvals......................................................33
5.5 Indemnification and Insurance............................................33
5.6 Employee Benefits........................................................35
5.7 Notification of Certain Matters..........................................35
5.8 Further Action...........................................................36
5.9 Public Announcements.....................................................36
5.10 Financial Information....................................................36
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Offer....................................................................36
6.2 Stockholder Approval.....................................................36
6.3 No Injunction or Action..................................................36
6.4 Governmental Approval....................................................37
ARTICLE VII
TERMINATION
7.1 Termination..............................................................37
7.2 Effect of Termination....................................................39
7.3 Fees and Expenses........................................................39
ARTICLE VIII
GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties and Agreements................40
8.2 Notices..................................................................41
8.3 Assignment; Binding Effect...............................................41
8.4 Entire Agreement.........................................................41
8.5 Amendment................................................................42
8.6 Governing Law; Consent to Jurisdiction...................................42
8.7 Counterparts.............................................................42
8.8 Headings.................................................................42
8.9 Interpretation...........................................................42
</TABLE>
iii
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
8.10 Waivers..................................................................43
8.11 Incorporation of Exhibits................................................43
8.12 Severability.............................................................43
8.13 Enforcement of Agreement.................................................43
8.14 Waiver of Jury Trial.....................................................44
8.15 Company Disclosure Letter................................................44
8.16 Execution................................................................44
8.17 Personal Liability.......................................................44
8.18 Date for any Action......................................................44
8.19 Obligation of Parent and the Company.....................................44
8.20 Certain Definitions......................................................44
</TABLE>
Annex A
iv
<PAGE>
Exhibit 2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") dated as
of February 16, 2000, is by and among International Paper Company, a New York
corporation ("PARENT"), International Paper-37, Inc., a Delaware corporation and
a direct wholly owned subsidiary of Parent ("PURCHASER"), and Shorewood
Packaging Corporation, a Delaware corporation (the "COMPANY").
RECITALS
WHEREAS, the Company and Parent have determined to engage in
the transactions (the "TRANSACTIONS") contemplated by this Agreement, including
(a) the commencement of an Offer (as defined below) by Purchaser to purchase for
cash all of the outstanding shares of common stock, $.01 par value, of the
Company ("COMPANY COMMON STOCK") together with the associated rights to purchase
preferred stock (the "RIGHTS"), issued pursuant to the Rights Agreement, dated
as of June 12, 1995 (the "RIGHTS AGREEMENT"), between the Company and The Bank
of New York, and (b) a business combination whereby Purchaser will be merged
with and into the Company in accordance with the Delaware General Corporation
Law (the "DGCL"), with the Company continuing as the surviving corporation of
such merger and a direct wholly-owned subsidiary of Parent (the "MERGER");
WHEREAS, the respective boards of directors of the Company,
Parent and Purchaser have each approved and declared advisable this Agreement
and the Transactions;
WHEREAS, the Board of Directors of the Company (the "BOARD")
(i) has determined that the Merger is advisable and in the best interests of the
Company and its stockholders, (ii) has approved the Merger, the Offer, this
Agreement and the other transactions contemplated hereby and (iii) recommends
that the Company's stockholders adopt this Agreement and the Merger and that the
Company's stockholders tender their shares pursuant to the Offer; and
WHEREAS, the Company, Parent and Purchaser desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer and the Merger and also to prescribe various conditions to the Offer
and the Merger.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, representation, warranties and agreements contained herein,
the parties hereto agree as follows:
ARTICLE I
THE OFFER
1.1 THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article VII and none of the events set forth in
ANNEX A hereto shall have occurred or be existing, Purchaser shall, and Parent
shall cause Purchaser to, as promptly as practicable after the
<PAGE>
date hereof (but in no event later than the tenth business day after the public
announcement of the terms of this Agreement), commence (within the meaning of
Rule 14d-2(a) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")), an offer (the "OFFER") to purchase any and all of the outstanding shares
of Company Common Stock (and associated Rights) at a price of Twenty-One United
States Dollars ($21.00) per share and associated Right (the "OFFER PRICE"), net
to the seller in cash, subject to reduction for any applicable withholding taxes
and, but only if such payment is to be made other than to the registered holder,
any applicable stock transfer taxes payable by such holder. The Offer will be
made pursuant to an Offer to Purchase and related Letter of Transmittal
containing the terms and conditions set forth in this Agreement. The initial
expiration date of the Offer shall be the twentieth business day from and after
the date the Offer is commenced (the "INITIAL EXPIRATION DATE"). The obligation
of Purchaser to accept for payment, purchase and pay for any shares of Company
Common Stock (and associated Rights) tendered pursuant to the Offer shall be
subject, except as provided in Section 1.1(b), only to the satisfaction of (i)
the condition that a number of shares of Company Common Stock representing not
less than fifty-one percent (51%) of the total issued and outstanding shares of
Company Common Stock on a fully-diluted basis (after giving effect to the
conversion or exercise of all outstanding options, warrants and other rights or
securities convertible into shares of Company Common Stock) (excluding any
shares of Company Common Stock held by the Company or any of its Subsidiaries)
on the date such shares are purchased pursuant to the Offer have been validly
tendered and not withdrawn prior to the expiration of the Offer (the "MINIMUM
CONDITION") and (ii) the other conditions set forth in ANNEX A hereto; PROVIDED,
HOWEVER, that Purchaser expressly reserves the right to waive any of the
conditions to the Offer (other than the Minimum Condition) and to make any
change in the terms or conditions of the Offer in its sole discretion, subject
to Section 1.1(b).
(b) Without the prior written consent of the Company,
neither Parent nor Purchaser will (i) decrease the price per share of Company
Common Stock payable in the Offer, (ii) decrease the number of shares of Company
Common Stock sought in the Offer, (iii) change the form of consideration payable
in the Offer, (iv) impose conditions to the Offer in addition to those set forth
in ANNEX A, (v) except as provided below or required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
applicable to the Offer, change the expiration date of the Offer, or (vi)
otherwise amend or change any term or condition of the Offer in a manner adverse
to the holders of shares of Company Common Stock. Notwithstanding anything in
this Agreement to the contrary, without the consent of the Company, Purchaser
shall have the right to extend the Offer beyond the Initial Expiration Date in
the following events: (i) from time to time if, at the Initial Expiration Date
(or extended expiration date of the Offer, if applicable), any of the conditions
to the Offer (other than the Minimum Condition to which this clause does not
apply) shall not have been satisfied or waived, until such conditions are
satisfied or waived; (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; (iii) if all conditions to the
Offer (other than the Minimum Condition) are satisfied or waived, but the
Minimum Condition has not been satisfied, for one or more periods not to exceed
thirty (30) business days (for all such extensions); or (iv) if all of the
conditions to the Offer are satisfied or waived but the number of shares of
Company Common Stock validly tendered and not withdrawn is less than ninety
percent (90%) of the then outstanding number of shares of Company Common Stock
on a fully diluted basis, for an aggregate period not to exceed twenty (20)
business days (for all such extensions), PROVIDED that
2
<PAGE>
Purchaser shall accept and promptly pay for all securities tendered prior to the
date of such extension and shall otherwise meet the requirements of Rule 14d-11
under the Exchange Act in connection with each such extension. In addition,
Parent and Purchaser agree that Purchaser shall from time to time extend the
Offer, if requested by the Company, (i) if at the Initial Expiration Date (or
any extended expiration date of the Offer, if applicable), any of the conditions
to the Offer other than (or in addition to) the Minimum Condition shall not have
been waived or satisfied, until (taking into account all such extensions) the
earlier of June 30, 2000 or such earlier date upon which any such condition
(other than the Minimum Condition) shall not be reasonably capable of being
satisfied prior to June 30, 2000; or (ii) if at the Initial Expiration Date (or
any extended expiration date of the Offer, if applicable), all of the conditions
to the Offer other than the Minimum Condition shall have been waived or
satisfied and the Minimum Condition shall not have been satisfied, until the
earlier of ten (10) business days after such expiration date or June 30, 2000.
Upon the prior satisfaction or waiver of all the conditions to the Offer, and
subject to the terms and conditions of this Agreement, Purchaser will, and
Parent will cause Purchaser to, accept for payment, purchase and pay for, in
accordance with the terms of the Offer, all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer as soon as reasonably
practicable after the expiration of the Offer.
(c) As soon as reasonably practicable on the date of
commencement of the Offer, Parent and Purchaser shall file or cause to be filed
with the SEC a Tender Offer Statement on Schedule TO (together with any
amendments or supplements thereto, the "SCHEDULE TO") with respect to the Offer.
The Schedule TO will comply as to form and content in all material respects with
the applicable provisions of the federal securities laws and will contain the
offer to purchase and form of the related letter of transmittal (such Schedule
TO and such documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "OFFER DOCUMENTS").
Parent and the Company each agrees to correct promptly any information provided
by it for use in the Offer Documents if and to the extent that such information
shall have become false or misleading in any material respect and to supplement
the information provided by it specifically for use in the Schedule TO or the
other Offer Documents to include any information that shall become necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Parent and Purchaser agree to take all steps
necessary to cause the Offer Documents as so corrected or supplemented to be
filed with the SEC and be disseminated to holders of shares of Company Common
Stock, in each case, as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents prior to their being
filed with the SEC. Parent and Purchaser agree to provide to the Company and its
counsel any comments or other communications which Parent, Purchaser or their
counsel may receive from the Staff of the SEC with respect to the Offer
Documents promptly after receipt thereof.
1.2 COMPANY ACTION.
(a) The Company hereby consents to the Offer and
represents and warrants that the Board, at a meeting duly called and held has
(i) unanimously determined that this Agreement and the Transactions, including
the Offer, the Merger, and the purchase of shares of Company Common Stock and
associated Rights contemplated by the Offer, are advisable and fair to and in
the best interests of the Company and the Company's stockholders,
3
<PAGE>
(ii) unanimously approved and adopted this Agreement, certain agreements with
stockholders of the Company being entered into in connection herewith and the
Transactions, including the Offer, the Merger, and the purchase of shares of
Company Common Stock and associated Rights contemplated by the Offer, in
accordance with the requirements of the DGCL, which approval satisfies in full
the requirements of prior approval contained in Section 203(a)(1) of the DGCL,
(iii) unanimously resolved to recommend that the stockholders of the Company
accept the Offer, tender their shares of Company Common Stock and associated
Rights pursuant to the Offer and approve and adopt this Agreement and the Merger
and (iv) unanimously resolved to amend the Rights Agreement as contemplated
herein. The Company hereby consents to the inclusion in the Offer Documents, the
Schedule 14D-9 (as defined below) and the Proxy Statement (as defined below) (if
any) of such recommendation of the Board. The Company represents that (1) a
special committee of the Board (the "SPECIAL COMMITTEE") and the Board have
received the written opinion (the "GREENHILL FAIRNESS OPINION") of Greenhill &
Co., LLC ("GREENHILL") and (2) the Board has received the written opinion (the
"BEAR STEARNS FAIRNESS OPINION") of Bear, Stearns & Co. Inc. ("BEAR STEARNS"),
in each case stating that the proposed consideration to be received by the
holders of shares of Company Common Stock pursuant to the Offer and the Merger
is fair to such holders from a financial point of view. The Company has been
authorized by (1) Greenhill to permit, subject to the prior review and consent
by Greenhill (such consent not to be unreasonably withheld), the inclusion of
the Greenhill Fairness Opinion (or a reference thereto) in the Offer Documents
and the Schedule 14D-9 and (2) by Bear Stearns to permit, subject to the prior
review and consent by Bear Stearns (such consent not to be unreasonably
withheld), the inclusion of the Bear Stearns Fairness Opinion (or a reference
thereto) in the Offer Documents and the Schedule 14D-9. The Company has been
advised by each of its directors and by each executive officer of the Company
who as of the date hereof is actually aware (to the knowledge of the Company) of
the Transactions that each such person intends to tender pursuant to the Offer
all Shares owned by such person.
(b) The Company will cause its transfer agent to promptly
furnish Parent and Purchaser with a list of the Company's stockholders, mailing
labels and any available listing or computer file containing the names and
addresses of all record holders of shares of Company Common Stock and lists of
securities positions of shares of Company Common Stock held in stock
depositories and to provide to Parent and Purchaser such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent or
Purchaser or their agents 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 Transactions, Parent and Purchaser and each of their
affiliates, associates and agents will hold in confidence the information
contained in any such labels, listings and files, will use such information only
in connection with the Offer and the Merger and, if this Agreement is
terminated, will deliver, and will use their reasonable efforts to cause their
agents to deliver, to the Company all copies and any extracts or summaries from
such information then in their possession or control.
(c) As soon as reasonably practicable on the date of
commencement of the Offer, the Company shall file with the SEC and disseminate
to holders of shares of Company Common Stock, 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
4
<PAGE>
supplements thereto, the "SCHEDULE 14D-9") that shall reflect the
recommendations of the Board referred to above. The Company and Parent each
agrees 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 and to supplement the information provided by
it specifically for use in the Schedule 14D-9 to include any information that
shall become necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected or
supplemented to be filed with the SEC and to be disseminated to holders of
shares of Company Common Stock, in each case, as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-9 prior to its
being filed with the SEC. The Company agrees to provide to Parent and Purchaser
and their counsel with any comments or other communications which the Company or
its counsel may receive from the Staff of the SEC with respect to the Schedule
14D-9 promptly after receipt thereof. Parent, Purchaser and the Company each
hereby agree to provide promptly such information necessary to the preparation
of the exhibits and schedules to the Schedule 14D-9 and the Offer Documents
which the respective party responsible therefor will reasonably request.
1.3 DIRECTORS.
(a) Promptly following the purchase of and payment for a
number of shares of Company Common Stock that satisfies the Minimum Condition,
and from time to time thereafter, Purchaser shall be entitled to designate the
number of directors, rounded up to the next whole number, on the Board that
equals the product of (i) the total number of directors on the Board (giving
effect to the election of any additional directors pursuant to this Section) and
(ii) the percentage that the number of shares of Company Common Stock
beneficially owned by Parent and Purchaser (including shares of Company Common
Stock paid for pursuant to the Offer), upon such acceptance for payment, bears
to the total number of shares of Company Common Stock outstanding, and the
Company shall take all action within its power to cause Purchaser's designees to
be elected or appointed to the 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
individual directors designated by Purchaser to constitute the number of
members, rounded up to the next whole number, on (i) each committee of the Board
other than any such committee of such board established to take action under
this Agreement and (ii) each board of directors of each Subsidiary (as defined
below) of the Company, and each committee thereof, that represents the same
percentage as such individuals represent on the Board. Notwithstanding the
foregoing, in the event that Purchaser's designees are to be appointed or
elected to the Board, until the Effective Time (as defined below), such board of
directors shall have at least two directors who are directors on the date of
this Agreement and who are not officers of the Company (the "CONTINUING
DIRECTORS"); provided that in the event that the number of Continuing Directors
shall be reduced below two for any reason whatsoever, any remaining Continuing
Directors (or Continuing Director, if there shall be only one remaining) shall
be entitled to designate persons to fill such vacancies who shall be deemed to
be Continuing Directors for purposes of this Agreement. As used in this
Agreement, the term "SUBSIDIARY" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, of
which such party directly or indirectly owns or controls at least a majority of
the securities or
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other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization, or any organization of which such party
is a general partner.
(b) The Company's obligations to appoint Purchaser's
designees to the Board shall be subject to Section 14(f) of the Exchange 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 and Purchaser
shall supply to the Company, and be solely responsible for, any information with
respect to themselves and their nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Purchaser's
designees pursuant to Section 1.3(a) and until the Effective Time, the approval
of the Continuing Directors shall be required to authorize (and such
authorization shall constitute the authorization of the Company's 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 Company's board of directors, any amendment of the
certificate of incorporation or bylaws of the Company, any extension of time for
performance of any obligation or action hereunder by Parent or Purchaser, any
waiver of compliance with any of the agreements or conditions contained herein
for the benefit of the Company and any material transaction with Parent,
Purchaser or any affiliate thereof.
ARTICLE II
THE MERGER
2.1 THE MERGER. At the Effective Time (as defined in
Section 2.2 below) and upon the terms and subject to the conditions of this
Agreement and in accordance with the DGCL, Purchaser will be merged with and
into the Company. Following the Merger, the Company will continue as the
surviving corporation (the "SURVIVING CORPORATION") and as a wholly owned
subsidiary of Parent, and the separate corporate existence of Purchaser will
cease in accordance with the DGCL. Subject to the terms and conditions of this
Agreement, Parent and Purchaser agree to use all reasonable efforts to cause the
Effective Time to occur as soon as practicable after the Stockholder Meeting
with respect to the Merger or the purchase by Purchaser of 90% or more of the
outstanding shares of Company Common Stock pursuant to the Offer.
2.2 EFFECTIVE TIME. Subject to the provisions of this
Agreement, the parties will cause the Merger to be consummated by filing an
appropriate certificate of merger (the "CERTIFICATE OF MERGER") with the
Secretary of State of the State of Delaware in such form as required by, and
executed in accordance with, the relevant provisions of the DGCL as soon as
practicable on or after the Closing Date (as defined in Section 2.3 below). The
Merger will become effective upon such filing or at such time thereafter as is
provided in the Certificate of Merger (the "EFFECTIVE TIME," and the date of
such effectiveness shall be the "EFFECTIVE DATE").
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2.3 CLOSING OF THE MERGER. The closing of the Merger (the
"CLOSING") will take place on a date and at a place in New York, New York to be
specified by the parties, which shall be no later than the second business day
after satisfaction or waiver (as permitted by this Agreement and applicable law)
of all of the conditions set forth in ARTICLE VI hereof (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions) (the "CLOSING DATE"), unless
the parties agree to another time, date or place in writing.
2.4 EFFECTS OF THE MERGER. The Merger will have the
effects set forth in the DGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all properties, rights, privileges,
powers and franchises of the Company and Purchaser will vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Purchaser
will become the debts, liabilities and duties of the Surviving Corporation.
2.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. Subject to
the provisions of Section 5.5, the certificate of incorporation and bylaws of
Purchaser in effect immediately prior to the Effective Time will be the
certificate of incorporation and bylaws of the Surviving Corporation until
respectively amended in accordance with their terms and applicable law.
2.6 DIRECTORS. The directors of Purchaser at the
Effective Time will be the initial directors of the Surviving Corporation, each
to hold office in accordance with the certificate of incorporation and bylaws of
the Surviving Corporation until such director's successor is duly elected and
qualified.
2.7 OFFICERS. The officers of the Company as of the
Effective Time will be the initial officers of the Surviving Corporation until
such officer's successor is duly elected or appointed and qualified.
2.8 CONVERSION OF SHARES. At the Effective Time and
without any action on the part of the holder thereof, subject to Section 2.10,
each issued and outstanding share of Company Common Stock will convert into the
right to receive an amount in cash, without interest, equal to Twenty-One United
States Dollars ($21.00) (the "MERGER CONSIDERATION"). As a result of the Merger,
each issued and outstanding share of common stock of Purchaser will be converted
into and become one fully paid and non-assessable share of common stock of the
Surviving Corporation. Notwithstanding anything contained in this Section 2.8 to
the contrary, each share of Company Common Stock issued and held in the
Company's treasury immediately before the Effective Time, and each share of
Company Common Stock held by Parent, Purchaser, any other Subsidiary of Parent
or any Subsidiary of the Company immediately before the Effective Time, will, by
virtue of the Merger, cease to be outstanding and will be cancelled and retired
without payment of any consideration therefor.
2.9 DELIVERY OF MERGER CONSIDERATION.
(a) Promptly after the Effective Time, Parent shall
deposit or cause to be deposited in trust (the "PAYMENT FUND") with an agent
designated by Parent (the "PAYMENT AGENT") for the benefit of the holders of
certificates representing the shares of Company Common Stock issued and
outstanding as of the Effective Time (collectively "CERTIFICATES"), the
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aggregate Merger Consideration, as and when needed, to be paid in respect of the
shares of Company Common Stock. The Payment Fund shall not be used for any other
purpose. The Payment Fund may be invested by the Payment Agent, as directed by
Surviving Corporation, in (i) obligations of or guaranteed by the United States,
(ii) commercial paper rated A-1, P-1 or A-2, P-2, and (iii) certificates of
deposit, bank repurchase agreements and bankers acceptances of any bank or trust
company organized under federal law or under the law of any state of the United
States or of the District of Columbia that has capital, surplus and undivided
profits of at least $1 billion or in money market funds which are invested
substantially in such investments. Any net earnings with respect thereto shall
be paid to the Surviving Corporation as and when requested by the Surviving
Corporation.
(b) As soon as reasonably practicable after the Effective
Time, Parent will instruct the Payment Agent to mail to each holder of record of
Company Common Stock immediately before the Effective Time (excluding any shares
of Company Common Stock cancelled pursuant to Section 2.8):
(1) a letter of transmittal (the "LETTER OF
TRANSMITTAL") (which will specify that delivery will be effected, and risk of
loss and title to the Certificates will pass, only upon delivery of such
Certificates to the Payment Agent and will be in such form and have such other
provisions as Parent reasonably specifies), and
(2) instructions for use in effecting the
surrender of each Certificate in exchange for the aggregate Merger Consideration
with respect to the shares of Company Common Stock formerly represented thereby.
(c) Parent and the Surviving Corporation shall cause the
Payment Agent to pay to the holders of a Certificate, as soon as practicable
after receipt of any Certificate (or in lieu of any such Certificate which has
been lost, stolen or destroyed, an affidavit of lost, stolen or destroyed share
certificates (including customary indemnity or bond against loss) in form and
substance reasonably satisfactory to Parent) together with the Letter of
Transmittal, duly executed, and such other documents as Parent or the Payment
Agent reasonably request, in exchange therefor a check in the amount equal to
the cash, if any, which such holder has the right to receive pursuant to the
provisions of this ARTICLE II. No interest shall be paid or accrued on any cash
payable upon the surrender of any Certificate. Each Certificate surrendered in
accordance with the provisions of this Section 2.9(c) shall be cancelled
forthwith.
(d) In the event of a transfer of ownership of shares of
Company Common Stock which is not registered in the transfer records of the
Company, the Merger Consideration may be paid to the transferee only if (i) the
Certificate representing such shares of Company Common Stock surrendered to the
Payment Agent in accordance with Section 2.9(c) hereof is properly endorsed for
transfer or is accompanied by appropriate and properly endorsed stock powers and
is otherwise in proper form to effect such transfer, (ii) the person requesting
such transfer pays to the Payment Agent any transfer or other taxes payable by
reason of such transfer or establishes to the satisfaction of the Payment Agent
that such taxes have been paid or are not required to be paid, and (iii) such
person establishes to the reasonable satisfaction of Parent that such transfer
would not violate any applicable federal or state securities laws.
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(e) At and after the Effective Time, each holder of a
Certificate that represented issued and outstanding shares of Company Common
Stock immediately prior to the Effective Time shall cease to have any rights as
a stockholder of the Company, except for the right to surrender his or her
Certificate in exchange for the Merger Consideration multiplied by the number of
shares represented by such Certificate and except as otherwise provided by
applicable law, and no transfer of shares of Company Common Stock shall be made
on the stock transfer books of the Surviving Corporation. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or the
Payment Agent for any reason, they will be canceled and exchanged as provided in
this ARTICLE II, except as otherwise provided by applicable law.
(f) The Merger Consideration paid in the Merger shall be
net to the holder of shares of Company Common Stock in cash, and without
interest thereon, subject to reduction only for any applicable withholding taxes
and, but only if the Merger Consideration is to be paid other than to the
registered holder, any applicable stock transfer taxes payable by such holder.
(g) Promptly following the date which is one year after
the Effective Time, the Payment Agent shall deliver to the Surviving Corporation
all cash, certificates and other documents in its possession relating to the
transactions contemplated hereby, and the Payment Agent's duties shall
terminate. Thereafter, each holder of a certificate representing shares of
Company Common Stock (other than certificates representing Dissenting Shares)
may surrender such certificate to the Surviving Corporation and (subject to any
applicable abandoned property, escheat or similar law) receive in consideration
therefor the aggregate Merger Consideration relating thereto, without any
interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving
Corporation, the Company or the Payment Agent shall be liable to a holder of a
Certificate for any Merger Consideration properly delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(h) Any portion of the Merger Consideration made
available to the Payment Agent pursuant to Section 2.9(a) to pay for shares of
Company Common Stock for which appraisal rights have been perfected shall be
returned to Parent upon demand.
2.10 DISSENTING SHARES . Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock that are issued and
outstanding immediately before the Effective Time and that are held by
stockholders who have not voted in favor of the Merger or consented thereto in
writing and who have properly exercised appraisal rights with respect thereto in
accordance with Section 262 of the DGCL (insofar as such Section is applicable
to the Merger and provides for appraisal rights with respect to it), shall not
be converted into the right to receive the Merger Consideration as provided in
Section 2.8 hereof, unless such holders fail to perfect or withdraw or otherwise
lose their rights to appraisal. Instead, ownership of such shares will entitle
the holder thereof to receive the consideration determined pursuant to Section
262 of the DGCL; PROVIDED, HOWEVER, that if such holder fails to perfect or
effectively withdraws such holder's right to appraisal and payment under the
DGCL, each of such shares shall thereupon be deemed to have been converted, at
the Effective Time, into the right to receive the Merger Consideration, without
any interest thereon, upon surrender of the Certificate or Certificates in the
manner provided in Section 2.8 hereof. The Company will give Parent (a) prompt
notice of any demands (or withdrawals of demands) for appraisal received by the
Company pursuant to the
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applicable provisions of the DGCL and any other instruments served pursuant to
the DGCL and received by the Company and (b) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company will not, except with the prior consent of Parent, make any
payment with respect to any such demands for appraisal or offer to settle, or
settle, any such demands.
2.11 TREATMENT OF COMPANY OPTIONS AND STOCK UNITS.
(a) Prior to the Initial Expiration Date, the Company
shall take all actions necessary and appropriate to provide that, upon the
Effective Time, each outstanding option to purchase shares or other similar
interest (collectively, the "OPTIONS") granted under any of the Company's stock
option plans or under any other plan or arrangement (the "OPTION PLANS") and
each outstanding warrant to purchase shares described in Section 3.3(b) of the
Company Disclosure Letter (collectively, the "WARRANTS"), whether or not then
exercisable or vested, shall be cancelled and, in exchange therefor, each holder
of such Option or Warrant shall receive an amount in cash in respect thereof, if
any, equal to the product of (i) the excess, if any, of the Merger Consideration
over the per share exercise price thereof and (ii) the number of shares subject
thereto (such payment to be net of applicable withholding taxes).
(b) Prior to the Initial Expiration Date, the Company
shall take all actions necessary and appropriate to provide that, upon the
Effective Time, each outstanding stock unit granted pursuant to the Company's
Incentive Program for Canadian Employees shall become vested and shall be
cancelled, and in exchange therefor, each holder thereof shall be entitled to
receive the Merger Consideration (such payment to be net of applicable
withholding taxes).
(c) The Company shall use its reasonable best efforts to
obtain all necessary waivers, consents or releases from holders of Options,
Warrants and stock units and shall take any such action as may be reasonably
necessary to give effect to, and to accomplish the transactions contemplated by,
this Section 2.11.
2.12 ADJUSTMENTS. If, during the period between the date
of this Agreement and the Effective Time, any change in the outstanding shares
of Company Common Stock shall occur, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares of Company Common Stock, 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.
2.13 STOCKHOLDERS' MEETING. If required by applicable law
to consummate the Merger, the Company, acting through the Board , shall, in
accordance with and to the extent permitted by applicable law:
(a) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "STOCKHOLDERS MEETING") as soon as practicable
following the date on which Purchaser completes the purchase of shares of
Company Common Stock pursuant to the Offer (the "OFFER COMPLETION DATE") for the
purpose of considering and taking action upon this Agreement;
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(b) subject to its fiduciary duties under applicable law,
include in the Proxy Statement (as defined below) the recommendation of the
Board that stockholders of the Company vote in favor of the approval and
adoption of this Agreement and the Merger; and
(c) prepare and file with the SEC a preliminary proxy or
information statement relating to this Agreement and the Merger and use its
reasonable best efforts to obtain and furnish the information required to be
included in the Proxy Statement and, after consultation with Parent and
Purchaser, respond promptly to any comments made by the SEC with respect to the
preliminary proxy statement or information statement and cause a definitive
proxy or information statement relating to this Agreement and the Merger (such
proxy or information statement together with any and all amendments or
supplements thereto, the "PROXY STATEMENT") to be mailed to its stockholders at
the earliest practicable time following the expiration or termination of the
Offer.
At the Stockholders Meeting, Parent and Purchaser and any of
their respective Subsidiaries will vote, or cause to be voted, all shares of
Company Common Stock owned by them in favor of this Agreement and the
transactions contemplated hereby.
2.14 MERGER WITHOUT MEETING OF STOCKHOLDERS. If Parent,
Purchaser or any other Subsidiary of Parent shall acquire at least 90% of the
outstanding shares of Company Common Stock pursuant to the Offer or otherwise,
the parties hereto agree, subject to satisfaction or (to the extent permitted
hereunder) waiver of all conditions to the Merger, 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 of Company Common Stock
pursuant to the Offer without the Stockholders Meeting.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered prior
to the execution of this Agreement to Parent (the "COMPANY DISCLOSURE LETTER"),
the Company represents and warrants to Parent and Purchaser as of the date of
this Agreement as follows:
3.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. The Company is duly licensed
or qualified to do business as a foreign corporation and is in good standing
under the laws of any other state of the United States in which the character of
the properties owned or leased by it or in which the transaction of its business
makes such qualification necessary, except where the failure to be so qualified
or to be in good standing could not reasonably be expected to have a Company
Material Adverse Effect. As used herein, the term "Company Material Adverse
Effect" means a material adverse effect on (i) the business, properties,
operations results of operations or condition (financial or otherwise) of (x)
the Company and the Company's Subsidiaries taken as a whole or (y), for purposes
only of Article III of this Agreement, any one of the Company's plants; or (ii)
the ability of the Company to perform its obligations hereunder. Notwithstanding
the foregoing, none of the following shall be deemed, either alone or in
combination, to constitute a "COMPANY MATERIAL ADVERSE EFFECT:" (i) a change in
the market price or trading volume of Company Common Stock, (ii) any adverse
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change, event or effect that is caused by conditions affecting the economy of
the United States generally or the economy of any nation or region in which the
Company or any of its Subsidiaries conducts business that is material to the
business of such entity and its Subsidiaries, taken as a whole, or (iii) the
matters set forth specifically in Section 3.1 of the Company Disclosure Letter.
As used herein, any reference to one or more failures, lapses, defaults,
breaches or other events or circumstances that "could not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect"
shall refer to such one or more failures, lapses, defaults, breaches or other
events or circumstances in the aggregate with all other failures, lapses,
defaults, breaches or other events or circumstances described in this Agreement
which would be required to be mentioned or disclosed herein or in the schedules
or exhibits hereto but for the fact that the same could not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect
(and like phrases shall be similarly interpreted). The Company has all requisite
corporate power and authority to own, operate and lease its properties and carry
on its business as now being conducted, except where the failure to have such
corporate power and authority could not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. The copies of
the Company's certificate of incorporation and bylaws made available to Parent
are true and correct as of the date hereof.
3.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. The
Company has the requisite corporate power and authority to execute and deliver
this Agreement and all agreements and documents contemplated hereby. The
Agreement, the Merger, and the purchase of shares of Company Common Stock
contemplated by the Offer have been approved by the Board and (other than, with
respect to the Merger, the approval and adoption of this Agreement and the
transactions contemplated hereby by the holders of a majority of the then
outstanding shares of Company Common Stock, if so required), the consummation by
the Company of the transactions contemplated hereby has been duly authorized by
all requisite corporate action and the Board has adopted resolutions so that the
restrictions on business combinations applicable to "interested stockholders"
contained in Section 203 of the DGCL will not apply to the Offer, the Merger and
the other transactions contemplated by this Agreement. This Agreement
constitutes, and all agreements and documents contemplated hereby (when executed
and delivered pursuant hereto) will constitute, the valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to applicable bankruptcy, insolvency, moratorium
or other similar laws relating to creditors' rights and general principles of
equity.
3.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists
of 60,000,000 shares of Company Common Stock, $0.01 par value, 50,000 shares of
Series A preferred stock, $10 par value ("COMPANY SERIES A PREFERRED STOCK"),
500,000 shares of Series B preferred stock, $10 par value ("COMPANY SERIES B
PREFERRED STOCK") and 5,000,000 shares of preferred stock, $10 par value
("COMPANY PREFERRED STOCK"). As of February 15, 2000, there were (i) 27,375,771
shares of Company Common Stock issued and outstanding, (ii) 8,470,424 shares of
Company Common Stock held in the Company's treasury, and (iii) no shares of
Company Series A Preferred Stock, Company Series B Preferred Stock or Company
Preferred Stock issued and outstanding. All issued and outstanding shares of
Company Common Stock are duly authorized,
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validly issued, fully paid, nonassessable, free of preemptive rights, and were
issued in compliance with all applicable laws.
(b) The Company Disclosure Letter lists all outstanding
options, warrants and other rights to purchase shares of Company Common Stock as
of February 15, 2000 with descriptions of such options, warrants and other
rights.
(c) Since February 15, 2000, (i) no options, warrants or
other rights to purchase shares of Company Common Stock have been granted, and
(ii) no additional shares of capital stock of the Company have been issued,
except pursuant to the exercise of outstanding options.
(d) Except with respect to the Rights and as set forth in
paragraphs (a), (b) and (c) above and in the Company Disclosure Letter, the
Company does not have any shares of its capital stock issued or outstanding and
there are no outstanding subscriptions, options, warrants, calls, subscriptions,
convertible securities, rights or other agreements or commitments obligating the
Company or any Subsidiary of the Company to issue, transfer or sell any shares
of capital stock of the Company or any Subsidiary of the Company or to
repurchase any such shares of capital stock. Neither the Company nor any of its
Subsidiaries has outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the stockholders of
the Company or such Subsidiary on any matter. Any equity securities, which were
issued and reacquired by the Company or any of its Subsidiaries, were so
reacquired in compliance with all applicable laws, and neither the Company nor
any of its Subsidiaries has any obligation or liability with respect thereto.
3.4 SUBSIDIARIES. Each Subsidiary of the Company is a
corporation, limited liability company or partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate, limited liability company or
partnership power and authority to own its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing in each jurisdiction in which the ownership of its property
or the conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be in good standing
could not reasonably be expected to have a Company Material Adverse Effect. The
copies of the organizational and charter documents for the Company's
Subsidiaries made available to Parent are true and correct as of the date
hereof. The Company Disclosure Letter lists all of the Company's Subsidiaries
and correctly sets forth the capitalization of each Subsidiary, the jurisdiction
in which each Subsidiary of the Company is organized or formed, and the current
directors and executive officers of each Subsidiary of the Company. All
outstanding securities or other ownership interests in each Subsidiary of the
Company are (i) owned of record and beneficially by the Company or another of
the Company's wholly-owned Subsidiaries and subject to no lien (other than liens
for taxes not yet due and payable), claim, charge or encumbrance, and (ii) have
been duly authorized, are validly issued, fully paid and nonassessable.
3.5 OTHER INTERESTS. Except as set forth on the Company
Disclosure Letter and except for interests in Subsidiaries of the Company,
neither the Company nor any Subsidiary
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of the Company owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, limited liability company,
joint venture, business, trust or other entity.
3.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in the Company Disclosure Letter,
the execution and delivery of this Agreement by the Company do not, and the
consummation by the Company of the transactions contemplated hereby will not,
(1) conflict with or violate the certificate of
incorporation or bylaws or equivalent organizational documents of (i) the
Company or (ii) any Subsidiary of the Company,
(2) subject to making the filings and obtaining
the approvals identified in Section 3.6(b) of this Agreement, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to the
Company or any Subsidiary of the Company or by which any property or asset of
the Company or any Subsidiary of the Company is bound or affected, or
(3) subject to making the filings and obtaining
the approvals identified in Section 3.6(b) of this Agreement, 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, result in the loss of a material
benefit under, or give to others any right of purchase or sale, or any right of
termination, amendment, acceleration, increased payments or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of the Company or any Subsidiary of the Company pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation (each, a "CONTRACT") to which the Company or any
Subsidiary of the Company is a party or by which the Company or any Subsidiary
of the Company or any property or asset of the Company or any Subsidiary of the
Company is bound or affected; except, in the case of clauses (2) and (3), for
any such conflicts, violations, breaches, defaults or other occurrences which
would not prevent or delay consummation of any of the transactions contemplated
hereby in any material respect, or otherwise prevent the Company from performing
its obligations under this Agreement in any material respect, and could not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the consummation by the Company of the transactions
contemplated hereby will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign (each a "GOVERNMENTAL ENTITY") or any other
third-party, except
(1) for:
(i) applicable requirements, if any, of the
Exchange Act, the Securities Act of 1933, as amended (the "SECURITIES
ACT"), state securities or "blue sky" laws ("BLUE SKY LAWS") and state
takeover laws,
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(ii) the pre-merger notification requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations thereunder (the "HSR ACT"),
(iii) filing of the Certificate of Merger and
related documents as required by the DGCL,
(iv) applicable requirements under the rules and
regulations of the New York Stock Exchange (the "NYSE"),
(v) the pre-merger notification requirements of
the Competition Act and the Investment Canada Act; and
(2) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of any of the transactions contemplated
hereby in any material respect, or otherwise prevent the Company from performing
its obligations under this Agreement in any material respect, and could not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
3.7 COMPLIANCE; PERMITS.
(a) The Company and each Subsidiary of the Company are in
compliance with:
(1) all laws, rules, regulations, orders,
judgments and decrees applicable to the Company or any Subsidiary of the Company
or by which any property or asset of the Company or any Subsidiary of the
Company is bound or affected, and
(2) all Contracts to which the Company or any
Subsidiary of the Company is a party or by which the Company or any Subsidiary
of the Company or any property or asset of the Company or any Subsidiary of the
Company is bound or affected; except in both (1) and (2) where failure to comply
could not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
(b) The Company and the Company's Subsidiaries have
obtained, and are in compliance with the terms of, all licenses, permits and
other authorizations and have taken all actions required by applicable law or
governmental regulations in connection with their businesses as now conducted,
except where the failure to obtain any such item or to take any such action
could not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
3.8 SEC DOCUMENTS.
(a) The Company has filed all forms, reports and
documents with the SEC since May 1, 1996 required to be filed by it under the
Securities Act and the Exchange Act (collectively, the "COMPANY REPORTS").
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(b) As of the filing date, each Company Report complied
as to form in all material respects with the applicable requirements of the
Securities Act and the Exchange 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 later filing), each
Company Report filed pursuant to the Exchange Act did not, and each such Company
Report filed subsequent to the date hereof 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.
(d) Each Company Report that is a registration statement,
as amended or supplemented, if applicable, filed pursuant to the Securities 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.
(e) None of the Company's Subsidiaries is required to
file any forms, reports or other documents with the SEC.
3.9 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. The
audited consolidated financial statements and unaudited consolidated interim
financial statements of the Company included in the Company Reports (including
the notes thereto) fairly present, 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 and footnotes in the case of any
unaudited interim financial statements). Except as and to the extent reflected
or reserved against in such consolidated balance sheets (including the notes
thereto), and except for liabilities or obligations which were incurred in the
ordinary course of business consistent with past practice since October 30, 1999
or which were incurred after such date and are expressly disclosed in the
Company Reports filed following such date and prior to the date hereof, the
Company and its Subsidiaries do not have any liabilities or obligations
(absolute or contingent) of a nature required to be or customarily reflected in
a consolidated balance sheet (or the notes thereto) prepared in accordance with
GAAP consistently applied. The consolidated statements of operations present
fairly in all material respects the results of operations of the Company for the
periods indicated.
3.10 ABSENCE OF CERTAIN CHANGES. Except as specifically
contemplated by this Agreement, since April 30, 1999 there has not occurred (a)
any circumstance or event not expressly disclosed in the Company Reports filed
following such date and prior to the date hereof having a Company Material
Adverse Effect or any circumstance or event that could reasonably be expected to
have a Company Material Adverse Effect; (b) any declaration, setting aside or
payment of any dividend or other distribution with respect to its capital stock;
(c) any material change in its accounting principles, practices or methods; (d)
any damage or destruction to, or loss of, any physical property, whether or not
covered by insurance, that could individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect; (e) any
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amendment or changes in the certificate of incorporation or by-laws of the
Company; or (f) other than in the ordinary course of business, any sale of a
material amount of assets of the Company or any of its Subsidiaries. Except as
set forth in the Company Disclosure Letter, since October 30, 1999, neither the
Company nor any Subsidiary of the Company has taken any other action that it
would be prohibited from taking without Parent's consent after the date hereof
pursuant to Section 5.1 other than such actions taken in the ordinary course of
business.
3.11 MATERIAL CONTRACTS. The Company Disclosure Letter
sets forth a complete and accurate list as of the date of this Agreement of any
of the following to which the Company or any Subsidiary of the Company is a
party or by which the Company or any Subsidiary of the Company is bound (each, a
"COMPANY MATERIAL CONTRACT"):
(a) all contracts, agreements, commitments or
understandings which involve payments or receipts by the Company or any of its
Subsidiaries in excess of $1,000,000 during any twelve month period;
(b) all written management, compensation, employment or
other contracts entered into with any executive officer or director of the
Company or any Subsidiary of the Company;
(c) all contracts or agreements under which the Company
or any Subsidiary of the Company has any outstanding indebtedness, obligation or
liability for borrowed money or the deferred purchase price of property or has
the right or obligation to incur any such indebtedness, obligation or liability;
(d) all bonds or agreements of guarantee or
indemnification in which the Company or any Subsidiary of the Company acts as
surety, guarantor or indemnitor with respect to any obligation (fixed or
contingent), other than any such guarantees of the obligations of the Company or
any Subsidiary of the Company;
(e) all noncompete agreements to which the Company, any
Subsidiary of the Company or any affiliate thereof is a party;
(f) all partnership and joint venture agreements;
(g) each other contract or agreement listed as an exhibit
to the Company's most recent Form 10-K and 10-Q; and
(h) all agreements relating to material business
acquisitions or dispositions during the last three years, including any separate
tax or indemnification agreements.
Except as set forth in the Company Disclosure Letter, (i)
neither the Company nor any Subsidiary of the Company is in default under the
terms of any Company Material Contract, which default permits the other party to
adversely alter or terminate any rights of the Company or any Subsidiary of the
Company or accelerate the obligations of the Company or any Subsidiary of the
Company under such Company Material Contract or to collect damages, (ii) to the
knowledge of the Company, no other party thereto is in default in any material
respect under the terms of any Company Material Contract, (iii) each Company
Material Contract is valid,
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binding and in full force and effect in all material respects, and (iv) all
contracts or agreements under which the Company or any Subsidiary of the Company
has any outstanding indebtedness, obligation or liability for borrowed money may
be prepaid in full without any prepayment penalties.
3.12 LITIGATION. Except as set forth in the Company
Disclosure Letter, there is no action, suit or proceeding pending against the
Company or any Subsidiary of the Company or, to the knowledge of the Company,
threatened against the Company or any Subsidiary of the Company, at law or in
equity, or before or by any federal or state court, commission, board, bureau,
agency or instrumentality, that (i) if resolved adversely to it could,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect or impair its ability to consummate the Merger or (ii)
seeks an amount of damages in excess of $1,000,000. The Company is not aware of
any judicial or administrative decision affecting it or any Subsidiary of the
Company that could reasonably be expected to impair its ability to consummate
the Merger.
3.13 TAXES. The Company and each of its Subsidiaries has
timely and accurately filed, or caused to be timely and accurately filed, all
material Tax Returns (as hereinafter defined) required to be filed by it, and
has paid, collected or withheld, or caused to be paid, collected or withheld,
all material amounts of Taxes (as hereinafter defined) required to be paid,
collected or withheld, other than Taxes for which adequate reserves have been
established and are included in the financial statements included in the most
recent Company Reports. There are no material claims, assessments, audits or
investigations pending against the Company or any of its Subsidiaries for any
alleged deficiency in any Tax or relating to any liability in respect of any
Taxes, and the Company has not been notified in writing of any material proposed
Tax claims or assessments against the Company or any of its Subsidiaries (other
than in each case, claims and assessments for which adequate reserves have been
established and are included in the financial statements included in the most
recent Company Reports). Except as set forth in the Company Disclosure Letter,
other than with respect to the Company and its Subsidiaries, neither the Company
nor any of its Subsidiaries is liable for Taxes of any other Person (as
hereinafter defined), or is currently under any contractual obligation to
indemnify any Person with respect to Taxes (except for customary agreements to
indemnify lenders or security holders in respect of Taxes other than income
Taxes), or is a party to any Tax sharing agreement or any other agreement
providing for payments by the Company or any of its Subsidiaries with respect to
Taxes. Neither the Company nor any of its Subsidiaries will be required to
include any adjustment in taxable income for any period ending after the Closing
under Section 481 of the Code (or under any similar provision of the Tax laws of
any jurisdiction) as a result of a change in the method of accounting for a
period ending on or before the Closing or pursuant to an agreement with a Tax
authority with regard to the Tax liability of the Company or any of its
Subsidiaries for any period ending on or before the Closing. Except as set forth
in the Company Disclosure Letter, the Company is not a party to any agreement,
contract, arrangement or plan that would result (taking into account the
Transactions contemplated by this Agreement), separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code.
As used herein, the term "TAX" means any United States
federal, state, local, non-United States or provincial income, gross receipts,
property, sales, use, license, excise, franchise,
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employment, payroll, alternative or add-on minimum, ad valorem, transfer or
excise tax, or any other tax, custom, duty, governmental fee or other like
assessment or charge imposed by any Governmental Entity, together with any
interest or penalty imposed thereon. As used herein, the term "TAX RETURN" means
a report or other information (including any attached schedules or any
amendments to such report, return or other information) required to be supplied
to or filed with a Governmental Entity with respect to any Tax, including an
information return, claim for refund, amended return or declaration or estimated
Tax. As used herein, the word "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.
3.14 EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE BENEFIT PLANS, COLLECTIVE BARGAINING AND
EMPLOYEE AGREEMENTS, AND SIMILAR ARRANGEMENTS.
(1) The Company Disclosure Letter lists all
employee benefit plans and collective bargaining, employment or severance
agreements or other similar arrangements to which or by which the Company or any
Subsidiary of the Company is bound, legally or otherwise, or under which there
is any continuing obligation of the Company or any Subsidiary of the Company
(collectively, the "PLANS"), including, without limitation, (a) any
profit-sharing, deferred compensation, bonus, stock option, stock purchase,
pension, retainer, consulting, retirement, severance, welfare or incentive plan,
agreement or arrangement, (b) any material plan, agreement or arrangement
providing for "fringe benefits" or perquisites to employees, officers, directors
or agents, including but not limited to benefits relating to the Company
automobiles, clubs, vacation, child care, parenting, sabbatical, sick leave,
medical, dental, hospitalization, life insurance and other types of insurance,
or (c) any other "employee benefit plan" within the meaning of Section 3(3) or
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(2) [intentionally omitted]
(3) To the best knowledge of the Company, there
are no negotiations, demands or proposals that are pending or have been made
which concern matters now covered by the Plans, or that (if adopted) would be
covered, by employee benefit plans, agreements or arrangements of the type
described in this section.
(4) The Company and each Subsidiary of the
Company are in compliance in all material respects with the applicable
provisions of ERISA (as amended through the date of this Agreement), the
regulations and published authorities thereunder, and all other laws applicable
with respect to the Plans. The Company and each Subsidiary of the Company have
performed all of their obligations under the Plans. To the best knowledge of the
Company as of the date of this Agreement, there are no actions (other than
routine claims for benefits) pending or threatened against the Plans or their
assets, or arising out of the Plans and all of the Plans have been operated in
compliance in all material respects with their terms. To the best knowledge of
the Company, as of the date of this Agreement, no facts exist which could give
rise to any such actions.
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(5) All obligations of the Company and each
Subsidiary of the Company under each of the Plans (x) that are due prior to the
Effective Time have been paid or will be paid prior to that date, and (y) that
have accrued prior to the Effective Time have been or will be paid or properly
accrued at that time.
(6) The Company and each Subsidiary of the
Company have classified all individuals who perform services for the Company or
any Subsidiary of the Company correctly under the Plans, ERISA and the Code as
common law employees, independent contractors or leased employees, except where
the failure to classify individuals correctly could not result in a material
liability for the Company or the Plans.
(b) RETIREMENT PLANS.
(1) The Company Disclosure Letter lists all
"employee pension benefit plans" (within the meaning of Section 3(2) of ERISA)
which are also stock bonus, pension or profit sharing plans within the meaning
of Section 401(a) of the Code (the "RETIREMENT PLANS").
(2) Each Retirement Plan has been duly
authorized by the appropriate board of directors of the Company and/or
Subsidiary of the Company whichever is appropriate. Each Retirement Plan is
qualified in form and operation under Section 401(a) of the Code and each trust
under each Retirement Plan is exempt from tax under Section 501(a) of the Code.
No event has occurred that could reasonably be expected to give rise to
disqualification or loss of tax-exempt status of any Retirement Plan or trust
thereunder. To the best knowledge of the Company, no event has occurred that
will or could subject any Retirement Plan to tax under Section 511 of the Code.
To the best knowledge of the Company, no non-exempt prohibited transaction
(within the meaning of Section 4975 of the Code) or party-in-interest
transaction (within the meaning of Section 406 of ERISA) has occurred with
respect to any Retirement Plan.
(3) [intentionally omitted]
(c) TITLE IV PLANS. No Plan is a "single employer plan"
within the meaning of Section 4001(a)(15) of ERISA or a "multiemployer plan"
within the meaning of Section 3(37) or Section 4001(a)(3) of ERISA. Neither the
Company, any Subsidiary of the Company nor any ERISA Affiliate has ever
maintained or had an obligation to contribute to a "single employer plan" within
the meaning of Section 4001(a)(15) of ERISA or a "multiemployer plan" within the
meaning of Section 3(37) or Section 4001(a)(3) of ERISA. "ERISA AFFILIATE" means
any trade or business (whether or not incorporated) that is or was a member of a
group of which the Company or any Subsidiary of the Company is or was a member
and which is or was under common control with the Company or any Subsidiary of
the Company within the meaning of Section 414 (b) or (c) of the Code or that
would be treated as a single employer with the Company or any Subsidiary of the
Company under Section 4001(a)(14) or Section 4001(b) of ERISA.
(d) HEALTH PLANS. All group health plans of the Company,
each Subsidiary of the Company and any ERISA Affiliate have been operated in
compliance in all material respects with the group health plan continuation
coverage requirements of Section 4980B of the Code. Except as required under
Section 4980B of the Code or as provided in the Company's Employee
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Severance Plan, neither the Company, any Subsidiary of the Company nor any ERISA
Affiliate has any obligation to provide health benefits to any employee
following termination of employment.
(e) FINES AND PENALTIES. There has been no act or
omission by the Company, any Subsidiary of the Company or any ERISA Affiliate
that has given rise to or may give rise to fines, penalties, taxes, or related
charges under Section 502(c) or (i) or Section 4071 of ERISA or Chapter 43 of
the Code, which fines, penalties, taxes or related charges, individually or in
the aggregate, could reasonably be expected to have a Company Material Adverse
Effect.
3.15 LABOR AND EMPLOYMENT MATTERS. Except as set forth in
the Company Disclosure Letter, there are no labor or collective bargaining
agreements which pertain to the Company or any Subsidiary of the Company. To the
knowledge of the Company, there is no union organizing effort pending or
threatened against the Company or any Subsidiary of the Company. Except as set
forth in the Company Disclosure Letter, there is no labor strike, material labor
dispute, work slowdown, stoppage or lockout actually pending, or to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary of the Company. There is no unfair labor practice or labor
arbitration proceeding pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary of the Company relating to their business,
except for any such proceeding, which could not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Except as set forth in the Company Disclosure Letter, none of the Company or any
Subsidiary of the Company is a party to any employment, consulting,
non-competition, severance, or indemnification agreement still in effect with
any current or former executive officer or director of the Company or any
Subsidiary of the Company.
3.16 NO BROKERS. No contract, arrangement or understanding
has been entered intro with any person or firm which may result in the
obligation of the Company, Purchaser or Parent to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except (i) that the Company has retained Bear Stearns and
Jefferson Capital Group, Ltd. as its financial advisors and the Company has
retained Greenhill as financial advisor to the Special Committee. Other than as
set forth in this Agreement, the Company is not aware of any claim against it
for payment of any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
3.17 PROPERTIES. The Company and each Subsidiary of the
Company have good and marketable title, free and clear of all liens, claims,
encumbrances and restrictions (except liens, claims, encumbrances or
restrictions arising under any existing bank agreements as described in the
Company Reports and liens for Taxes not yet due and payable or which are being
contested in good faith, statutory liens and other encumbrances and restrictions
affecting real estate which do not secure amounts for borrowed money and will
not materially impair title thereto), to all property and assets described in
the Company Reports as being owned by it. All material leases to which the
Company or any Subsidiary of the Company is a party are valid and binding and no
default has occurred or is continuing thereunder, which could, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. The
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Company and each of the Company's Subsidiaries enjoy peaceful and undisturbed
possession under all such leases to which any of them is a party as lessee with
such exceptions as do not materially interfere with the use made by the Company
or any Subsidiary of the Company. The plants and equipment, taken as a whole, of
each of the Company and each Subsidiary of the Company are in good operating
condition and repair other than ordinary wear and tear.
3.18 ENVIRONMENTAL LAWS.
(a) Except as set forth on the Company Disclosure Letter:
(1) neither the Company nor any present or
former Subsidiary of the Company has received any written notice, claim, request
for information or demand from any governmental agency or third party alleging
that the Company, any present or former Subsidiary of the Company or any Company
Real Properties is in material violation of, is subject to any administrative or
judicial proceeding pursuant to, or has any material liability under, any
Environmental Law;
(2) with respect to Company Real Properties
which are currently owned, leased or operated by the Company or any present or
former Subsidiary of the Company, to the knowledge of the Company, there has not
occurred, nor is there presently occurring, any Release or Releases of any
Hazardous Materials at, on, into, beneath or migrating from such Company Real
Properties which could reasonably be expected, individually or in the aggregate,
to have a Company Material Adverse Effect;
(3) with respect to Company Real Properties
which were previously owned, leased or operated by the Company or any present or
former Subsidiary of the Company, there did not occur any Release or Releases of
any Hazardous Materials, at, on, into, beneath or migrating from such Company
Real Properties during or, to the knowledge of the Company, prior to the period
of ownership, lease or operation by the Company or any Subsidiary of the Company
which could reasonably be expected, individually or in the aggregate, to have a
Company Material Adverse Effect;
(4) neither the Company nor any present or
former Subsidiary of the Company has Released, or allowed or arranged for any
third parties to Release, any Hazardous Materials at any other site in violation
of or which would reasonably be expected to lead to liability under, any
Environmental Law which could reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect;
(5) to the knowledge of the Company, neither the
Company nor any present or former Subsidiary of the Company is a potentially
responsible party with respect to a federal, state, local or foreign
environmental cleanup site or sites or with respect to investigation or
corrective actions under any Environmental Law with respect to matters which
could reasonably be expected, individually or in the aggregate, to have a
Company Material Adverse Effect;
(6) each of the Company and its Subsidiaries is
currently in compliance with and has been in compliance with all Environmental
Laws except where any
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failure to comply could not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect;
(7) during the period of ownership, lease or
operation by the Company or any present or former Subsidiary of the Company of
any Company Real Properties, the Company or such Subsidiary operated the Company
Real Properties in compliance with all Environmental Laws, except where any
failure could not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect;; and
(8) there are no costs or liabilities associated
with any capital or operating expenditures of the Company or any present or
former Subsidiary of the Company required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license, consent, exemption,
franchise, authorization or other approval, any related constraints on operating
activities or any potential liabilities to third parties under Environmental
Laws which could reasonably be expected, individually or in the aggregate, to
have a Company Material Adverse Effect.
(b) As used in this Section,
(1) "COMPANY REAL PROPERTIES" shall mean all
real property now or previously owned, operated or leased by the Company or any
present or former Subsidiary of the Company.
(2) "HAZARDOUS MATERIALS" shall mean asbestos,
petroleum products and all other materials on the date hereof defined as
"hazardous substances," "hazardous wastes," "toxic substances," "solid wastes"
or otherwise on or prior to the date hereof listed or regulated pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. (S)9601 et seq. ("CERCLA"); the Resource Conservation and
Recovery Act, 42 U.S.C. (S)(S)6901 et seq. ("RCRA") and any amendments thereto;
the Hazardous Materials Transportation Act, 49 U.S.C. (S)(S)1801 et seq.
("HMTA"); the Clean Water Act, the Safe Drinking Water Act; the Atomic Energy
Act; the Federal Insecticide, Fungicide, and Rodenticide Act, the Clean Air Act;
or any other similar foreign, federal, state or local statute, regulation or
ordinance or any other law, as now in effect, relating to, or imposing liability
or standards of conduct concerning any hazardous or toxic waste, substance or
material.
(3) "ENVIRONMENTAL LAWS" shall mean any and all
foreign, federal, state and local laws (including, without limitation, common
law), statutes, ordinances, rules, regulations, permits, licenses or other
governmental requirements relating to health, pollution, the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), the release or threatened release, discharge,
emission, of any Hazardous Materials or materials containing Hazardous Materials
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials or
the pollution of the environment, including, without limitation, CERCLA, RCRA
and HMTA.
(4) "RELEASE" shall mean releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, escaping, leaching,
disposing or dumping.
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3.19 RELATED PARTY TRANSACTIONS. Except as set forth in
the Company Disclosure Letter, no director or officer of the Company or any
Subsidiary of the Company and no person related to any of them by consanguinity
or marriage has any direct or indirect interest in (i) any material equipment or
other property, real or personal, tangible or intangible, including, but without
limitation, any item of intellectual property, used in connection with or
pertaining to the Company's or any Subsidiary of the Company's business, or (ii)
any creditor, supplier, customer, manufacturer, agent, representative, or
distributor of products of the Company or any Subsidiary of the Company;
PROVIDED, HOWEVER, that (A) no such director or officer or other person shall be
deemed to have such an interest solely by virtue of the ownership of less than
five percent (5%) of the outstanding voting stock or debt securities of any
publicly-held company, the stock or debt securities of which are traded on a
recognized stock exchange or quoted on the National Association of Securities
Dealers Automated Quotation System, and (B) no such director or officer or other
person shall be deemed to have such an interest solely by virtue of the
ownership by a partnership in which he is a partner of less than 10% of the
outstanding voting stock or debt securities of any privately held company.
3.20 INTELLECTUAL PROPERTY. The Company Disclosure Letter
contains a true and correct list of all the patents, patent applications,
trademarks, service marks, trade names, domain names, and registered copyrights
owned or exclusively licensed by the Company or any Subsidiary of the Company.
The Company and each Subsidiary of the Company own, or possess adequate and
enforceable licenses or other rights to use, all patents, trade secrets,
inventions, processes, technology, software, trademarks, service marks, trade
names, domain names, and content (collectively, the "COMPANY INTELLECTUAL
PROPERTY") used in the business of the Company or any Subsidiary of the Company
as currently conducted. The Company and/or each of its Subsidiaries has made all
necessary filings and recordations to protect and maintain its interest in the
patents, patent applications, trademark and service mark registrations,
trademark and service mark applications, copyright registrations and copyright
applications and licenses included in the Company Intellectual Property, except
where the failure to do so protect or maintain could not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Each patent, patent applications, trademark or service mark registration, and
trademark or service mark application and copyright registration or copyright
application of the Company and/or each of its Subsidiaries included in the
Company Intellectual Property is valid and subsisting and each license of the
Company Intellectual Property is valid, subsisting and enforceable, except where
the failure to be valid, subsisting and enforceable could not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. The Company's and its Subsidiaries' ownership, licenses or rights in the
Company Intellectual Property will not be affected by the consummation of the
Merger. To the knowledge of the Company, (i) its rights in, to and under the
Company Intellectual Property do not conflict with or infringe on the rights of
any other person, (ii) no legal action or proceeding has been initiated,
asserted or is pending, nor has any legal action or proceeding been threatened,
against the Company or any Subsidiary of the Company either based upon or
challenging or seeking to deny or restrict its use of any of the Company
Intellectual Property, and (iii) no other person is using the Company
Intellectual Property in a manner that conflict or infringes on the rights of
the Company, nor has it made any written or oral claim or notice to such effect.
The disclosure under the heading "Year 2000" contained in the Company's
Quarterly Report on Form 10-Q for the period ended October 30, 1999 is accurate
and in compliance with applicable law in all material respects.
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3.21 STATE TAKEOVER STATUTES INAPPLICABLE. The
restrictions on business combinations applicable to "interested stockholders"
contained in Section 203 of the DGCL will not apply to the Offer, the Merger and
the other transactions contemplated hereby.
3.22 PRODUCT LIABILITY. Since January 1, 1998, the Company
has not received written notice of any claim, pending or threatened, against the
Company or any of its Subsidiaries for injury to person or property of employees
or any third parties suffered as a result of the sale of any product or
performance of any service by the Company or any of its Subsidiaries, including
claims arising out of the defective or unsafe nature of its products or
services, which is reasonably likely, individually or in the aggregate, to have
a Company Material Adverse Effect.
3.23 OPINIONS OF FINANCIAL ADVISORS. The Special Committee
and the Board have been advised by Greenhill to the effect that in its opinion,
as of the date of this Agreement, the price to be paid for shares of Company
Common Stock in the Offer and the Merger is fair to the holders of shares of
Company Common Stock from a financial point of view. The Company has been
advised by Bear Stearns to the effect that, in its opinion, as of the date of
this Agreement, the price to be paid for shares of Company Common Stock in the
Offer and the Merger is fair to the holders of shares of Company Common Stock
from a financial point of view.
3.24 RIGHTS AGREEMENT The Company has irrevocably taken,
or will take, all necessary action, including, without limitation, amending the
Rights Agreement with respect to all of the outstanding Rights, (a) to render
the Rights Agreement inapplicable to this Agreement, the Offer, the Merger and
the other transactions contemplated hereby, (b) to ensure that (i) Parent and
Purchaser, or either of them, are not deemed to be an Acquiring Person (as
defined in the Rights Agreement) pursuant to the Rights Agreement and (ii) no
Section 11(b) Event or Section 13 Event (as such terms are defined in the Rights
Agreement) occurs by reason of the execution and delivery of this Agreement or
the consummation of the Offer, the Merger or transactions contemplated by this
Agreement and (c) so that the Company will have no obligations under the Rights
or the Rights Agreement in connection with the Offer and the Merger and the
holders of shares of Company Common Stock and the associated Rights will have no
rights under the Rights or the Rights Agreement in connection with the Offer and
the Merger. The Rights Agreement, as so amended, has not been further amended or
modified. Copies of all such amendments to the Rights Agreement have been
previously provided to Purchaser.
3.25 FULL DISCLOSURE.
(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 (the "COMPANY
FILINGS"), including, without limitation, the Schedule 14D-9 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 applicable laws.
(b) No information with respect to the Company or any
Subsidiaries of the Company that the Company or any Subsidiary of the Company or
any of their officers, directors,
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employees, representatives or agents furnishes to Parent or Purchaser for
inclusion or incorporation by reference in the Offer Documents, the Schedule
14D-9 or the Proxy Statement, including any amendments or supplements thereto,
shall, at the respective times the Offer Documents and the Schedule 14D-9 are
filed with the SEC or first published, sent or given to the Company's
stockholders, or, in the case of the Proxy Statement, at the date the Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting, 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.
Notwithstanding the foregoing, the Company does not make any representation or
warranty with respect to the information that has been supplied by Parent or
Purchaser or their officers, directors, employees, representatives or agents for
inclusion or incorporation by reference in any of the foregoing documents.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser each represents and warrants to the
Company as of the date of this Agreement as follows:
4.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each
of Parent and Purchaser is a corporation duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation, is duly
licensed or qualified to do business as a foreign corporation and is in good
standing under the laws of any other state of the United States in which the
character of the properties owned or leased by it or in which the transaction of
its business makes such qualification necessary, except where the failure to be
so qualified or to be in good standing would not reasonably be expected to have
a Parent Material Adverse Effect. As used herein, a "Parent Material Adverse
Effect" means material adverse effect on (i) the business, properties,
operations, prospects, results of operations or condition (financial or
otherwise) of Parent and Parent's Subsidiaries taken as a whole or (ii) the
ability of Parent or Purchaser to perform its obligations hereunder. Each of
Parent and Purchaser has all requisite corporate power and authority to own,
operate and lease its properties and carry on its business as now being
conducted.
4.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS.
Each of Parent and Purchaser has the requisite corporate power and authority to
execute and deliver this Agreement and all agreements and documents contemplated
hereby, and the consummation by Parent and Purchaser of the transactions
contemplated hereby has been duly authorized by all requisite corporate action.
This Agreement constitutes, and all agreements and documents contemplated hereby
(when executed and delivered pursuant hereto) will constitute, the valid and
legally binding obligations of Parent and Purchaser, enforceable against Parent
and Purchaser in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
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4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by
Parent and Purchaser do not, and the consummation by Parent and Purchaser of the
transactions contemplated hereby will not,
(1) conflict with or violate the certificate of
incorporation or bylaws or equivalent organizational documents of (i) Parent or
(ii) Purchaser,
(2) subject to making the filings and obtaining
the approvals identified in Section 4.3(b) of this Agreement, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Parent or any Purchaser or by which any property or asset of Parent or any
Purchaser is bound or affected, or
(3) subject to making the filings and obtaining
the approvals identified in Section 4.3(b) of this Agreement, 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, result in the loss of a material
benefit under, or give to others any right of purchase or sale, or any right of
termination, amendment, acceleration, increased payments or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of Parent or any Purchaser pursuant to, any Contract to which Parent or any
Purchaser is a party or by which Parent or any Purchaser or any property or
asset of Parent or any Purchaser is bound or affected: except, in the case of
clauses (2) and (3), for any such conflicts, violations, breaches, defaults or
other occurrences which would not prevent or delay consummation of any of the
transactions contemplated hereby in any material respect, or otherwise prevent
Parent from performing its obligations under this Agreement in any material
respect, and would not, individually or in the aggregate, reasonably be expected
to have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by
Parent and Purchaser does not, and the consummation of the transactions
contemplated hereby by Parent and Purchaser will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity or any other third-party, except
(1) for
(i) applicable requirements, if any, of the
Exchange Act, the Securities Act, Blue Sky Laws and state takeover
laws,
(ii) the pre-merger notification requirements of
the HSR Act,
(iii) filing of the Certificate of Merger and
related documents as required by DGCL,
(iv) applicable requirements under the rules and
regulations of the New York Stock Exchange (the "NYSE"),
(v) the pre-merger notification requirements of
the Competition Act and the Investment Canada Act; and
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(2) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of any of the transactions contemplated
hereby in any material respect, or otherwise prevent Parent or Purchaser from
performing its obligations under this Agreement in any material respect, and
would not, individually or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect.
4.4 NO BROKERS. Neither Parent nor Purchaser has not
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of the Company, Purchaser or Parent to pay
any finder's fee, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby, except that Parent has retained Credit
Suisse First Boston as its financial advisor, the terms of which have been
disclosed in writing to the Company before the date of this Agreement. Other
than the foregoing arrangements, neither Parent nor Purchaser is aware of any
claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
4.5 FULL DISCLOSURE. None of the information supplied or
to be supplied by Parent or Purchaser, or any of its officers, directors,
employees, representatives or agents, for inclusion or incorporation by
reference in the Proxy Statement, the Schedule 14D-9 or the Offer Documents,
including any amendments or supplements thereto, will, at the respective times
that the Proxy Statement, the Schedule 14D-9 and the Offer Documents, or any
amendments or supplements thereto, are filed with the SEC or first published,
sent or given to the Company's stockholders or, in the case of the Proxy
Statement or the Schedule TO, at the date first mailed to the Company's
stockholders or at the time of the Stockholders Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Schedule TO shall comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
4.6 NO PRIOR ACTIVITIES Except for the obligations or
liabilities incurred in connection with its incorporation or organization or the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby, Purchaser has not incurred any obligations or
liabilities nor engaged in any business or activities of any type or kind
whatsoever or entered into any agreements or arrangements with any person or
entity.
4.7 FINANCING. Parent has or will obtain sufficient funds
necessary to enable it and Purchaser to consummate the Offer and the Merger and
the transactions contemplated hereby on a timely basis.
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ARTICLE V
COVENANTS
5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. The Company covenants and agrees that, during the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Offer Completion Date, unless Parent shall otherwise agree in
writing, and except as set forth in Section 5.1 of the Company Disclosure Letter
or as contemplated hereby, the Company shall conduct its business and shall
cause the businesses of its Subsidiaries to be conducted only in, and the
Company and its Subsidiaries shall not take any action except in, the ordinary
course of business and in a manner consistent with past practice; and the
Company shall use reasonable commercial efforts to preserve substantially intact
the business organization of the Company and its Subsidiaries, to keep available
the services of the present officers, employees and consultants of the Company
and its Subsidiaries and to preserve the present relationships of the Company
and its Subsidiaries with customers, suppliers and other persons with which the
Company or any of its Subsidiaries has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement, or
as required by applicable law or rule of any stock exchange or over-the-counter
market, neither the Company nor any of its Subsidiaries shall, during the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Offer Completion Date, and except as set
forth in Section 5.1 of the Company Disclosure Letter, directly or indirectly
do, or propose to do, any of the following without the prior written consent of
Parent:
(a) Amend or otherwise change the Company's certificate
of incorporation or by-laws, or amend the Rights Agreement or reduce the rights
issued thereunder;
(b) Issue, sell, pledge, dispose of or encumber, or
authorize the issuance, sale, pledge, disposition or encumbrance of, any shares
of capital stock of any class, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company, any of its Subsidiaries or affiliates (except for the issuance of
shares of Company Common Stock issuable pursuant to Options under the Option
Plans, which options are outstanding on the date hereof; PROVIDED that the
occurrence of a separation of the rights under the Rights Agreement, and the
related issuance of shares of Company Common Stock to the Company's stockholders
thereunder shall not be deemed a breach of this Agreement to the extent that (i)
the occurrence of such separation occurred as a result of an unsolicited
acquisition of Company Common Stock by a third party, and (ii) such acquisition
did not occur as a result of the Company breaching Section 5.2 hereof;
(c) Sell, pledge, dispose of or encumber any assets of
the Company or any of its Subsidiaries (except for (i) sales of inventory in the
ordinary course of business and in a manner consistent with past practice, (ii)
dispositions of obsolete or worthless assets, and (iii) sales of assets not in
excess of $1,000,000 in the aggregate);
(d) (i) Declare, set aside, make or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly-owned
Subsidiary of the Company may declare and pay a dividend to
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its parent, (ii) split, combine or reclassify any of its capital stock or issue
or authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, (iii) except as
required by the terms of any security as in effect on the date hereof or
expressly permitted hereunder, amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit
any Subsidiary to amend the terms or change the period of exercisability of,
purchase, repurchase, redeem or otherwise acquire, any of its securities or any
securities of its subsidiaries, including, without limitation, shares of Company
Common Stock, or any option, warrant or right, directly or indirectly, to
acquire any such securities, or propose to do any of the foregoing, or (iv)
settle, pay or discharge any claim, suit or other action brought or threatened
against the Company with respect to or arising out of a stockholder equity
interest in the Company;
(e) (i) Acquire (by merger, consolidation, or acquisition
of stock or assets) any corporation, partnership or other business organization
or division thereof; (ii) incur any indebtedness for borrowed money, except in
the ordinary course of business or issue any debt securities or assume,
guarantee (other than guarantees of the Company's Subsidiaries entered into in
the ordinary course of business) or endorse or otherwise as an accommodation
become responsible for, the obligations of any person, make any loans or
advances, except in the ordinary course of business consistent with past
practice; or (iii) commit to make any capital expenditures or purchases of fixed
assets which are, in the aggregate, in excess of $7,000,000; PROVIDED that the
Company shall consult with Parent with respect to any such commitment in excess
of $1,000,000; or (iv) enter into or materially amend any contract, agreement,
commitment or arrangement to effect any of the matters prohibited in this
Section 5.1(e);
(f) Except as set forth in Section 5.1 of the Company
Disclosure Letter, increase the compensation or severance payable or to become
payable to its directors, officers or employees, except for increases in salary
or wages of employees of the Company or its Subsidiaries (who are not directors
or executive officers of the Company) in accordance with past practices, or
grant any severance or termination pay (except payments required to be made
under obligations existing on the date hereof in accordance with the terms of
such obligations) to, or enter into any employment or severance agreement with,
any employee of the Company or any of its Subsidiaries, except for agreements
with new employees entered into in the ordinary course of business and providing
for annual base and bonus compensation not to exceed $150,000, or establish,
adopt, enter into or amend any collective bargaining agreement, Plan (within the
meaning of Section 3.14 of this Agreement), trust, fund, policy or arrangement
for the benefit of any current or former directors, officers or employees or any
of their beneficiaries, except, in each case, as may be required by law or as
would not result in a material increase in the cost of maintaining such
collective bargaining agreement, Plan, trust, fund, policy or arrangement;
(g) Take any action to change accounting policies or
procedures (including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable), except as required by a change in GAAP or SEC position occurring
after the date hereof;
(h) Except in the ordinary course of business, make any
Tax election or settle or compromise any material United States federal, state,
local or non-United States Tax liability;
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(i) Pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
in excess of $1,000,000 in the aggregate, other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of liabilities reflected or reserved against in the financial
statements contained in the Company Reports or incurred in the ordinary course
of business and consistent with past practice; or
(j) Take, or agree in writing or otherwise to take, any
of the actions described in Sections 5.1(a) through (i) above, or any action
which would make any of the representations or warranties of the Company
contained in this Agreement untrue or incorrect or prevent the Company from
performing or cause the Company not to perform its covenants hereunder.
5.2 NO SOLICITATION. The Company shall not, directly or
indirectly, or through any officer, director, employee, representative or agent
of the Company or any of its Subsidiaries, and shall not permit any such
officer, director, employee, representative or agent to, solicit or encourage
the initiation of (including by way of furnishing information) any inquiries or
proposals regarding, or participate in negotiations or discussions concerning
any merger, sale of assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving the
Company or any Subsidiaries of the Company that if consummated would constitute
an Alternative Transaction (as defined in Section 7.1) (any of the foregoing
inquiries or proposals being referred to herein as an "ACQUISITION PROPOSAL").
Upon the execution of this Agreement, the Company shall immediately cease any
discussions or negotiations with any person, entity or group (other than Parent
or any of its affiliates or representatives) concerning any such transaction or
any Acquisition Proposal that are continuing on the date hereof and thereafter
shall seek to have returned to the Company any confidential information that has
been provided in any such discussions or negotiations. Nothing in this section
shall prevent the Board from (i) furnishing information to a third person which
has made a BONA FIDE Acquisition Proposal that the Board reasonably determines
is likely to lead to a Superior Proposal (as defined below) not solicited in
violation of this Agreement, provided that, with respect to any person that is
not currently party to a confidentiality agreement with the Company, such person
has executed an agreement with confidentiality, standstill and other provisions
substantially similar to those then in effect between the Company and Parent, or
(ii) subject to compliance with the other terms of this Section 5.2, considering
and negotiating a bona fide Acquisition Proposal that is a Superior Proposal not
solicited in violation of this Agreement; PROVIDED, HOWEVER, that, as to each of
clauses (i) and (ii), (x) such actions occur at a time prior to the consummation
(or, if the Offer is consummated and extended, the initial consummation) of the
Offer and (y) the Board determines in good faith (based on the advice of its
financial advisor and counsel) that it is required to take such actions in order
to discharge properly its fiduciary duties. For purposes of this Agreement, a
"SUPERIOR PROPOSAL" means any proposal made by a third person to acquire,
directly or indirectly, for consideration consisting of cash and/or securities,
all of the equity securities of the Company entitled to vote generally in the
election of directors or all or substantially all the assets of the Company, if,
and only if, the Board reasonably determines (after consultation with its
financial advisor and counsel) (i) that the proposed transaction would be more
favorable from a financial point of view to its stockholders than the Offer and
the Merger and the transactions contemplated by this Agreement taking into
account at the time of determination any changes to the terms of this Agreement
which as of that time had been proposed by Parent and (ii) that the person or
entity making such
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Acquisition Proposal is capable of consummating such Acquisition Proposal (based
upon, among other things, the availability of financing and the degree of
certainty of obtaining financing, the expectation of obtaining required
regulatory approvals and the identity and background of such person).
(a) The Company shall notify Parent promptly upon receipt
of any Acquisition Proposal, or any modification of or amendment to any
Acquisition Proposal, or any request for nonpublic information relating to the
Company or any of its Subsidiaries in connection with an Acquisition Proposal or
for access to the properties, books or records of the Company or any Subsidiary
by any person or entity that informs the Board or such Subsidiary that it is
considering making, or has made, an Acquisition Proposal. Such notice to Parent
shall be made orally and in writing, and shall indicate the identity of the
person making the Acquisition Proposal or intending to make an Acquisition
Proposal or requesting non-public information or access to the books and records
of the Company, the terms of any such Acquisition Proposal or modification or
amendment to an Acquisition Proposal, and whether the Company is providing or
intends to provide the person making the Acquisition Proposal with access to
information concerning the Company as provided in this Section 5.2. the Company
shall also promptly notify Parent, orally and in writing, if it enters into
negotiations concerning any Acquisition Proposal.
(b) Except as provided in the following sentence, neither
the Company nor the Board shall withdraw or modify in a manner adverse to Parent
or Purchaser, or propose to withdraw or modify in a manner adverse to Parent or
Purchaser, or fail at Parent's request to reaffirm, the approval by such Board
of this Agreement, the Offer or the Merger or the favorable recommendation of
the Board with respect thereto. The foregoing notwithstanding, in the event
that, after the Company has received a BONA FIDE Acquisition Proposal not
solicited in violation of this Agreement, the Board determines (based on the
advice of its counsel), prior to the consummation (or, if the Offer is
consummated and extended, the initial consummation) of the Offer, that is
required to do so in order to discharge properly its fiduciary duties, the Board
may (x) withdraw or modify its approval or recommendation of this Agreement, the
Offer or the Merger and disclose to the Company's stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act
or otherwise make disclosure to them, or (y) approve or recommend such an
Acquisition Proposal that is a Superior Proposal; PROVIDED, HOWEVER, that in no
event may the Board take either such action earlier than the second full
business day following Parent's receipt of written notice of the intention of
the Board to do so.
(c) The Company and the Board shall not (i) redeem the
Rights under the Rights Agreement, or waive or amend any provision of the Rights
Agreement, in any such case to permit or facilitate the consummation of any
Acquisition Proposal or Alternative Transaction, or (ii) enter into any
agreement with respect to, or otherwise approve or recommend to stockholders, or
publicly propose to approve or recommend, any Acquisition Proposal or
Alternative Transaction, unless this Agreement has been terminated in accordance
with its terms.
(d) The Company shall not release any third party from
the confidentiality and standstill provisions of any agreement to which the
Company is a party.
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5.3 ACCESS TO INFORMATION; CONFIDENTIALITY. (a) The
Company shall (and shall cause its Subsidiaries to):
(i) afford to the officers, employees,
accountants, counsel, financing sources and other representatives of
Parent, reasonable access during normal business hours to its
properties, books, contracts, commitments and records;
(ii) furnish to Parent all information concerning
its business, properties, personnel as Parent may reasonably request or
has reasonably requested; and
(iii) make available during normal business hours
to the officers, employees, accountants, counsel, financing sources and
other representatives of Parent the appropriate individuals (including
management personnel, attorneys, accountants and other professionals)
for discussion of the Company's business, properties, prospects and
personnel as Parent may reasonably request.
(b) Parent shall keep all information disclosed to it
pursuant to this Agreement confidential in accordance with the terms of the
confidentiality letter, dated December 10, 1999 (the "CONFIDENTIALITY LETTER"),
between Parent and the Company.
5.4 CONSENTS; APPROVALS. The Company and Parent shall
each use its reasonable best efforts (which efforts, to the extent reasonably
practicable, shall be made prior to the consummation of the Offer) to obtain all
consents, waivers, approvals, authorizations or orders (including, without
limitation, all United States and foreign governmental and regulatory rulings
and approvals), and the Company and Parent shall make all filings (including,
without limitation, all filings with United States and foreign governmental or
regulatory agencies) required in connection with the authorization, execution
and delivery of this Agreement by the Company, Parent and Purchaser and the
consummation by them of the transactions contemplated hereby. The Company,
Purchaser and Parent shall furnish all information required to be included in
the Proxy Statement or for any application or other filing to be made pursuant
to the rules and regulations of any United States or foreign governmental body
in connection with the transactions contemplated by this Agreement. Each party
hereto shall make an appropriate filing of a notification and report form
pursuant to the HSR Act with respect to the transactions contemplated hereby
within ten business days after the date hereof, shall promptly supply any
additional information and documentary material that may be requested pursuant
to the HSR Act, and shall use commercially reasonable efforts to obtain early
termination of the waiting period under the HSR Act. In addition, each party
hereto shall promptly make any other filing that may be required under any
antitrust law or by any antitrust authority.
5.5 INDEMNIFICATION AND INSURANCE.
(a) The certificate of incorporation and by-laws of the
Surviving Corporation shall contain provisions with respect to indemnification
substantially to the same effect as those set forth in the certificate of
incorporation and the by-laws of the Company on the date hereof, which
provisions shall not be amended, modified or otherwise repealed for a period of
six years after the Effective Time in any manner that would adversely affect the
rights thereunder as of the
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Effective Time of individuals who at the Effective Time were directors,
officers, employees or agents of the Company, unless such modification is
required after the Effective Time by law.
(b) Parent shall cause the Surviving Corporation, to the
fullest extent permitted under applicable law or under the Surviving
Corporation's certificate of incorporation or by-laws, to indemnify and hold
harmless, each present and former director, officer or employee of the Company
or any of its Subsidiaries (collectively, the "INDEMNIFIED PARTIES") against any
costs or expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, (x) arising out of or pertaining to the
transactions contemplated by this Agreement or (y) otherwise with respect to any
acts or omissions occurring at or prior to the Effective Time, to the same
extent as provided in the Company's certificate of incorporation or by-laws or
any applicable contract or agreement as in effect on the date hereof, in each
case for a period of six years after the date hereof. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time) and subject to the specific terms of any
indemnification contract, (i) any counsel retained by the Indemnified Parties
for any period after the Effective Time shall be reasonably satisfactory to the
Surviving Corporation, (ii) after the Effective Time, the Surviving Corporation
shall pay the reasonable fees and expenses of such counsel, promptly after
statements therefor are received and (iii) the Surviving Corporation will
cooperate in the defense of any such matter; PROVIDED, HOWEVER, that the
Surviving Corporation shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld or
delayed); and PROVIDED, FURTHER, that, in the event that any claim or claims for
indemnification are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until the
disposition of any and all such claims. The Indemnified Parties as a group may
retain only one law firm to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties, in which case each Indemnified Person with respect to whom such a
conflict exists (or group of such Indemnified Persons who among them have no
such conflict) may retain one separate law firm.
(c) In addition, Parent will provide, or cause the
Surviving Corporation to provide, for a period of not less than six years after
the Effective Time, the Company's current directors and officers an insurance
and indemnification policy that provides coverage for events occurring at or
prior to the Effective Time (the "D&O INSURANCE") that is no less favorable than
the existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; PROVIDED, HOWEVER, that Parent and the
Surviving Corporation shall not be required to pay an annual premium for the D&O
Insurance in excess of one and one-half of the annual premium currently paid by
the Company for such insurance, but in such case shall purchase as much such
coverage as possible for such amount.
(d) This Section shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of the Surviving Corporation and shall be enforceable by the Indemnified
Parties.
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5.6 EMPLOYEE BENEFITS
(a) Effective as of the Effective Time and for a one-year
period following the Effective Time, Parent shall provide, or cause the
Surviving Corporation and its Subsidiaries and successors to provide, those
persons who, immediately prior to the Effective Time, were employees of the
Company and its Subsidiaries and who continue in such employment ("CONTINUING
EMPLOYEES"), with benefits and compensation that are substantially comparable,
in the aggregate, to the compensation and benefits provided to such employees as
of the date of this Agreement; PROVIDED, that nothing herein shall restrict
Parent or the Surviving Corporation from terminating the employment of any such
employees in accordance with applicable laws and contractual rights, if any, of
such employees.
(b) Except with respect to accruals under any defined
benefit pension plan, Parent will, or will cause the Surviving Corporation and
its Subsidiaries to, give Continuing Employees full credit for purposes of
eligibility, vesting and determination of the level of benefits under any
employee benefit plans or arrangements maintained by Parent, the Surviving
Corporation or any Subsidiary of Parent or the Surviving Corporation for such
Continuing Employees' service with the Company or any Subsidiary of the Company
to the same extent recognized by the Company for similar purposes immediately
prior to the Effective Time. Parent will, or will cause the Surviving
Corporation and its Subsidiaries to, (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Continuing Employees under any welfare
plan that such employees may be eligible to participate in after the Effective
Time, other than limitations or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the Effective
Time under any welfare plan maintained for the Continuing Employees immediately
prior to the Effective Time, and (ii) provide each Continuing Employee with
credit for any co-payments and deductibles paid prior to the Effective Time in
satisfying any applicable deductible or out-of-pocket requirements under any
welfare plans that such employees are eligible to participate in after the
Effective Time to the same extent as if those deductibles or co-payments had
been paid under the welfare plans for which such employees are eligible after
the Effective Time.
(c) For purposes of the Plans, the Offer Completion Date
will constitute a "Change in Control" of the Company (as such term or similar
term is defined in an applicable Plan). The Parent shall (i) cause the Surviving
Corporation after the Offer Completion Date to pay all amounts provided under
all Plans in accordance with their terms, and (ii) honor and cause the Surviving
Corporation to honor all rights, privileges and modifications to or with respect
to any such Plans which become effective as a result of such Change in Control.
5.7 NOTIFICATION OF CERTAIN MATTERS. The Company shall
give prompt notice to Parent and Parent shall give prompt notice to the Company,
of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which is reasonably likely to cause any representation or
warranty of such party contained in this Agreement to be materially untrue or
inaccurate, (ii) any failure of the Company or Parent, as the case may be,
materially to comply with or satisfy, or the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which is reasonably likely to cause the
failure by such party materially to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by
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it hereunder; (iii) the Company obtaining knowledge of a material breach by
Parent, or Parent obtaining knowledge of a material breach by the Company, of
their respective representations, warranties, or covenants hereunder of which
the breaching party has not already given notice pursuant to clauses (i) or
(ii); or (iv) the occurrence of any other event which would be reasonably likely
(A) to have a Company Material Adverse Effect or (B) to cause any condition set
forth in ANNEX A hereto to be unsatisfied in any material respect at any time
prior to the consummation of the Offer; PROVIDED, HOWEVER, that the delivery of
any notice pursuant to this Section shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
5.8 FURTHER ACTION. Upon the terms and subject to the
conditions hereof each of the parties hereto shall use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement.
5.9 PUBLIC ANNOUNCEMENTS. Parent and the Company shall
consult with each other before issuing any press release or making any written
public statement with respect to the Offer or Merger or this Agreement and shall
not issue any such press release or make any such public statement without the
prior consent of the other party, which shall not be unreasonably withheld;
PROVIDED, HOWEVER, that either party may, without the prior consent of the
other, issue such press release or make such public statement as may upon the
advice of counsel be required by law or the rules and regulations of The New
York Stock Exchange, in advance of obtaining such prior consent, if it has used
all reasonable efforts to consult with the other party.
5.10 FINANCIAL INFORMATION. The Company will deliver to
Parent, as soon as reasonably practicable, such financial information as Parent
may request to the extent such financial information is regularly prepared by
the Company for the Board or for management.
ARTICLE VI
CONDITIONS TO THE MERGER
The respective obligations of each party to effect the Merger
shall be subject to the fulfillment or waiver at or prior to the Effective Time
of the following conditions:
6.1 OFFER. The Offer Completion Date shall have occurred.
6.2 STOCKHOLDER APPROVAL. This Agreement shall have been
adopted at or prior to the Effective Time by the requisite vote of the
stockholders of the Company in accordance with the DGCL.
6.3 NO INJUNCTION OR ACTION. No order, statute, rule,
regulation, executive order, stay, decree, judgment or injunction shall have
been enacted, entered, promulgated or enforced by any court or other
Governmental Entity which prohibits or prevents the consummation of the Merger
which has not been vacated, dismissed or withdrawn prior to the
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Effective Time. The Company and Parent shall use all reasonable best efforts to
have any of the foregoing vacated, dismissed or withdrawn by the Effective Time.
6.4 GOVERNMENTAL APPROVAL. All Consents of any
Governmental Entity required for the consummation of the Merger and the
transactions contemplated by this Agreement shall have been obtained, except for
those Consents the failure to obtain which would not have a material adverse
effect on the business, assets, condition (financial or other), liabilities or
results of operations of the Surviving Corporation and its Subsidiaries taken as
a whole.
ARTICLE VII
TERMINATION
7.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company:
(a) by mutual written consent duly authorized by the
Boards of Directors of Parent and the Company; or
(b) by either Parent or the Company if the initial
consummation of the Offer shall not have occurred on or prior to June 30, 2000;
PROVIDED, HOWEVER, that the right to terminate this Agreement under this Section
7.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Offer to be consummated on or prior to such date; or
(c) by either Parent or the Company if, as the result of
the failure of the Minimum Condition or any of the other conditions set forth in
ANNEX A hereto, the Offer shall have terminated or expired in accordance with
its terms without Purchaser having purchased any Shares pursuant to the Offer,
PROVIDED that if the failure to satisfy any conditions set forth in ANNEX A
shall be a basis for termination of this Agreement under any other clause of
this Section 7.1, a termination pursuant to this clause (c) shall be deemed a
termination under such other clause; or
(d) by either Parent or the Company if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a nonappealable final order, decree or ruling or
taken any other nonappealable final action having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger; or
(e) by Parent, if, whether or not permitted to do so by
this Agreement, the Board or the Company shall (x) (i) withdraw, modify or
change its approval or recommendation of the Offer, this Agreement or the Merger
in a manner adverse to Parent, (ii) approve or recommend to the stockholders of
the Company an Acquisition Proposal or Alternative Transaction; or (iii) approve
or recommend that the stockholders of the Company tender their shares in any
tender or exchange offer that is an Alternative Transaction or (y) take any
public position or make any disclosures to the Company's stockholders, whether
or not permitted pursuant to Section 5.2, which has the effect of any of the
foregoing; or
(f) by Parent or the Company, if any representation or
warranty of the Company or Parent, respectively, set forth in this Agreement
shall be untrue when made, if such
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failure to be true and correct, individually or in the aggregate, is reasonably
likely to cause the failure of the condition contained in subparagraph (e) of
ANNEX A; PROVIDED that, if such failure is curable prior to the Initial
Expiration Date (or any extension thereof) by the Company or Parent, as the case
may be, through the exercise of its reasonable best efforts and for so long as
the Company or Parent, as the case may be, continues to exercise such reasonable
best efforts, neither Parent nor the Company, respectively, may terminate this
Agreement under this Section 7.1(f) until such Initial Expiration Date (or
extension); or
(g) by Parent or the Company, if any representation or
warranty of the Company or Parent, respectively, set forth in this Agreement,
shall have become untrue (without for this purpose giving effect to
qualifications of materiality contained in such representations and warranties)
if such failure to be true and correct, individually or in the aggregate, is
reasonably likely to cause the failure of the condition contained in
subparagraph (e) of ANNEX A, other than by reason of a Terminating Breach (as
hereinafter defined); PROVIDED that, if any such failure is curable prior to the
Initial Expiration Date (or any extension thereof) by the Company or Parent, as
the case may be, through the exercise of its reasonable best efforts, and for so
long as the Company or Parent, as the case may be, continues to exercise such
reasonable best efforts, neither Parent nor the Company, respectively, may
terminate this Agreement under this Section 7.1(g) until such Initial Expiration
Date (or extension); or
(h) by Parent or the Company, upon a material breach of
any covenant or agreement on the part of the Company or Parent, respectively,
set forth in this Agreement (a "TERMINATING BREACH"); PROVIDED that, except for
any breach of the Company's obligations under Section 5.2, if such Terminating
Breach is curable prior to the Initial Expiration Date (or any extension
thereof) by the Company or Parent, as the case may be, through the exercise of
its reasonable best efforts and for so long as the Company or Parent, as the
case may be, continues to exercise such reasonable best efforts, neither Parent
nor the Company, respectively, may terminate this Agreement under this Section
7.1(h) until such date; or
(i) by the Company, in order to accept a Superior
Proposal; PROVIDED that (A) the Offer shall not theretofore have been
consummated (or, if the Offer is consummated and extended, initially
consummated); (B) the Board determines (based on the advice of counsel) that it
is required to accept such proposal in order to discharge properly its fiduciary
duties; (C) the Company has given Parent two full business days' advance notice
of the Company's intention to accept such Superior Proposal; (D) the Company
shall have paid the Fee and the Expense Reimbursement pursuant to Section
7.3(b); and (E) the Company shall have complied in all respects with the
provisions of Section 5.2.
Notwithstanding the foregoing, the right to terminate this
Agreement pursuant to clauses (e), (f), (g), (h) and (i) above shall not be
available to Parent if Purchaser or any other affiliate of Parent shall have
acquired Shares pursuant to the Offer.
As used herein, "ALTERNATIVE TRANSACTION" means any of (i) a
transaction pursuant to which any person (or group of persons (including the
shareholders of any party to such transaction)) other than Parent or its
affiliates (a "THIRD PARTY") acquires or would acquire more than 30% of the
outstanding shares of any class of equity securities of the Company, whether
from the Company or pursuant to a tender offer or exchange offer or otherwise,
(ii) a merger or
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other business combination involving the Company pursuant to which any Third
Party acquires more than 30% of the outstanding equity securities of the Company
or the entity surviving such merger or business combination, (iii) any
transaction pursuant to which any Third Party acquires or would acquire control
of assets (including for this purpose the outstanding equity securities of
Subsidiaries of the Company and securities of the entity surviving any merger or
business combination including any of the Company's Subsidiaries) of the
Company, or any of its Subsidiaries having a fair market value (as determined by
the Board in good faith) equal to more than 30% of the fair market value of all
the assets of the Company and its Subsidiaries, taken as a whole, immediately
prior to such transaction, or (iv) any other consolidation, business
combination, recapitalization or similar transaction involving the Company or
any of the Company Subsidiaries that are "significant" under Regulation S-X at a
level of 30% or more, other than the transactions contemplated by this
Agreement; PROVIDED, HOWEVER, that the term Alternative Transaction shall not
include any acquisition of securities by a broker dealer in connection with a
bona fide public offering of such securities.
7.2 EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 7.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto or any of its affiliates, directors, officers or stockholders except for
any obligation of the Company or Parent set forth in Section 7.3 hereof.
Notwithstanding the foregoing, nothing herein shall relieve the Company or
Parent from liability for any willful breach hereof (it being understood that
the provisions of Section 7.3 do not constitute a sole or exclusive remedy for
such willful breach).
7.3 FEES AND EXPENSES.
(a) Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, whether
or not the Merger is consummated.
(b) The Company shall pay Parent a fee of $25,000,000
(the "FEE") and shall also pay Parent $3,000,000 to reimburse Parent for its
itemized out-of-pocket expenses in connection with the transactions contemplated
hereby (the "Expense Reimbursement") upon the first to occur of any of the
following events:
(1) the termination of this Agreement by Parent
or the Company pursuant to Section 7.1(b), Section 7.1(c), Section 7.1(f) or
Section 7.1(g); PROVIDED that an Alternative Transaction shall be publicly
announced by the Company or any third party within twelve months following the
date of such termination and such transaction shall at any time thereafter be
consummated on substantially the terms theretofore announced; PROVIDED further
that if the termination of this Agreement is pursuant to Section 7.1(g), such
Alternative Transaction, if all cash, must be no less favorable from a financial
point of view to the shareholders of the Company than the transactions
contemplated by the Offer and Merger, unless the events giving rise to the
breach underlying such termination relate to the third party with whom the
Alternative Transaction was consummated;
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(2) the termination of this Agreement by Parent
pursuant to Section 7.1(e) or Section 7.1(h); or
(3) the termination of this Agreement by the
Company pursuant to Section 7.1(i).
(c) Upon the termination of this Agreement by Parent
pursuant to Section 7.1(c) in the event of the failure of the Minimum Condition
to be satisfied, the Company shall pay to Parent the Expense Reimbursement (in
which case such payment shall be credited against any subsequent payment that
may become due to Parent under Section 7.3(b)(1)).
(d) Upon termination of this Agreement by Parent pursuant
to Section 7.1(f), the Company shall pay to Parent the Expense Reimbursement (in
which case such payment shall be credited against any subsequent payment that
may become due to Parent under Section 7.3(b)(1)).
(e) The Fee and/or the Expense Reimbursement shall be
paid by wire transfer of same day funds to an account designated by Parent
within two business days after a demand for payment following (i) in the case of
the Fee and the Expense Reimbursement, the first to occur of any of the events
described in Section 7.3(b); PROVIDED that, in the event of a termination of
this Agreement under Section 7.1(i), the Fee and the Expense Reimbursement shall
be paid as therein provided as a condition to the effectiveness of such
termination; (ii) in the case of the Expense Reimbursement, the first to occur
of any of the events described in Section 7.3(c) or 7.3(d).
(f) The agreements contained in this Section 7.3 are an
integral part of the transactions contemplated by this Agreement and do not
constitute a penalty. In the event of any dispute between the Company and Parent
as to whether the Fee or the Expense Reimbursement under this Section 7.3 is due
and payable, the prevailing party shall be entitled to receive from the other
party the reasonable costs and expenses (including reasonable legal fees and
expenses) in connection with any action, including the filing of any lawsuit or
other legal action, relating to such dispute. Interest shall be paid on the
amount any unpaid fee at the publicly announced prime rate of Citibank, N.A.
from the date such fee was required to be paid.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall not survive the
Merger, PROVIDED that the representations and warranties of the Company shall
not survive the Offer Completion Date, and PROVIDED FURTHER that the agreements
contained in Section 1.3, Section 5.5 and this ARTICLE VIII will survive the
Merger.
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8.2 NOTICES. Any notice required to be given hereunder
will be sufficient if in writing, and sent by facsimile transmission (provided
that any notice received by facsimile transmission or otherwise at the
addressee's location on any business day after 5:00 p.m. (addressee's local
time) shall be deemed to have been received at 9:00 a.m. (addressee's local
time) on the next business day), by courier service (with proof of service),
hand delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
If to Parent or Purchaser: If to the Company:
International Paper Company Shorewood Packaging Company
2 Manhattanville Road 277 Park Avenue
Purchase, NY 10577 New York, NY 10172
Attention: General Counsel Attention: Andrew N. Shore, Esq.
Telecopier No.: 914-397-1909 Telecopier No.: 212-508-5677
With copies to: With copies to:
O'Melveny & Myers LLP Skadden, Arps, Slate, Meagher & Flom LLP
153 East 53rd Street Four Times Square
New York, NY 10022 New York, NY 10036-6522
Attention: Jeffrey J. Rosen, Esq. Attention: Jeffrey W. Tindell, Esq.
Telecopier No.: 212-326-2061 Richard J. Grossman, Esq.
Telecopier No.: 212-735-2000
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed. Any party to this Agreement
may notify any other party of any changes to the address or any of the other
details specified in this paragraph, provided that such notification shall only
be effective on the date specified in such notice or five (5) business days
after the notice is given, whichever is later. Rejection or other refusal to
accept or the inability to deliver because of changed address of which no notice
was given shall be deemed to be receipt of the notice as of the date of such
rejection, refusal or inability to deliver.
8.3 ASSIGNMENT; BINDING EFFECT. Neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by any
of the parties (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon and shall inure to the benefit of the parties and
their respective successors and permitted assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the provisions of
Section 5.5, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
8.4 ENTIRE AGREEMENT. This Agreement, the Exhibits, the
Company Disclosure Letter, and any documents delivered by the parties in
connection herewith constitute
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the entire agreement among the parties with respect to the subject matter of
this Agreement and supersede all prior representations, warranties, agreements
and understandings among the parties, both written and oral, with respect
thereto except the Confidentiality Agreement which shall continue in full force
and effect, PROVIDED that if there is any conflict between the Confidentiality
Agreement and this Agreement, this Agreement shall prevail; PROVIDED FURTHER,
that if the Offer is terminated without Purchaser purchasing any shares of
Company Common Stock, then the standstill and non-solicitation provisions set
forth on pages four and five of the Confidentiality Agreement shall terminate.
No prior drafts of this Agreement or portions thereof shall be admissible into
evidence in any action, suit or other proceeding involving this Agreement.
8.5 AMENDMENT. This Agreement may be amended by the
parties hereto, by action taken by their respective boards of directors, at any
time before or after approval of matters presented in connection with the Merger
by the stockholders of the Company, but after any such stockholder approval, no
amendment shall be made which by law requires the further approval of
stockholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
8.6 GOVERNING LAW; CONSENT TO JURISDICTION.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its rules of
conflict of laws.
(b) Each of the parties hereto (1) (A) consents to submit
itself to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement and (B)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, and (2) (A) agrees that
any action under this Agreement may also be brought in any Federal or state
court located in the City of New York, Borough of Manhattan and (B) agrees that
it will not by motion or other action contest the bringing of any such action in
the above mentioned courts rather than in any other venue or forum.
8.7 COUNTERPARTS. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies of
this Agreement each signed by less than all, but together signed by all of the
parties hereto. This Agreement shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other
parties.
8.8 HEADINGS. Headings of the Articles and Sections of
this Agreement are for the convenience of the parties only, and shall be given
no substantive or interpretive effect whatsoever.
8.9 INTERPRETATION. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. The table of contents to this Agreement is for
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reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant thereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns. Each of
the parties has participated in the drafting and negotiation of this Agreement.
If an ambiguity or question of intent or interpretation arises, this Agreement
must be construed as if it is drafted by all the parties and no presumption or
burden of proof will arise favoring or disfavoring any party by virtue of
authorship of any of the provisions of this Agreement.
8.10 WAIVERS. Except as provided in this Agreement, no
action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, will be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder will not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
8.11 INCORPORATION OF EXHIBITS. The Company Disclosure
Letter and all Exhibits attached hereto and referred to in this Agreement are
hereby incorporated in this Agreement and made a part of this Agreement for all
purposes as if fully set forth in this Agreement.
8.12 SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent (and only to the extent) of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto 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 are consummated as originally
contemplated to the greatest extent possible.
8.13 ENFORCEMENT OF AGREEMENT. The parties hereto agree
that irreparable damage would occur if any of the provisions of this Agreement
was not performed in accordance with its specific terms or as otherwise breached
and that money damages would not be an
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adequate remedy for any breach of this Agreement. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court referred to in Section 8.6(b), this being in
addition to any other remedy to which they are entitled at law or in equity. In
any such action for specific performance, each of the parties will waive (a) the
defense of adequacy of a remedy at law and (b) any requirement for the securing
and posting of any bond.
8.14 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT.
8.15 COMPANY DISCLOSURE LETTER. Except where reference is
made to the Company Disclosure Letter in the definition of "Company Material
Adverse Effect" or in Article V, any matter disclosed in a section of the
Company Disclosure Letter shall be treated as if it were disclosed in all
applicable locations throughout such disclosure letter to the extent that, based
upon a reasonable review of such disclosure letter by someone familiar with this
Agreement, its applicability would be readily apparent. No disclosure in the
Company Disclosure Letter shall be deemed to be an admission or representation
as to the materiality of the item so disclosed.
8.16 EXECUTION. This Agreement may be executed by
facsimile signatures by any party and such signature shall be deemed binding for
all purposes hereof, without delivery of an original signature being thereafter
required.
8.17 PERSONAL LIABILITY. Neither this Agreement nor any
other document delivered in connection with this Agreement (other than the
Stockholders Agreement executed in connection herewith on the date hereof) shall
create or be deemed to create or permit any personal liability or obligation on
the part of any officer or director of the Company or any Subsidiary of the
Company.
8.18 DATE FOR ANY ACTION. In the event that any date on
which any action is required to be taken hereunder by any of the parties hereto
is not a business day, such action shall be required to be taken on the next
succeeding day which is a business day.
8.19 OBLIGATION OF PARENT AND THE COMPANY. Whenever this
Agreement requires Purchaser or another Subsidiary of Parent to take any action,
such requirement shall be deemed to include an undertaking on the part of Parent
to cause Purchaser or such Subsidiary to take such action and a guarantee of the
performance thereof. Whenever this Agreement requires the Surviving Corporation
to take any action, from and after the Offer Completion Date, such requirement
shall be deemed to include an undertaking on the part of Parent to cause the
Surviving Corporation to take such action and a guarantee of the performance
thereof. Whenever this Agreement requires a Subsidiary of the Company to take
any action, such requirement shall be deemed to include an undertaking on the
part of the Company to cause such Subsidiary to take such action and a guarantee
of the performance thereof.
8.20 CERTAIN DEFINITIONS. As used in this Agreement:
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(a) The term "AFFILIATE," as applied to any person, shall
mean any other person directly or indirectly controlling, controlled by, or
under common control with, that person; for purposes of this definition,
"CONTROL" (including, with correlative meanings, the terms "controlling,"
"controlled by," "under common control with"), as applied to any person, means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise.
(b) A person will be deemed to "BENEFICIALLY" own
securities if such person would be the beneficial owner of such securities under
Rule 13d-3 under the Exchange Act, including securities which such person has
the right to acquire (whether such right is exercisable immediately or only
after the passage of time).
(c) The term "BUSINESS DAY" means any day on which
commercial banks are open for business in New York, New York other than a
Saturday, a Sunday or a day observed as a holiday in New York, New York under
the laws of the State of New York or the federal laws of the United States.
(d) The term "KNOWLEDGE" or any similar formulation of
"KNOWLEDGE" shall mean, with respect to the Company, the actual knowledge of the
Company's executive officers.
(e) The term "PERSON" shall include individuals,
corporations, partnerships, trusts, limited liability companies, associations,
unincorporated organizations, joint ventures, other entities, groups (which term
shall include a "group" as such term is defined in Section 13(d)(3) of the
Exchange Act), labor unions or Governmental Entity.
45
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
and caused the same to be duly delivered on their behalf on the day and year
first written above.
INTERNATIONAL PAPER COMPANY
By: /s/ David W. Oskin
-------------------------------
Name: David W. Oskin
Title: Executive Vice President
SHOREWOOD PACKAGING CORPORATION
By: /s/ Marc P. Shore
---------------------------
Name: Marc P. Shore
Title: Chairman and CEO
INTERNATIONAL PAPER - 37, INC.
By: /s/ James W. Guedry
---------------------------
Name: James W. Guedry
Title: President
S-1
<PAGE>
ANNEX A
CONDITIONS TO THE OFFER
Capitalized terms used but not defined herein shall have the
meanings set forth in the Agreement and Plan of Merger (the "AGREEMENT") of
which this Annex A is a part. Notwithstanding any other provision of the Offer,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated
under the Exchange Act (relating to the obligation of Purchaser to pay for or
return tendered shares of Company Common Stock promptly after termination or
withdrawal of the Offer), pay for, and (subject to any such rules or
regulations) may delay the acceptance for payment of or the payment for any
tendered shares of Company Common Stock and (except as provided in the
Agreement) amend or terminate the Offer if (i) there shall not be validly
tendered and not withdrawn prior to the expiration of the Offer a number of
shares of Company Common Stock such that, upon consummation of the Offer,
Purchaser would own at least fifty-one percent (51%) of the total number of
issued and outstanding shares of Company Common Stock on a fully diluted basis
(after giving effect to the conversion or exercise of all outstanding options,
warrants and other rights or securities convertible into shares of Company
Common Stock) (excluding any shares of Company Common Stock held by the Company
or any of its Subsidiaries) (the "MINIMUM CONDITION") or (ii) any applicable
waiting period under the HSR Act, the Competition Act or the Investment Canada
Act or any similar legal regime in any other country applicable to significant
operations of Parent or any of its Subsidiaries or Company or any of its
Subsidiaries shall not have expired or been terminated prior to the expiration
of the Offer or (iii) at any time on or after the date of this Agreement and
before the initial time of acceptance of shares of Company Common Stock for
payment pursuant to the Offer, any of the following conditions exists:
(a) there shall be in effect an injunction or other
order, decree, judgment or ruling by a Governmental Entity of competent
jurisdiction or a law, rule or regulation shall have been promulgated, or
enacted by a Governmental Entity of competent jurisdiction which in any such
case (i) restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger, or (ii) prohibits or restricts the ownership or
operation by Parent (or any of its affiliates or Subsidiaries) of any portion of
the Company's business or assets or which would substantially deprive Parent
and/or its affiliates or Subsidiaries of the benefit of ownership of the
Company's business or assets, or compels Parent (or any of its affiliates or
Subsidiaries) to dispose of or hold separate any portion of the Company's
business or assets, or of its business or assets, or which would substantially
deprive Parent and/or its affiliates or Subsidiaries of the benefit of ownership
of the Company's business or assets, or (iii) imposes material limitations on
the ability of Purchaser or Parent effectively to acquire or to hold or to
exercise full rights of ownership of the shares of Company Common Stock,
including, without limitation, the right to vote shares of Company Common Stock
purchased by Purchaser pursuant to the Offer or acquired by Parent in the Merger
on all matters properly presented to the stockholders of the Company, or (iv)
imposes any material limitations on the ability of Parent and/or its affiliates
or Subsidiaries effectively to control in any material respect the business and
operations of the Company (other than, prior to the Effective Time, by reason of
there being minority stockholder in the Company); or
Annex A-1
<PAGE>
(b) there shall have been instituted, pending or
threatened (in writing or by public announcement) an action by a Governmental
Entity seeking (i) to restrain or prohibit the making or consummation of the
Offer or the consummation of the Merger or (ii) to impose any other restriction,
prohibition or limitation referred to in the foregoing paragraph (a); or
(c) this Agreement shall have been terminated by the
Company or Parent in accordance with its terms; or
(d) Parent and the Company shall have agreed in writing
that Purchaser shall amend the Offer to terminate the Offer or postpone the
payment for shares of Company Common Stock pursuant thereto; or
(e) the representations and warranties of the Company set
forth in the Agreement shall not be true and accurate in all respects as of the
date of consummation of the Offer as though made on or as of such date (except
for those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time which need
only be true and accurate as of such date or with respect to such period) (in
each case without for this purpose giving effect to qualifications or
limitations as to materiality or the absence of a Company Material Adverse
Effect contained in such representations and warranties, but reading each such
representation and warranty as though the Company Disclosure Letter included
information plainly disclosed in the Company Reports filed subsequent to May 2,
1999 and prior to the date hereof), except for such failures to be true and
correct as could not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect, or the Company shall have breached or
failed to perform or comply in any material respect with any obligations,
agreement or covenant required by the Agreement to be performed or complied with
by it; PROVIDED, HOWEVER, that such breach or failure to perform is incapable of
being cured or has not been cured prior to the Initial Expiration Date (or such
later date upon with the Offer shall expire); or
(f) The Company or Purchaser shall have failed to receive
any or all governmental or third party consents and approvals to consummate the
Offer which, if not received, would have a Company Material Adverse Effect; or
(g) the Board shall have modified or amended its
recommendation of the Offer in any manner adverse to Parent or shall have
withdrawn its recommendation of the Offer, or shall have recommended acceptance
of any Acquisition Proposal or shall have resolved to do any of the foregoing;
or
(h) (i) any corporation, entity or "group" (as defined in
Section 13(d)(3) of the Securities Exchange Act) ("PERSON/GROUP"), other than
Parent and Purchaser shall have acquired beneficial ownership of more than 21%
of the outstanding shares of Company Common Stock, or shall have been granted
any options or rights, conditional or otherwise, to acquire a total of more than
21% of the outstanding shares of Company Common Stock and which, in each case,
does not tender the shares of Company Common Stock beneficially owned by it in
the Offer; (ii) any new group shall have been formed which beneficially owns
more than 15% of the outstanding shares of Company Common Stock and which does
not tender the shares of Company Common Stock beneficially owned by it in the
Offer; or (iii) any person/group (other
Annex A-2
<PAGE>
than Parent or one or more of its affiliates) shall have entered into an
agreement in principle or definitive agreement with the Company with respect to
a tender or exchange offer for any shares of Company Common Stock or a merger,
consolidation or other business combination with or involving the Company; or
(i) any change, development, effect or circumstance shall
have occurred or be threatened that is reasonably likely to be a Company
Material Adverse Effect; or
(j) the Rights shall have become exercisable;
which in the reasonable judgment of Parent or the Purchaser, in any such case,
and regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment or
payments.
The foregoing conditions are for the sole benefit of Parent
and Purchaser and may be asserted by Parent and Purchaser regardless of the
circumstances giving rise to any such condition, and, subject to the terms of
this Agreement, may be waived by Parent and Purchaser, in whole or in part, at
any time and from time to time, in the sole discretion of Parent and Purchaser.
The failure by Parent and Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any right, the waiver of such right with
respect to any particular facts or circumstances shall not be deemed a waiver
with respect to any other facts or circumstances, and each right shall be deemed
an ongoing right which may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing
provisions, all tendered shares of Company Common Stock not theretofore accepted
for payment pursuant thereto shall forthwith be returned to the tendering
stockholders.
Annex A-3
<PAGE>
STOCKHOLDERS AGREEMENT
This STOCKHOLDER AGREEMENT (this "Agreement") is made and
entered into as of this 16th day of February 2000 by and among International
Paper Company, a New York corporation ("Parent"), International Paper-37, Inc.,
a Delaware corporation and a direct wholly owned subsidiary of Parent
("Purchaser"), and the individuals and other parties listed on SCHEDULE A
attached hereto (each, a "Stockholder" and, collectively the "Stockholders").
All capitalized terms not otherwise defined herein shall have the meanings set
forth in the Merger Agreement (as defined below).
RECITALS
WHEREAS, the Stockholders desire that Shorewood Packaging
Corporation, a Delaware corporation (the "Company"), Parent and Purchaser enter
into an Agreement and Plan of Merger dated as of the date hereof (as the same
may be amended or supplemented, the "Merger Agreement") with respect to a tender
offer by Purchaser to purchase any and all of the outstanding shares of common
stock, $.01 par value, of the Company ("Company Common Stock") and the
associated rights to purchase preferred stock, issued pursuant to the Rights
Agreement, dated as of June 12, 1995, between the Company and The Bank of New
York, and a business combination whereby Purchaser will be merged with and into
the Company (the "Merger"); and
WHEREAS, the Stockholders are executing this Agreement as an
inducement to Parent to enter into and execute, and to cause Purchaser to enter
into and execute, the Merger Agreement.
NOW, THEREFORE, in consideration of the execution and delivery
by Parent and Purchaser of the Merger Agreement, the foregoing premises and the
mutual covenants, conditions and agreements contained herein and therein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS. Each
Stockholder represents and warrants to Parent and Purchaser in respect of
himself or itself as follows:
(a) The Stockholder is the beneficial owner of, and has good
and marketable title to, the number of shares of Company Common Stock set
forth opposite the Stockholder's name in SCHEDULE A hereto (as may be
adjusted from time to time pursuant to Section 5, the Stockholder's
"Shares"). Except for the Stockholder's Shares and any other shares of
Common Company Stock subject hereto, the Stockholder is not the record or
beneficial owner of any shares of capital stock of the Company other than
shares issuable upon the exercise of options and Shares otherwise subject
to this Agreement due to their ownership by other Stockholders party
hereto. The Stockholder has the sole right to vote such Stockholder's
Shares, and none of such Stockholder's Shares is subject to any voting
trust or other agreement, arrangement or restriction with
<PAGE>
respect to the voting of such Stockholder's Shares, except as contemplated
by this Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes the legal, valid and binding
obligation of the Stockholder, enforceable against the Stockholder in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity. Neither the execution and delivery of this Agreement
nor the consummation by the Stockholder of the transactions contemplated
hereby will result in a violation of, or a default under, or conflict with,
any contract, trust, commitment, agreement, understanding, arrangement or
restriction of any kind to which the Stockholder is a party or bound or to
which the Stockholder's Shares are subject. Except for filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
consummation by the Stockholder of the transactions contemplated hereby
will not violate, or require any consent, approval, or notice under, any
provision of any judgment, order, decree, statute, law, rule or regulation
applicable to the Stockholder or the Stockholder's Shares. If the
Stockholder is married and the Stockholder's Shares constitute community
property or otherwise need spousal or other approval to be legal, valid and
binding, this Agreement has been duly authorized, executed and delivered
by, and constitutes a valid and binding agreement of, the Stockholder's
spouse, enforceable against such spouse in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally. No trust of which such Stockholder is a
trustee requires the consent of any beneficiary to the execution and
delivery of this Agreement or to the consummation of the transactions
contemplated hereby. Each Stockholder hereby grants to Parent an
irrevocable proxy with full power of substitution and resubstitution which
shall be deemed coupled with an interest to vote such Stockholder's Shares
as contemplated by Sections 3(c) and 4 hereof.
(c) The Stockholder's Shares and the certificates representing
such Shares are now and at all times during the term hereof will be held by
the Stockholder, or by a nominee or custodian for the benefit of the
Stockholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever, except for any such encumbrances or proxies
arising hereunder and except for such liens and encumbrances that will not
interfere with the Stockholder's ability to perform his or its obligations
hereunder.
(d) No broker, investment banker, financial adviser or other
person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission from Parent, Purchaser or the Company in
connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Stockholder in his individual
capacity.
(e) The Stockholder understands and acknowledges that Parent
is entering into, and causing Purchaser to enter into, the Merger Agreement
in reliance upon the Stockholder's execution and delivery of this
Agreement.
2
<PAGE>
SECTION 2. AGREEMENT TO TENDER OR SELL.
(a) Each Stockholder hereby agrees that he shall tender all of
his Shares into the Offer (as defined in the Merger Agreement) and that he
shall not withdraw any Shares so tendered. The parties agree that each of
the Stockholders will, for all Shares tendered thereby in the Offer and
accepted for payment by Purchaser, receive a price for each of its Shares
equal to $21.00, or such higher per share consideration paid to other
stockholders who have tendered into the Offer.
(b) Each Stockholder hereby agrees to enter into such
agreements and take such actions as are necessary to provide that all
Options held by such Stockholder are cashed out in connection with the
Merger.
SECTION 3. COVENANTS. Each Stockholder, severally and not jointly, agrees
with, and covenants to, Parent and Purchaser as follows:
(a) The Stockholder shall not, except as contemplated by the
terms of this Agreement, (i) transfer (the term "transfer" shall include,
without limitation, for the purposes of this Agreement, any sale, gift,
pledge or other disposition), any or all of the Stockholder's Shares or any
interest therein, (ii) enter into any contract, option or other agreement
or understanding with respect to any transfer of any or all of such Shares
or any interest therein, (iii) grant any proxy, power-of-attorney or other
authorization or consent in or with respect to such Shares, (iv) deposit
such Shares into a voting trust or enter into a voting agreement or
arrangement with respect to such Shares or (v) subject to Section 7, take
any other action that would in any way restrict, limit or interfere with
the performance of his obligations hereunder or the transactions
contemplated hereby. Notwithstanding anything to the contrary provided in
this Agreement, the Stockholder shall have the right to transfer Shares to
(i) any Family Member (as defined below), (ii) the trustee or trustees of a
trust solely (except for remote contingent interests) for the benefit of
the Stockholder and/or one or more Family Members, (iii) a charitable
remainder trust for the benefit of the Stockholder and/or one or more
Family Members and/or designated charities, (iv) a partnership of which the
Stockholder or a Family Member owns all of the partnership interests or (v)
the executor, administrator personal representative of the estate of the
Stockholder; PROVIDED, THAT in the case of any such transfer, the
transferee shall execute an agreement to be bound by the terms of this
Agreement. "Family Member" shall mean (i) the Stockholder's spouse and (ii)
any other natural person who is a lineal descendant of the Stockholder or
the Stockholder's spouse or is related to the Stockholder or the
Stockholder's spouse within the second degree.
(b) The Stockholder shall not, nor shall he permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, directly or indirectly, (i) solicit, initiate or encourage
the submission of, any Acquisition Proposal or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to any Acquisition Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding sentence by an investment banker, attorney or
3
<PAGE>
other adviser or representative of the Stockholder shall be deemed to be a
violation of this Section 3(b) by the Stockholder.
(c) At any meeting of stockholders of the Company called to
vote upon the Merger and the Merger Agreement or at any adjournment thereof
or in any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and the Merger
Agreement is sought, the Stockholder shall, including by initiating a
written consent solicitation if requested by Parent, vote (or cause to be
voted) the Stockholder's Shares in favor of the Merger, the adoption by the
Company of the Merger Agreement and the approval of the terms thereof and
each of the other transactions contemplated by the Merger Agreement.
(d) Until after the Merger is consummated or the Merger
Agreement is terminated, the Stockholder shall use all reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement.
SECTION 4. COMPETING TRANSACTIONS. Each Stockholder hereby agrees to vote
against or refrain from giving any consent in favor of, and not to tender his
shares into any offer relating to, (i) any merger agreement or merger (other
than the Merger Agreement and the Merger), consolidation, combination, sale of
substantial assets, reorganization, joint venture, recapitalization,
dissolution, liquidation or winding up of or by the Company and (ii) any
amendment of the Company's certificate of incorporation or by-laws or other
proposal or transaction including any consent solicitation to remove or elect
any directors of the Company) involving the Company or any of its subsidiaries
which amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify, or result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under or with respect to, the Offer, the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement (each of the
foregoing in clause (i) or (ii) above, a "Competing Transaction").
SECTION 5. CERTAIN EVENTS. Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to the Stockholder's Shares and shall
be binding upon any person or entity to which legal or beneficial ownership of
such Shares shall pass, whether by operation of law or otherwise, including
without limitation the Stockholder's heirs, guardians, administrators or
successors. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of the
Company affecting the Company Common Stock, or the acquisition of additional
shares of Company Common Stock or other securities or rights of the Company by
any Stockholder, the number of Shares listed on SCHEDULE A beside the name of
the Stockholder shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of Company Common
Stock or other securities or rights of the Company issued to or acquired by the
Stockholder.
4
<PAGE>
SECTION 6. VOIDABILITY. If prior to the execution hereof, the board of
directors of the Company shall not have duly and validly authorized and approved
by all necessary corporate action the acquisition of Company Common Stock by
Parent and Purchaser and the other transactions contemplated by this Agreement
and the Merger Agreement, so that by the execution and delivery hereof Parent or
Purchaser would become, or could reasonably be expected to become, an
"interested stockholder" with whom the Company would be prevented for any period
pursuant to Section 203 of the Delaware General Corporation Law from engaging in
any "affiliated transaction" (as such terms are defined in Section 203 of the
Delaware General Corporation Law), then this Agreement shall be void and
unenforceable until such time as such authorization and approval shall have been
duly and validly obtained.
SECTION 7. STOCKHOLDER CAPACITY. No person executing this Agreement who
is or becomes during the term hereof a director or officer of the Company makes
any agreement or understanding herein in his capacity as such director or
officer. Each Stockholder signs solely in his capacity as the record holder and
beneficial owner of, or the trustee of a trust whose beneficiaries are the
beneficial owners of, such Stockholder's Shares and nothing herein shall limit
or affect any actions taken by a Stockholder in his capacity as an officer or
director of the Company to the extent specifically permitted by the Merger
Agreement.
SECTION 8. FURTHER ASSURANCES. Each Stockholder shall, upon request of
Parent or Purchaser, execute and deliver any additional documents and take such
further actions as may reasonably be deemed by Parent or Purchaser to be
necessary or desirable to carry out the provisions hereof.
SECTION 9. TERMINATION. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate upon the earlier of (a) the date upon
which the Merger Agreement is terminated in accordance with its terms or (b) the
date that Parent, Purchaser or the Company shall have purchased and paid for the
Shares of the Stockholders pursuant to Section 2; PROVIDED, HOWEVER, that the
termination of this Agreement shall not relieve any party of liability for
breach of this Agreement prior to termination.
SECTION 10. PUBLIC ANNOUNCEMENTS. Each Stockholder will consult with
Parent before issuing, and provide Parent with the opportunity to review an
comment upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement and the Merger Agreement, and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange.
SECTION 11. MISCELLANEOUS.
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned to such terms in the
Merger Agreement.
(b) All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof
of delivery) to the parties at the
5
<PAGE>
following addresses (or at such other address for a party as shall be
specified by like notice): (i) if to Parent or Purchaser, to the address
set forth in the Merger Agreement; and (ii) if to any Stockholder, to the
address set forth on SCHEDULE A hereto, or such other address as may be
specified in writing by such Stockholder.
(c) Headings of Sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
(d) This Agreement may be executed by the parties in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies of this
Agreement each signed by less than all, but together signed by all of the
parties hereto. This Agreement shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the
other parties.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its
rules of conflict of laws or those of any other jurisdiction.
(f) Each of the parties hereto (1) (A) consents to submit
itself to the personal jurisdiction of any Federal court located in the
State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement or any of the transactions contemplated by
this Agreement and (B) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any
such court, and (2) (A) agrees that any action under this Agreement may
also be brought in any Federal or state court located in the City of New
York, Borough of Manhattan and (B) agrees that it will not by motion or
other action contest the bringing of any such action in the above mentioned
courts rather than in any other venue or forum.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior
written consent of the other parties, except by laws of descent. Any
assignment in violation of the foregoing shall be void.
(h) If any term, provisions, covenant or restriction herein,
or the application thereof of any circumstance, shall, to any event, be
held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions herein and the application thereof to any other circumstances,
shall remain in full force and effect, shall not in any way be affected,
impaired or invalidated, and shall be enforced to the fullest extent
permitted by law.
(i) The parties hereto agree that irreparable damage would
occur if any of the provisions of this Agreement was not performed in
accordance with its specific terms or as otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
6
<PAGE>
specifically the terms and provisions of this Agreement in any court
referred to in Section 11(f) of this Agreement, this being in addition to
any other remedy to which they are entitled at law or in equity. In any
such action for specific performance, no party will be required to post a
bond.
(j) No amendment, modification or waiver in respect of this
Agreement shall be effective against any parry unless it shall be in
writing and signed by such party.
(k) This Agreement may be executed by facsimile signatures by
any party and such signature shall be deemed binding for all purposes
hereof, without delivery of an original signature being thereafter
required.
(l) This Agreement, including the Schedule hereto, constitutes
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations,
representations and warranties, and discussions, whether oral or written,
among the parties hereto, with respect to the subject matter hereof. There
are no conditions, covenants, agreements, representations, warranties or
other provisions, express or implied, collateral, statutory or otherwise,
relating to the subject matter of this Agreement. No prior drafts of this
Agreement or portions thereof shall be admissible into evidence in any
action, suit or other proceeding involving this Agreement.
(m) Whenever this Agreement requires Purchaser to take any
action, such requirement shall be deemed to include an undertaking on the
part of Parent to cause Purchaser to take such action and a guarantee of
the performance thereof.
7
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused
this Agreement to be duly executed and delivered as of the date first written
above.
INTERNATIONAL PAPER COMPANY
By: /s/ David W. Oskin
---------------------------
Name: David W. Oskin
Title: Executive Vice President
INTERNATIONAL PAPER - 37, INC.
By: /s/ James W. Guedry
---------------------------
Name: James W. Guedry
Title: Presidents
/s/ Andrew N. Shore
--------------------------
Andrew N. Shore
/s/ Marc P. Shore
--------------------------
Marc P. Shore
SHORE FAMILY PARTNERSHIP, L.P.
By: SHORE FAMILY LLC, as sole
general partner
By: /s/ Marc P. Shore
---------------------------
Name: Marc P. Shore
Title: Manager
PAUL SHORE ESTATE MARITAL TRUST
By: /s/ Marc P. Shore
---------------------------
Name: Marc P. Shore
Title: Trustee
/s/ Howard M. Liebman
---------------------------
Howard M. Liebman
S-1
<PAGE>
PAUL SHORE MARITAL TRUST
By: /s/ Marc P. Shore
---------------------------
Name: Marc P. Shore
Title: Trustee
S-2
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NUMBER OF SHARES OF
NAME AND ADDRESS OF STOCKHOLDER COMPANY COMMON STOCK
- --------------------------------------------------------------------------------
<S> <C>
Shore Family Partnership, L.P. 2,700,000
c/o Shorewood Packaging Corporation
277 Park Avenue
New York, NY 10172-0124
- --------------------------------------------------------------------------------
Marc P. Shore 1,007,687
c/o Shorewood Packaging Corporation
277 Park Avenue
New York, NY 10172-0124
- --------------------------------------------------------------------------------
Paul Shore Estate Marital Trust (testamentary 586,062
trust)
c/o Shorewood Packaging Corporation
277 Park Avenue
New York, NY 10172-0124
- --------------------------------------------------------------------------------
Andrew N. Shore 163,402
c/o Shorewood Packaging Corporation
277 Park Avenue
New York, NY 10172-0124
- --------------------------------------------------------------------------------
Paul Shore Marital Trust 108,258
c/o Shorewood Packaging Corporation
277 Park Avenue
New York, NY 10172-0124
- --------------------------------------------------------------------------------
Howard M. Liebman 86,736
1302 Azure Place
Hewlett Harbor, NY 11557
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit (d)(3)
February 16, 2000
Mr. Marc P. Shore
68 Talcott Road
Rye, New York 10573
Re: Employment Agreement
Dear Mark:
As you know, International Paper Company, a New York
corporation ("Parent"), International Paper-37, Inc., a Delaware corporation
and a direct wholly owned subsidiary of Parent ("Purchaser") and Shorewood
Packaging Corporation, a Delaware corporation (the "Company") have entered into
discussions relating to a proposal to engage in transactions including (a) the
commencement of an offer by Purchaser to purchase all of the outstanding shares
of common stock of the Company (the "Proposed Offer") and (b) the merger of
Purchaser with and into the Company, with the Company continuing as the
surviving corporation and a direct wholly owned subsidiary of Parent (the
"Proposed Merger")(such transactions are hereinafter together referred to as the
"Proposed Transactions"). As Parent has made clear to you in discussions
relating to the Proposed Transactions, Parent is willing to proceed with the
Proposed Transactions based upon your representation that you agree to remain
employed by the Company upon the terms and conditions set forth in the
employment agreement attached hereto as EXHIBIT A (the "Employment Agreement"),
and would be unwilling to proceed if you did not so agree.
In addition, the Company has adopted an Employee Severance
Plan that provides certain benefits if your employment terminates under certain
conditions following a Change in Control (as defined in the Company Employee
Severance Plan) of the Company. Finally, the Company has made loans to you that
are currently outstanding and which are listed in the schedule attached hereto
as EXHIBIT B.
In order to assure Parent that you will remain employed by the
Company on and after the date of Purchaser's first purchase of the Company's
common stock pursuant to the Proposed Offer (the "First Purchase Date") if the
Proposed Transactions are consummated, and for other good and valuable
consideration, this letter agreement (the "Agreement") sets forth the agreements
and understandings between you and Parent with respect to these matters.
<PAGE>
Section 1. EMPLOYMENT AGREEMENT.
Simultaneously with your execution of this letter you will
execute the Employment Agreement. Parent will execute and cause the Company to
execute the Employment Agreement on the First Purchase Date. The Employment
Agreement will automatically become effective upon execution by Parent and the
Company on the First Purchase Date.
Section 2. REPAYMENT OF LOANS.
On the First Purchase Date you will repay to the Company the
entire outstanding principal balance on each loan listed in the schedule
attached hereto as EXHIBIT B, together with interest accrued through the First
Payment Date.
Section 3. EMPLOYEE SEVERANCE PLAN.
On the First Payment Date, Parent will cause the Company to
pay to you a lump sum payment of Severance Pay (as defined in the Company
Severance Plan) in the amount of $5,699,475.72 and the Gross-Up Payment (as
defined in the Company's Employee Severance Plan) determined in accordance with
the applicable terms of the Employee Severance Plan.
Section 4. GOVERNING LAW.
The provisions of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without regard to principles of conflicts of laws.
If the foregoing terms are acceptable to you, please sign and
return to Parent the enclosed copy of this letter and the enclosed Employment
Agreement, whereupon this letter shall become a binding agreement between you
and Parent.
Sincerely,
INTERNATIONAL PAPER COMPANY
By: /s/ David W. Oskin
-------------------------------------
David W. Oskin
Executive Vice President
Accepted and Agreed as of the date first written above
/s/ Marc P. Shore
- -------------------------
Marc P. Shore
2
<PAGE>
EXHIBIT A
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into on
this __th day of ___________, 2000 by and among Marc P. Shore ("Executive"),
International Paper Company ("International Paper"), a New York corporation, and
Shorewood Packaging Corporation (the "Company"), a Delaware corporation having
its principal executive offices at 277 Park Avenue, New York, New York 10172.
I. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby
accepts such employment, upon the terms and conditions hereinafter set forth,
from ____________, 2000 to and including December 31, 2004 (hereinafter the
"Term"), unless earlier terminated under Section V of this Agreement.
II. DUTIES.
A. Executive shall serve during the course of his employment as
President of the Company and shall perform such duties as may from time to time
be assigned, delegated or limited by the senior officer of International Paper
designated in writing by the Chief Executive Officer of International Paper,
which shall initially be the Senior Vice President-Consumer Packaging of
International Paper, (such senior officer is hereinafter referred to as the "IP
Officer") consistent with Executive's position as President of the Company.
Executive shall report directly to the IP Officer. During the Term of this
Agreement, Executive shall devote all of his professional and business-related
time, energy and skill to the business of the Company and shall perform his
duties in good faith.
<PAGE>
B. Executive shall not, without the prior written consent of the
IP Officer, render to others any services of any kind for compensation or engage
in any activity which conflicts or interferes with the performance of his duties
and obligations hereunder.
C. Neither International Paper nor the Company shall be deemed to
have breached this Agreement if the Company is liquidated to become a division
of International Paper instead of a separate subsidiary provided that Executive
becomes the President of such division. If such a liquidation occurs, "Company"
shall thereafter mean International Paper.
D. In connection with his employment hereunder, Executive shall
not be required, without his consent, to be based anywhere other than the
greater metropolitan New York City area, which shall include Purchase, New York.
III. PRIOR AGREEMENT.
Executive and the Company are currently parties to that
certain Amended and Restated Employment Agreement made effective as of May 3,
1998 (the "Prior Agreement"). Company and Executive agree that from and after
execution of this Agreement, all further obligations of the parties under the
Prior Agreement shall cease and become null and void, except as to (A) the
Company's obligation to pay to Executive any salary earned prior to execution of
this Agreement and not yet paid and (B) Executive's obligation to repay the
unearned portion of the $1 million signing bonus that the Company paid to him in
connection with the original execution of the Prior Agreement in the event that
he is terminated by the Company for Cause as defined in Section V-C1 or he
terminates his employment with the Company without Good Reason (as defined in
Section V-C) prior to May 1, 2003.
2
<PAGE>
IV. COMPENSATION.
A. SALARY. The Company will pay to Executive a base salary at the
rate of $500,000 per year. Such salary shall be earned monthly and shall be
payable in periodic installments no less frequently than monthly in accordance
with the Company's customary practices. Any increases in Executive's base salary
will be at the discretion of the IP Officer.
B. ANNUAL BONUS. During the Term of this Agreement, Executive
shall be entitled to receive an annual bonus from the Company in accordance
with an annual bonus plan for Executive (the "Bonus Plan") in lieu of any
further bonuses under the 1995 Performance Bonus Plan of Shorewood Packaging
Corporation. The IP Officer shall establish reasonable target performance
objectives for Executive under the Bonus Plan for the year 2000. For each
subsequent year ending during the Term of this Agreement, the IP Officer
shall establish reasonable target performance objectives under the Bonus Plan
on or before January 31 of the year for which the bonus may be earned.
Executive's bonus under the Bonus Plan for each calendar year ending during
the Term of this Agreement will be determined on the basis of the
satisfaction of the target performance objectives in accordance with the
following table:
<TABLE>
<CAPTION>
PERCENT OF TARGET BONUS
----------------- -----
<S> <C>
below 80% $0
80% $250,000
100% $350,000
at or above 125% $450,000
</TABLE>
The amount of the bonus payable to Executive for satisfaction of performance
objectives above the 80% level and below the 125% level will be determined using
linear interpolation. Notwithstanding the foregoing, for the period ending
December 31, 2000, the amount of the bonus that Executive is eligible to earn
under the Bonus Plan shall be equal to 75% of the amounts shown in the above
table. The Company shall pay any bonus that Executive earns
3
<PAGE>
under the Bonus Plan on or before March 15 of the year following the year in
which Executive earns such bonus. In the event Executive's employment with the
Company terminates on or after July 1 of a year during the Term of this
Agreement on account of Executive's death, Disability or termination of his
employment with Good Reason, or the Company's termination of his employment
without Cause, Executive (or his beneficiary or estate) shall be entitled to a
bonus under the Bonus Plan in an amount equal to the 100% target bonus for the
year prorated for the number of days during the year that Executive was employed
by the Company. No bonus will be payable under the Bonus Plan for a year if (1)
his employment terminates for any reason prior to July 1 of such year, (2) the
Company terminates Executive with Cause or (3) Executive terminates his
employment without Good Reason.
C. GUARANTEED BONUS. In addition to any bonus Executive earns
under the Bonus Plan, the Company shall pay to Executive (1) a separate
guaranteed bonus of $112,000 for the period of service from the date of this
Agreement through December 31, 2000, and (2) a separate guaranteed bonus of
$150,000 for each subsequent calendar year ending during the Term of this
Agreement. The Company shall pay each such guaranteed bonus to Executive on or
before February 15 of the year following the year for which the guaranteed bonus
is paid.
D. RESTRICTED STOCK AWARD. Effective as of the date of this
Agreement, International Paper shall grant to Executive, in accordance with the
International Paper Company Long-Term Incentive Compensation Plan (the "Stock
Incentive Plan"), that number of shares of common stock of International Paper
having a fair market value as of the date of this Agreement of $1 million, which
shares shall be nontransferable and subject to forfeiture until vested in
accordance with the vesting schedule set forth in the award agreement (the
"Restricted Stock"). The award agreement for the Restricted Stock shall provide
that one-fifth of Restricted Stock will vest on
4
<PAGE>
December 31, 2000 and on December 31 of each of the four subsequent years
provided that the target performance objectives established under the Bonus Plan
for each such year are achieved. If in any year shares of Restricted Stock do
not vest because of the failure to satisfy the target performance objectives for
that year, those shares shall vest on December 31 of the first subsequent year
ending on or before December 31, 2004 for which the target performance
objectives are achieved. Any shares of Restricted Stock which have not vested as
of December 31, 2004, shall be permanently forfeited, and neither International
Paper nor the Company shall have any obligations to Executive with respect to
such forfeited shares. The award agreement for the Restricted Stock shall also
provide that all of Executive's shares of Restricted Stock will immediately vest
and be non-forfeitable in the event Executive's employment is terminated on
account of death or Disability, he terminates his employment with Good Reason or
the Company terminates his employment without Cause.
E. STOCK OPTIONS. Effective as of the date of this Agreement,
International Paper shall grant to Executive a nonqualified stock option under
the Stock Incentive Plan to purchase 20,000 shares of International Paper common
stock at a price per share equal to the fair market value of International Paper
common stock on the date of this Agreement. Such option grant shall be evidenced
by a standard stock option agreement in the form used by International Paper for
the grant of other stock options under the Stock Incentive Plan and shall
contain vesting and other terms which are consistent with the grants of stock
options made to other executives of International Paper and its subsidiaries.
Each year thereafter during the Term of this Agreement, Executive shall be
eligible to receive such additional stock option awards under the Stock
Incentive Plan or any successor plan as the Board of Directors of International
Paper (or its delegate) determines in its sole discretion.
5
<PAGE>
F. For a one-year period of time following the effective date of
the merger of the Company with International Paper-37, Inc., (the "Effective
Time"), the Company shall provide Executive with benefits that are substantially
comparable in the aggregate to the benefits provided to Executive as of the date
of the merger agreement between the Company and International Paper-37, Inc.;
PROVIDED, HOWEVER, that the Company will continue Executive's current
split-dollar life insurance arrangement only through December 31, 2000, and the
Company will provide Executive an automobile lease allowance of $2,250 per month
plus reimbursement for reasonable insurance, maintenance, gasoline and parking
expenses incurred in furtherance of the Company's business only through December
31, 2000. After the one-year period following the Effective Time, the following
provisions will apply:
1. SAVINGS AND RETIREMENT PLANS. Executive shall be entitled to
participate in all savings and retirement plans, practices, policies
and programs to the extent applicable generally to other peer
executives of International Paper.
2. WELFARE BENEFIT PLANS. Executive shall be eligible for
participation in and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by International Paper
(including, without limitation, medical, dental, disability, group life
insurance, accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer executives
of International Paper.
3. FRINGE BENEFITS; VACATION. Executive shall be entitled to
fringe benefits and paid vacation in accordance with the plans,
practices, programs and policies as in effect generally with respect to
other peer executives of International Paper.
4. International Paper and the Company reserve the right to
modify, suspend or discontinue any and all of the above plans,
practices, policies and programs at any time
6
<PAGE>
without recourse by Executive so long as such action is taken generally
with respect to other similarly situated peer executives and does not
single out Executive.
V. TERMINATION.
A. DEATH. Executive's employment shall terminate automatically
upon Executive's death.
B. DISABILITY. If the Company determines in good faith that
Executive has become disabled (physically or mentally), it may give to Executive
written notice in accordance with Section XV of this Agreement of its intention
to terminate Executive's employment. In such event, Executive's employment with
the Company shall terminate effective on the 30th day after receipt of such
notice by Executive, provided that, within the 30 days after such receipt,
Executive shall not have returned to full-time performance of his duties. For
purposes of this Agreement, disability shall mean a physical or mental
impairment that renders Executive unable to perform the essential functions of
his position. The Company reserves the right, in good faith, to make the
determination of disability under this Agreement based upon information supplied
by Executive and/or his medical personnel, as well as information from medical
personnel (or others) selected by the Company or its insurers.
C. CAUSE OR GOOD REASON.
1. The Company may terminate Executive's employment for Cause.
For purposes of this Agreement, "Cause" shall mean that the Company,
acting in good faith based upon the information then known to the
Company, determines that Executive has engaged in or committed: willful
misconduct; gross negligence; theft, fraud or other illegal conduct;
refusal or unwillingness to perform his duties or performance of his
duties in an unsatisfactory manner; sexual harassment; conduct which
reflects adversely
7
<PAGE>
upon, or making any remarks disparaging of, the Company or
International Paper, their Boards of Directors, officers, directors,
advisors or employees or their affiliates or subsidiaries;
insubordination; any willful act that is likely to and which does in
fact have the effect of injuring the reputation, business or a business
relationship of the Company or International Paper; violation of any
fiduciary duty; violation of any duty of loyalty; and breach of any
term of this Agreement.
2. Executive may terminate his employment for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean a material breach
of this Agreement by the Company or International Paper.
D. OTHER THAN CAUSE OR DEATH OR DISABILITY. The Company may
terminate Executive's employment at any time, with or without Cause, by written
notice to Executive, effective upon Executive's receipt of such notice.
E. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
1. DEATH OR DISABILITY. If Executive's employment is
terminated by reason of Executive's death or Disability, this Agreement
shall terminate without further obligations to Executive or his legal
representatives under this Agreement, other than for (a) payment of the
sum of (i) Executive's annual base salary through the date of
termination to the extent not theretofore paid, (ii) any guaranteed
bonus or performance bonus under the Bonus Plan for the calendar year
ending prior to Executive's death or Disability to the extent not
theretofore paid, (iii) any prorated bonus payable under the Bonus Plan
pursuant to Section IV-B and (iv) and any accrued vacation pay to the
extent not theretofore paid (the sum of the amounts described in
clauses (i), (ii), (iii) and (iv) shall be hereinafter referred to as
the "Accrued Obligations"), which shall be paid to
8
<PAGE>
Executive or his estate or beneficiary, as applicable, in a lump sum in
cash within 30 days of the date of termination.
2. CAUSE. If the Company terminates Executive's employment for
Cause, this Agreement shall terminate without further obligations to
Executive other than for the timely payment of Accrued Obligations. If
it is subsequently determined that the Company did not have Cause for
termination under Section V-C, then the Company's decision to terminate
shall be deemed to have been made under Section V-D and the amounts
payable under Section V-E3 shall be the only amounts Executive may
receive for his termination.
3. OTHER THAN CAUSE OR DEATH OR DISABILITY; GOOD REASON. If
the Company terminates Executive's employment for other than Cause or
death or Disability during the Term of this Agreement, or if Executive
terminates his employment with the Company with Good Reason, this
Agreement shall terminate without further obligations by the Company or
International Paper to Executive other than (a) the timely payment of
Accrued Obligations, and (b), subject to Executive's signing a release
in the standard form then in use by the Company or International Paper
for other peer executives, (i) severance pay (payable in regular
installments in accordance with the Company's normal payroll practices)
constituting Executive's base salary for the lesser of one year or the
remaining Term of this Agreement and (ii) the amount of the guaranteed
bonus for the calendar year during which Executive's employment with
the Company terminates.
9
<PAGE>
4. EXPIRATION OF AGREEMENT. If this Agreement expires at the
end of the Term and Executive ceases to be employed by the Company at
that time, Executive will receive timely payment of the Accrued
Obligations.
5. EXCLUSIVE REMEDY. Executive agrees that the payments
contemplated by this Agreement shall constitute the exclusive and sole
remedy for any termination of his employment and Executive covenants
not to assert or pursue any other remedies, at law or in equity, with
respect to any termination of employment. Notwithstanding the preceding
sentence, neither the severance pay described in Section V-E3 nor any
other payment under this Section V-E shall reduce or affect any
benefits the Executive (or his estate or beneficiary) may be entitled
to under the specific terms of the benefit plans of the Company or any
stock option or restricted stock awards.
VI. COVENANTS OF EXECUTIVE.
A. GENERAL: Executive and the Company understand and agree that
the purpose of the provisions of this Section VI is to protect the legitimate
business interests of the Company and International Paper, as more fully
described below. Executive hereby acknowledges that the restrictions set forth
in this Section VI are reasonable and necessary to protect the business
interests of the Company and/or International Paper. Therefore, Executive shall
be subject to the restrictions set forth in this Section.
B. RESTRICTIONS ON DISCLOSURE AND USE OF CONFIDENTIAL
INFORMATION: Executive understands and agrees that confidential information and
materials of a confidential or proprietary nature constitute valuable assets of
the Company and International Paper and may not be converted to Executive's own
use. Accordingly, Executive hereby agrees that he shall not, directly or
indirectly, at any time during the Term and at any time following the Term,
10
<PAGE>
reveal, divulge or disclose any "Confidential Information" (as defined below),
and Executive shall not, directly or indirectly, use or make use of any
"Confidential Information" in connection with any business activity other than
that of the Company and/or International Paper; PROVIDED, HOWEVER, that
Executive may disclose or use "Confidential Information" during the Term as
authorized by the IP Officer or consistent with the proper exercise of
Executive's duties as President of the Company. "Confidential Information" means
all information regarding the Company and/or International Paper, its and their
activities, business, clients, or potential clients that is the subject of
reasonable efforts by the Company and/or International Paper to maintain its
confidentiality and that is not generally disclosed to persons not employed by
the Company and/or International Paper. "Confidential Information" shall
include, but is not limited to, any of the following information or materials of
the Company and/or International Paper: financial plans and data; management
planning information; business plans; operational methods; market studies;
marketing plans or strategies; product development techniques or plans; customer
lists; details of customer contracts; current and anticipated customer
requirements; past, current and planned research and development; business
acquisition plans; and new personnel acquisition plans. "Confidential
Information" shall not include information that has become generally available
to the public.
C. NONSOLICITATION. Executive understands and agrees that the
relationship between the Company and/or International Paper and their respective
employees, business relations, clients and customers, and potential clients and
customers, constitutes a valuable asset of the Company and/or International
Paper and may not be converted to Executive's own use. Accordingly, Executive
agrees that, during the Term of this Agreement, and for a period of three (3)
years from the termination for any reason pursuant to Section V of this
Agreement other than
11
<PAGE>
the Company's termination of Executive without Cause or Executive's termination
of his employment with Good Reason (the "Restricted Period"), neither Executive
nor any entity with whom he is at the time affiliated (any other person,
corporation, partnership or other business entity of any kind) shall, directly
or indirectly, solicit or entice away or in any manner persuade or attempt to
persuade, any officer, employee, agent, representative, business relation,
client or customer, or prospective client or customer of the Company and/or
International Paper, to discontinue his/her/its relationship or prospective
relationship with the Company and/or International Paper.
D. RESTRICTIVE COVENANT. Executive acknowledges that his services
are special, unique, and extraordinary, and that in the course of his employment
with the Company and/or International Paper he has had and will continue to have
dealings and develop special relationships with the clients and customers of the
Company and/or International Paper. Executive further acknowledges that in the
course of his employment with or service to the Company and/or International
Paper, he has obtained and will continue to obtain Confidential Information. In
order to protect the legitimate business interests, goodwill, relationships, and
Confidential Information of the Company and/or International Paper, Executive
agrees that during the Restricted Period defined above in Section VI-C,
Executive shall not (whether for his own account or on behalf of any person,
corporation, partnership, or other business entity of any kind, and whether
directly or indirectly), without the prior written consent of the IP Officer,
engage in the business of printing or manufacturing paperboard packaging
anywhere in North America. Notwithstanding the foregoing, if Executive's
employment with the Company terminates on or after the expiration of this
Agreement at the end of its Term, Executive shall be
12
<PAGE>
subject to the same non-competition policy of International Paper that is
applicable to other peer executives of International Paper.
E. ENFORCEMENT OF COVENANTS. In the event Executive breaches, or
threatens to commit a breach of, any of the provisions of this Section VI, the
Company and/or International Paper shall have the following rights and remedies,
which shall be independent of any others and severally enforceable, and shall be
in addition to, and not in lieu of, any other rights and remedies available to
the Company and/or International Paper at law or in equity:
1. the right to enjoin, preliminarily and permanently,
Executive from violating or threatening to violate the terms of this
Section VI and to have the promises made herein specifically enforced
by any court of competent jurisdiction; and
2. the right and remedy to require Executive to account
for and pay over to the Company and/or International Paper all
compensation, profits, monies, accruals, increments or other benefits
derived or received by Executive as a result of the transactions
constituting a breach of this Section VI.
VII. ARBITRATION.
Any and all controversies, claims or disputes arising out of
or in any way relating to this Agreement, its enforcement or interpretation, or
because of an alleged breach, default, or misrepresentation in connection with
any of its provisions, or any other claim by Executive arising out of or in
connection with his employment, including any claims for discrimination
prohibited by any federal, state or other statute, ordinance or law, shall be
submitted to a panel of three (3) arbitrators (hereinafter referred to as the
"Panel"). Executive shall select one arbitrator; the Company or International
Paper, as the case may be, shall select one arbitrator; and the two arbitrators
shall choose the third arbitrator from a list of arbitrators with expertise in
employment
13
<PAGE>
disputes provided by the American Arbitration Association ("AAA").
Subject to the foregoing, the arbitration shall be in accordance with the
National Rules for Resolution of Employment Disputes of the AAA. The arbitration
shall be commenced by filing a demand for arbitration with the AAA within sixty
(60) days after the occurrence of the facts giving rise to any such controversy,
claim or dispute. The arbitration shall be conducted in Purchase, New York.
Judgment upon the award rendered by the Panel may be entered in any court having
jurisdiction thereof. All costs and expenses of any arbitration proceeding shall
be borne by the respective party incurring such costs and expenses.
VIII. ASSIGNMENT.
Executive acknowledges that his services are unique and
personal. Accordingly, Executive may not assign his rights or delegate his
duties under this Agreement to any person or entity.
IX. SUCCESSORSHIP.
This Agreement is binding on and inures to the benefit of the
Company and/or International Paper, its successors and assigns.
X. MODIFICATION.
This Agreement may not be amended or modified other than by a
written agreement executed by Executive and the Company or its designee.
XI. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof
is held invalid, the invalidity shall not affect other provisions or
applications of the Agreement which can be given
14
<PAGE>
effect without the invalid provisions or applications and to this end the
provisions of this Agreement are declared to be severable.
XII. COMPLETE AGREEMENT.
This Agreement hereby incorporates by reference the letter
agreement entered into between Executive and International Paper on February 16,
2000 (the "Letter Agreement"). This Agreement, together with the Letter
Agreement, constitutes and contains the entire agreement and final understanding
concerning Executive's employment with the Company and the other subject matters
addressed herein between the parties. The parties intend it as a complete and
exclusive statement of the terms of their agreement. It supersedes and replaces
all prior negotiations and all agreements proposed or otherwise, whether written
or oral, concerning the subject matter hereof. Any representation, promise or
agreement not specifically included in this Agreement shall not be binding upon
or enforceable against either party. This is a fully integrated agreement.
XIII. GOVERNING LAW.
The provisions of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without regard to principles of conflict of laws.
XIV. PARAGRAPH HEADINGS.
Paragraph and other headings contained in this Agreement are
for the convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
15
<PAGE>
XV. NOTICES.
Any notices to be given under this Agreement by one party to
the other may be effected by personal delivery in writing or by mail, registered
or certified, postage prepaid with return receipt requested. Mailed notice shall
be deemed received as of three (3) days after mailing. Notices by mail shall be
sent to the address listed below unless and until notice to a change is given
pursuant to this Section:
To Executive:
Mr. Marc P. Shore
68 Talcott Road
Ryebrook, New York 10573
To the Company:
Shorewood Packaging Corporation
c/o International Paper Company
Two Manhattanville Road
Purchase, New York 10577
Attn: William Slowikowski
XVI. WITHHOLDING.
All amounts payable to Executive under this Agreement shall be
reduced by any applicable income and employment withholding taxes and other
authorized deductions.
XVII. SURVIVORSHIP.
The respective rights and obligations of the parties hereunder
shall survive any termination of Executive's employment to the extent necessary
to the intended preservation of such rights and obligations.
16
<PAGE>
XVIII. COUNTERPARTS.
This Agreement may be executed in two or more counterparts,
each of which will take effect as an original, and all of which shall evidence
one and the same Agreement.
XIX. REPRESENTATION.
The Company, International Paper and Executive represent that
they are knowledgeable and sophisticated as to business matters, including the
subject matter of this Agreement, that they have read this Agreement and that
they understand its terms. The Company, International Paper and Executive
acknowledge that, prior to assenting to the terms of this Agreement, they have
been given a reasonable amount of time to review it and to negotiate at arm's
length as to its contents. The Company, International Paper and Executive agree
that the language used in this Agreement is the language chosen by the parties
to express their mutual intent, and that they have entered into this Agreement
freely and voluntarily and without pressure or coercion from anyone.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
SHOREWOOD PACKAGING CORPORATION
By:
--------------------------------
Title:
--------------------------
INTERNATIONAL PAPER COMPANY
By:
--------------------------------
Title:
--------------------------
MARC P. SHORE
------------------------------------
<PAGE>
EXHIBIT B
<TABLE>
<CAPTION>
Outstanding
Date Of Loan Principal Amount Rate of Interest Due Date
------------ ---------------- ---------------- --------
<S> <C> <C> <C>
May, 1995 $2,000,000 Applicable Federal May 4, 2000
Rate plus Interest
July 26, 1999 $527,316 6.5% October 2, 2000
</TABLE>
<PAGE>
Exhibit (d)(4)
February 16, 2000
Mr. Howard M. Liebman
1302 Azure Place
Hewlitt Harbor, New York 11557
Re: Employment Agreement
Dear Howard:
As you know, International Paper Company, a New York corporation
("Parent"), International Paper-37, Inc., a Delaware corporation and a
direct wholly owned subsidiary of Parent ("Purchaser") and Shorewood
Packaging Corporation, a Delaware corporation (the "Company") have entered
into discussions relating to a proposal to engage in transactions including
(a) the commencement of an offer by Purchaser to purchase all of the
outstanding shares of common stock of the Company (the "Proposed Offer")
and (b) the merger of Purchaser with and into the Company, with the Company
continuing as the surviving corporation and a direct wholly owned
subsidiary of Parent (the "Proposed Merger")(such transactions are
hereinafter together referred to as the "Proposed Transactions"). As Parent
has made clear to you in discussions relating to the Proposed Transactions,
Parent is willing to proceed with the Proposed Transactions based upon your
representation that you agree to remain employed by the Company upon the
terms and conditions set forth in the employment agreement attached hereto
as EXHIBIT A (the "Employment Agreement"), and would be unwilling to
proceed if you did not so agree.
In addition, the Company has adopted an Employee Severance Plan that
provides certain benefits if your employment terminates under certain
conditions following a Change in Control (as defined in the Company
Employee Severance Plan) of the Company. Finally, the Company has made
loans to you that are currently outstanding and which are listed in the
schedule attached hereto as EXHIBIT B.
In order to assure Parent that you will remain employed by the Company
on and after the date of Purchaser's first purchase of the Company's common
stock pursuant to the Proposed Offer (the "First Purchase Date") if the
Proposed Transactions are consummated, and for other good and valuable
consideration, this letter agreement (the "Agreement") sets forth the
agreements and understandings between you and Parent with respect to these
matters.
<PAGE>
Section 1. EMPLOYMENT AGREEMENT.
Simultaneously with your execution of this letter you will execute the
Employment Agreement. Parent will execute and cause the Company to execute
the Employment Agreement on the First Purchase Date. The Employment
Agreement will automatically become effective upon execution by Parent and
the Company on the First Purchase Date.
Section 2. REPAYMENT OF LOANS.
On the First Purchase Date you will repay to the Company the entire
outstanding principal balance on each loan listed in the schedule attached
hereto as EXHIBIT B, together with interest accrued through the First
Payment Date.
Section 3. EMPLOYEE SEVERANCE PLAN.
On the First Payment Date, Parent will cause the Company to pay to you
a lump sum payment of Severance Pay (as defined in the Company Severance
Plan) in the amount of $1,820,499.00 and the Gross-Up Payment (as defined
in the Company's Employee Severance Plan) determined in accordance with the
applicable terms of the Employee Severance Plan.
Section 4. GOVERNING LAW.
The provisions of this Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York without
regard to principles of conflicts of laws.
If the foregoing terms are acceptable to you, please sign and return
to Parent the enclosed copy of this letter and the enclosed Employment
Agreement, whereupon this letter shall become a binding agreement between
you and Parent.
Sincerely,
INTERNATIONAL PAPER COMPANY
By: /s/ David W. Oskin
-------------------------
David W. Oskin
Executive Vice President
Accepted and Agreed as of the date first written above
/s/ Howard M. Liebman
- -------------------------
Howard M. Liebman
2
<PAGE>
EXHIBIT A
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into on this
__th day of ___________, 2000 by and among Howard M. Liebman ("Executive"),
International Paper Company ("International Paper"), a New York
corporation, and Shorewood Packaging Corporation (the "Company"), a
Delaware corporation having its principal executive offices at 277 Park
Avenue, New York, New York 10172.
I. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby accepts such
employment, upon the terms and conditions hereinafter set forth, from
____________, 2000 to and including December 31, 2002 (hereinafter the
"Term"), unless earlier terminated under Section V of this Agreement.
II. DUTIES.
A. Executive shall serve during the course of his employment as
Executive Vice-President of the Company and shall perform such duties as
may from time to time be assigned, delegated or limited by the President of
the Company. Executive shall report directly to the President of the
Company. During the Term of this Agreement, Executive shall devote all of
his professional and business-related time, energy and skill to the
business of the Company and shall perform his duties in good faith.
B. Executive shall not, without the prior written consent of the
senior officer of International Paper designated in writing by the Chief
Executive Officer of International Paper, which shall initially be the
Senior Vice President-Consumer Packaging of International Paper,
<PAGE>
(such senior officer is hereinafter referred to as the "IP Officer"), render to
others any services of any kind for compensation or engage in any activity which
conflicts or interferes with the performance of his duties and obligations
hereunder.
C. Neither International Paper nor the Company shall be deemed to have
breached this Agreement if the Company is liquidated to become a division
of International Paper provided that Executive remains employed by such
division and reports directly to the President or other head of such
division. If such a liquidation occurs, "Company" shall thereafter mean
International Paper.
D. In connection with his employment hereunder, Executive shall not be
required, without his consent, to be based anywhere other than the greater
metropolitan New York City area, which shall include Purchase, New York.
III. PRIOR AGREEMENT.
Executive and the Company are currently parties to that certain
Amended and Restated Employment Agreement made effective as of May 3, 1998
(the "Prior Agreement"). Company and Executive agree that from and after
execution of this Agreement, all further obligations of the parties under
the Prior Agreement shall, except as to salary earned prior to execution of
this Agreement and not yet paid, cease and become null and void.
IV. COMPENSATION.
A. SALARY. The Company will pay to Executive a base salary at the rate
of $350,000 per year. Such salary shall be earned monthly and shall be
payable in periodic installments no less frequently than monthly in
accordance with the Company's customary practices. Any increases in
Executive's base salary will be at the discretion of the IP Officer.
2
<PAGE>
B. ANNUAL BONUS. During the Term of this Agreement, Executive shall be entitled
to receive an annual bonus from the Company in accordance with an annual bonus
plan for Executive (the "Bonus Plan"). The IP Officer shall establish reasonable
target performance objectives for Executive under the Bonus Plan for the year
2000. For each subsequent year ending during the Term of this Agreement, the IP
Officer shall establish reasonable target performance objectives under the Bonus
Plan on or before January 31 of the year for which the bonus may be earned.
Executive's bonus under the Bonus Plan for each calendar year ending during the
Term of this Agreement will be determined on the basis of the satisfaction of
the target performance objectives in accordance with the following table:
<TABLE>
<CAPTION>
<S> <C> <C>
PERCENT OF TARGET BONUS
below 80% $0
80% $140,000
100% $175,000
at or above 125% $215,000
</TABLE>
The amount of the bonus payable to Executive for satisfaction of performance
objectives above the 80% level and below the 125% level will be determined using
linear interpolation. Notwithstanding the foregoing, for the period ending
December 31, 2000, the amount of the bonus that Executive is eligible to under
the Bonus Plan shall be equal to 75% of the amounts shown in the above table.
The Company shall pay any bonus that Executive earns under the Bonus Plan on or
before March 15 of the year following the year in which Executive earns such
bonus. In the event Executive's employment with the Company terminates on or
after July 1 of a year during the Term of this Agreement on account of
Executive's death, Disability or termination of his employment with Good Reason,
or the Company's termination of his employment without Cause, Executive (or his
beneficiary or estate) shall be entitled to a bonus under the Bonus Plan in an
amount equal to the 100% target bonus for the year prorated for the
3
<PAGE>
number of days during the year that Executive was employed by the Company. No
bonus will be payable under the Bonus Plan for a year if (1) his employment
terminates for any reason prior to July 1 of such year, (2) the Company
terminates Executive with Cause or (3) Executive terminates his employment
without Good Reason.
C. RESTRICTED STOCK. Effective as of the date of this Agreement,
International Paper shall grant to Executive, in accordance with the
International Paper Company Long-Term Incentive Compensation Plan (the
"Stock Incentive Plan"), that number of shares of common stock of
International Paper having a fair market value as of the date of this
Agreement of $100,000, which shares shall be nontransferable and subject to
forfeiture until vested in accordance with the vesting schedule set forth
in the award agreement (the "Restricted Stock"). The award agreement for
the Restricted Stock shall provide that Executive's shares of Restricted
Stock will vest on December 31, 2002 provided that Executive remains
employed until that date. The award agreement for the Restricted Stock
shall also provide that all of Executive's shares of Restricted Stock will
immediately vest and be non-forfeitable in the event Executive's employment
is terminated on account of death or Disability, he terminates employment
with Good Reason or the Company terminates his employment without Cause. If
Executive's employment terminates for any other reason prior to December
31, 2000, his shares of Restricted Stock shall be permanently forfeited,
and neither International Paper nor the Company shall have any obligations
to Executive with respect to such forfeited shares.
D. STOCK OPTIONS. Effective as of the date of this Agreement,
International Paper shall grant to Executive a nonqualified stock option
under the Stock Incentive Plan to purchase 10,000 shares of International
Paper common stock at a price per share equal to the fair market value of
International Paper common stock on the date of this Agreement. Such option
grant
4
<PAGE>
shall be evidenced by a standard stock option agreement in the form used by
International Paper for the grant of other stock options under the Stock
Incentive Plan and shall contain vesting and other terms which are consistent
with the grants of stock options made to other executives of International Paper
and its subsidiaries. Each year thereafter during the Term of this Agreement,
Executive shall be eligible to receive such additional stock option awards under
the Stock Incentive Plan or any successor plan as the Board of Directors of
International Paper (or its delegate) determines in its sole discretion.
E. For a one-year period of time following the effective date of the
merger of the Company with International Paper-37, Inc. (the "Effective
Time"), the Company shall provide Executive with benefits that are
substantially comparable in the aggregate to the benefits provided to
Executive as of the date of the merger agreement between the Company and
International Paper-37, Inc.; PROVIDED, HOWEVER, that the Company will
continue Executive's current split-dollar life insurance arrangement only
through December 31, 2000, and the Company will provide Executive an
automobile lease allowance of $1,000 per month plus reimbursement for
reasonable insurance, maintenance, gasoline and parking expenses incurred
in furtherance of the Company's business only through December 31, 2000.
After the one-year period following the Effective Time, the following
provisions will apply:
1. SAVINGS AND RETIREMENT PLANS. Executive shall be entitled to
participate in all savings and retirement plans, practices,
policies and programs to the extent applicable generally to
other peer executives of International Paper.
2. WELFARE BENEFIT PLANS. Executive shall be eligible for
participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by
International Paper (including, without limitation, medical,
dental, disability,
5
<PAGE>
group life insurance, accidental death and travel accident
insurance plans and programs) to the extent applicable
generally to other peer executives of International Paper.
3. RABBI TRUST. The Company shall continue to maintain the rabbi
trust established for the benefit of Executive in accordance
with its terms.
4. FRINGE BENEFITS; VACATION. Executive shall be entitled to
fringe benefits and paid vacation in accordance with the
plans, practices, programs and policies as in effect
generally with respect to other peer executives of
International Paper, PROVIDED HOWEVER, Executive shall be
entitled to five weeks of vacation per year.
5. International Paper and the Company reserve the right to
modify, suspend or discontinue any and all of the above plans,
practices, policies and programs at any time without recourse
by Executive so long as such action is taken generally with
respect to other similarly situated peer executives and does
not single out Executive.
V. TERMINATION.
A. DEATH. Executive's employment shall terminate automatically upon
Executive's death.
B. DISABILITY. If the Company determines in good faith that Executive
has become disabled (physically or mentally), it may give to Executive
written notice in accordance with Section XV of this Agreement of its
intention to terminate Executive's employment. In such event, Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by Executive, provided that, within the 30 days
after such receipt, Executive shall not have returned to full-time
performance of his duties. For purposes of this Agreement, disability shall
mean a physical or mental impairment that renders Executive unable to
perform the essential functions of his position. The Company reserves the
right, in good faith,
6
<PAGE>
to make the determination of disability under this Agreement based upon
information supplied by Executive and/or his medical personnel, as well as
information from medical personnel (or others) selected by the Company or its
insurers.
C. CAUSE OR GOOD REASON.
1. The Company may terminate Executive's employment for Cause.
For purposes of this Agreement, "Cause" shall mean that the Company,
acting in good faith based upon the information then known to the
Company, determines that Executive has engaged in or committed:
willful misconduct; gross negligence; theft, fraud or other illegal
conduct; refusal or unwillingness to perform his duties or performance
of his duties in an unsatisfactory manner; sexual harassment; conduct
which reflects adversely upon, or making any remarks disparaging of,
the Company or International Paper, their Boards, officers, directors,
advisors or employees or their affiliates or subsidiaries;
insubordination; any willful act that is likely to and which does in
fact have the effect of injuring the reputation, business or a
business relationship of the Company or International Paper; violation
of any fiduciary duty; violation of any duty of loyalty; and breach of
any term of this Agreement.
2. Executive may terminate his employment for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean a material breach
of this Agreement by the Company or International Paper.
D. OTHER THAN CAUSE OR DEATH OR DISABILITY. The Company may terminate
Executive's employment at any time, with or without Cause, by written
notice to Executive, effective upon Executive's receipt of such notice.
7
<PAGE>
E. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
1. DEATH OR DISABILITY. If Executive's employment is terminated
by reason of Executive's death or Disability, this Agreement
shall terminate without further obligations to Executive or
his legal representatives under this Agreement, other than for (a)
payment of the sum of (i) Executive's annual base salary through the
date of termination to the extent not theretofore paid, (ii) any
performance bonus under the Bonus Plan for the calendar year ending
prior to Executive's death or Disability to the extent not theretofore
paid, (iii) any prorated bonus payable under the Bonus Plan pursuant
to Section IV-B and (iv) and any accrued vacation pay to the extent
not theretofore paid (the sum of the amounts described in clauses (i),
(ii), (iii) and (iv) shall be hereinafter referred to as the "Accrued
Obligations"), which shall be paid to Executive or his estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of
the date of termination.
2. CAUSE. If the Company terminates Executive's employment for
Cause, this Agreement shall terminate without further obligations to
Executive other than for the timely payment of Accrued Obligations. If
it is subsequently determined that the Company did not have Cause for
termination under Section V-C, then the Company's decision to
terminate shall be deemed to have been made under Section V-D and the
amounts payable under Section V-E3 shall be the only amounts Executive
may receive for his termination.
3. OTHER THAN CAUSE OR DEATH OR DISABILITY; GOOD REASON. If the
Company terminates Executive's employment for other than Cause or
death or Disability during the Term of this Agreement, or if Executive
terminates his employment with the Company
8
<PAGE>
with Good Reason, this Agreement shall terminate without further
obligations by the Company or International Paper to Executive other
than (a) the timely payment of Accrued Obligations, and (b), subject
to Executive's signing a release in the standard form then in use by
the Company or International Paper for other peer executives,
severance pay (payable in regular installments in accordance with the
Company's normal payroll practices) constituting Executive's base
salary for the lesser of one year or the remaining Term of this
Agreement.
4. EXPIRATION OF AGREEMENT. If this Agreement expires at the end
of the Term and Executive ceases to be employed by the Company at that
time, Executive will receive timely payment of the Accrued
Obligations.
5. EXCLUSIVE REMEDY. Executive agrees that the payments
contemplated by this Agreement shall constitute the exclusive and sole
remedy for any termination of his employment and Executive covenants
not to assert or pursue any other remedies, at law or in equity, with
respect to any termination of employment. Notwithstanding the
preceding sentence, neither the severance pay described in Section
V-E3 nor any other payment under this Section V-E shall reduce or
affect any benefits the Executive (or his estate or beneficiary) may
be entitled to under the specific terms of the benefit plans of the
Company or any stock option or restricted stock award.
VI. COVENANTS OF EXECUTIVE
A. GENERAL: Executive and the Company understand and agree that the purpose
of the provisions of this Section VI is to protect the legitimate business
interests of the Company and International Paper, as more fully described below.
Executive hereby acknowledges that the restrictions set forth in this Section VI
are reasonable and necessary to protect the business
9
<PAGE>
interests of the Company and/or International Paper. Therefore, Executive shall
be subject to the restrictions set forth in this Section.
B. RESTRICTIONS ON DISCLOSURE AND USE OF CONFIDENTIAL INFORMATION:
Executive understands and agrees that confidential information and materials of
a confidential or proprietary nature constitute valuable assets of the Company
and International Paper and may not be converted to Executive's own use.
Accordingly, Executive hereby agrees that he shall not, directly or indirectly,
at any time during the Term and at any time following the Term, reveal, divulge
or disclose any "Confidential Information" (as defined below), and Executive
shall not, directly or indirectly, use or make use of any "Confidential
Information" in connection with any business activity other than that of the
Company and/or International Paper; PROVIDED, HOWEVER, that Executive may
disclose or use "Confidential Information" during the Term as authorized by the
IP Officer or consistent with the proper exercise of Executive's duties as
President of the Company. "Confidential Information" means all information
regarding the Company and/or International Paper, its and their activities,
business, clients, or potential clients that is the subject of reasonable
efforts by the Company and/or International Paper to maintain its
confidentiality and that is not generally disclosed to persons not employed by
the Company and/or International Paper. "Confidential Information" shall
include, but is not limited to, any of the following information or materials of
the Company and/or International Paper: financial plans and data; management
planning information; business plans; operational methods; market studies;
marketing plans or strategies; product development techniques or plans; customer
lists; details of customer contracts; current and anticipated customer
requirements; past, current and planned research and development; business
acquisition plans; and new personnel acquisition
10
<PAGE>
plans. "Confidential Information" shall not include information that has become
generally available to the public.
C. NONSOLICITATION. Executive understands and agrees that the relationship
between the Company and/or International Paper and their respective employees,
business relations, clients and customers, and potential clients and customers,
constitutes a valuable asset of the Company and/or International Paper and may
not be converted to Executive's own use. Accordingly, Executive agrees that,
during the Term of this Agreement, and for a period of two (2) years from the
termination for any reason pursuant to Section V of this Agreement other than
the Company's termination of Executive without Cause or Executive's termination
of his employment with Good Reason (the "Restricted Period"), neither Executive
nor any entity with whom he is at the time affiliated (any other person,
corporation, partnership or other business entity of any kind) shall, directly
or indirectly, solicit or entice away or in any manner persuade or attempt to
persuade, any officer, employee, agent, representative, business relation,
client or customer, or prospective client or customer of the Company and/or
International Paper, to discontinue his/her/its relationship or prospective
relationship with the Company and/or International Paper.
D. RESTRICTIVE COVENANT. Executive acknowledges that his services are
special, unique, and extraordinary, and that in the course of his employment
with the Company and/or International Paper he has had and will continue to have
dealings and develop special relationships with the clients and customers of the
Company and/or International Paper. Executive further acknowledges that in the
course of his employment with or service to the Company and/or International
Paper, he has obtained and will continue to obtain Confidential Information. In
order to protect the legitimate business interests, goodwill, relationships, and
11
<PAGE>
Confidential Information of the Company and/or International Paper, Executive
agrees that during the Restricted Period defined above in Section VI-C,
Executive shall not (whether for his own account or on behalf of any person,
corporation, partnership, or other business entity of any kind, and whether
directly or indirectly), without the prior written consent of the IP Officer,
engage in the business of printing or manufacturing paperboard packaging
anywhere in North America. Notwithstanding the foregoing, if Executive's
employment with the Company terminates on or after the expiration of this
Agreement at the end of its Term, Executive shall be subject to the same
non-competition policy of International Paper that is applicable to other peer
executives of International Paper.
E. ENFORCEMENT OF COVENANTS. In the event Executive breaches, or threatens
to commit a breach of, any of the provisions of this Section VI, the Company
and/or International Paper shall have the following rights and remedies, which
shall be independent of any others and severally enforceable, and shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company and/or International Paper at law or in equity:
1. the right to enjoin, preliminarily and permanently, Executive
from violating or threatening to violate the terms of this Section VI
and to have the promises made herein specifically enforced by any
court of competent jurisdiction; and
2. the right and remedy to require Executive to account for and
pay over to the Company and/or International Paper all compensation,
profits, monies, accruals, increments or other benefits derived or
received by Executive as a result of the transactions constituting a
breach of this Section VI.
12
<PAGE>
VII. ARBITRATION.
Any and all controversies, claims or disputes arising out of or in
any way relating to this Agreement, its enforcement or interpretation, or
because of an alleged breach, default, or misrepresentation in connection with
any of its provisions, or any other claim by Executive arising out of or in
connection with his employment, including any claims for discrimination
prohibited by any federal, state or other statute, ordinance or law, shall be
settled by arbitration in accordance with the National Rules for Resolution of
Employment Disputes of the American Arbitration Association (the "AAA"). The
arbitration shall be commenced by filing a demand for arbitration with the AAA
within sixty (60) days after the occurrence of the facts giving rise to any such
controversy, claim or dispute. The arbitration shall be conducted in Purchase,
New York. Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. All costs and expenses of any arbitration
proceeding shall be borne by the respective party incurring such costs and
expenses.
VIII. ASSIGNMENT.
Executive acknowledges that his services are unique and personal.
Accordingly, Executive may not assign his rights or delegate his duties under
this Agreement to any person or entity.
IX. SUCCESSORSHIP.
This Agreement is binding on and inures to the benefit of the
Company and/or International Paper, its successors and assigns.
13
<PAGE>
X. MODIFICATION.
This Agreement may not be amended or modified other than by a
written agreement executed by Executive and the Company or its designee.
XI. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof is
held invalid, the invalidity shall not affect other provisions or applications
of the Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to be
severable.
XII. COMPLETE AGREEMENT.
This Agreement hereby incorporates by reference the letter
agreement entered into between Executive and International Paper on February 16,
2000 (the "Letter Agreement"). This Agreement, together with the Letter
Agreement, constitutes and contains the entire agreement and final understanding
concerning Executive's employment with the Company and the other subject matters
addressed herein between the parties. The parties intend it as a complete and
exclusive statement of the terms of their agreement. It supersedes and replaces
all prior negotiations and all agreements proposed or otherwise, whether written
or oral, concerning the subject matter hereof. Any representation, promise or
agreement not specifically included in this Agreement shall not be binding upon
or enforceable against either party. This is a fully integrated agreement.
14
<PAGE>
XIII. GOVERNING LAW.
The provisions of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without regard to principles of conflict of laws.
XIV. PARAGRAPH HEADINGS.
Paragraph and other headings contained in this Agreement are for
the convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
XV. NOTICES.
Any notices to be given under this Agreement by one party to the
other may be effected by personal delivery in writing or by mail, registered or
certified, postage prepaid with return receipt requested. Mailed notice shall be
deemed receive as of three (3) days after mailing. Notices by mail shall be sent
to the address listed below unless and until notice to a change is given
pursuant to this Section:
To Executive:
Mr. Howard M. Liebman
1302 Azure Place
Hewlett Harbor, New York 11557
To the Company:
Shorewood Packaging Corporation
c/o International Paper Company
Two Manhattanville Road
Purchase, New York 10577
Attn: William Slowikowski
15
<PAGE>
XVI. WITHHOLDING.
All amounts payable to Executive under this Agreement shall be
reduced by any applicable income and employment withholding taxes and
other authorized deductions.
XVII . SURVIVORSHIP.
The respective rights and obligations of the parties hereunder
shall survive any termination of Executive's employment to the extent
necessary to the intended preservation of such rights and obligations.
XVIII. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each
of which will take effect as an original, and all of which shall
evidence one and the same Agreement.
XIX. REPRESENTATION.
The Company, International Paper and Executive represent that they
are knowledgeable and sophisticated as to business matters, including the
subject matter of this Agreement, that they have read this Agreement and that
they understand its terms. The Company, International Paper and Executive
acknowledge that, prior to assenting to the terms of this Agreement, they have
been given a reasonable amount of time to review it and to negotiate at arm's
length as to its contents. The Company, International Paper and Executive agree
that the language used in this Agreement is the language chosen by the parties
to express their mutual intent, and that they have entered into this Agreement
freely and voluntarily and without pressure or coercion from anyone.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
SHOREWOOD PACKAGING CORPORATION
By: ________________________________
Title:____________________________
INTERNATIONAL PAPER COMPANY
By: ________________________________
Title:____________________________
HOWARD M. LIEBMAN
______________________________________
16
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT B
OUTSTANDING
DATE OF LOAN PRINCIPAL AMOUNT RATE OF INTEREST DUE DATE
------------ ---------------- ---------------- --------
<S> <C> <C> <C> <C>
April 1998 $605,000 6.5% August 1, 2013
June 23, 1999 $341,145 6.5% October 2, 2000
July 26, 1999 $316,376 6.5% October 2, 2000
</TABLE>
