<PAGE>
EXHIBIT (a)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Justin Industries, Inc.
at
$22.00 Net Per Share
by
J Acquisition Corp.
a Wholly-Owned Subsidiary of
Berkshire Hathaway Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JULY 25, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF JUNE 19, 2000, BY AND AMONG BERKSHIRE HATHAWAY INC., J ACQUISITION
CORP., A WHOLLY-OWNED SUBSIDIARY OF BERKSHIRE HATHAWAY, AND JUSTIN INDUSTRIES,
INC. THE BOARD OF DIRECTORS OF JUSTIN INDUSTRIES HAS UNANIMOUSLY DETERMINED
THAT THE OFFER AND THE MERGER DESCRIBED HEREIN ARE FAIR TO AND IN THE BEST
INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER, AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE
OFFER AND TENDER ALL OF THEIR SHARES PURSUANT THERETO.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED, AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN),
THAT NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $2.50 PER SHARE, OF THE
COMPANY WHICH (TOGETHER WITH ANY SHARES OWNED BY BERKSHIRE HATHAWAY, J
ACQUISITION CORP. OR THEIR AFFILIATES) CONSTITUTES SIXTY-SEVEN PERCENT OF THE
SHARES OF COMMON STOCK OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES
ARE ACCEPTED FOR PAYMENT (THE "MINIMUM CONDITION"). J ACQUISITION CORP. AND
BERKSHIRE HATHAWAY, IN THEIR DISCRETION, MAY WAIVE THIS CONDITION. THE OFFER
IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS SET FORTH IN THIS OFFER TO
PURCHASE. THE OFFER IS NOT SUBJECT TO A FINANCING CONDITION.
<PAGE>
IMPORTANT
Any Stockholder desiring to tender all or any portion of his shares of
Common Stock (together with the associated common stock purchase rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of October 6,
1989, as amended from time to time, between the Company and The Bank of New
York, as Rights Agent, the "Shares") should either (1) complete and sign the
Letter of Transmittal or a facsimile thereof in accordance with the
instructions in the Letter of Transmittal, and mail or deliver the Letter of
Transmittal or such facsimile with his certificate(s) for the tendered Shares
and any other required documents to the Depositary, (2) follow the procedure
for book-entry tender of Shares set forth in Section 3 of this Offer to
Purchase, or (3) request such Stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such Stockholder.
Stockholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee are urged to contact such
broker, dealer, commercial bank, trust company or other nominee if they desire
to tender such Shares.
A Stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available, or who cannot comply with the procedure
for book-entry transfer on a timely basis, may tender such Shares by following
the procedures for guaranteed delivery set forth in Section 3 of this Offer to
Purchase.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase
and the Letter of Transmittal may be directed to the Information Agent or to
brokers, dealers, commercial banks or trust companies.
----------------
June 27, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
SUMMARY TERM SHEET....................................................... 4
INTRODUCTION............................................................. 8
THE TENDER OFFER......................................................... 11
1. Terms of the Offer.................................................. 11
2. Acceptance for Payment and Payment for Shares....................... 12
3. Procedure for Tendering Shares...................................... 13
4. Withdrawal Rights................................................... 15
5. Certain Federal Income Tax Consequences of the Offer and the
Merger............................................................. 16
6. Price Range of Shares; Dividends.................................... 17
7. Effect of the Offer on Market for the Shares, Stock Market
Quotation, and Exchange Act Registration........................... 17
8. Certain Information Concerning the Company.......................... 18
9. Certain Information Concerning Purchaser and Parent................. 20
10. Source and Amount of Funds.......................................... 21
11. Background of the Offer; Contacts with the Company; the Merger
Agreement and Stockholders Agreement............................... 21
12. Purpose of the Offer and the Merger; Plans for the Company After the
Offer and the Merger; Stockholder Approval and Appraisal Rights.... 33
13. Dividends and Distributions......................................... 34
14. Conditions of the Offer............................................. 34
15. Certain Legal Matters and Regulatory Approvals...................... 35
16. Fees and Expenses................................................... 37
17. Miscellaneous....................................................... 37
Schedule I Information Concerning the Directors and Executive Officers of
Purchaser and Parent.................................................... 39
</TABLE>
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SUMMARY TERM SHEET
J Acquisition Corp. is offering to purchase all of the outstanding common
stock of Justin Industries, Inc., including the associated common stock
purchase rights, for $22 per share in cash. The following are some of the
questions you, as a stockholder of Justin Industries, Inc., may have and
answers to those questions. We urge you to read carefully the remainder of
this Offer to Purchase and the Letter of Transmittal because the information
in this summary term sheet is not complete. Additional important information
is contained in the remainder of this Offer to Purchase and the Letter of
Transmittal.
Who is offering to buy my securities?
Our name is J Acquisition Corp. We are a Texas corporation formed for the
purpose of making a tender offer for all of the common stock, including the
associated common stock purchase rights, of Justin Industries, Inc. and have
carried on no activities other than in connection with the merger agreement
among us, Berkshire Hathaway Inc. and Justin Industries, Inc. We are a wholly
owned subsidiary of Berkshire Hathaway Inc., a Delaware corporation. Berkshire
Hathaway Inc. is a holding company engaged through subsidiaries in a number of
diverse businesses, the most important of which is property and casualty
insurance and reinsurance offered on both a direct and reinsurance basis
through insurance subsidiaries. See the "Introduction" to this Offer to
Purchase and Section 9 "Certain Information Concerning Purchaser and Parent."
What are the classes and amounts of securities sought in the offer?
We are seeking to purchase all of the outstanding shares of common stock of
Justin Industries, Inc. Wherever we refer to "shares of common stock of Justin
Industries, Inc.," we are referring also to the associated rights to purchase
common stock under Justin's "Rights Agreement." By tendering your shares of
common stock, you will automatically also tender the associated rights. See
the "Introduction" to this Offer to Purchase and Section 1 "Terms of the
Offer."
How much are you offering to pay? What is the form of payment? Will I have to
pay any fees or commissions?
We are offering to pay $22 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" to this Offer to Purchase and Section 3
"Procedure for Tendering Shares."
Do you have the financial resources to make payment?
Yes. Berkshire Hathaway Inc., our parent company, has or has available cash
resources that are many times larger than needed to complete the offer and the
merger. Berkshire will provide us with sufficient funds to purchase all shares
validly tendered and not withdrawn in the offer and to provide funding for the
merger, which is expected to follow the successful completion of the offer in
accordance with the terms and conditions of the merger agreement. The offer is
not conditioned on any financing arrangements. See Section 10 "Source and
Amount of Funds.
Is your financial condition relevant to my decision to tender in the offer?
We do not think our financial condition is relevant to your decision whether
to tender in the offer because the form of payment consists solely of cash,
which we have available, because the offer is not subject to any financing
condition, and because the offer is for all outstanding shares. Also, upon
consummation of the offer, J Acquisition Corp. will acquire all shares that
are not tendered for the same price in the merger. See Section 10 "Source and
Amount of Funds."
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How long do I have to decide whether to tender in the offer?
Unless the offer is extended, you will have until 12:00 midnight, New York
City time, on Tuesday, July 25, 2000, to tender your shares in the offer. 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 "Terms of the Offer"
and Section 3 "Procedures for Tendering Shares."
Can the offer be extended and under what circumstances?
Subject to the terms of the merger agreement, we can extend the offer. We
have agreed in the merger agreement that:
. We may extend the offer for up to an additional 40 days, in one or more
periods of not more than 10 business days, if any condition to the offer
is not met.
. We may also extend the offer for up to 10 business days if, on the
expiration date of the offer, at least 75% but not more than 90% of the
common stock has been tendered. In order to extend the offer in this
way, we must first waive the satisfaction of any conditions to the
offer.
For more details on our ability to extend the offer, see Section 1 "Terms of
the Offer."
How will I be notified if the offer is extended?
If we extend the offer, we will inform The Bank of New York (the depositary
for the offer) of that fact and will make a public announcement of the
extension not later than 9:00 a.m., New York City time, on the next business
day after the day on which the offer was scheduled to expire. See Section 1
"Terms of the Offer."
What are the most significant conditions to the offer?
We are not obligated to purchase any shares that are validly tendered:
. unless the number of shares validly tendered and not withdrawn before
the expiration date of the offer represents at least 67% of the then
outstanding shares on a fully diluted basis. We call this condition the
"Minimum Condition."
. if, among other things, the applicable waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, has not
expired or been terminated.
The offer is also subject to other conditions. We can waive all of the
conditions to the offer in our sole discretion. See Section 1 "Terms of the
Offer" and Section 14 "Conditions of the Offer."
How do I tender my shares?
To tender shares, you must deliver the certificates representing your
shares, together with a completed letter of transmittal and any other
documents required by the letter of transmittal, to The Bank of New York, the
depositary for the offer, not later than the time the tender offer expires. If
your shares are held in street name (i.e., through a broker, dealer or other
nominee), the shares can be tendered by your nominee through The Depository
Trust Company. If you are unable to deliver any required document or
instrument to the depositary by the expiration of the tender offer, you may
gain some extra time by having a broker, a bank or other fiduciary that is an
eligible institution guarantee that the missing items will be received by the
depositary within three New York Stock Exchange and Nasdaq Stock Market
trading days. For the tender to be valid, however, they must receive the
missing items within that three trading day period. See Section 3 "Procedures
for Tendering Shares."
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Until what time may I withdraw previously tendered shares?
You may withdraw shares at any time until the offer has expired and, if we
have not accepted your shares for payment by August 25, 2000, you may withdraw
them at any time after that date until we accept shares for payment. See
Section 1 "Terms of the Offer" and Section 4 "Withdrawal Rights."
How do I withdraw previously tendered shares?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. See Section 4 "Withdrawal
Rights."
What does the board of directors of Justin Industries, Inc. think of the
offer?
We are making the offer pursuant to the merger agreement among us, Berkshire
Hathaway Inc. and Justin Industries, Inc. The board of directors of Justin
Industries, Inc. has unanimously approved the offer, the merger and the merger
agreement. The board of directors of Justin Industries, Inc. has determined
that the terms of the offer and the merger are fair to, and in the best
interests of, the stockholders of Justin Industries, Inc. and recommends that
the stockholders of Justin Industries, Inc. accept the offer, tender their
shares, and approve the merger and the merger agreement. See the
"Introduction" to this Offer to Purchase.
Have any stockholders agreed to tender their shares?
Yes. John S. Justin, Jr., a director and formerly chief executive officer of
Justin Industries, Inc., and two trusts that he controls have agreed to tender
all of their shares of Justin Industries, Inc. stock, representing
approximately 19.8% of the outstanding common stock of Justin Industries, Inc.
Mr. Justin and the trusts have also agreed to vote in favor of the merger and
against any competing acquisition proposal. See the "Introduction" to this
Offer to Purchase.
If sixty-seven percent of the shares are tendered and accepted for payment,
will Justin Industries, Inc. continue as a public company?
No. Following the purchase of shares in the offer we expect to consummate
the merger. If the merger takes place, Justin Industries, Inc. no longer will
be publicly owned. Even if for some reason the merger does not take place, if
we purchase all of the tendered shares, there may be so few remaining
stockholders and publicly held shares that (i) Justin Industries, Inc. common
stock may no longer be eligible to be quoted and traded on the Nasdaq Stock
Market or any other securities market or exchange, (ii) there may not be a
public trading market for Justin Industries, Inc. common stock, and (iii)
Justin Industries, Inc. may cease making filings with the Securities and
Exchange Commission or otherwise cease being required to comply with the SEC
rules relating to publicly held companies. See Section 7 "Effect of Offer on
Market for the Shares, Stock Market Quotation, and Exchange Act Registration."
Will the tender offer be followed by a merger if all shares of Justin
Industries, Inc. are not tendered in the offer?
If we accept for payment and pay for at least 67% of the shares of Justin
Industries, Inc. on a fully diluted basis, we will be merged with and into
Justin Industries, Inc. If that merger takes place, Berkshire Hathaway Inc.
will own all of the shares of Justin Industries, Inc., and all other persons
who were stockholders of Justin Industries, Inc. immediately prior to the
merger (other than stockholders properly exercising appraisal rights) will
receive $22 per share in cash (or any higher price per share that is paid in
the offer). See the "Introduction" to this Offer to Purchase.
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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 appraisal
rights properly exercised under Texas law. Therefore, if the merger takes
place and you do not perfect your appraisal rights, the only difference to you
between tendering your shares and not tendering your shares is that you will
be paid earlier if you tender your shares. If the merger does not take place,
however, the number of stockholders and the number of shares of Justin
Industries, Inc. that are still in the hands of the public may be so small
that there may no longer be an active public trading market (or, possibly,
there may not be any public trading market) for the Justin Industries, Inc.
common stock. Also, as described above, Justin Industries, Inc. may cease
making filings with the Securities and Exchange Commission or otherwise cease
being required to comply with the SEC rules relating to publicly held
companies. See the "Introduction" to this Offer to Purchase and Section 7
"Effect of Offer on Market for Shares, Stock Market Quotation, and Exchange
Act Registration."
There are no appraisal rights in connection with the offer. However, if the
merger takes place, stockholders who have not sold their shares in the offer,
have not voted for the merger, and have complied with other requirements of
Texas law, will have appraisal rights under Texas law. See Section 12,
"Purpose of the Offer and the Merger; Plans for the Company; Stockholder
Approval and Appraisal Rights."
What is the market value of my shares as of a recent date?
On June 19, 2000, the last trading day before we announced the signing of
the merger agreement, the last sale price of Justin Industries, Inc. common
stock reported on the Nasdaq Stock Market was $17 7/8 per share. On June 23,
2000, the closing price of Justin Industries, Inc. common stock reported on
the Nasdaq Stock Market was $21 13/16. We encourage you to obtain a recent
quotation for shares of Justin Industries, Inc. common stock in deciding
whether to tender your shares. See Section 6 "Price Range of Shares;
Dividends."
What are certain United States federal income tax consequences of tendering
shares?
The receipt of cash for shares pursuant to the tender offer or the merger
will be a taxable transaction for United States federal income tax purposes
and possibly for state, local and foreign income tax purposes as well. In
general, a stockholder who sells shares pursuant to the tender offer or
receives cash in exchange for shares pursuant to the merger will recognize
gain or loss for United States federal income tax purposes equal to the
difference, if any, between the amount of cash received and the stockholder's
adjusted tax basis in the shares sold pursuant to the tender offer or
exchanged for cash pursuant to the merger. If the shares exchanged constitute
capital assets in the hands of the stockholder, such gain or loss will be
capital gain or loss. In general, capital gains recognized by an individual
will be subject to a maximum United States federal income tax rate of 20% if
the shares were held for more than one year, and if held for one year or less
they will be subject to tax at ordinary income tax rates. See Section 5
"Certain Federal Income Tax Consequences of the Offer and the Merger."
To whom may I speak if I have questions about the tender offer?
You may call the information agent for the offer, Georgeson Shareholder
Communications Inc., at (800) 223-2064 (toll free). See the back cover of this
Offer to Purchase.
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To the Holders of Common Stock of
JUSTIN INDUSTRIES, INC.:
INTRODUCTION
J Acquisition Corp., a Texas corporation (the "Purchaser") and a wholly-
owned subsidiary of Berkshire Hathaway Inc., a Delaware corporation
("Parent"), hereby offers to purchase all of the outstanding shares (together
with the associated common stock purchase rights (the "Rights") issued
pursuant to the Rights Agreement, dated as of October 6, 1989, as amended from
time to time, between the Company and The Bank of New York, as Rights Agent,
the "Shares") of Common Stock, par value $2.50 per share (the "Common Stock"),
of Justin Industries, Inc., a Texas corporation (the "Company"), at a price of
$22.00 per Share, without interest thereon, net to the seller in cash (the
"Offer Price"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, as amended
and supplemented from time to time, together constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of June 19, 2000, among the Company, Parent and
Purchaser. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction or, if permissible, waiver of the conditions set forth in the
Merger Agreement, including the purchase of Shares pursuant to the Offer
(sometimes referred to herein as the "consummation" of the Offer) and the
adoption of the Merger Agreement by the Stockholders (if required by
applicable law) in accordance with the relevant provisions of the Texas
Business Corporation Act (the "Texas Act"), Purchaser will be merged with and
into the Company. Following consummation of the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation") and will
be a direct wholly owned subsidiary of Parent. The purpose of the Offer and
the Merger is to facilitate the acquisition of all of the Shares for cash and
thereby enable Parent to own 100% of the Shares. At the effective time of the
Merger (the "Effective Time"), each Share issued and outstanding immediately
prior to the Effective Time held by the Stockholders will be canceled and,
subject to appraisal rights under the Texas Act, converted automatically into
the right to receive $22.00 in cash, or, in the event any higher price is paid
in the Offer, such higher price (the "Merger Consideration"), without
interest. The Merger Agreement is more fully described in "Section 11--
Background of the Offer; Contacts with the Company; the Merger Agreement and
Stockholders Agreement." Stockholders who hold their Shares at the time of the
Merger and who fully comply with the statutory dissenters' procedures set
forth in the Texas Act will be entitled to dissent from the Merger and have
the fair value of their Shares (which may be more than, equal to, or less than
the Merger Consideration) judicially determined and paid to them in cash
pursuant to the procedures prescribed by the Texas Act. DISSENTERS' RIGHTS ARE
AVAILABLE ONLY IN CONNECTION WITH THE MERGER AND NOT IN CONNECTION WITH THE
OFFER. SEE "SECTION 12--PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE
COMPANY; STOCKHOLDER APPROVAL AND APPRAISAL RIGHTS."
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT EACH
OF THE OFFER AND THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND
THE MERGER (COLLECTIVELY, THE "TRANSACTIONS"), AND UNANIMOUSLY RECOMMENDS THAT
THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES PURSUANT
THERETO.
The Company has advised Parent that Donaldson, Lufkin & Jenrette, the
Company's financial advisor ("DLJ"), has delivered to the Company its written
opinion, dated June 19, 2000, to the effect that, as of such date, the
consideration to be received by the Stockholders in the Offer and the Merger
is fair, from a financial point of view, to the Stockholders. A copy of the
written opinion of DLJ is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
filed with the Securities
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and Exchange Commission (the "SEC") in connection with the Offer, a copy of
which is being furnished to the Stockholders concurrently with this Offer to
Purchase.
Simultaneously with entering into the Merger Agreement, Parent and Purchaser
also entered into a Stockholders Agreement with John S. Justin, Jr., the John
and Jane Justin Charitable Remainder Unitrust and the John S. Justin Jr.
Charitable Remainder Trust (together, "Mr. Justin and the Trusts"), dated as
of June 19, 2000 (the "Stockholders Agreement"), pursuant to which Mr. Justin
and the Trusts (a) agreed to tender all Shares owned by them (the "Justin and
Trust Shares," which equal approximately 20% of the outstanding Shares) in the
Offer, (b) granted Parent and Purchaser an option, exercisable under certain
circumstances, to purchase all Shares owned by them at the price per share
paid in the Offer, and (c) agreed to vote the Justin and Trust Shares in favor
of the Merger Agreement and the Merger and against any Takeover Proposal (as
defined below). See "Section 11--Background of the Offer; Contacts with the
Company; the Merger Agreement and Stockholders Agreement."
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED, AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN),
THAT NUMBER OF SHARES OF COMMON STOCK WHICH (TOGETHER WITH ANY SHARES OWNED BY
PARENT, PURCHASER OR THEIR AFFILIATES) CONSTITUTES SIXTY-SEVEN PERCENT OF THE
SHARES OF COMMON STOCK OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES
ARE ACCEPTED FOR PAYMENT (THE "MINIMUM CONDITION"). PURCHASER AND PARENT, IN
THEIR DISCRETION, MAY WAIVE THIS CONDITION UNDER CERTAIN CIRCUMSTANCES. THE
OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS SET FORTH IN THIS OFFER TO
PURCHASE, AS DESCRIBED IN "SECTION 14--CONDITIONS OF THE OFFER."
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including (if required by the Texas Act) the adoption of
the Merger Agreement by the affirmative vote of the holders of at least two-
thirds of the outstanding shares entitled to vote thereon. Under the Texas Act
and pursuant to the Company's Amended Articles of Incorporation, the
affirmative vote of the holders of two-thirds of the outstanding Shares is the
only vote that would be necessary to adopt the Merger Agreement at any
required meeting of Stockholders. If the Minimum Condition is satisfied and as
a result of the purchase of Shares by Purchaser pursuant to the Offer,
Purchaser and its affiliates own at least two-thirds of the outstanding
Shares, Purchaser will be able to effect the Merger without the affirmative
vote of any other Stockholder.
If Purchaser acquires, pursuant to the Offer, at least 90% of the then
issued and outstanding Shares, under the Texas Act, Purchaser's board of
directors will be able to adopt a plan of merger to effect the Merger without
a vote of Stockholders, pursuant to Article 5.16 of the Texas Act (a "Short-
Form Merger"). If Purchaser does not acquire at least 90% of the then issued
and outstanding Shares pursuant to the Offer, a vote of the Stockholders will
be required under the Texas Act to effect the Merger, and a significantly
longer period of time will be required to effect the Merger. Parent, Purchaser
and the Company have agreed to take all necessary and appropriate action to
cause the Merger to become effective as promptly as practicable after the
consummation of the Offer.
Purchaser may, without the consent of the Company, (a) extend the Offer for
up to an additional 40 days, in one or more periods of not more than 10
business days, if any condition to the Offer is not satisfied or waived and
(b) if, on the expiration date of the Offer, the Shares validly tendered and
not withdrawn pursuant to the Offer equal at least 75% of the outstanding
Shares but less than 90% of the outstanding Shares on a fully-diluted basis,
extend the Offer on one occasion for up to 10 business days notwithstanding
that all the conditions to the Offer have been satisfied so long as Purchaser
irrevocably waives the satisfaction of any of the conditions to the Offer
(other than in the case of the first condition set forth in "Section 14--
Conditions of the Offer," the occurrence of any statute, rule, regulation,
judgment, order or preliminary or permanent injunction making illegal or
prohibiting the consummation of the Offer (a "Prohibition")) that subsequently
may not be satisfied during any such extension of the Offer. Purchaser does
not intend to provide a subsequent offering period. In addition,
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the Offer Price may be increased and the Offer may be extended to the extent
required by law in connection with such increase in each case without the
consent of the Company.
According to the Company, as of June 19, 2000 there were 25,775,603 Shares
issued and outstanding, held by approximately 1,528 holders of record. Based
on the issued and outstanding Shares as of June 19, 2000 (which number is
subject to increase upon the exercise of outstanding options to purchase
Shares), the Minimum Condition would be satisfied if at least 18,414,491
Shares are tendered in the Offer and not withdrawn prior to the close of the
Offer, or at least 13,309,711 Shares in addition to the Justin and Trust
Shares are so tendered and not withdrawn. Based on such number of issued and
outstanding Shares, Purchaser would be able to effect a Short-Form Merger if
23,198,044 Shares were validly tendered in the Offer and not withdrawn prior
to the close of the Offer.
Tendering Stockholders who tender Shares directly will not be obligated to
pay brokerage fees or commissions or, subject to Instruction 6 of the Letter
of Transmittal, stock transfer taxes, if any, with respect to the purchase of
Shares by Purchaser pursuant to the Offer. However, any tendering Stockholder
or other payee who fails to complete and sign the Substitute Form W-9 included
in the Letter of Transmittal may be subject to required backup federal income
tax withholding of 31% of the gross proceeds payable to such Stockholder or
other payee pursuant to the Offer. Purchaser will pay all charges and expenses
of the Bank of New York, as Depositary (the "Depositary") and Georgeson
Shareholder Communications Inc., as Information Agent (the "Information
Agent") in connection with the Offer. See "Section 16--Fees and Expenses."
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
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THE TENDER OFFER
1. Terms of the Offer. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), Purchaser will accept for payment,
and pay for, all Shares validly tendered on or prior to the Expiration Date
(as herein defined) and not withdrawn as permitted by Section 4 hereof. The
term "Expiration Date" means 12:00 Midnight, New York City time, on July 25,
2000, unless and until Purchaser, in accordance with the terms of the Merger
Agreement, extends the period for which the Offer is open, in which event the
term "Expiration Date" will mean the latest time and date on which the Offer,
as so extended, expires.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Merger Agreement), at any time and from
time to time, to extend for any reason the period of time during which the
Offer is open and to delay acceptance for payment of, and payment for, any
Shares, including as a result of the occurrence of any of the events specified
in Section 14 hereof, by giving oral or written notice of such extension to
the Depositary and by making a public announcement thereof, as described
below. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer, subject to the right of a
tendering stockholder to withdraw his Shares. See "Section 4--Withdrawal
Rights."
Subject to the applicable rules and regulations of the SEC, Purchaser also
expressly reserves the right, in its sole discretion (but subject to the terms
and conditions of the Merger Agreement), at any time and from time to time,
(1) to delay acceptance for payment of or, regardless of whether such Shares
were theretofore accepted for payment, payment for, any Shares, pending
receipt of any regulatory approval specified in "Section 15--Certain Legal
Matters and Regulatory Approvals," (2) to terminate the Offer and not accept
for payment any Shares if any of the conditions referred to in Section 14 have
not been satisfied or upon the occurrence of any of the events specified in
Section 15, and (3) to waive any condition or otherwise amend the Offer in any
respect, in each case, by giving oral or written notice of such delay,
termination, waiver or amendment to the Depositary and by making a public
announcement thereof.
The Merger Agreement provides that Purchaser shall not (i) decrease the
price per Share payable pursuant to the Offer or the number of Shares sought,
(ii) amend the conditions to the Offer set forth in Annex A to the Merger
Agreement, or (iii) impose conditions to the Offer in addition to those set
forth in Annex A to the Merger Agreement, without the prior written consent of
the Company.
Notwithstanding the foregoing, if Purchaser and Parent are not in material
breach of the Merger Agreement, Purchaser may, without the consent of the
Company, extend the Offer for up to an additional 40 days, in one or more
periods of not more than 10 business days, if any condition to the Offer is
not satisfied or waived and such condition is reasonably capable of being
satisfied. If, on the expiration date of the Offer, the Shares validly
tendered and not withdrawn pursuant to the Offer equal at least 75% of the
outstanding Shares but less than 90% of the outstanding Shares on a fully-
diluted basis, Purchaser may, without the consent of the Company, extend the
Offer on one occasion for up to 10 business days notwithstanding that all the
conditions to the Offer have been satisfied so long as Purchaser irrevocably
waives the satisfaction of any of the conditions to the Offer (other than in
the case of the first condition contained in Section 14 of this Offer to
Purchase, the occurrence of any Prohibition) that subsequently may not be
satisfied during any such extension of the Offer. Purchaser does not intend to
provide a subsequent offering period pursuant to Rule 14d-11 under the
Exchange Act. In addition, the Offer Price may be increased and the Offer may
be extended to the extent required by law or the SEC in connection with such
increase in each case without the consent of the Company.
Any such extension, delay, termination, waiver or amendment of the Offer
will be followed as promptly as practicable by public announcement thereof,
such announcement in the case of an extension to be issued no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Subject to applicable law (including Rules 14d-
4(d), 14d-6(b), 14d-6(c) and 14e-1 under the Exchange Act, which require that
material changes be promptly disseminated to Stockholders in a manner
reasonably designed to inform them of such change) and without limiting the
manner in which Purchaser may choose to make any
11
<PAGE>
public announcement, Purchaser shall have no obligation to publish, advertise
or otherwise communicate any such public announcement other than by issuing a
press release or other announcement.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by
Rules 14d-4(d), 14d-6(b), 14d-6(c) and 14e-1 under the Exchange Act.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should increase the consideration being offered in the Offer,
such increase in the consideration being offered will be applicable to all
Stockholders whose Shares are accepted for payment pursuant to the Offer and,
if at the time notice of any increase in the consideration being offered is
first published, sent or given to holders of such Shares, the Offer is
scheduled to expire at any time earlier than the period ending on the tenth
business day from and including the date that such notice is first so
published, sent or given, the Offer will be extended at least until the
expiration of such ten business-day period. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 Midnight, New
York City time.
The Company has provided Purchaser with the Company stockholder list and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares whose names appear on
the Company stockholder list and will be furnished, for subsequent transmittal
to beneficial owners of Shares, to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
2. Acceptance for Payment and Payment for Shares. Upon the terms and subject
to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment),
Purchaser will accept for payment, and will pay for, all Shares validly
tendered prior to the Expiration Date and not properly withdrawn, promptly
after the later to occur of (1) the Expiration Date and (2) the satisfaction
or waiver of the conditions set forth in "Section 14--Conditions to the
Offer." Subject to applicable rules of the SEC, Purchaser expressly reserves
the right to delay acceptance for payment of, or payment for, Shares in order
to comply, in whole or in part, with any applicable law.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (a)
the certificates representing tendered Shares (the "Certificates") or timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to Section 3, (b) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, or
an Agent's Message (as defined in Section 3) in connection with a book-entry
transfer, and (c) any other documents required by the Letter of Transmittal.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn if,
as and when Purchaser gives oral or written notice to the Depositary of
Purchaser's acceptance for payment of such Shares pursuant to the Offer.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for the tendering Stockholders for the purposes of receiving payments
from Purchaser and transmitting such payments to the tendering Stockholders
whose Shares have been accepted for payment. Under no circumstances will
interest be paid on the purchase price to be paid by Purchaser for the
tendered Shares, regardless of any delay in making such payment.
If any tendering Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer or if Certificates are submitted
evidencing more Shares than are tendered or accepted for payment, Certificates
for such unpurchased Shares will be returned, without expense to the tendering
Stockholder (or, in the case of Shares tendered by book-entry transfer into
the Depositary's account at a Book-Entry Transfer Facility
12
<PAGE>
pursuant to the procedures set forth in Section 3, such Shares will be
credited to an account maintained with such Book-Entry Transfer Facility), as
promptly as practicable following expiration or termination of the Offer.
Purchaser reserves the right to assign, in whole or from time to time in
part, to Parent or to any direct or indirect subsidiary of Parent the right to
purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such assignment will not relieve Purchaser of its obligations under the
Offer and will in no way prejudice the rights of tendering Stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant
to the Offer.
3. Procedure for Tendering Shares.
Valid Tender of Shares. In order for a holder of Shares validly to tender
Shares pursuant to the Offer, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions of
the Letter of Transmittal, together with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message in lieu of the
Letter of Transmittal), and any other documents required by the Letter of
Transmittal, must be received by the Depositary prior to the Expiration Date
at one of its addresses set forth on the back cover of this Offer to Purchase,
and either (i) the Certificates evidencing tendered Shares must be received by
the Depositary at such address or such Shares must be tendered pursuant to the
procedures for book-entry transfer described below (and a Book-Entry
Confirmation of such delivery received by the Depositary, including an Agent's
Message if the tendering stockholder has not delivered a Letter of
Transmittal), prior to the Expiration Date, or (c) the tendering stockholder
must comply with the guaranteed delivery procedures set forth below. The term
"Agent's Message" means a message, transmitted by the Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of a Book-
Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such
Book-Entry Confirmation, that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that Purchaser may enforce
such agreement against the participant.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER, AND
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT THE STOCKHOLDER USE PROPERLY
INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Delivery. The Depositary will establish accounts with respect to
the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedure for
such transfer. Although delivery of Shares may be effected through book-entry
at the Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message in lieu of the Letter of
Transmittal, and any other required documents, must, in any case, be received
by the Depositary prior to the Expiration Date at one or more of its addresses
set forth on the back cover of this Offer to Purchase, or the tendering
stockholder must comply with the guaranteed delivery procedure described
below. Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Depositary.
Signature Guarantees. Except as otherwise provided below, all signatures on
a Letter of Transmittal must be guaranteed by a firm which is a bank, broker,
dealer, credit union, savings association or other entity that is a member in
good standing of the Securities Transfer Agents Medallion Program, or by any
other "eligible guarantor institution," as such term is defined in Rule 17Ad-
15 under the Exchange Act (each of the foregoing
13
<PAGE>
being referred to as an "Eligible Institution"). Signatures on a Letter of
Transmittal need not be guaranteed (a) if the Letter of Transmittal is signed
by the registered holder (which term, for purposes of this section, includes
any participant in any of the Book-Entry Transfer Facility's systems whose
name appears on a security position listing as the owner of the Shares) of
Shares and such registered holder has not completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of an Eligible Institution. See Instructions 1 and 5 of the
Letter of Transmittal. If a Certificate is registered in the name of a person
other than the signer of the Letter of Transmittal, or if payment is to be
made or Certificates for Shares not tendered or not accepted for payment are
to be returned to a person other than the registered holder of the
Certificates surrendered, then the tendered Certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the Certificates,
with the signatures on the Certificates or stock powers guaranteed by an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a Stockholder desires to tender Shares pursuant to
the Offer and such Stockholder's Certificates evidencing such Shares are not
immediately available or time will not permit all required documents to reach
the Depositary prior to the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, such Shares may nevertheless
be tendered if all of the following conditions are satisfied:
(a) the tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser herewith, is received by
the Depositary as provided below prior to the Expiration Date; and
(c) the Certificates (or a Book-Entry Confirmation) representing all
tendered Shares, in proper form for transfer together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and any other documents required by the
Letter of Transmittal are received by the Depositary within three trading
days after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the New York Stock Exchange ("NYSE") and
the Nasdaq Stock Market ("Nasdaq") are open for business.
Any Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram, telex or facsimile transmission to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
the Notice of Guaranteed Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (a)
Certificates for (or a timely Book-Entry Confirmation, if available, with
respect to) such Shares, (b) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and (c) any
other documents required by the Letter of Transmittal. Accordingly, tendering
Stockholders may be paid at different times depending upon when certificates
for Shares or Book-Entry Confirmations with respect to the Shares are actually
received by the Depositary. Under no circumstances will interest be paid on
the purchase price to be paid by Purchaser for the tendered Shares, regardless
of any extension of the Offer or any delay in making such payment.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser, in its sole discretion,
whose determination shall be final and binding on all parties. Purchaser
reserves the absolute right to reject any and all tenders of Shares determined
by it not to be in proper form or the acceptance for payment of which, or
payment for, such Shares may, in the opinion of Purchaser's counsel, be
unlawful. Purchaser also reserves the absolute right, in its sole discretion,
to waive any of the conditions of the Offer or any defect or irregularity in
the tender
14
<PAGE>
of any Shares of any particular Stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities relating thereto have been cured or waived. None of Purchaser,
Parent, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in
tenders or will incur any liability for failure to give any such notification.
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and instructions thereto) will be final and binding.
Other Requirements. By executing a Letter of Transmittal as set forth above,
a tendering Stockholder irrevocably appoints designees of Purchaser as such
stockholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent of such Stockholder's
rights with respect to the Shares tendered by such Stockholder and accepted
for payment by Purchaser (and with respect to all other Shares or other
securities issued or issuable in respect of such Shares) on or after the date
of this Offer to Purchase. All such proxies will be considered coupled with an
interest in the tendered Shares. This appointment is effective if, when, and
only to the extent that Purchaser accepts such Shares for payment pursuant to
the Offer. Upon such acceptance for payment, all prior proxies given by such
stockholder will be revoked, and no subsequent proxies may be given nor any
subsequent written consent executed by such Stockholder (and, if given, will
not be deemed effective) with respect thereto. Purchaser's designees will,
with respect to the Shares for which the appointment is effective, be
empowered to exercise all voting and other rights of such Stockholder as they,
in their sole discretion, may deem proper at any annual, special or adjourned
meeting of the Stockholders, by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares.
The foregoing proxies are effective only upon acceptance for payment of
Shares pursuant to the Offer. The Offer does not constitute a solicitation of
proxies, absent a purchase of Shares, for any meeting of the Stockholders,
which will be made only pursuant to separate proxy solicitation materials
complying with the Exchange Act.
Purchaser's acceptance for payment of the Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering Stockholder and Purchaser upon the terms and subject to the
conditions of the Offer.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT TO
CERTAIN STOCKHOLDERS OF THE OFFER PRICE, EACH SUCH STOCKHOLDER MUST PROVIDE
THE DEPOSITARY WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER
AND CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX
WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF
TRANSMITTAL. IF BACKUP WITHHOLDING APPLIES WITH RESPECT TO A STOCKHOLDER, THE
DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO SUCH
STOCKHOLDER. SEE INSTRUCTION 10 OF THE LETTER OF TRANSMITTAL.
4. Withdrawal Rights. Tenders of Shares made pursuant to the Offer are
irrevocable except that such Shares may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after August 25,
2000. If Purchaser extends the Offer, is delayed in its acceptance for payment
of Shares, or is unable to accept Shares for payment pursuant to the Offer for
any reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
Stockholders are entitled to withdrawal rights as set forth in this Section 4.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
15
<PAGE>
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name
of the registered holder of such Shares, if different from that of the person
who tendered such Shares. If Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then prior to
the physical release of such Certificates, the serial numbers shown on the
particular Certificates to be withdrawn must be submitted to the Depositary,
and the signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution, unless such Shares have been tendered for the account of
an Eligible Institution. If Shares have been tendered pursuant to the
procedures for book-entry tender as set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the Book-
Entry Transfer Facility to be credited with the withdrawn Shares.
All questions as to the form and validity (including, without limitation,
time of receipt) of notices of withdrawal will be determined by Purchaser, in
its sole discretion, whose determination shall be final and binding. None of
Parent, Purchaser, the Depositary, the Information Agent, or any other person
will be under any duty to give notification of any defects or irregularities
in any notice of withdrawal or incur any liability for failure to give such
notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.
5. Certain Federal Income Tax Consequences of the Offer and the Merger. The
following is a general summary of certain U.S. federal income tax consequences
of the Offer and the Merger relevant to a beneficial holder of Shares whose
Shares are tendered and accepted for payment pursuant to the Offer or whose
Shares are converted to cash in the Merger (a "Holder"). The discussion is
based on the Internal Revenue Code of 1986, as amended (the "Code"),
regulations issued thereunder, judicial decisions and administrative rulings,
all of which are subject to change, possibly with retroactive effect. This
discussion does not discuss all aspects of U.S. federal income taxation which
may be important to particular Holders in light of their individual investment
circumstances, such as Holders who do not hold the Shares as "capital assets"
within the meaning of Section 1221 of the Code, Holders who acquired their
Shares through the exercise of options or otherwise as compensation, or
Holders subject to special tax rules (e.g., financial institutions, broker-
dealers, insurance companies, and tax-exempt organizations). In addition, this
discussion does not address state, local or foreign tax consequences. HOLDERS
OF SHARES ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE SPECIFIC U.S.
FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE
OFFER AND THE MERGER.
The receipt of cash for Shares pursuant to the Offer or in the Merger will
be a taxable transaction for federal income tax purposes and may also be a
taxable transaction under applicable state, local or foreign tax laws. In
general, a Holder will recognize gain or loss for federal income tax purposes
equal to the difference between the amount of cash received in exchange for
the Shares sold and such Holder's adjusted tax basis in such Shares. Assuming
the Shares constitute capital assets in the hands of the Holder, such gain or
loss will be capital gain or loss. If, at the time of the Offer or the Merger,
the Shares then exchanged have been held for more than one year, such gain or
loss will be a long-term capital gain or loss. Under current law, long-term
capital gains of individuals are, under certain circumstances, taxed at lower
rates than items of ordinary income.
A Holder (other than certain exempt Holders including, among others, all
corporations and certain foreign individuals and entities) that tenders Shares
may be subject to a 31% backup withholding unless the Holder provides its
taxpayer identification number, or unless an exemption applies. If backup
withholding applies to a Holder, the Depositary is required to withhold 31%
from payments to such Holder. Backup withholding is not an additional tax.
Rather, the amount of the backup withholding can be credited against the
federal income tax liability of the person subject to the backup withholding,
provided that the required information is given to the Internal Revenue
Service. If backup withholding results in an overpayment of tax, a refund can
be obtained by the Holder upon filing an income tax return.
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<PAGE>
6. Price Range of Shares; Dividends. The Shares are listed on the Nasdaq
under the ticker symbol "JSTN." The following table sets forth, for the
calendar quarters indicated, the high and low sales prices for the Common
Stock on Nasdaq:
<TABLE>
<CAPTION>
Calendar Year High Low
------------- ------- --------
<S> <C> <C>
1998:
First Quarter........................................... 15 3/4 12
Second Quarter.......................................... 17 13 1/4
Third Quarter........................................... 16 1/4 12 19/32
Fourth Quarter.......................................... 15 1/16 10 3/8
1999:
First Quarter........................................... 14 1/4 9 11/16
Second Quarter.......................................... 14 7/8 10 9/16
Third Quarter........................................... 15 7/8 12 3/4
Fourth Quarter.......................................... 16 12 3/4
2000:
First Quarter........................................... 18 1/2 13 3/4
Second Quarter (through June 23, 2000).................. 22 15 3/4
</TABLE>
According to the Company's 10-K, the Company has declared a quarterly cash
divided of $.05 per Share in each quarter of fiscal years 1998 and 1999. The
Company also declared a quarterly cash dividend of $.06 per Share for the
first quarter of fiscal year 2000. On June 14, 2000, the Board of Directors of
the Company declared a cash dividend of $.06 per Share payable on July 5, 2000
to stockholders of record on June 26, 2000. Pursuant to the Merger Agreement,
the Company has agreed that, without the prior written consent of Parent, it
will not declare, set aside or pay any dividend or other distribution on any
shares of capital stock of the Company, except for the $.06 dividend described
above.
On June 19, 2000, the last full trading day prior to the public announcement
of the terms of the Offer and the Merger, the reported closing price on the
Nasdaq was $17 7/8 per Share. Stockholders are urged to obtain a current
market quotation for the Shares.
7. Effect of the Offer on Market for the Shares, Stock Market Quotation, and
Exchange Act Registration.
Market for Shares. The purchase of Shares by Purchaser pursuant to the Offer
will reduce the number of Shares that might otherwise trade publicly and will
reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the Stockholders.
Stock Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements for continued
inclusion and quotation on Nasdaq and may be cease to be quoted on Nasdaq.
According to Nasdaq's published guidelines, Nasdaq would consider no longer
including the Shares for quotation and trading if, among other things, the
number of publicly held Shares were less than 500,000, there were less than
300 round lot holders (round lot holders are considered holders of 100 shares
or more) of Shares, or the aggregate market capitalization of the Company were
less than $35 million. The Company has advised Purchaser that, as of June 19,
2000, there were 25,775,603 Shares outstanding, held by approximately 1,528
holders of record. If Nasdaq were to discontinue the quotation and trading of
the Shares, the market for the Shares could be adversely affected.
If the Nasdaq were to discontinue the quotation and trading of the Shares,
it is possible that the Shares would be traded or quoted on other securities
exchanges or in the over-the-counter market, and that price quotations would
be reported by such exchanges or other sources. The extent of the public
market for the Shares and the availability of such quotations would, however,
depend upon the number of Stockholders and/or the aggregate market value of
the Shares remaining at such time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of
registration of the Shares under the Exchange Act and
17
<PAGE>
other factors. Purchaser cannot predict whether the reduction in the number of
Shares that might otherwise trade publicly would have an adverse 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 Merger Consideration.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, following the Offer it is possible that the Shares might no
longer constitute "margin securities" for the purposes of the Federal Reserve
Board's margin regulations, in which event the Shares could no longer be used
as collateral for loans made by brokers.
Exchange Act Regulation. The Shares are currently registered under the
Exchange Act. Such registration may be terminated by the Company upon
application to the SEC if the Shares are not listed on a national securities
exchange and if there are fewer than 300 record holders. The termination of
registration of the Shares under the Exchange Act would substantially reduce
the information required to be furnished by the Company to its Stockholders
and to the SEC and would make certain provisions of the Exchange Act, such as
the short-swing profit recovery provisions of Section 16(b), the requirement
of furnishing a proxy statement in connection with Stockholders' meetings and
the related requirement of furnishing an annual report to Stockholders, and
the requirements of Rule 13e-3 under the Exchange Act with respect to "going-
private" transactions, no longer applicable to the Shares. In addition,
"affiliates" of the Company and persons holding "restricted securities" of the
Company may be deprived of the ability to dispose of such securities pursuant
to Rule 144 under the Securities Act of 1933, as amended. If registration of
the Shares under the Exchange Act were terminated, the Shares would no longer
be eligible for listing on the Nasdaq or for continued inclusion on the
Federal Reserve Board's list of "margin securities".
8. Certain Information Concerning the Company. The information concerning
the Company contained in this Offer to Purchase, other than the financial
forecasts below, has been taken from or is based upon publicly available
documents and records on file with the SEC and other public sources. Neither
Parent nor Purchaser assumes any responsibility for the accuracy or
completeness of the information concerning the Company contained herein or in
such documents and records or for any failure by the Company to disclose
events which may have occurred or may affect the significance or accuracy of
any such information but which are unknown to Parent or Purchaser.
General. The Company is a Texas corporation with its principal executive
offices located at 2821 West 7th Street, Fort Worth, Texas 76107. The
Company's operations are in two principal business areas operating under the
corporate names of Acme Building Brands, Inc., which manufactures and sells
building materials, and Justin Brands, Inc., which manufactures, purchases and
sells footwear products.
The building materials segment includes clay brick manufactured and sold
under the name Acme Brick for use in residential and commercial construction
primarily in the central and southwest United States. Acme is one of the
largest manufacturers of face brick in the United States. Other products in
the Company's building materials segment include concrete block manufactured
and sold under the trade name Featherlite Building Products and cut limestone
manufactured under the name Texas Quarries. Acme and Featherlite also
represent other manufacturers as distributors of clay brick, glass block, tile
and masonry units and other masonry materials, fireplace equipment and
purchased used brick for resale. This segment includes the sale of ceramic and
marble floor and wall tile through American Tile distribution centers in Texas
and one location in Arkansas. In a number of states, the Company's building
materials are marketed directly through approximately 500 full time company
sales employees, and in other states, sales are made principally through
independent distributors and dealers.
The footwear segment includes the design, manufacture or purchase, and
distribution of western style, safety, work and sports boots and shoes,
primarily for sale in the United States under the "Justin", "Nocona", "Tony
Lama", "Chippewa", and "Sport Lace-R" brand names. The Company's footwear
products are marketed by commissioned company and independent sales
representatives. Sales are made throughout the United States to a network of
approximately 6,500 authorized retail outlets and dealers such as western
goods stores,
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<PAGE>
department stores, specialty retail stores and mail order houses. The Company
also publishes books about the history and art of the West through the
Northland Publishing Company.
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is obligated to file reports and
other information with the SEC relating to its business, financial condition
and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities, any material
interests of such persons in transactions with the Company and other matters
is required to be disclosed in proxy statements distributed to shareholders
and filed with the SEC. Such reports, proxy statements and other information
should be available for inspection at the public reference room at the SEC's
office at 450 Fifth Street, N.W., Washington, D.C. 20549, and also should be
available for inspection and copying at the regional offices of the SEC
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Information regarding the public reference facilities may be obtained from the
SEC by telephoning 1-800-SEC-0330. Copies may be obtained, by mail, upon
payment of the SEC's customary charges, by writing to its Public Reference
Section at 450 Fifth Street, N.W., Washington, D.C. 20549 and can be accessed
electronically on the SEC's website at http://www.sec.gov.
In connection with this transaction, Parent received some financial
information forecasting potential future operating performance of the Company
and its two business divisions. The Company does not as a matter of course
make public forecasts as to future operations, and these forecasts were not
prepared with a view to public disclosure or compliance with published
guidelines of the SEC or the American Institute of Certified Public
Accountants regarding financial forecasts. Such information is set forth below
for the limited purpose of making available to stockholders the forecasts that
were made available to Parent in connection with the Offer. Neither the
Company nor Parent intends to update or otherwise revise these forecasts.
These forecasts necessarily reflect numerous assumptions as to general
business and economic conditions and other matters, many of which are
inherently uncertain or beyond the Company's control. It is not possible to
predict whether the assumptions made in preparing these forecasts will be
valid, and actual results may prove to be materially higher or lower than
these forecasts. Factors that may cause actual results to differ, perhaps
materially, from these forecasts include changes in demand and prices for the
Company's products, raw materials costs, changes in the economic conditions of
the various markets the Company serves, change in interest rates, and changes
in the amount and severity of inclement weather. The inclusion of these
forecasts does not mean that Parent considered them reliable or relied upon
them, and these forecasts should not be relied on as predictors of future
events. Neither Parent nor the Company takes any responsibility for the
validity, reasonableness, accuracy or completeness of these forecasts. The
Company has made no representation to Parent regarding these forecasts, and
Parent asked for none.
The following are forecasted revenues and net income for the year ending
December 31, 2000 for the Company on a consolidated basis, and forecasted
revenues and operating profit (earnings before interest, taxes, and corporate
charges) for the Company's Acme Building Brands and Justin Brands divisions
for the year ending December 31, 2000 (dollars in millions):
<TABLE>
<CAPTION>
Net
Revenues Income
-------- ---------
<S> <C> <C>
Justin Industries....................................... $540.3 $51.8
<CAPTION>
Operating
Profit
---------
<S> <C> <C>
Acme Building Brands.................................... $367.3 $81.3
Justin Brands........................................... $173.0 $ 8.0
</TABLE>
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<PAGE>
The following are forecasted revenues and EBITDA (earnings before interest,
taxes, depreciation, amortization and corporate charges) for the Company's
Acme Building Brands and Justin Brands divisions for the years ending December
31, 2001-2003 (dollars in millions):
<TABLE>
<CAPTION>
2001 2002 2003
---- ---- ----
<S> <C> <C> <C>
Acme Building Brands
Revenue................................................... $385 $406 $427
EBITDA.................................................... $103 $110 $117
Justin Brands
Revenue................................................... $207 $227 $253
EBITDA.................................................... $ 20 $ 25 $ 31
</TABLE>
9. Certain Information Concerning Purchaser and Parent. Purchaser is a Texas
corporation and to date has engaged in no activities other than those incident
to its formation and the commencement of the Offer. Purchaser is a direct
wholly owned subsidiary of Parent. The principal executive offices of
Purchaser and Parent are located at 1440 Kiewit Plaza, Omaha, Nebraska 68131.
Berkshire Hathaway Inc. ("Berkshire" or "Parent"), a Delaware corporation,
is a holding company engaged through subsidiaries in a number of diverse
businesses, the most important of which is property and casualty insurance and
reinsurance offered on both a direct and reinsurance basis through insurance
subsidiaries.
Berkshire may be deemed to be controlled by Warren E. Buffett, who is
Berkshire's chairman and chief executive officer and who beneficially owns
Berkshire shares representing approximately 34.9% of its voting power.
Additional information concerning Berkshire is set forth in Berkshire's
Annual Report on Form 10-K for the year ended December 31, 1999 and the
subsequent Quarterly Report on Form 10-Q, which reports may be obtained from
the SEC in the manner set forth with respect to information concerning the
Company in Section 8.
The name, citizenship, business address, principal occupation, and five-year
employment history of each of the directors and executive officers of Parent
and Purchaser are set forth in Schedule I to this Offer to Purchase.
None of the Parent, Purchaser nor, to the best of their knowledge, any of
the persons listed in Schedule I to this Offer to Purchase, nor any associate
or majority-owned subsidiary of any of the foregoing, beneficially owns or has
any right to acquire, directly or indirectly, any Shares and none of the
Parent, Purchaser nor, to the best of their knowledge, any of the persons or
entities referred to above, nor any director, executive officer or subsidiary
of any of the foregoing, has effected any transaction in the Shares during the
past 60 days, other than pursuant to the Merger Agreement and the Stockholders
Agreement.
Except as provided in the Merger Agreement and Stockholders Agreement, and
as otherwise described in this Offer to Purchase, (i) none of the Parent,
Purchaser nor any of their respective subsidiaries nor, to the best of their
knowledge, any of the persons listed in Schedule I to this Offer to Purchase,
has any contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any such securities, finder's fees,
joint ventures, loan or option arrangements, puts or calls, guaranties of
loans, guaranties against loss, guarantees of profits, division of profits or
loss or the giving or withholding of proxies, and (ii) none of Parent,
Purchaser nor, to the best of their knowledge, any of the persons listed on
Schedule I to this Offer to Purchase, has had any business relationship or
transaction with the Company or any of its executive officers, directors or
affiliates that is required to be reported under the rules and regulations of
the SEC applicable to the Offer. Set forth below in Section 11 of this Offer
to Purchase and elsewhere herein is a summary description of the mutual
contacts, negotiations and transactions between any of Purchaser or Parent, or
any of their respective subsidiaries or any of the persons listed on Schedule
I to this Offer to Purchase, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
20
<PAGE>
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
10. Source and Amount of Funds. The Offer is not conditioned upon any
financing arrangements. Purchaser estimates that the total amount of funds
required to purchase all of the outstanding Shares pursuant to the Offer and
the Merger and to pay related fees and expenses will be approximately $585
million. Purchaser will obtain these funds from Parent, either directly or
indirectly, in the form of capital contributions and/or loans from Parent or
its affiliates. Parent will obtain all required funds through dividends and/or
loans from its affiliates.
11. Background of the Offer; Contacts with the Company; the Merger Agreement
and Stockholders Agreement.
Background of the Offer; Contacts with the Company.
In May 1998, the Board first authorized the Company to engage Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ") as the Company's financial
advisor to assist the Board in evaluating the Company's strategic
alternatives, including the following: (i) remaining as a stand-alone,
independent entity, (ii) conducting a sale of the entire Company, (iii)
pursuing a sale of Acme Building Brands, Inc. ("Acme Building Brands") and
Justin Brands, Inc. ("Justin Brands") in separate transactions, and (iv)
considering other extraordinary corporate transactions. After considering the
various alternatives, the Board authorized DLJ and senior management to embark
upon a process of contacting companies that might be interested in a business
combination with the Company. The Company's management, with the assistance of
DLJ, then identified a number of third parties that might have an interest in
a business combination with the Company.
During the period from May 1998 through August 1998, the Company and DLJ
contacted various potential strategic buyers of both Justin Brands and Acme
Building Brands, as well as a number of potential financial buyers. The
Company and DLJ also furnished written information to certain of these
potential buyers. At a meeting in August 1998, DLJ reviewed with the Board the
preliminary indications of interest in acquiring the Company. After an
evaluation of the Company's current and prospective situation and its various
strategic options, the Board determined not to pursue discussions with any
particular prospective buyer at that time due to the Board's determination
that the preliminary indications of interest did not adequately reflect the
Company's value. The Board then terminated any active pursuit of strategic
alternatives.
Representatives of the Company made oral presentations to various
prospective purchasers during the period from September 1999 through June
2000. In September 1999, the Company was contacted by a representative of a
publicly held European brick manufacturing corporation (the "Brick Industry
Buyer") who indicated that the Brick Industry Buyer was interested in
exploring a business combination with Acme Building Brands. After continued
discussions between management of the Company and the Brick Industry Buyer,
the Brick Industry Buyer proposed an acquisition of Acme Building Brands for a
combination of cash and securities at a price per share of $20 (with not more
than $10 per share to be paid in cash). In addition, the Brick Industry Buyer
indicated that it would require up to six months to close an acquisition
transaction. After careful deliberation, the Board rejected the offer as
inadequate given the partly non-cash nature of the offer and its proposed
timing.
In December 1999, a representative of a leveraged buyout firm contacted the
Company and indicated a preliminary interest in pursuing a transaction
involving a purchase of the entire Company for a price in the range of $20 to
$24. These preliminary discussions, however, ended when this potential
purchaser proved unable to secure financing.
In January 2000, a venture capital group (the "Venture Capital Group") and
an individual (the "Individual Buyer") both contacted the Company regarding
their interest in a possible combination with the Company. Both the Venture
Capital Group and the Individual Buyer conducted extensive due diligence of
the Company's business and operations. In March 2000, the Individual Buyer
orally indicated to the Company a preliminary
21
<PAGE>
interest in a business combination with Justin Brands. After careful
deliberation, the Board rejected the preliminary oral proposal based on the
inadequacy of the consideration and the fact that the proposal was not fully
financed. The Company also received an oral preliminary proposal from the
Venture Capital Group shortly thereafter, which contemplated a transaction in
which the Venture Capital Group would acquire all the outstanding shares of
the Company's Common Stock for $19 per share in cash and $4 per share in
subordinated debt. Following a Board meeting on March 17, 2000, the Company
decided not to consider the proposal due to the highly conditional nature of
the offer, the uncertainties involved in valuing the subordinated debt
component and the fact that the offer was not fully financed.
In April 2000, the Individual Buyer teamed with a financial partner (the
"Financial Buyer"). The Individual Buyer and the Financial Buyer notified the
Company of their combined interest in pursuing an acquisition of Justin
Brands. The Individual Buyer and the Financial Buyer also informed the Company
that they were in the process of initiating a search for a partner to purchase
Acme Building Brands. The Individual Buyer and the Financial Buyer eventually
located a building materials company (the "Building Materials Company")
interested in pursuing a possible acquisition of Acme Building Brands. The
Building Materials Company, the Individual Buyer and the Financial Buyer
(together, the "Bidders") conducted extensive due diligence of the Company's
business and operations, but did not contact the Company with a proposal at
that time.
In mid-May 2000, a former employee of the Company contacted Warren E.
Buffett, Chairman of Berkshire, and provided him with information about the
Company. On or about May 24, 2000, Mr. Buffett contacted John V. Roach,
Chairman of the Board of the Company. Mr. Roach and Mr. Buffett arranged a
meeting to be held at the offices of Mr. Roach on June 7, 2000. The Company
then notified the Brick Industry Buyer and the Bidders that discussions
regarding the possible sale of the Company had progressed and were moving
forward.
On June 7, 2000, Mr. Buffett met with Mr. Roach, Mr. Justin, the senior
managers of Acme Building Brands and Justin Brands, and other senior Company
officers, to discuss the Company's businesses. At the conclusion of those
meetings, Mr. Buffett verbally indicated to Mr. Roach Berkshire's interest in
pursuing a $22 per share, all cash offer for the Company with no financing or
due diligence requirements. Thereafter, the Company contacted the Venture
Capital Group, the Brick Industry Buyer and the Bidders and indicated that the
Company had received an indication of interest for an acquisition of the
Company that could result in a transaction. Accordingly, the Company indicated
that the Venture Capital Group, the Brick Industry Buyer and the Bidders
should prepare to act decisively if they remained interested in a possible
acquisition of the Company. The Company suggested to each of the Venture
Capital Group, Berkshire, the Brick Industry Buyer and the Bidders that it
prepare a proposal, including price, and submit such proposal to the Company
by noon on June 14, 2000. Berkshire and the Bidders submitted proposals.
On June 14, 2000, the Board met and received a detailed presentation from
its legal counsel on the duties of the directors in considering a potential
acquisition of the Company. The Board also received oral presentations from
representatives of the Bidders and representatives of Berkshire. The Bidders
proposed an acquisition of the Company structured as a cash tender offer at a
price below $22. The Bidders' offer was conditioned on, among other things,
the completion of due diligence by the Bidders. Representatives of Berkshire
then definitively proposed an all cash acquisition of the Company at $22 per
Share through a first-step tender offer for all outstanding Shares followed by
a second-step merger in which all remaining Shares would be converted into the
right to receive the same per share consideration paid in the tender offer.
The proposal was subject to customary conditions but was not subject to due
diligence or financing conditions. Berkshire's representatives stated that
Berkshire was prepared to negotiate definitive acquisition agreements and
announce a transaction within three business days. The Board then discussed
the two proposals extensively. The Board considered a number of factors
relating to the two proposals, including the amount of the consideration
offered, the fact that the Bidders' financing was not yet fully committed and
the fact that a transaction with the Bidders would require more time to
consummate and was subject to more conditions than a transaction with
Berkshire. At the conclusion of the discussion, the Board unanimously
determined that it would be in the best interests of the shareholders to
proceed with the Berkshire proposal. This conclusion was based principally on
the Board's belief that the Bidders' price per share did not adequately
reflect the Company's value and the possibility that the transaction would not
be
22
<PAGE>
consummated, while the Berkshire proposal, in the Board's judgment, reflected
a fair price and was more likely to be consummated as it was subject to few
conditions. The Board instructed management to attempt to negotiate
satisfactory definitive agreements that could be presented to the Board at its
next meeting on June 19, 2000.
Berkshire's representatives provided a draft merger agreement and
stockholders agreement to the Company and the Stockholders at the conclusion
of the Board meeting on June 14, 2000. Between then and June 19, 2000,
Berkshire's counsel and counsel for the Company and the Stockholders
negotiated the definitive agreements.
On Monday afternoon, June 19, 2000, the Board met to receive presentations
from the Company's legal and financial advisors and to consider the Offer, the
Merger, the Merger Agreement and the transactions contemplated thereby. At the
meeting, DLJ delivered both its oral and written opinion to the effect that,
as of such date and based on and subject to the assumptions, limitations and
qualifications set forth in its written opinion, the consideration to be
received by the holders of Shares pursuant to the Offer and the Merger was
fair to such holders, from a financial point of view. Following such
presentations and receipt of DLJ's written opinion, the Board determined that
the terms of the Offer and the Merger were fair to, and in the best interests
of, the shareholders of the Company, approved the Offer, the Merger, the
Merger Agreement and the transactions contemplated thereby, and determined to
recommend that the Company's shareholders accept the Offer and tender their
Shares pursuant to the Offer and approve and adopt the Merger Agreement. Also
on June 19, 2000, the Board of Directors of Berkshire met telephonically to
review the terms of the proposed transaction. After full discussion, the
Berkshire Board determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, were in the best
interests of Berkshire and its stockholders, and approved the Merger
Agreement.
Following the two Board meetings, Berkshire, the Purchaser and the Company
executed the Merger Agreement and Berkshire, the Purchaser and the
Stockholders executed the Stockholders Agreement, as contemplated by the
Merger Agreement.
On the morning of June 20, 2000, Berkshire and the Company issued a joint
press release announcing the execution of the Merger Agreement and the
Stockholders Agreement.
On June 27, 2000, in accordance with the Merger Agreement, the Purchaser
commenced the Offer.
The Merger Agreement
The following is a summary of the Merger Agreement, a copy of which is filed
as an Exhibit to the Form 8-K/A filed by Parent with the SEC on June 27, 2000.
Such summary is qualified in its entirety by reference to the Merger
Agreement. Capitalized terms not otherwise defined in the following
description of the Merger Agreement have the respective meanings ascribed to
them in the Merger Agreement.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as practicable, but in no event later than seven business days
after the public announcement of the execution of the Merger Agreement. The
obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer is subject to the satisfaction of certain conditions
that are described below under the caption "Section 14--Conditions to the
Offer."
Purchaser and Parent have agreed that, without the prior written consent of
the Company, no change in the Offer may be made which decreases the price per
Share payable in the Offer, which reduces the maximum number of Shares to be
purchased in the Offer, or which amends the conditions to the Offer set forth
below under "Section 14--Conditions to the Offer." Purchaser may, without the
consent of the Company, extend the Offer for up to an additional 40 days, in
one or more periods of not more than 10 business days, if any condition to the
Offer is not satisfied or waived and such condition is reasonably capable of
being satisfied. If, on the expiration date of the Offer, the Shares validly
tendered and not withdrawn pursuant to the Offer equal at least 75% of the
outstanding Shares but less than 90% of the outstanding Shares on a fully-
diluted basis, Purchaser
23
<PAGE>
may, without the consent of the Company, extend the Offer on one occasion for
up to 10 business days notwithstanding that all the conditions to the Offer
have been satisfied so long as Purchaser irrevocably waives the satisfaction
of any of the conditions to the Offer (other than in the case of the first
condition contained in Section 14 of this Offer to Purchase, the occurrence of
any Prohibition) that subsequently may not be satisfied during any such
extension of the Offer. In addition, the Offer Price may be increased and the
Offer may be extended to the extent required by law in connection with such
increase, in each case without the consent of the Company.
Board Representation. Pursuant to the Merger Agreement, upon the purchase by
Purchaser of Shares pursuant to the Offer, and from time to time thereafter as
Shares are acquired by Purchaser, Parent or their affiliates, Purchaser shall
be entitled to designate such number of directors, rounded up to the next
whole number, on the Company Board as will give Purchaser, subject to
compliance with Section 14(f) of the Exchange Act, representation on the
Company Board equal to that number of directors which equals the product of
the total number of directors on the Company Board (giving effect to the
election or appointment of any additional directors pursuant to this paragraph
and including current directors serving as officers of the Company) multiplied
by the percentage that the aggregate number of Shares beneficially owned by
Parent, Purchaser or any of their affiliates (including such Shares as are
accepted for payment pursuant to the Offer, but excluding Shares held by the
Company or any of its subsidiaries) bears to the total number of Shares then
issued and outstanding. The Company has agreed, upon request by Purchaser, to
promptly increase the size of the Company Board as is necessary to enable
Purchaser's designees to be elected to the Company Board and to cause
Purchaser's designees to be so elected; provided that, if Purchaser's
designees are appointed or elected to the Company Board, until the Effective
Time, the Company Board shall have at least two directors who are directors on
the date of the Merger Agreement and who are neither officers of the Company
nor designees, stockholders, affiliates or associates (within the meaning of
the federal securities laws) of Parent (the "Independent Directors"). The
Merger Agreement also provides that, during the period after such election of
directors designated by Purchaser but prior to the Effective Time, the Company
Board shall delegate to a committee of the Company Board comprised solely of
the Independent Directors the sole responsibility for (i) the amendment or
termination of the Merger Agreement on behalf of the Company, other than a
termination in connection with the Company's execution of a definitive
agreement providing for a Superior Proposal, (ii) the waiver of any of the
Company's rights or remedies under the Merger Agreement, (iii) the extension
of the time for performance of Parent's or Purchaser's obligations under the
Merger Agreement, or (iv) the assertion or enforcement of the Company's rights
under the Merger Agreement to (a) object to a failure to consummate the Merger
for a failure of the condition that the Company perform in all material
respects all material obligations required by it under the Merger Agreement to
be satisfied or (b) object to a termination of the Merger Agreement by the
Parent based on any alleged inaccuracy in the representations and warranties
of the Company in the Merger Agreement.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and an accordance with the Texas Act, at the
Effective Time, Purchaser shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Purchaser will cease
and the Company will continue as the Surviving Corporation. Upon consummation
of the Merger, each Share issued and outstanding immediately prior to the
Effective Time held by a stockholder (other than any Dissenting Shares) shall
be canceled and shall be converted automatically into the right to receive
from Surviving Corporation $22 per Share in cash (or any higher price per
Share that is paid in the Offer), without interest. All Shares that are owned
by the Company as treasury stock, all Shares owned by any subsidiary of the
Company and any Shares owned by Parent, Purchaser or any other wholly owned
subsidiary of Parent will be canceled and retired and will cease to exist and
no consideration will be delivered in exchange therefor.
Pursuant to the Merger Agreement at the Effective Time, each share of common
stock, par value $.01 per share, of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted into and exchanged
for one validly issued, fully paid and nonassessable share of common stock,
par value $.01 per share, of the Surviving Corporation.
24
<PAGE>
The Merger Agreement provides that the Amended Articles of Incorporation of
the Company, as in effect immediately prior to the Effective Time, will be
amended as set forth in the Merger Agreement, and as so amended, will be the
Articles of Incorporation of the Surviving Corporation. The Merger Agreement
also provides that the By-laws of Purchaser, as in effect immediately prior to
the Effective Time, will be the By-laws of the Surviving Corporation.
Directors and Officers of the Surviving Corporation. The Merger Agreement
provides that the directors of Purchaser and the officers of the Company
immediately prior to the Effective Time will, from and after the Effective
Time, be the directors and officers, respectively, of the Surviving
Corporation until their successors have been duly elected or appointed or
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-laws.
Treatment of Options. The Merger Agreement also provides that each
outstanding option to purchase Shares (an "Option") granted under any employee
stock option plan and non-employee director stock option plan of the Company,
whether or not exercisable, shall vest as of the Effective Time. If the Option
has an exercise price of less than the Offer Price, unless the holder of the
Option elects to receive the consideration described in the next sentence (by
giving notice to Parent at least 15 business days before the Effective Time),
the Option will be cancelled in exchange for a cash payment from the Surviving
Corporation immediately following the Effective Time equal to the product of
(1) the total number of shares subject to the Option and (2) the excess of the
Offer price over the exercise price of the Option. If the Option is not
cancelled as described above, the Option will be assumed by Parent, or
substituted with a new option issued by Parent, so that the Option shall be
deemed to constitute an option to acquire, on the terms and conditions of
Parent's 1996 Stock Option Plan, as amended, (x) the number of shares of
Parent Class B common stock, par value $.1667 per share ("Parent Class B
Stock") (which shares shall be registered pursuant to an effective
registration statement) equal to the product of (1) the number of shares of
Company Common Stock issuable upon exercise of such Company Stock Option and
(2) 0.0113519 (the "Parent Class B Exchange Ratio"), provided that any
fractional shares of Parent Class B Stock resulting from such multiplication
shall be rounded up or down to the nearest whole share, at (y) a price per
share equal to (1) the exercise price for the shares of Company Common Stock
otherwise purchasable pursuant to such Company Stock Option divided by (2) the
Parent Class B Exchange Ratio, provided that such exercise price shall be
rounded up or down to the nearest cent.
Stockholders' Meeting. The Merger Agreement provides that the Company will,
if required by applicable law in order to consummate the Merger, (i) duly
call, give notice of, convene and hold a meeting of the stockholders (the
"Special Meeting") as soon as practicable following the acceptance for payment
and purchase of Shares by Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the Merger Agreement, (ii) prepare and file
with the SEC a preliminary proxy or information statement relating to the
Merger and the Merger Agreement and use its reasonable efforts (x) to obtain
and furnish the information required to be included by the federal securities
laws (and the rules and regulations thereunder) in the Proxy Statement (as
hereinafter defined) and, after consultation with Parent, to respond promptly
to any comments made by the SEC with respect to the preliminary proxy or
information statement and cause a definitive proxy or information statement
(the "Proxy Statement") to be mailed to its stockholders and (y) to obtain the
necessary approvals of the Merger and the Merger Agreement by its
stockholders; and (iii) include in the Proxy Statement the recommendation of
the Company Board that stockholders vote in favor of the approval of the
Merger and the adoption of the Merger Agreement, unless such recommendation
has been withdrawn, or as such recommendation has been modified, in accordance
with the Merger Agreement.
Parent has agreed to provide the Company with the information concerning
Parent and Purchaser required to be included in the Proxy Statement and to
vote, or cause to be voted, all of the Shares then owned by it, Purchaser or
any of its other subsidiaries and affiliates in favor of the approval of the
Merger and the approval and adoption of the Merger Agreement.
Merger Without Meeting of Stockholders. In the event that Parent and
Purchaser acquire at least 90% of the outstanding Shares pursuant to the Offer
or otherwise, each of the parties to the Merger Agreement has agreed
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to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
stockholders, in accordance with Article 5.16 of the Texas Act.
Conduct of Business. Pursuant to the Merger Agreement, during the period
from the date of the Merger Agreement to the Effective Time, unless Parent
otherwise agrees in writing, the Company shall, and shall cause its
subsidiaries to, in all material respects, (i) conduct its business in the
usual, regular and ordinary course consistent with past practice and (ii) use
all reasonable efforts to maintain and preserve intact its business
organization and the good will of those having business relationships with it
and retain the services of its present officers and key employees.
The Company has further agreed that during this period, except as expressly
provided in the Merger Agreement, it will not, nor will it permit any of its
subsidiaries to, without the prior written consent of Parent:
(i) issue, sell, grant, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, sale, disposition or pledge or other
encumbrance of (A) any additional shares of its capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for any shares of its capital stock, or any rights,
warrants, option, calls, commitments or any other agreements of any
character to purchase or acquire any shares of its capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for, any shares of its capital stock or (B) any other
securities in respect of, in lieu of, or in substitution for, any shares of
its capital stock outstanding on the date of the Merger Agreement other
than pursuant to the exercise of stock options outstanding as of the date
of the Merger Agreement; (ii) redeem, purchase or otherwise acquire, or
propose to redeem, purchase or otherwise acquire, any of its outstanding
shares of capital stock; or (iii) split, combine, subdivide or reclassify
any shares of its capital stock or declare, set aside for payment or pay
any dividend, or make any other actual, constructive or deemed distribution
in respect of any shares of its capital stock or otherwise make any
payments to its Stockholders in their capacity as such, other than the
payment of the cash dividend of $.06 per share of common stock declared on
June 14, 2000 payable on July 5 to holders of record on June 26, 2000;
(ii) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
investments in, any other person other than the Company or its
subsidiaries;
(iii) sell, transfer, mortgage, encumber or otherwise dispose of any of
its properties or assets with a minimum value in excess of $10 million to
any individual, corporation or other entity other than a direct or indirect
wholly owned subsidiary, or cancel, release or assign any indebtedness in
excess of $1 million to any such person or any claims held by any such
person, in each case that is material to the Company and its subsidiaries,
taken as a whole, except (i) in the ordinary course of business consistent
with past practice or (ii) pursuant to contracts or agreements in force at
the date of the Merger Agreement;
(iv) make any material acquisition or investment in a business either by
purchase of stock or securities, merger or consolidation, contributions to
capital, property transfers, or purchases of any property or assets of any
other individual, corporation or other entity other than a wholly owned
subsidiary thereof, or purchase or enter into any agreement to purchase
equipment, materials, supplies, or services in excess of $10 million in any
one transaction or $20 million in the aggregate;
(v) increase in any manner the compensation of any of its directors,
officers or employees or enter into, establish, amend, or terminate any
employment, consulting, retention, change in control, collective
bargaining, bonus or other incentive compensation, profit sharing, health
or other welfare, stock option or other equity, pension, retirement,
vacation, severance, deferred compensation or other compensation or benefit
plan or arrangement with or for any stockholder, officer, director,
employee, agent, consultant or affiliate other than (a) as required
pursuant to existing agreements and (ii) increases in salaries and benefits
of employees who are not directors or officers of the Company made in the
ordinary course of business consistent with past practices;
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(vi) amend its articles of incorporation, bylaws or similar governing
documents;
(vii) waive or fail to enforce any provision of any confidentiality or
standstill agreement to which it is a party; or
(viii) make any commitment to or take any of these aforementioned
actions.
Access to Information. Pursuant to the Merger Agreement, upon reasonable
notice and subject to applicable laws, the Company has agreed to, and to cause
each of its subsidiaries to, afford to the officers, employees, accountants,
counsel and other representatives of Parent, during normal business hours
during the period prior to the Effective Time, reasonable access to all its
properties, books, contracts, commitments and records, and to its officers,
employees, accountants, counsel and other representatives and, during such
period, to make available to Parent (i) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws and (ii) all
other information concerning its business, properties and personnel as Parent
may reasonably request.
Further Assurances. Parent and the Company have agreed to, and to cause
their subsidiaries to, use all reasonable efforts (i) to take, or cause to be
taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its subsidiaries with
respect to the Merger and, subject to certain conditions set forth in the
Merger Agreement, to consummate the transactions contemplated by the Merger
Agreement (including the Offer and the Merger) as promptly as practicable and
(ii) to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by the
Company or Parent or any of their respective subsidiaries in connection with
the Merger and the other transactions contemplated by the Merger Agreement,
and to comply with the terms and conditions of any such consent,
authorization, order or approval.
The Company and Parent have further agreed to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective, as
soon as practicable after the date of the Merger Agreement, the transactions
contemplated therein, including, without limitation, using all reasonable
efforts to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby and using all reasonable efforts to defend any litigation
seeking to enjoin, prevent or delay the consummation of the transactions
contemplated thereby or seeking material damages.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company, Parent and Purchaser as to the enforceability
of the Merger Agreement. The Company also has provided representations and
warranties as to absence of certain changes or events concerning its business,
compliance with law, absence of litigation, corporate status, capitalization,
and the accuracy of financial statements and filings with the SEC.
Indemnification of Officers and Directors. The Merger Agreement provides
that from and after the Effective Time, Parent shall, and shall cause the
Surviving Corporation to, indemnify, defend and hold harmless each person who
is now, or has been at any time prior to the date of the Merger Agreement or
who becomes such prior to the Effective Time, an officer, director, agent,
fiduciary or employee of the Company or any of its subsidiaries (the
"Indemnified Parties") against (i) all losses, claims, damages, costs,
expenses, fines, liabilities or judgments or amounts that are paid in
settlement with the approval of the indemnifying party (which approval will
not be unreasonably withheld) of or in connection with any claim, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of the fact that such person is or was a director,
officer, agent, fiduciary or employee of the Company or any of its
subsidiaries, whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to, or at or
after, the Effective Time ("Indemnified Liabilities") and (ii) all Indemnified
Liabilities based in whole or in part on, arising in whole or in part out of,
or pertaining to the Merger Agreement or the transactions contemplated
thereby. In the case of Purchaser and the Surviving Corporation, such
indemnification will only be to the fullest
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extent a corporation is permitted under the Delaware General Corporation Law
(the "DGCL") or the Texas Act, as applicable, to indemnify its own directors,
officers, agents, fiduciaries and employees; and in the case of Parent, such
indemnification will not be limited by the DGCL but will not be applicable to
any claims made against the Indemnified Parties (A) if a judgment or other
final adjudication establishes that their acts or omissions were committed in
bad faith or were the result of active and deliberate dishonesty and were
material to the cause of action so deliberated or (B) arising out of, based
upon or attributable to the gaining in fact of any financial profit or other
advantage to which they were not legally entitled. Parent, Purchaser and the
Surviving Corporation, as the case may be, will pay all expenses of each
Indemnified Party in advance of the final disposition of any such action or
proceeding, which in the case of Purchaser and the Surviving Corporation will
be only to the fullest extent permitted by law upon receipt of any undertaking
contemplated by Section 145(e) of the DGCL or Article 2.02-1 of the Texas Act,
as applicable.
Treatment of Employee Benefits. Parent has agreed to honor, in accordance
with their terms, all employee benefit plans and other employment, consulting,
benefit, compensation or severance agreements, arrangements and policies of
the Company. Parent or the Company may, however, amend, modify or terminate
any such plan in accordance with its terms, provided that Parent will not
cause the Company to (i) reduce any benefits to employees under the plans for
a period of 12 months following the Effective Time, (ii) reduce any benefit
accruals to employees pursuant to the plans that are defined benefit pension
plans, or (iii) reduce the employer contribution pursuant to the plans that
are defined contribution pension plans. The Company shall amend its
Supplemental Executive Retirement Plans to provide that participants who have
been, or would have been, employed by the Company for 10 years or more as of
the later of the Closing Date or December 31, 2000, shall be entitled to
benefits under such plan upon termination of employment, if terminated within
12 months after the Effective Time, as if such participant was 55 years old at
the date of such termination, subject to the other provisions of the plan. Any
employee of the Company employed at the time of the Closing at the Company's
Fort Worth corporate offices that is terminated by the Company without cause
during the 12 months following the Closing, shall be paid by the Company in
cash (i) with respect to employees who are officers of the Company at the time
of Closing, 12 months' base pay, and (ii) with respect to employees who are
not officers of the Company, the greater of two months' base pay or one-half
of one week's pay for each year of service. Each officer of the Company who is
any employee of the Company at the time annual bonuses are paid in the
ordinary course of business (or any such officer who is terminated without
cause by the Company) shall receive a cash bonus for fiscal year 2000 that is
equal to or greater than his or her 1999 bonus.
Conditions to Each Party's Obligation to Effect the Merger. Under the Merger
Agreement, the respective obligations of each party to effect the Merger are
subject to the satisfaction at or prior to the Closing Date of the following
conditions: (i) the Merger Agreement and the transactions contemplated thereby
shall have been approved and adopted by the requisite vote of the Stockholders
to the extent required by applicable law; (ii) no statute, rule, order, decree
or regulation shall have been enacted by any Governmental Entity or authority
of competent jurisdiction which prohibits the consummation of the Merger and
all governmental consents, orders and approvals required for consummation of
the Merger and the other transactions contemplated by the Merger Agreement
shall have been obtained and shall be in effect at the Effective Time; (iii)
no order or injunction of any Governmental Entity shall be in effect which
precludes, restrains, enjoins or prohibits the consummation of the Merger
provided the parties used reasonable best efforts to prevent such order of
injunction; and (iv) Parent or Purchaser shall have purchased all Shares
validly tendered and not withdrawn pursuant to the Offer, provided, that this
condition shall be deemed satisfied if Purchaser shall have failed to purchase
Shares pursuant to the Offer in breach of its obligations under the Merger
Agreement. In addition, the obligations of Parent and Purchaser to effect the
Merger are subject to the further condition (which Parent may waive) that the
Company shall have performed in all material respects all of its material
obligations under the Merger Agreement required to be performed prior to the
earlier of (a) such time as Parent's or Purchaser's designees constitute a
majority of the Company's Board of Directors, and (b) the Closing Date.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed to
immediately cease any discussions or negotiations with any parties that may be
ongoing with respect to a Takeover Proposal (as hereinafter defined) and it
shall seek to have returned to the Company any confidential information that
has been
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provided in any such discussions or negotiations. From the date of the Merger
Agreement until the Expiration Date, the Company shall not, and to not permit
any of its subsidiaries, or any of its officers, directors or employees or any
affiliate, investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or knowingly encourage (including by way of
furnishing information which has not been previously publicly disseminated),
or take any other action designed to facilitate any inquiries or the making of
any proposal which constitutes, or may reasonably be expected to lead to, any
Takeover Proposal or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal; provided that if, prior to the Expiration
Date and following the receipt of a Superior Proposal (as hereinafter defined)
or a proposal which is reasonably expected to lead to a Superior Proposal that
was unsolicited and made after the date of the Merger Agreement in
circumstances not otherwise involving a breach of the Merger Agreement, the
Company Board determines in good faith, after considering applicable
provisions of state law and after consultation with outside counsel, that a
failure to do so would constitute a breach of its fiduciary duties to the
Company's stockholders under applicable law, the Company may, in response to
such Takeover Proposal and subject to compliance with the Merger Agreement,
(x) furnish information with respect to the Company to the party making such
Takeover Proposal pursuant to a customary confidentiality agreement, provided
that (i) such confidentiality agreement must include a provision prohibiting
solicitation of key employees of the Company or its subsidiaries, such
provision lasting at least one year, and may not include any provision calling
for an exclusive right to negotiate with the Company and (ii) the Company
advises Parent of all such nonpublic information delivered to such person
concurrently with its delivery to the requesting party, and (y) participate in
negotiations with such party regarding such Takeover Proposal. Any violation
of these restrictions by any executive officer of the Company or any of its
subsidiaries or any affiliate, director or investment banker, attorney or
other advisor or representative of the Company or any of its subsidiaries, if
known by the Company, shall be deemed to be a breach by the Company of the
Merger Agreement.
Except as expressly permitted in the Merger Agreement, the Company has
agreed that neither the Company Board nor any committee thereof shall (i)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent, the approval, determination of advisability, or
recommendation by such Board of Directors or such committee of the
Transactions, (ii) approve, determine to be advisable, or recommend, or
propose publicly to approve, determine to be advisable, or recommend, any
Takeover Proposal or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") related to any Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the Expiration Date
the Company Board determines in good faith, in response to a Superior Proposal
that was unsolicited and made after the date of the Merger Agreement in
circumstances not otherwise involving a breach of the Merger Agreement, and
after considering applicable provisions of state law and after consultation
with outside counsel, that the failure to do so would constitute a breach of
its fiduciary duties to the Company's stockholders under applicable law, the
Company Board may (subject to this and the following sentences and to
compliance with the provisions of the immediately preceding paragraph) (x)
withdraw or modify its approval, determination, or recommendation of the
Transactions or (y) approve, determine to be advisable, or recommend a
Superior Proposal, provided that any actions described in clause (y) may be
taken only at a time that is after the second business day following Parent's
receipt of written notice from the Company advising Parent that the Company
Board has received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal, identifying the person making such
Superior Proposal and providing notice of the determination of the Company
Board of what action referred to in clause (y) the Company Board has
determined to take.
The Company has further agreed to promptly advise Parent orally and in
writing of any request for confidential information or of any Takeover
Proposal, the material terms and conditions of such request or the Takeover
Proposal and the identity of the person making such request or Takeover
Proposal and to keep Parent reasonably informed of the status and details of
any such request or Takeover Proposal.
For purposes of the Merger Agreement, (i) a "Takeover Proposal" means any
inquiry, proposal or offer from any person (other than Parent and its
subsidiaries, affiliates, and representatives) relating to any direct or
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indirect acquisition or purchase of 15% or more of the assets of the Company
and its subsidiaries or 15% or more of any class of equity securities of the
Company or any of its Significant Subsidiaries, any tender offer or exchange
offer that if consummated would result in any person beneficially owning 15%
or more of any class of equity securities of the Company or any of its
Significant Subsidiaries, or any merger, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its Significant Subsidiaries,
other than the transactions contemplated by the Merger Agreement, and (ii) a
"Superior Proposal" means a bona fide written offer from any person (other
than Parent and its subsidiaries, affiliates and representatives) for a direct
or indirect acquisition or purchase of 50% or more of the assets of the
Company or any of its Significant Subsidiaries or 50% or more of any class of
equity securities of the Company or any of its Significant Subsidiaries, any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 50% or more of any class of equity securities of the
Company or any of its Significant Subsidiaries, or any merger, consolidation,
share exchange, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Significant Subsidiaries, other than the transactions contemplated by the
Merger Agreement, (A) which provides for consideration on a per share basis to
the stockholders with a value (taking into account, among other things, the
likelihood of such offer resulting in a consummated transaction) exceeding the
Offer Price, (B) which, considering all relevant factors, is more favorable to
the Company and its stockholders than the Offer and the Merger, and (C) for
which the third party has demonstrated that financing is reasonably likely to
be obtained, in each case as determined by the Company Board in its good faith
judgment (based on the advice of independent financial advisors and outside
counsel). Any Superior Proposal is a Takeover Proposal.
Termination; Termination Fee and Expenses. The Merger Agreement may be
terminated and the Merger and the other transactions contemplated thereby may
be abandoned at any time prior to the Effective Time, whether before or after
stockholder approval thereof (i) by the mutual consent of Parent and the
Company; (ii) by either the Company or Parent if: (A) a Governmental Entity
issues an order or takes other action that becomes final and non-appealable,
restraining or prohibiting the transactions contemplated by the Merger
Agreement provided that the party seeking to terminate has used all reasonable
efforts to challenge the order or action, (B) the Offer expires or is
withdrawn without any Shares being purchased, provided that such right shall
not be available to any party whose failure to fulfill any obligation under
the Merger Agreement has resulted in the failure of Purchaser to purchase
shares in the Offer, or (C) the Offer has not been consummated by
September 30, 2000 (the "Outside Date"), provided that such right shall not be
available to any party whose failure to fulfill any obligation under the
Merger Agreement has resulted in the failure of the Offer to be consummated by
such time, and provided further that such date will be extended for each day
in which any party is subject to a nonfinal order or action restraining or
prohibiting the consummation of the Offer (but shall be no later than December
31, 2000); (iii) by the Company if (A) Parent, Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to seven
business days following the date of the initial public announcement of the
Offer; provided, that the Company may not terminate the Merger Agreement if it
is in material breach thereof; (B) it concurrently enters into a definitive
agreement providing for a Superior Proposal entered into in accordance with
the Merger Agreement, provided that prior thereto or simultaneously therewith
the Company has paid the Termination Fee (as defined below) to Parent; or (C)
if the representations and warranties of Parent and Purchaser set forth in the
Merger Agreement that are qualified by materiality shall not be true and
correct in any respect, or if the representations and warranties of Parent and
Purchaser set forth in the Merger Agreement that are not qualified by
materiality shall not be true and correct in all material respects, in each
case as of the date of the Merger Agreement and as of the Expiration Date as
if made on such date, or either Parent or Purchaser shall have breached or
failed in any material respect to perform or comply with any material
obligation, agreement or covenant required by the Merger Agreement, which
inaccuracy or breach cannot be cured or has not been cured within one business
day prior to the Expiration Date, except in the case of the failure of any
representation or warranty, for changes specifically permitted by the Merger
Agreement, and for those representations and warranties that address matters
only as of a particular date which are true and correct as of such date; or
(iv) by Parent if (A) due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Section 14 of this Offer to Purchase, Parent,
Purchaser, or any of their affiliates shall have failed to commence the Offer
on or prior to seven business days following the date of
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the initial public announcement of the Offer; provided, that Parent may not
terminate the Merger Agreement if Parent is in material breach of the Merger
Agreement; (B) the Company Board shall have withdrawn or modified, or proposed
publicly to withdraw or modify, in a manner adverse to Parent its approval or
recommendation of the Offer, the Merger Agreement or the Merger, or failed to
reconfirm its recommendation within four business days after a written request
to do so, or approved or recommended, or proposed publicly to approve or
recommend, any Takeover Proposal, or shall have resolved to do any of the
foregoing, or (C) if the representations and warranties of the Company set
forth in the Merger Agreement that are qualified by materiality shall not be
true and correct in any respect, or if the representations and warranties of
the Company set forth in the Merger Agreement that are not qualified by
materiality shall not be true and correct in all material respects, in each
case as of the date of the Merger Agreement and as of the Expiration Date as
if made on such date, or the Company shall have breached or failed in any
material respect to perform or comply with any material obligation, agreement
or covenant required by the Merger Agreement, which inaccuracy or breach
cannot be cured or has not been cured within one business day prior to the
Expiration Date, except in the case of the failure of any representation or
warranty, for changes specifically permitted by the Merger Agreement, and for
those representations and warranties that address matters only as of a
particular date which are true and correct as of such date.
If the Merger Agreement (i) is terminated by Parent because the Company
Board changed its recommendation in a manner adverse to Parent, (ii) is
terminated by the Company if the Company concurrently enters into a definitive
agreement providing for a Superior Proposal, or (iii) if a Takeover Proposal
has been made known to the Company or made directly to its stockholders or any
person has publicly announced an intention to make a Takeover Proposal and
thereafter the Merger Agreement is terminated by the Company because (a) the
Offer has not been consummated by the Outside Date or (b) the Offer has
expired or been withdrawn without any Shares being purchased therein, provided
that the Offer has remained open for twenty business days and the Minimum
Condition has not been satisfied, and in either such event described in
clauses (a) and (b) above such Takeover Proposal is consummated within one
year of such termination, then the Company shall pay to Parent a termination
fee equal to $10 million in cash and shall reimburse Parent's out of pocket
expenses, including attorney's fees, related to the Merger Agreement and the
transactions contemplated thereby. Each party to the Merger Agreement shall
otherwise be solely responsible for all fees and expenses incurred by such
party.
Amendment. Subject to applicable law, at any time prior to the Closing Date,
the Merger Agreement may be modified or amended by written agreement of the
parties thereto, provided that no modification or amendment shall be made
after consummation of the Offer which adversely affects the Stockholders, or
otherwise requires the approval of the Stockholders, unless approved by the
Independent Directors.
The Stockholders Agreement
The following is a summary of the Stockholders Agreement, a copy of which
has been filed as an Exhibit to the Form 8-K filed by Parent with the SEC on
June 20, 2000. Such summary is qualified in its entirety by reference to the
Stockholders Agreement. Capitalized terms not otherwise defined in the
following description of the Stockholders Agreement have the respective
meanings ascribed to them in such agreement.
Concurrently with the execution of the Merger Agreement, Parent and
Purchaser entered into the Stockholders Agreement with John S. Justin, Jr.,
the John and Jane Justin Charitable Remainder Unitrust under Agreement dated
June 20, 1998 and the John S. Justin Jr. Charitable Remainder Trust under
Agreement dated October 12, 1992 (together, "Mr. Justin and the Trusts"). Mr.
Justin and the Trusts are the owners of 5,104,780 Shares of Common Stock (such
Shares, together with any other Shares acquired by Mr. Justin and the Trusts,
the "Justin and Trust Shares"), or approximately 19.8% of the outstanding
Shares. John S. Justin, Jr. also owns all 100 shares of the Company's
outstanding Preferred Stock (the "Preferred Shares"), which under the
Stockholders Agreement, he has agreed to convert into Common Stock and tender
prior to the Expiration Date of the Offer.
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Pursuant to the Stockholders Agreement, Mr. Justin and the Trusts have
agreed to tender in the Offer, prior to the initial expiration date of the
Offer, all Shares (including Shares acquired upon conversion of the Preferred
Shares) owned beneficially and of record by them. Except pursuant to the
Company Securities Option described below, Purchaser will not purchase the
Justin and Trust Shares, without the consent of Mr. Justin and the Trusts,
unless the Minimum Condition has been satisfied and not waived by Purchaser
and Parent. Mr. Justin and the Trusts have also agreed to vote the Justin and
Trust Shares in favor of the Merger and the Merger Agreement, against any
Takeover Proposal and against any proposal for action or agreement that would
result in a breach of any covenant or agreement of the Company under the
Merger Agreement or which is reasonably likely to result in any of the
Company's obligations under the Merger Agreement not being fulfilled, any
change in the directors of the Company (except as contemplated by the Merger
Agreement), any change in the Company's capitalization, corporate structure or
business, any other action which could reasonably be expected to interfere
with, delay or materially adversely affect the likelihood that the
transactions contemplated by the Merger Agreement will be consummated, or any
other matter necessary for the consummation of the transactions contemplated
in the Merger Agreement. Mr. Justin and the Trusts have also granted to Parent
and Purchaser, or any of their nominees, an irrevocable proxy to demand that
the Company call a special meeting to consider the Merger and the Merger
Agreement and to vote the Justin and Trust Shares in respect of such matter at
every meeting of the Stockholders, however called.
In addition, Mr. Justin and the Trusts have covenanted and agreed not to
transfer or consent to the transfer of any of the Justin and Trust Shares,
enter into any contract, option or other arrangement with respect to the
transfer of the Justin and Trust Shares, grant any proxies with respect to the
Justin and Trust Shares, deposit the Justin and Trust Shares into a voting
trust or enter into any voting agreement with respect to the Justin and Trust
Shares, take any other action that would make any representation or warranty
of Mr. Justin and the Trusts contained in the Stockholders Agreement untrue or
have the effect of preventing Mr. Justin and the Trusts from performing their
obligations under the Stockholders Agreement.
Mr. Justin and the Trusts have also agreed that they will not, directly or
indirectly, solicit, initiate, knowingly encourage or take any other action
designed to facilitate any inquiries or the making of any proposal relating to
the acquisition of any Justin and Trust Shares or any transaction that
constitutes a Takeover Proposal. Mr. Justin and the Trusts have agreed not to
participate in any discussions (except with Parent and Purchaser) regarding,
or furnish to any person (other than Parent or Purchaser) any information with
respect to, or otherwise cooperate with, or assist or encourage, any attempt
by any person (other than Parent or Purchaser) to make, any transaction that
may constitute a Takeover Proposal. Mr. Justin and the Trusts have also agreed
to immediately cease all existing discussions or negotiations of Mr. Justin
and the Trusts with any person (other than Parent or Purchaser) with respect
to the foregoing. Notwithstanding any provisions of this paragraph to the
contrary, Mr. Justin and the Trusts and any of their agents or representatives
who is a member of Company Board may, in his capacity as such, take such
actions, if any, as are permitted by the Merger Agreement.
Mr. Justin and the Trusts have also each granted to Parent and Purchaser an
irrevocable option (the "Company Securities Option") to purchase the Justin
and Trust Shares at a price per Share equal to the Offer Price or any higher
price paid or to be paid by Parent or Purchaser pursuant to the Offer or the
Merger. The Company Securities Option becomes exercisable, in whole but not in
part, for all Shares subject thereto not accepted for payment in the Offer, at
the close of business on the Expiration Date, if, but only if, (i) the number
of Shares tendered in the Offer, when added to the number of Shares not
tendered, if any, that are subject to the Company Securities Option, will
satisfy the Minimum Condition, (ii) if the number of Shares tendered in the
Offer is not sufficient to cause the Minimum Condition to be satisfied, Parent
and Purchaser shall have waived the Minimum Condition, and (iii) Purchaser has
accepted for payment all Shares tendered and not withdrawn, and the Company
Securities Option shall remain exercisable for 15 days from such date.
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<PAGE>
12. Purpose of the Offer and the Merger; Plans for the Company After the
Offer and the Merger; Stockholder Approval and Appraisal Rights.
Purpose of the Offer and the Merger. The purpose of the Offer and the Merger
is for Parent to acquire control of, and the entire equity interest in, the
Company. The Offer is intended to increase the likelihood that the Merger will
be completed promptly. The acquisition of the entire equity interest in the
Company has been structured as a cash tender offer followed by a cash merger
in order to provide a prompt and orderly transfer of ownership of the Company
from the Stockholders to Parent and to provide the Stockholders with cash in a
per Share amount equal to the Offer Price for all of their Shares.
Plans for the Company. Following the Merger, the Company will be operated as
a wholly owned subsidiary of Parent. Except as otherwise provided in this
Offer to Purchase, Purchaser and Parent have no present plans or proposals
that would result in an extraordinary corporate transaction, such as a merger,
reorganization, liquidation or sale or transfer of a material amount of assets
involving the Company or its subsidiaries, or any other material changes in
the Company's capitalization, dividend policy, corporate structure, business
or the composition of the Company Board or the Company's management.
Stockholder Approval. Under the Texas Act, the approval of the Company Board
and, except as described below, the affirmative vote of the holders of two-
thirds of the outstanding Shares is required to approve and adopt the Merger
Agreement and the transactions contemplated thereby, including the Merger. The
Company Board has unanimously approved and adopted the Merger Agreement and
the transactions contemplated thereby and, unless the Merger is consummated
pursuant to the short-form merger provisions under the Texas Act described
below, the only remaining required corporate action of the Company is the
approval and adoption of the Merger Agreement and the transactions
contemplated thereby by the affirmative vote of the holders of two-thirds of
the Shares. Accordingly, if the Minimum Condition is satisfied, Purchaser will
have sufficient voting power to cause the approval and adoption of the Merger
Agreement and the transactions contemplated thereby without the affirmative
vote of any other stockholder.
In the Merger Agreement, the Company has agreed to take all action necessary
to convene a meeting of its Stockholders as soon as practicable after the
expiration of the Offer for the purpose of considering and taking action on
the Merger Agreement and the transactions contemplated thereby, if such action
is required.
Under the Texas Act, if Purchaser acquires, pursuant to the Offer or
otherwise, such number of Shares which, when added to the Shares owned of
record by Purchaser on such date, constitutes at least 90% of the then
outstanding Shares, Purchaser will be able to approve and adopt the Merger
Agreement and the transactions contemplated thereby, and effect the Merger
pursuant to the short-form merger provisions of the Texas Act, without a vote
of the Stockholders. Parent, Purchaser and the Company have agreed to take all
necessary and appropriate action to cause the Merger to be effective as soon
as practicable after such acquisition. If Purchaser does not acquire such
number of Shares which, when added to the Shares owned of record by Purchaser
on such date, constitutes at least 90% of the then outstanding Shares pursuant
to the Offer or otherwise and a vote of the Stockholders is required under the
Texas Act, a significantly longer period of time will be required to effect
the Merger.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, Stockholders will have certain
rights under Articles 5.11-5.13 of the Texas Act to dissent and demand
appraisal of, and to receive payment in cash of the fair value of, their
Shares. Such rights to dissent, if the statutory procedures are complied with,
could lead to a judicial determination of the fair value (excluding any value
arising from the Merger) required to be paid in cash to dissenting
Stockholders for their Shares. Any judicial determination of the fair value of
Shares could be based upon considerations other than or in addition to the
Merger Consideration and the market value of the Shares, including asset
values and the investment value of the Shares. The value as so determined
could be more or less than the Merger Consideration.
If a stockholder who demands appraisal under Articles 5.11-5.13 of the Texas
Act fails to perfect, or effectively withdraws or loses, his or her right to
appraisal as provided in the Texas Act, the Shares of that
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<PAGE>
stockholder will be converted into the right to receive the Merger
Consideration in accordance with the Merger Agreement. A stockholder may
withdraw his demand for appraisal by delivering to the Company a written
withdrawal of such demand for appraisal and acceptance of the Merger.
Failure to precisely follow the steps required by Articles 5.11-5.13 of the
Texas Act for the perfection of appraisal rights may result in the loss of
those rights.
Going Private Transactions. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. Parent does not believe that Rule
13e-3 will be applicable to the Merger. If applicable, Rule 13e-3 would
require, among other things, that certain financial information concerning the
Company and certain information relating to the fairness of the Merger and the
consideration offered to Stockholders therein, be filed with the SEC and
disclosed to Stockholders prior to consummation of the Merger.
13. Dividends and Distributions.
The Merger Agreement provides that the Company will not, between the date of
the Merger Agreement and the Effective Time, without the prior written consent
of Parent, declare or pay any dividends on or make any other distributions in
respect of any capital stock or split, combine, subdivide or reclassify any
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any capital stock, except for
the $.06 per Share dividend declared by the Board on June 14, 2000 payable on
July 5, 2000 to stockholders of record on June 26, 2000.
14. Conditions of the Offer. Notwithstanding any other provision of the
Offer (subject to the provisions of the Merger Agreement), Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, pay for, and may delay the acceptance for payment of
or, subject to such restrictions, the payment for, any tendered Shares, and
may terminate the Offer and not accept for payment any tendered shares if (i)
there shall not have been validly tendered and not withdrawn prior to the
expiration of the Offer such number of Shares which would constitute at least
sixty-seven percent of the Shares outstanding on a fully-diluted basis on the
date of purchase (on a "fully-diluted basis" meaning the number of Shares
outstanding, together with the Shares which the Company may be required to
issue pursuant to options or obligations outstanding at that date, whether or
not vested or then exercisable), when aggregated with any Shares owned by
Parent, Purchaser or an affiliate of Parent or Purchaser (the "Minimum
Condition"), (ii) any applicable waiting period under the HSR Act (as
hereinafter defined) has not expired or terminated prior to the expiration of
the Offer, or (iii) at any time on or after the date of the Merger Agreement,
and before the time of acceptance of Shares for payment pursuant to the Offer,
any of the following events shall occur and be continuing:
. there shall be any statute, rule, regulation, judgment, order or
injunction promulgated, entered, enforced, enacted, issued or applicable
to the Offer or the Merger by any domestic or foreign federal or state
governmental regulatory or administrative agency or authority or court
or legislative body or commission which (1) prohibits, or imposes any
material limitations on, Parent's or Purchaser's ownership or operation
of all or a material portion of the Company's and its subsidiaries'
businesses and assets, taken as a whole, (2) prohibits, or makes illegal
the acceptance for payment, payment for or purchase of Shares or the
consummation of the Offer or the Merger, (3) renders Purchaser unable to
accept for payment, pay for or purchase some or all of the Shares, or
(4) imposes material limitations on the ability of Purchaser or Parent
effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by
it on all matters properly presented to the Stockholders, provided that
Parent shall have used all reasonable efforts to cause any such
judgment, order or injunction to be vacated or lifted;
. there shall be any action or proceeding pending by any domestic or
foreign federal or state governmental regulatory or administrative
agency or authority which (1) seeks to prohibit, or impose any material
limitation on, Parent's or Purchaser's ownership or operation of all or
a material portion of the Company's and its subsidiaries' businesses and
assets, taken as a whole, (2) seeks to prohibit or make illegal the
acceptance for payment, payment for or purchase of Shares or the
consummation of
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<PAGE>
the Offer or the Merger, (3) is reasonably likely to result in a
material delay in or seeks to restrict the ability of Purchaser, or
render Purchaser unable to accept for payment, pay for or purchase some
or all of the Shares, or (4) seeks to impose material limitations on the
ability of Purchaser or Parent effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters properly presented to the
Stockholders; provided that Parent shall have used all reasonable
efforts to cause any such action or proceeding to be dismissed;
. the representations and warranties of the Company set forth in the
Merger Agreement that are qualified by materiality shall not be true and
correct in any respect, or the representations and warranties of the
Company set forth in the Merger Agreement that are not so qualified
shall not be true and correct in any material respect, in either case,
as of the date of consummation of the Offer as though made on or as of
such date, or the Company shall have breached or failed in any material
respect to perform or comply with any material obligation, agreement or
covenant required by the Agreement to be performed or complied with by
it (including without limitation if the Company shall have entered into
any definitive agreement or any agreement in principle with any person
with respect to a Takeover Proposal or similar business combination with
the Company in violation of Section 5.2 of the Merger Agreement),
except, in the case of the failure of any representation or warranty,
for changes specifically permitted by the Merger Agreement, and for
those representations and warranties that address matters only as of a
particular date which are true and correct as of such date;
. (1) any general suspension of trading in securities on any national
securities exchange or in the over-the-counter market, (2) the
declaration of a banking moratorium or any suspension of payments in
respect of banks by a United States Governmental Entity (as defined in
the Merger Agreement, or (3) any mandatory limitation by a United States
Governmental Entity that materially and adversely affects the extension
of credit by banks or other financial institutions; or
. the Merger Agreement shall have been terminated in accordance with its
terms;
which in the reasonable judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer or with such acceptance for payment or
payments.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by either of them or may be waived by Parent or Purchaser,
in whole or in part at any time and from time to time in the sole discretion
of Parent or Purchaser.
15. Certain Legal Matters and Regulatory Approvals
General. Except as described in this Section 15, based on information
provided by the Company, none of the Company, Purchaser or Parent is aware of
(i) any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the acquisition of Shares by Parent or Purchaser
pursuant to the Offer, the Merger or otherwise, or (ii) except as set forth
herein, any approval or other action by any governmental, administrative or
regulatory agency or authority, domestic or foreign, that would be required
prior to the acquisition of Shares by Purchaser pursuant to the Offer, the
Merger or otherwise. Should any such approval or other action be required,
Purchaser and Parent presently contemplate that such approval or other action
will be sought, except as described below under "State Antitakeover Statutes."
While, except as otherwise described in this Offer to Purchase, Purchaser does
not presently intend to delay the acceptance for payment of, or payment for,
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of, or other substantial
conditions complied with, in the event that such approvals were not obtained
or such other actions were not taken or in order to obtain any such approval
or other action. If certain types of adverse action are taken with respect to
the matters discussed
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<PAGE>
below, Purchaser could decline to accept for payment, or pay for, any Shares
tendered. See Section 14 for certain conditions to the Offer, including
conditions with respect to governmental actions.
State Antitakeover Statutes. Article 13 of the Texas Act, in general,
prohibits a Texas corporation, such as the Company, from engaging in a
"Business Combination" (defined to include a variety of transactions,
including mergers) with an "Affiliated Shareholder" (defined generally as a
person that is the beneficial owner of 20% or more of the outstanding voting
stock of the subject corporation) for a period of three years following the
date that such person became an Affiliated Shareholder unless, (i) prior to
the date such person became an Affiliated Shareholder, the board of directors
of the corporation approved either the Business Combination or the transaction
that resulted in the stockholder becoming an Affiliated Shareholder, or (ii)
the Business Combination or transaction is approved by the affirmative vote of
at least two-thirds of the outstanding voting shares of the Company (not
including those owned by the Affiliated Shareholder) within six months of the
date that such person became an Affiliated Shareholder. The provisions of
Article 13 of the Texas Act are not applicable to any of the transactions
contemplated by the Merger Agreement because the Merger Agreement and the
transactions contemplated thereby (including the acquisition of Shares
pursuant to the Stockholders Agreement) were approved by the Company Board
prior to the execution thereof.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal
executive offices or principal places of business in such states. In Edgar v.
MITE Corp., the Supreme Court of the United States (the "Supreme Court")
invalidated on constitutional grounds the Illinois Business Takeover statute,
which, as a matter of state securities law, made certain corporate
acquisitions more difficult. However, in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court held that the State of Indiana may, as a matter
of corporate law and, in particular, with respect to those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquirer from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of stockholders in the state and were incorporated there.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of Texas will by their terms
apply to the Offer, and, except as set forth above with respect to Article
13.01 of the Texas Act, neither Parent nor Purchaser has attempted to comply
with any state antitakeover statute or regulation. Purchaser reserves the
right to challenge the applicability or validity of any state law purportedly
applicable to the Offer and nothing in this Offer to Purchase or any action
taken in connection with the Offer is intended as a waiver of such right. If
it is asserted that any state antitakeover statute is applicable to the Offer
and an appropriate court does not determine that it is inapplicable or invalid
as applied to the Offer, Purchaser might be required to file certain
information with, or to receive approvals from, the relevant state
authorities, and Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer or may be delayed in consummating the
Offer. In such case, Purchaser may not be obligated to accept for payment, or
pay for, any Shares tendered pursuant to the Offer. See Section 14.
Antitrust Compliance. The Offer and the Merger are subject to the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
which provides that certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the Federal Trade
Commission (the "FTC") and certain waiting period requirements have been
satisfied.
Parent expects to file its Notification and Report Form with respect to the
Offer and the Merger with the Antitrust Division and the FTC on or about June
27, 2000 or as soon thereafter as practicable. The waiting period under the
HSR Act with respect to the Offer will expire at 11:59 p.m., New York City
time, the fifteenth day after the date Parent's form is filed, unless early
termination of the waiting period is granted. However, the DOJ or FTC may
extend the waiting period by requesting additional information or documentary
material from Parent or the Company. If such a request is made, such waiting
period will expire at 11:59 p.m., New York City time,
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<PAGE>
on the tenth calendar day after the date of substantial compliance by Parent
with such request. Thereafter, the waiting period could be extended only by
court order or with the consent of Parent. In practice, complying with a
request for additional information or material can take a significant amount
of time. In addition, if the DOJ or the FTC raises substantive issues in
connection with a proposed transaction, the parties frequently engage in
negotiations with the relevant governmental agency concerning possible means
of addressing those issues and may agree to delay consummation of the
transaction while such negotiations continue. Purchaser will not accept for
payment Shares tendered pursuant to the Offer unless and until the waiting
period requirements imposed by the HSR Act with respect to the Offer have been
satisfied. See Section 14.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares
by Purchaser pursuant to the Offer and the Merger. At any time before or after
Purchaser's purchase of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares
pursuant to the Offer or seeking divestiture of Shares acquired by Purchaser
or the divestiture of substantial assets of Parent, the Company or any of
their respective subsidiaries. Private parties, as well as state governments,
may also bring legal action under the antitrust laws under certain
circumstances. There can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if a challenge is made, what the result
will be. See Section 14 of this Offer to Purchase for certain conditions to
the Offer that could become applicable in the event of such a challenge.
16. Fees and Expenses.
Information Agent. Purchaser has retained Georgeson Shareholder
Communications Inc. to act as the Information Agent in connection with the
Offer. The Information Agent may contact holders of Shares by mail, telephone,
telex, telegraph and personal interviews and may request brokers, dealers and
other nominee stockholders to forward materials relating to the Offer to
beneficial owners of Shares. The Information Agent will receive reasonable and
customary compensation for such services, plus reimbursement of out-of-pocket
expenses, and Purchaser will indemnify the Information Agent against certain
liabilities and expenses in connection with the Offer, including liabilities
under the federal securities laws.
Depositary. Purchaser will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, plus reimbursement
for out-of-pocket expenses, and will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws. Brokers, dealers, commercial banks and trust
companies will be reimbursed by Purchaser for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
17. Miscellaneous.
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid
state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Purchaser will make a good faith effort to comply with any such state
statute. If, after such good faith effort, Purchaser cannot comply with any
such state statute, the Offer will not made to (nor will tenders be accepted
from or on behalf of) holders of Shares in such state.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER, PARENT OR THE COMPANY NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
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<PAGE>
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the SEC the Schedule TO,
together with exhibits, furnishing certain additional information with respect
to the Offer, and may file amendments thereto. Such Statement, including
exhibits and any amendments thereto, may be inspected at, and copies may be
obtained from, the same places and in the same manner as set forth in Section
8 with respect to the Company (except that they will not be available at the
regional offices of the SEC).
J ACQUISITION CORP.
June 27, 2000
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SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT
The following description sets forth (i) the name and title of each
executive officer and director of each of Purchaser and Parent, and (ii) each
such individual's business address, present principal occupation and material
positions and occupations within the past five years. Unless otherwise
specified, each person listed below is a citizen of the United States and has
his or her principal business address at 1440 Kiewit Plaza, Omaha,
Nebraska 68131.
A. Directors and Executive Officers of Purchaser
The directors of Purchaser are Warren E. Buffett and Marc D. Hamburg, and
the executive officers of Purchaser are Warren E. Buffett, Chief Executive
Officer, and Marc D. Hamburg, Vice President, Secretary and Treasurer.
B. Directors and Executive Officers of Parent
The Directors of Berkshire Hathaway Inc. are Warren E. Buffett, Charles T.
Munger, Susan T. Buffett, Howard G. Buffett, Malcolm G. Chace, Ronald L.
Olson, and Walter Scott, Jr. The executive officers of Berkshire Hathaway Inc.
are Warren E. Buffett, Chairman and Chief Executive Officer, Charles T.
Munger, Vice Chairman, and Marc D. Hamburg, Vice President and Treasurer.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment,
Material Positions Held During Past Five Years, and
Name Business Address
---- ---------------------------------------------------
<C> <S>
Warren E. Buffett....... Mr. Buffett has been Chairman and Chief Executive
Officer of Berkshire since 1970. He is also a
director of The Coca-Cola Company, The Gillette
Company and The Washington Post Company.
Charles T. Munger....... Mr. Munger has been a director and Vice Chairman of
Berkshire's Board of Directors since 1978. He is
Chairman of the Board of Directors and Chief
Executive Officer of Wesco Financial Corporation,
Chairman of the Board of Directors of Daily Journal
Corporation and a director of Costco Wholesale
Corporation. His business address is 355 S. Grand
Avenue, 34th Floor, Los Angeles, California 90071.
Howard G. Buffett....... Mr. Buffett is Chairman of the Board of Directors of
The GSI Group, a company primarily engaged in the
manufacture of agricultural equipment. From 1992
until June 5, 1995, Mr. Buffett had been Vice
President, Assistant to the Chairman and a Director
of Archer Daniels Midland Company, a company engaged
principally in the business of processing and
merchandising agricultural commodities. He is also a
director of Coca-Cola Enterprises, Inc., Lindsay
Manufacturing Co. and Mond Industries Inc. His
business address is 1004 East Illinois Street,
Assumption, Illinois 62510.
Susan T. Buffett........ Mrs. Buffett has been a director of Berkshire since
1991. Mrs. Buffett has not been employed in the past
five years.
Malcolm G. Chace........ In 1996, Mr. Chace was named Chairman of the Board of
Directors of BankRI, a community bank located in the
state of Rhode Island. Prior to 1996, Mr. Chace had
been a private investor. Mr. Chace's business address
is One Providence Washington Plaza, Providence, Rhode
Island 02903.
Marc D. Hamburg......... Mr. Hamburg has been the Vice President and Treasurer
of Berkshire for more than the past five years.
</TABLE>
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<PAGE>
<TABLE>
<C> <S>
Ronald L. Olson......... Mr. Olson has, for more than the past five years,
been a partner in the law firm of Munger, Tolles &
Olson LLP. He is also a director of Edison
International, Western Asset Trust, Inc. and Pacific
American Income Shares Inc. His business address is
355 S. Grand Avenue, 35th Floor, Los Angeles,
California 90071.
Walter Scott, Jr. ...... Mr. Scott has been Chairman of the Board of Level 3
Communications, Inc., a communications and
information services company, since 1979. Level 3
Communications was formerly known as Peter Kiewit
Sons', Inc., for which, until the spin-off of its
construction operations in March 1998, Mr. Scott also
served as Chief Executive Officer. Mr. Scott is also
a director of Burlington Resources, Inc., ConAgra,
Inc., Valmont Industries, Inc., Commonwealth
Telephone Enterprises, Inc. and RCN Corporation.
</TABLE>
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Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for the Shares and any other
required documents should be sent by each stockholder of the Company or such
stockholder's broker-dealer, commercial bank, trust company or other nominee
to the Depositary as follows:
The Depositary for the Offer is:
The Bank of New York
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange Department (Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 Confirm by Telephone to: New York, New York 10286
(212) 815-6156
</TABLE>
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Information
Agent at its telephone number and location listed below. You may also contact
your broker, dealer, commercial bank or trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the offer is:
GEORGESON
SHAREHOLDER
COMMUNICATIONS INC.
17 State Street
10th floor
New York, NY 10004
Bankers and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
