<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___ )*
SHOREWOOD PACKAGING CORPORATION
-------------------------------
(Name of Issuer)
Common Stock $.01 Par Value
---------------------------
(Title of Class of Securities)
825229107
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(CUSIP Number)
Eric T. McKissack., Ariel Capital Management, Inc.
307 North Michigan Avenue, Suite 500, Chicago, IL 60601 Tel. # (312) 726-0140
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
November 26, 1999
-----------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
NOTE. Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
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CUSIP No. 825229107 PAGE 2 OF 7 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ARIEL CAPITAL MANAGEMENT JOHN W. ROGERS, JR.*
IRS ID # 36-3219058
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) / / N/A
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois Corporation
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 4,106,264**
OWNED BY
EACH
REPORTING
PERSON
WITH
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8 SHARED VOTING POWER
Ariel 0 Rogers - 0
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9 SOLE DISPOSITIVE POWER
Ariel 4,106,264** Rogers - 0
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10 SHARED DISPOSITIVE POWER
Ariel 0 Rogers - 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
Ariel 4,106,264** Rogers - 0
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* / /
Not Applicable
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.9%
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14 TYPE OF REPORTING PERSON *
Ariel - IA Rogers - HC
- --------------------------------------------------------------------------------
*This report is being made on behalf of John W. Rogers, Jr., President and
principal shareholder of Ariel Capital Management, Inc., who may be deemed to
have beneficial ownership of the securities of the issuer. Mr. Rogers disclaims
beneficial ownership of shares held by Ariel Capital Management, Inc.
**A report on Schedule 13G is being filed substantially simultaneous herewith
relating to an additional 919,473 shares of Shorewood Common Stock owned by
Ariel's clients but not part of the purchase agreement described herein.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
___________________________
P. 2
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[Page 3 of 7]
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (this "Statement" or the "Schedule 13D")
relates to the common stock, par value $0.01 per share (the "Common Stock") of
Shorewood Packaging Corporation, a Delaware corporation (the "Issuer" or
"Shorewood"). The principal executive offices of the Issuer are located at 277
Park Avenue, New York, New York 10172.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) This Statement is being filed by Ariel Capital Management,
Inc., an Illinois corporation ("Ariel" or the "Reporting Person"). Ariel is
located in Chicago, Illinois and is primarily engaged in providing investment
advisory services for its clients. The address of the Reporting Persons'
principal business and principal office is 307 North Michigan Avenue, Suite 500,
Chicago, IL 60601.
The name, address and present principal occupation of each of the
directors and executive officers of the Reporting Person are set forth in
Appendix A which is attached hereto.
(d) During the last five years, neither the Reporting Person nor, to
the best of the Reporting Person's knowledge, any of the directors or executive
officers of the Reporting Persons, have been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) During the last five years, neither the Reporting Persons nor, to
the best of the Reporting Person's knowledge, any of the directors or executive
officers of the Reporting Person, have been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding is or was subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
(f) Each director and executive officer of the Reporting Person is a
citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Not applicable.
ITEM 4. PURPOSE OF TRANSACTION.
On November 26, 1999, Chesapeake and Ariel entered into a stock
purchase agreement (the "Purchase Agreement"), pursuant to which Ariel agreed to
use its best efforts as investment advisor to exercise its discretionary
authority to cause Ariel's clients to sell to Chesapeake an aggregate amount of
shares (the "Purchased Shares"), representing approximately 14.9% of the
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[Page 4 of 7]
Company's outstanding Shares (which the parties have agreed equals 4,106,264
shares), at a purchase price of $17.25 per share. The sale of the Purchased
Shares was consummated on February 25, 2000.
This Schedule 13D is being filed solely with respect to the Purchased
Shares.
Ariel's sole purpose for entering into the Purchase Agreement was a
private sale of the Purchased Shares at a market premium. In executing the
Purchase Agreement, Ariel acted as investment adviser for its clients, and not
with the purpose of changing or influencing the control of the Shorewood.
However, pursuant to certain provisions of the Purchase Agreement (as described
in Section 6 below) and solely with respect to the Purchased Shares, Ariel could
be deemed to have entered into a "group" for purposes of Section 13(d) of the
Securities Act of 1933, as amended (the "Securities Act"). Notwithstanding the
foregoing, Ariel expressly disclaims that it is a member of any group under
Section 13(d) of the Act, with Chesapeake or any other party, and further
disclaims any intent to (or effect of) change or influence the control of the
issuer.
In addition, Ariel had no pecuniary interests in the consummation of
the transactions contemplated by the Purchase Agreement. In addition to the
Purchased Shares, Ariel's clients hold an additional 919,473 shares of Common
Stock. Following the filing of this Schedule 13D, Ariel intends to promptly
file a final Schedule 13G reporting its beneficial ownership of the remaining
919,473 shares of Common Stock held by Ariel's clients (which is less than
five percent of the issued and outstanding Common Stock).
On December 3, 1999, Chesapeake and Sheffield Inc, a wholly-owned
subsidiary of Chesapeake (collectively "Purchaser") filed a tender offer
statement on Schedule 14D-1 (the "Schedule 14D-1") relating to the offer by
Purchaser to purchase all outstanding shares of Common Stock, including the
associated rights to purchase preferred stock, of Shorewood, not directly or
indirectly owned by Chesapeake and its subsidiaries, for a purchase price of
$17.25 per share, net to the seller in cash. Ariel was not consulted by
Purchaser with respect to the tender offer, and did not in any manner
participate in any of the discussions between Shorewood and Purchaser prior to
or after the commencement of such offer.
No proxy or consent solicitation was made by Chesapeake. On February
18, 2000, Purchaser's tender offer for the Common Stock of Shorewood expired
in accordance with its terms. The sale of the Purchased Shares was
consummated on February 25, 2000.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The aggregate number and percentage of Shares to which this
Statement relates is 4,106,264 Shares, representing 14.9% of the 27,367,000
shares of Common Stock outstanding as reported by the Issuer on December 1, 1999
in the Issuer's Quarterly Report on Form 10-Q. In addition, Ariel's clients own
an additional 948,054 shares of Common Stock, which are not subject to the terms
of the Purchase Agreement and which continue to be held by Ariel's clients as
passive investors without the intent or effect of influencing the control of
Shorewood. All such shares were purchased in an open market transactions.
<PAGE>
[Page 5 of 7]
(b) As of the date of this filing, Ariel has the discretionary power to
direct the vote and the disposition of all shares of Common Stock owned by its
clients.
(c) A description of all transactions in the Shares, described in Item
4 and this Item 5, which transactions were effected by Ariel on behalf of its
clients during the past 60 days is set forth on Ariel's Schedule 13G filed on
January 8, 2000 (Amendment No. 16) and Schedule 13G filed February 9, 2000
(Amendment No. 17).
(d) Ariel does not own the Purchased Shares, and acts as an investment
adviser for its clients. Accordingly, Ariel's clients will receive the proceeds
of the sale contemplated by the Purchase Agreement.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Ariel intends to consummate the transactions contemplated by the
Purchase Agreement as soon as possible. The Purchase Agreement is conditioned on
the satisfaction of the requirements of the HSR Act and that the transaction not
be subject to any adverse litigation or governmental proceeding.
If, on the proposed closing date ("Closing"), Chesapeake's proposed
purchase of the Purchased Shares would not then be permitted under Rule 10b-13
promulgated under the Exchange Act (because Chesapeake has commenced a public
tender offer for Shares that has not terminated or expired as of that date), the
Closing date will be postponed as necessary to permit closing in compliance with
such Rule.
The Purchase Agreement provides that if, prior to Closing, Chesapeake
or any of its affiliates commences a public tender offer for shares of the
Issuer at a purchase price that equals or exceeds $17.25 per Share, then Ariel
has agreed to use its best efforts as investment adviser to exercise its
discretionary authority to cause Ariel's clients to: (i) tender the Purchased
Shares in such tender offer; and (ii) execute proxies or written consents in the
form solicited by Chesapeake or any of its affiliates in any proxy or written
consent solicitation commenced in connection with such tender offer. Ariel was
never asked to execute proxies or written consents by Chesapeake since no such
solicitation was commenced.
If, within one year following the Closing date, Chesapeake, directly or
indirectly, acquires a majority of the outstanding shares of the Issuer pursuant
to a tender offer, merger, consolidation, business combination or other similar
transaction, then Chesapeake will pay each Ariel client 100% of the excess, if
any, of the per share consideration paid by Chesapeake in such transaction over
$17.25, multiplied by the number of Shares purchased by Chesapeake from such
Ariel client pursuant to the Purchase Agreement. If, within one year following
the Closing date, any third party not affiliated with either Chesapeake or
Ariel, directly or indirectly, acquires a majority of the outstanding shares of
the Issuer pursuant to a tender offer, merger,
<PAGE>
[Page 6 of 7]
consolidation, business combination or other similar transaction, then
Chesapeake will pay each Ariel client the sum of (i) 100% of the excess, if any,
of the highest per share consideration offered by Chesapeake in any public
tender offer for shares (the "Highest Chesapeake Price") over $17.25 per share,
plus (ii) 50% of the excess, if any, of the per Share consideration paid by such
third party over the Highest Chesapeake Price, multiplied by the number of
shares purchased by Chesapeake from such Ariel client pursuant to the Purchase
Agreement.
If, prior to the Closing, Chesapeake's purchase of 4,106,264 shares
would result in Chesapeake becoming (i) an "Acquiring Person" as defined in the
Rights Agreement of the Issuer, dated as of June 12, 1995, (the "Rights
Agreement"), or (ii) an "interested stockholder" within the meaning of Section
203 of the Delaware General Corporation Law ("Section 203"), the number of
shares to be purchased under the Purchase Agreement shall be reduced to one
Share less than the number of Shares that, if purchased, would cause the Buyer
to be deemed (A) an "Acquiring Person" as defined in the Rights Agreement, or
(B) an "interested stockholder" within the meaning of Section 203.
If prior to the Closing, a Distribution Date shall have occurred within
the meaning of the Rights Agreement, Ariel's clients will sell to Chesapeake all
of the Rights associated with the Purchased Shares.
The foregoing description is qualified by and subject to the terms of
the Purchase Agreement. A copy of the Purchase Agreement is attached hereto as
Exhibit 1 and is incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Stock Purchase Agreement, dated November 26, 1999, between
Chesapeake Corporation and Ariel Capital Management, Inc.
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[Page 7 of 7]
SIGNATURE.
After reasonable inquiry and to the best of the undersigned's knowledge
and belief, the undersigned certify that the information set forth in this
statement is true, complete and correct.
ARIEL CAPITAL MANAGEMENT, INC.
By: /s/ Eric T. McKissack
---------------------
Eric T. McKissack
Co-Chief Investment Officer and
Senior Vice President
/s/ JOHN W. ROGERS, JR.*
--------------------------
JOHN W. ROGERS, JR.
*By: /s/ Eric T. McKissack
---------------------
Eric T. McKissack
Dated: February 28, 2000
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* Eric T. McKissack signs this Schedule 13D on behalf of John W. Rogers, Jr.
pursuant to the power of attorney attached as Exhibit 1 to the Schedule 13G
filed with the Securities and Exchange Commission on or about January 10, 1994,
on behalf of Ariel Capital Management, Inc. and John W. Rogers, Jr. with respect
to Oshkosh B'Gosh, Incorporated, which said power of attorney is hereby
incorporated by reference.
<PAGE>
APPENDIX A
DIRECTORS AND EXECUTIVE OFFICERS OF ARIEL CAPITAL MANAGEMENT, INC.
<TABLE>
<CAPTION>
Officer/Director Address Position
- ---------------- ------- --------
<S> <C> <C>
James W. Atkinson Ariel Capital Management Executive Vice President and Chief
307 North Michigan Avenue Financial Officer of Ariel Capital
Suite 500 Management
Chicago, IL 60601
James E. Bowman, Jr., M.D. University of Illinois Director. Professor Emeritus for the
Chicago, IL 60637 Departments of Pathology and Medicine
at the University of Chicago
Mellody L. Hobson Ariel Capital Management Senior Vice President, Director of
307 North Michigan Avenue Marketing of Ariel Capital Management
Suite 500
Chicago, IL 60601
Merrillyn J. Kosier Ariel Capital Management Senior Vice President/Director of
307 North Michigan Avenue Mutual Fund Marketing of Directors of
Suite 500 Ariel Capital Management
Chicago, IL 60601
Franklin Morton Ariel Capital Management Senior Vice President and Director of
307 North Michigan Avenue Research of Ariel Capital Management
Suite 500
Chicago, IL 60601
Eric T. McKissack Ariel Capital Management Chairman and Co-Chief Investment
307 North Michigan Avenue Officer of Ariel Capital Management
Suite 500
Chicago, IL 60601
Henry B. Pearsall c/o Ariel Funds Director. Former Chairman of the
307 North Michigan Avenue Board of Sanford Corporation. Member
Suite 500 of Board of Directors of First
Chicago, IL 60601 Colonial Bankshares Corporation,
Avenue Bank of Oak Park, First
Colonial Trust Company and Swing
-N-Slide
Anna Perez c/o Ariel Funds Director. General Manager of
<PAGE>
<CAPTION>
Officer/Director Address Position
- ---------------- ------- --------
<S> <C> <C>
307 North Michigan Avenue Corporation Communications and
Suite 500 Programs, Chevron Corporation
Chicago, IL 60601
John W. Rogers, Jr. Ariel Funds President, Treasurer and Chairman of
307 North Michigan Avenue the Board of Directors of Ariel
Suite 500 Capital Management
Chicago, IL 60601
Roger P. Schmitt Ariel Capital Management Vice President/Chief Information
307 North Michigan Avenue Officer, Assistant Secretary, and
Suite 500 Assistant Treasurer of Ariel Capital
Chicago, IL 60601 Management
Robert I. Solomon 5215 Old Orchard Boulevard Director; Vice President, Marketing,
Skokie, IL 60079 of Silliker Laboratories.
Peter Q. Thompson Ariel Capital Management Senior Vice President/Director of
307 North Michigan Avenue Institutional Marketing and Client
Suite 500 Services of Ariel Capital Management
Chicago, IL 60601
Roxanne Ward Ariel Capital Management Vice President and Secretary of Ariel
307 North Michigan Avenue Capital Management
Suite 500
Chicago, IL 60601
Paula Wolff 4920 South Greenwood Director. President of Governors
Chicago, IL 60615 State University.
</TABLE>
<PAGE>
Exhibits to Schedule 13D
of Ariel Capital Management, Inc. relating to
Shares of Shorewood Packaging Corporation
-----------------------------------------
Exhibit No.
- -----------
Exhibit 1 Stock Purchase Agreement, dated November 26, 1999, between
Chesapeake Corporation and Ariel Capital Management, Inc.
<PAGE>
EXHIBIT 1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered
into as of this 26th day of November, 1999, by and between ARIEL CAPITAL
MANAGEMENT, INC., an Illinois corporation ("Ariel"), and CHESAPEAKE CORPORATION,
a Virginia corporation (the "Buyer").
RECITALS
WHEREAS, Ariel is a registered investment adviser whose various
clients, including public investment companies and separate investment accounts
(collectively, "Ariel's Clients"), are the beneficial owners of approximately
5.6 million shares of common stock, $0.01 par value per share ("Common Stock"),
together with the associated rights to purchase shares of Series B Junior
Participating Preferred Stock (the "Rights," and together with the Common Stock,
the "Shares"), of SHOREWOOD PACKAGING CORPORATION, a Delaware corporation (the
"Corporation"); and
WHEREAS, Buyer desires to purchase, and Ariel desires to use its best
efforts as investment adviser to exercise its discretionary authority to cause
Ariel's Clients to sell, an aggregate 4,106,440 Shares (the "Purchased Shares"),
representing approximately 14.9% of the Corporation's outstanding Shares,
pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants and promises set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
SECTION ONE
PURCHASE AND SALE OF STOCK;
AGREEMENT TO TENDER
(a) Upon all of the terms and subject to all of the conditions of this
Agreement, Ariel hereby agrees to use its best efforts as investment adviser to
exercise its discretionary authority to cause Ariel's Clients to transfer,
assign and convey to Buyer at the Closing (as defined below), and Buyer hereby
agrees to purchase and accept from Ariel's Clients at the Closing, the Purchased
Shares. To effect such purchase and sale, at a meeting to take place at the
principal offices of Ariel (the "Closing") on the Closing Date (as defined
below): (i) Ariel's Clients will deliver to Buyer certificates representing the
Purchased Shares, duly endorsed for transfer to Buyer, or acceptable evidence of
book-entry transfer of the Purchased Shares to Buyer; and (ii) Buyer shall pay
to each Ariel Client an amount equal to $17.25 (the "Purchase Price") multiplied
by the number of Purchased Shares purchased by Buyer from such Ariel Client,
such amount to be paid in cash by wire transfer of immediately available funds
in accordance with wire instructions to be provided to Buyer. If, prior to the
Closing, a Distribution Date shall have occurred within the meaning of the
Rights Agreement of the Corporation, dated as of June 12, 1995 (the "Rights
Agreement"), then, in addition to the foregoing, Ariel's Clients shall transfer,
<PAGE>
assign and convey to Buyer at the Closing any and all Rights and the
certificates relating thereto (if any) which are associated with the Purchased
Shares.
(b) Unless otherwise agreed by the parties hereto, the closing date
(the "Closing Date") shall be the second business day following the satisfaction
or waiver of all of the conditions to Closing set forth in Section Five hereto.
(c) Notwithstanding the foregoing, if for any reason prior to the
Closing, Buyer's purchase of the Purchased Shares would result in the Buyer
becoming (i) an "Acquiring Person" as defined in the Rights Agreement, or (ii)
an "interested stockholder" within the meaning of Section 203 of the Delaware
General Corporation Law ("Section 203"), the number of Purchased Shares
automatically shall be deemed and shall be reduced to one Share less than the
number of Shares that, if purchased, would cause the Buyer to be deemed (i) an
"Acquiring Person" as defined in the Rights Agreement, or (ii) an "interested
stockholder" within the meaning of Section 203.
(d) If, prior to the Closing, Buyer or any of its affiliates (as
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), commences a public tender offer for Shares of the Corporation
at a cash purchase price that equals or exceeds the Purchase Price per Share,
then Ariel agrees to use its best efforts as investment adviser to exercise its
discretionary authority to cause Ariel's Clients to: (i) tender the Purchased
Shares in such tender offer; and (ii) execute proxies or written consents in the
form solicited by Buyer or any of its affiliates in any proxy or written consent
solicitation commenced in connection with such tender offer.
SECTION TWO
ADJUSTMENT OF THE PURCHASE PRICE
UPON A SUBSEQUENT TENDER OFFER OR MERGER
(a) If, within one year following the Closing Date, (i) Buyer or any of
its affiliates, directly or indirectly, acting alone or in concert with others,
acquires ownership (including, but not limited to, beneficial ownership as
defined in Rule 13d-3 under the Exchange Act) of a majority of the outstanding
Shares of the Corporation pursuant to a tender offer, merger, consolidation,
business combination or other similar transaction (each of the foregoing, a
"Transaction"); or (ii) any third party not affiliated with either Buyer or
Ariel, directly or indirectly, acting alone or in concert with others, acquires
ownership (including, but not limited to, beneficial ownership as defined in
Rule 13d-3 under the Exchange Act) of a majority of the outstanding Shares of
the Corporation pursuant to a tender offer, merger, consolidation, business
combination or other similar transaction (each of the foregoing, a "Third Party
Transaction"), then the Purchase Price paid by Buyer to Ariel's Clients shall be
adjusted in accordance with this Section.
(b) In the event a Transaction occurs after the Closing Date, Buyer
shall promptly pay to each Ariel Client an amount in cash equal to 100% of the
excess, if any, of the per Share consideration paid in such Transaction over the
Purchase Price, multiplied by the number of Purchased Shares purchased by Buyer
from such Ariel Client. In the event a Third Party
2
<PAGE>
Transaction occurs after the Closing Date, Buyer shall promptly pay to each
Ariel Client an amount in cash equal to the sum of (i) 100% of the excess, if
any, of the highest per Share consideration offered by Buyer in any public
tender offer for Shares of the Corporation prior to the closing of such Third
Party Transaction (the "Highest Buyer Price"), over the Purchase Price,
multiplied by the number of Purchased Shares purchased by Buyer from such Ariel
Client; plus (ii) 50% of the excess, if any, of the per Share consideration paid
in such Third Party Transaction over the Highest Buyer Price, multiplied by the
number of Purchased Shares purchased by Buyer from such Ariel Client. In the
event the consideration paid in any Transaction or Third Party Transaction
includes contingent or non-cash consideration, the parties agree to negotiate in
good faith with respect to the fair valuation of such consideration.
SECTION THREE
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer hereby represents and warrants to Ariel as follows:
(a) Buyer is a corporation duly incorporated, validly existing and in
good standing under the laws of the Commonwealth of Virginia;
(b) Buyer has full corporate power and authority to execute, deliver
and perform its obligations under this Agreement;
(c) this Agreement has been duly authorized, executed and delivered by
Buyer and constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms;
(d) the execution, delivery and performance of this Agreement by Buyer
will not (i) conflict with or result in any breach of any provision of the
Articles of Incorporation or bylaws of Buyer, (ii) violate any requirement of
law or any existing mortgage, contract, lease, indenture or agreement binding on
Buyer or Buyer's property or (iii) result in the creation or imposition of any
lien on any of the properties or assets of Buyer pursuant to the provisions of
any of the foregoing;
(e) except for compliance with the requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and any
applicable reporting requirements under the Exchange Act, no consent of any
other person and no consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority is required in connection with the execution,
delivery or performance of this Agreement by Buyer. Buyer agrees promptly to
file a Premerger Notification and Report Form under the HSR Act with respect to
the transactions contemplated herein; and
(f) Buyer is an accredited investor (within the meaning of Rule 501
under the Securities Act of 1933, as amended), and is purchasing the Purchased
Shares for investment and not with a present intent to conduct a distribution
thereof.
3
<PAGE>
SECTION FOUR
ARIEL'S REPRESENTATIONS AND WARRANTIES
Ariel hereby represents and warrants to Buyer as follows:
(a) Ariel is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Illinois, and a registered
investment adviser under the Investment Advisers Act of 1940, as amended;
(b) Ariel has full corporate power and authority to execute, deliver
and perform its obligations under this Agreement;
(c) this Agreement has been duly authorized, executed and delivered by
Ariel and constitutes the legal, valid and binding obligation of Ariel,
enforceable against Ariel in accordance with its terms;
(d) the execution, delivery and performance of this Agreement by Ariel
will not (i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or bylaws of Ariel, (ii) violate any requirement of
law or any existing mortgage, contract, lease, indenture or agreement binding on
Ariel or Ariel's property or (iii) result in the creation or imposition of any
lien on any of the properties or assets of Ariel pursuant to the provisions of
any of the foregoing;
(e) except for any applicable reporting requirements under the Exchange
Act, no consent, license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with, any
governmental authority is required in connection with the execution, delivery or
performance of this Agreement by Ariel; and
(f) to the best of Ariel's knowledge: Ariel's Clients are the legal and
beneficial owners of the respective Purchased Shares to be sold by them
hereunder, with good and valid title thereto, free and clear of any and all
mortgages, liens, encumbrances, charges, claims, restrictions, pledges, security
interests or impositions of any kind thereon or in the proceeds thereof and,
upon Buyer's payment of the Purchase Price therefor, good and valid title to the
Purchased Shares will pass to Buyer.
SECTION FIVE
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the purchase of the Purchased
Shares as contemplated herein are subject to the satisfaction or waiver by Buyer
at or prior to the Closing of the following conditions precedent:
(a) No Litigation. No investigation, suit, action or other proceeding
shall be pending before any court or governmental agency that seeks restraint,
prohibition, damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.
4
<PAGE>
(b) Antitrust Filings. In the reasonable opinion of Buyer, all
necessary requirements of the HSR Act and the regulations promulgated thereunder
shall have been complied with, and any "waiting period" applicable to the
transactions contemplated by this Agreement which are imposed by such statute or
regulations shall have expired prior to the Closing Date or shall have been
terminated by the appropriate agency.
The parties agree that if, as of any proposed Closing Date when the
conditions precedent to Closing would otherwise be satisfied, Buyer's proposed
purchase of the Purchased Shares would not then be permitted under Exchange Act
Rule 10b-13, the Closing Date shall be postponed as necessary to permit Closing
in compliance with such Rule (subject, in any event, to the provisions of
Section 1(d) hereof related to the tender of the Purchased Shares into a tender
offer under certain circumstances, and to the termination provisions of Section
8 hereof).
SECTION SIX
MUTUAL ACKNOWLEDGEMENTS
In executing this Agreement, Ariel has acted as investment adviser for
Ariel's Clients, and not with the purpose or effect of changing or influencing
the control of the Corporation, nor in connection with or as a participant in
any transaction having such purpose or effect. The parties agree that Ariel and
Ariel's Clients have reserved all of their respective rights with respect to,
and have no agreement, arrangement or understanding with Buyer relating to, any
Shares of the Corporation other than the Purchased Shares. Without limiting the
foregoing, Ariel and Ariel's Clients shall be free, subject to applicable
securities laws, to acquire or dispose of any additional Shares in their sole
discretion.
SECTION SEVEN
CONFIDENTIALITY
Ariel agrees that, except as may be required by applicable law (based
on the written advice of its outside counsel), until such time that Buyer files
with the SEC a Schedule 13D with respect to its planned acquisition of the
Purchased Shares pursuant to this Agreement or until such time that the
transactions contemplated herein are otherwise publicly announced (other than
through any action by Ariel or its affiliates), Ariel shall keep strictly
confidential from all persons (including, without limitation, the Corporation
and its officers and directors) all information concerning the execution and
delivery of this Agreement and the transactions contemplated herein. Buyer
agrees to file such Schedule 13D with the SEC within 10 days after the date
hereof.
SECTION EIGHT
TERMINATION; EXPENSES
(a) This Agreement may be terminated, and the transactions contemplated
herein may be abandoned at any time prior to the Closing, under the following
circumstances:
(i) by the mutual written consent of Buyer and Ariel; or
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(ii) by Ariel, if for any reason the Closing has not occurred by
February 29, 2000; or by Buyer, if the Closing shall not have occurred
by May 30, 2000, solely as a result of the failure to satisfy the
conditions precedent to Closing set forth in Section 5(a) hereof;
provided, however, that the right to terminate this Agreement shall
not be available to any party whose failure to fulfill its obligations
hereunder has been the cause of, or has resulted in, the failure of
Closing to occur on or before such date.
(b) In the event of a termination of this Agreement by either party
hereto pursuant to this Section 8, written notice thereof shall promptly be
given to the other party and this Agreement shall thereupon terminate and be of
no further force or effect; provided, however, that the termination of this
Agreement shall not relieve either party from any liability to the other for any
breach of its obligations hereunder.
(c) Each party shall be responsible for and shall pay all of its own
expenses in connection with the transactions contemplated herein; provided,
however, that if this Agreement is terminated by Ariel pursuant to Section
8(a)(ii) hereof, Buyer shall reimburse Ariel, promptly upon demand, for all of
Ariel's actual out-of-pocket expenses incurred in connection with the
transactions contemplated in this Agreement (including, without limitation,
Ariel's reasonable attorneys' fees). In addition, Buyer agrees to indemnify and
hold Ariel harmless from and against any and all out-of-pocket costs and
expenses (including, without limitation, Ariel's reasonable attorneys' fees)
incurred by Ariel in connection with the investigation and defense of any third
party claims, proceedings or litigation related to the matters that are the
subject of this Agreement.
SECTION NINE
ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties and
supersedes any prior written or oral understandings, agreements or conditions.
No change, modification, amendment, or addition will be valid unless it is in
writing and signed by the party against whom enforcement of any change,
modification, amendment, or addition is assigned.
SECTION TEN
PARTIES BOUND; ASSIGNMENT
All covenants, agreements, representations and warranties set forth in
this Agreement are binding on and inure to the benefit of the successors and
assigns of the parties. Each party hereto agrees not to assign (by operation of
law or otherwise) this Agreement or any of its rights or obligations hereunder
without the express written consent of the other party hereto; provided,
however, that Buyer may assign any of its rights under this Agreement to any
affiliate of Buyer (it being understood that no such assignment shall relieve
Buyer of any of its obligations hereunder).
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SECTION ELEVEN
GOOD FAITH; SPECIFIC PERFORMANCE
The parties have entered into this Agreement, and will perform their
respective obligations hereunder, in good faith intending to be legally bound.
The parties agree that irreparable harm would occur in the event any of the
provisions of this Agreement were not performed in accordance with their terms
and that money damages would not be an adequate remedy for any such breach.
Accordingly, the parties agree that they shall be entitled to specific
performance in addition to any other remedy at law or in equity in the event of
a breach of this Agreement.
SECTION TWELVE
GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the
laws of the Commonwealth of Virginia, without regard to the conflicts of laws
provisions thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ARIEL: BUYER:
ARIEL CAPITAL MANAGEMENT, INC. CHESAPEAKE CORPORATION
By: /s/ Franklin L. Morton By: /s/ Andrew J. Kohut
----------------------------------- -----------------------------
Title: Senior Vice President Title: Senior Vice President
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