<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
ULTRA PAC, INC.
(NAME OF SUBJECT COMPANY)
PACKAGE ACQUISITION, INC.
IVEX PACKAGING CORPORATION
(BIDDERS)
------------------------
COMMON STOCK, NO PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------------------
903886
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
G. DOUGLAS PATTERSON
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
IVEX PACKAGING CORPORATION
100 TRI-STATE DRIVE
LINCOLNSHIRE, ILLINOIS 60069
(847) 945-9100
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
------------------------
COPY TO:
WILLIAM R. KUNKEL, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700
MARCH 23, 1998
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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$66,971,260 $13,395
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* Estimated for purposes of calculating the filing fee only. This amount assumes
the purchase of 3,893,791 shares of Ultra Pac, Inc. Common Stock, including
the associated preferred stock purchase rights ("Shares"), which are
outstanding at $15.50 per Share, and 637,524 Shares which are subject to
outstanding options and warrants at $15.50 per Share less the exercise price
of such options and warrants. The amount of the filing fee, calculated in
accordance with Rule 0-11(d) under the Securities Exchange Act of 1934, as
amended, equals 1/50 of one percent of the value of the Shares to be
purchased.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11 (a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: NOT APPLICABLE.
FORM OR REGISTRATION NO.: NOT APPLICABLE.
FILING PARTY: NOT APPLICABLE.
DATE FILED: NOT APPLICABLE.
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PAGE 1 OF 9 PAGES EXHIBIT INDEX ON PAGE 9
<PAGE> 2
SCHEDULE 14D-1 AND 13D
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CUSIP NO. 903886 PAGE 2 OF 9 PAGES
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1 NAME OF REPORTING PERSONS: IVEX PACKAGING CORPORATION
I.R.S. IDENTIFICATION NUMBER: 76-0171625
- -----------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [ ]
(B) [ ]
- -----------------------------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------------------------
4 SOURCE OF FUNDS:
BK; AF
- -----------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) or 2(E): [ ]
- -----------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
STATE OF DELAWARE
- -----------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON:
509,550*
- -----------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES: [ ]
- -----------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
13.09%*
- -----------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON:
HC AND CO
- -----------------------------------------------------------------------------------
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* On March 23, 1998, Ivex Packaging Corporation, a Delaware corporation
("Parent"), and Package Acquisition, Inc., a Minnesota corporation and an
indirect wholly-owned subsidiary of Parent ("Purchaser"), entered into Tender
and Option Agreements (the "Tender Agreements") with Calvin S. Krupa,
President, Chief Executive Officer and Chairman of the Board of Ultra Pac,
Inc. (the "Company"), and James A. Thole, Secretary of the Company (the
"Executive Shareholders"), who own an aggregate of 509,550 shares, or
approximately 13.09% of the shares outstanding on March 23, 1998, pursuant to
which the Executive Shareholders agreed, among other things and upon the terms
and conditions set forth therein, to tender the shares owned by them in the
Offer (as defined herein), to grant an option on such shares at the Offer
Price (as defined herein) to Purchaser, to vote such shares in the manner
specified in the Tender Agreements with respect to certain matters and to
appoint Parent as the Executive Shareholders' proxy to vote such shares in
certain circumstances. The Tender Agreements are described more fully in
Section 11 of the Offer to Purchase dated March 26, 1998.
<PAGE> 3
SCHEDULE 14D-1 AND 13D
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CUSIP NO. 903886 PAGE 3 OF 9 PAGES
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- -----------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON:
PACKAGE ACQUISITION, INC.
S.S. OR I.R.S. IDENTIFICATION NUMBER: APPLIED FOR.
- -----------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [ ]
(B) [ ]
- -----------------------------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------------------------
4 SOURCE OF FUNDS:
AF
- -----------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(E) or 2(F): [ ]
- -----------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
STATE OF MINNESOTA
- -----------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON:
509,550*
- -----------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES: [ ]
- -----------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (7):
13.09%*
- -----------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON:
CO
- -----------------------------------------------------------------------------------
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- ---------------
* The footnote on page 2 is incorporated by reference herein.
<PAGE> 4
SCHEDULE 14D-1 AND 13D
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CUSIP NO. 903886 PAGE 4 OF 9 PAGES
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This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Package Acquisition, Inc., a Minnesota corporation (the
"Purchaser") and an indirect wholly-owned subsidiary of Ivex Packaging
Corporation, a Delaware corporation ("Parent"), to purchase all outstanding
shares of Common Stock, no par value per share (the "Common Stock"), including
the associated preferred share purchase rights (the "Rights", and together with
the Common Stock, the "Shares"), of Ultra Pac, Inc., a Minnesota corporation
(the "Company"), at $15.50 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated March 26,
1998 (the "Offer to Purchase"), a copy of which is attached hereto as
Exhibit(a)(1), and in the related Letter of Transmittal, a copy of which is
attached hereto as Exhibit(a)(2) (which together constitute the "Offer").
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13D with respect to the Tender Agreements as described above. The
item numbers and responses thereto below are in accordance with the requirements
of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Ultra Pac, Inc. and the address of
its principal executive offices is 21925 Industrial Boulevard, Rogers, Minnesota
55374.
(b) The class of securities to which this Statement relates is the Common
Stock, no par value per share (including the associated preferred share purchase
rights), of the Company. The information set forth in the "Introduction" and
Section 1, "Terms of the Offer" of the Offer to Purchase is incorporated herein
by reference.
(c) The information set forth in Section 6, "Price Range of the Shares;
Dividends on the Shares" of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) The information set forth in the "Introduction" and Section 9,
"Certain Information Concerning Parent and the Purchaser" of the Offer to
Purchase is incorporated herein by reference. The name, business address,
present principal occupation or employment, the material occupations, positions,
offices or employments for the past five years and citizenship of each director
and executive officer of the Purchaser and Parent and the name, principal
business and address of any corporation or other organization in which such
occupations, positions, offices and employments are or were carried on are set
forth in Schedule I of the Offer to Purchase and incorporated herein by
reference.
(e) and (f) During the last five years, none of the Purchaser or Parent or,
to the best of the Purchaser's knowledge, any of the directors or executive
officers of the Purchaser or Parent has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which any such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)(1) The information set forth in Section 9, "Certain Information
Concerning Parent and the Purchaser" of the Offer to Purchase is incorporated
herein by reference. Except as described therein, neither the Purchaser nor
Parent, nor to the best of the knowledge of the Purchaser and Parent, any of the
persons listed in Schedule I of the Offer to Purchase, has entered into any
transaction with the Company, or any of the Company's affiliates which are
corporations, since the commencement of the Company's third full fiscal year
preceding the date of this Statement, the aggregate amount of which was equal to
or greater than one percent of the consolidated revenues of the Company for (i)
the fiscal year in which such transaction occurred, or (ii) the portion of the
current fiscal year which has occurred if the transaction occurred in such year.
<PAGE> 5
SCHEDULE 14D-1 AND 13D
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CUSIP NO. 903886 PAGE 5 OF 9 PAGES
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(a)(2) The information set forth in Section 9, "Certain Information
Concerning Parent and the Purchaser" of the Offer to Purchase is incorporated
herein by reference. Except as described therein, neither the Purchaser nor
Parent, nor to the best of the knowledge of the Purchaser and Parent, any of the
persons listed in Schedule I of the Offer to Purchase, has entered into any
transaction since the commencement of the Company's third full fiscal year
preceding the date of this Statement, with the executive officers, directors or
affiliates of the Company which are not corporations, in which the aggregate
amount involved in such transaction or in a series of similar transactions,
including all periodic installments in the case of any lease or other agreement
providing for periodic payments or installments, exceeded $40,000.
(b) The information set forth in the "Introduction," Section 9, "Certain
Information Concerning Parent and the Purchaser," Section 11, "Background of the
Offer; the Merger Agreement and Certain Other Agreements" and Section 12,
"Purpose of the Offer and the Merger; Plans for the Company; Other Matters" of
the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 10, "Source and Amount of
Funds" and Section 12, "Purpose of the Offer and the Merger; Plans for the
Company; Other Matters" of the Offer to Purchase is incorporated herein by
reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the "Introduction," Section 11,
"Background of the Offer; the Merger Agreement and Certain Other Agreements,"
and Section 12, "Purpose of the Offer and the Merger; Plans for the Company;
Other Matters" of the Offer to Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 7, "Effect of the Offer on
the Market for Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations" of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the "Introduction," Section 9,
"Certain Information Concerning Parent and the Purchaser," Section 11,
"Background of the Offer; the Merger Agreement and Certain Other Agreements,"
and Section 12, "Purpose of the Offer and the Merger; Plans for the Company;
Other Matters" of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "Introduction," Section 10, "Source and
Amount of Funds," Section 11, "Background of the Offer; the Merger Agreement and
Certain Other Agreements," Section 12, "Purpose of the Offer and the Merger;
Plans for the Company; Other Matters," Section 13, "Dividends and Distributions"
and Section 16, "Fees and Expenses" of the Offer to Purchase is incorporated
herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the "Introduction" and in Section 16, "Fees
and Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9, "Certain Information Concerning
Parent and the Purchaser" of the Offer to Purchase is incorporated herein by
reference.
<PAGE> 6
SCHEDULE 14D-1 AND 13D
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CUSIP NO. 903886 PAGE 6 OF 9 PAGES
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ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the "Introduction," Section 11,
"Background of the Offer; the Merger Agreement and Certain Other Agreements,"
and Section 12, "Purpose of the Offer and the Merger; Plans for the Company;
Other Matters" of the Offer to Purchase is incorporated herein by reference.
Except as described therein, there are no present or proposed material
contracts, arrangements, understandings or relationships between the Purchaser
or Parent, or to the best of the knowledge of the Purchaser and Parent, any of
the persons listed in Schedule I of the Offer to Purchase, and the Company, or
any of its executive officers, directors, controlling persons or subsidiaries.
(b) and (c) The information set forth in Section 15, "Certain Legal
Matters" of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7, "Effect of the Offer on the
Market for Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations," and Section 15, "Certain Legal Matters" of the Offer to Purchase
is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
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(a)(1) Offer to Purchase, dated March 26, 1998.
(a)(2) Letter of Transmittal with respect to the Shares.
(a)(3) Letter, dated March 26, 1998, from Innisfree M&A
Incorporated to Brokers, Dealers, Banks, Trust Companies and
Other Nominees.
(a)(4) Letter for use by Brokers, Dealers, Banks, Trust Companies
and Nominees to their Clients.
(a)(5) Notice of Guaranteed Delivery with respect to the Shares.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Press Release jointly issued by Parent and the Company,
dated March 23, 1998.
(a)(8) Form of Summary Advertisement, dated March 26, 1998.
(b)(1) Amended and Restated Credit Agreement, dated as of October
2, 1997, by and among IPC, Inc., Parent, NationsBank, N.A.
and Bankers Trust, as agents, and the guarantors and lenders
identified on the signature pages thereto (incorporated
herein by reference to Parent's Annual Report on Form 10-K
for the year ended December 31, 1997).
(b)(2) Form of Amended and Restated Pledge Agreement, dated as of
October 2, 1997, among IPC, Inc., Parent, certain of IPC
Inc.'s subsidiaries and NationsBank, N.A., and Bankers Trust
Company, as agents (incorporated herein by reference to
Parent's Annual Report on Form 10-K for the year ended
December 31, 1997).
(b)(3) Form of Amended and Restated Security Agreement, dated as of
October 2, 1997, among IPC, Inc., Parent, and certain of IPC
Inc.'s subsidiaries and NationsBank, N.A., and Bankers Trust
Company, as agents (incorporated herein by reference to
Parent's Annual Report on Form 10-K for the year ended
December 31, 1997).
(b)(4) Form of Amended and Restated Mortgage and Security Agreement
(incorporated herein by reference to Parent's Annual Report
on Form 10-K for the year ended December 31, 1997).
(c)(1) Agreement and Plan of Merger, dated as of March 23, 1998, by
and among Parent, the Purchaser and the Company.
(c)(2) Form of Tender and Option Agreement, dated as of March 23,
1998, by and between Parent and certain shareholders of the
Company.
(c)(3) Confidentiality Agreement, dated February 27, 1998, by and
between Parent and the Company.
(d) None.
(e) Not applicable.
(f) None.
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<PAGE> 7
SCHEDULE 14D-1 AND 13D
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CUSIP NO. 903886 PAGE 7 OF 9 PAGES
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Package Acquisition, Inc.
By: /s/ G. DOUGLAS PATTERSON
------------------------------------
Name: G. Douglas Patterson
Title: Secretary
Date: March 26, 1998
<PAGE> 8
SCHEDULE 14D-1 AND 13D
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CUSIP NO. 903886 PAGE 8 OF 9 PAGES
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Ivex Packaging Corporation
By: /s/ G. DOUGLAS PATTERSON
------------------------------------
Name: G. Douglas Patterson
Title: Vice President
Date: March 26, 1998
<PAGE> 9
SCHEDULE 14D-1 AND 13D
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CUSIP NO. 903886 PAGE 9 OF 9 PAGES
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INDEX TO EXHIBITS
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EXHIBIT
NUMBER EXHIBIT
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(a)(1) Offer to Purchase, dated March 26, 1998.
(a)(2) Letter of Transmittal with respect to the Shares.
(a)(3) Letter, dated March 26, 1998, from Innisfree M&A
Incorporated to Brokers, Dealers, Banks, Trust Companies and
Nominees.
(a)(4) Letter for use by Brokers, Dealers, Banks, Trust Companies
and Nominees to their Clients.
(a)(5) Notice of Guaranteed Delivery with respect to the Shares.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Press Release jointly issued by Parent and the Company,
dated March 23, 1998.
(a)(8) Form of summary advertisement, dated March 26, 1998.
(c)(1) Agreement and Plan of Merger, dated as of March 23, 1998, by
and among Parent, the Purchaser and the Company.
(c)(2) Form of Tender and Option Agreement, dated as of March 23,
1998, by and between Parent and certain shareholders of the
Company.
(c)(3) Confidentiality Agreement, dated February 27, 1998, by and
between Parent and the Company.
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<PAGE> 1
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
ULTRA PAC, INC.
BY
PACKAGE ACQUISITION, INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
IVEX PACKAGING CORPORATION
AT
$15.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, APRIL 22, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER
OF SHARES WHICH, WHEN ADDED TO ANY SHARES ACQUIRED PURSUANT TO THE TENDER
AGREEMENTS (AS DEFINED HEREIN), REPRESENTS AT LEAST A MAJORITY OF THE
OUTSTANDING SHARES ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO OTHER
TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTION 14.
IN CONNECTION WITH THE MERGER AGREEMENT, PARENT ENTERED INTO TENDER
AGREEMENTS WITH CERTAIN SHAREHOLDERS OF THE COMPANY WHO COLLECTIVELY OWN
APPROXIMATELY 13% OF THE OUTSTANDING SHARES, PURSUANT TO WHICH SUCH SHAREHOLDERS
AGREED, AMONG OTHER THINGS, TO TENDER THEIR SHARES IN THE OFFER AND GRANT AN
OPTION ON THEIR SHARES TO PARENT AT THE OFFER PRICE (AS DEFINED HEREIN).
THE BOARD OF DIRECTORS OF THE COMPANY AND A DISINTERESTED COMMITTEE OF THE
BOARD OF DIRECTORS (AS CONTEMPLATED BY SECTIONS 302A.673 AND 302A.675 OF THE
MINNESOTA BUSINESS CORPORATION ACT) HAVE EACH UNANIMOUSLY APPROVED THE OFFER AND
THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S SHAREHOLDERS, AND UNANIMOUSLY
RECOMMEND THAT SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER ALL OF
THEIR SHARES.
------------------------
IMPORTANT
Any shareholder who desires to tender all or any portion of his Shares
should either (1) complete and sign the Letter of Transmittal or a facsimile
thereof in accordance with the instructions in the Letter of Transmittal, mail
or deliver it and any other required documents to the Depositary and either
deliver the certificates for such Shares to the Depositary along with the Letter
of Transmittal or tender such Shares pursuant to the procedures for book-entry
transfer set forth in Section 2 or (2) request his broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for him. Any
shareholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if he desires to tender
such Shares.
Any shareholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, may tender such
Shares by following the procedures for guaranteed delivery set forth in Section
2.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase, the
Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to
the Information Agent, the Depositary, or to brokers, dealers, commercial banks
or trust companies. A shareholder may also contact brokers, dealers, commercial
banks or trust companies for assistance concerning the Offer.
------------------------
The Information Agent for the Offer is:
[INNISFRE M&A INCORPORATED LOGO]
March 26, 1998
<PAGE> 2
TABLE OF CONTENTS
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INTRODUCTION................................................ 1
THE OFFER................................................... 3
1. Terms of the Offer................................. 3
2. Procedure for Tendering Shares..................... 5
3. Withdrawal Rights.................................. 7
4. Acceptance for Payment and Payment................. 8
5. Certain Federal Income Tax Consequences............ 9
6. Price Range of the Shares; Dividends on the
Shares............................................... 9
7. Effect of the Offer on the Market for the Shares;
Stock Quotation; Exchange Act Registration; Margin
Regulations......................................... 10
8. Certain Information Concerning the Company......... 11
9. Certain Information Concerning Parent and the
Purchaser............................................ 14
10. Source and Amount of Funds......................... 15
11. Background of the Offer; The Merger Agreement and
Certain Other Agreements.............................. 16
12. Purpose of the Offer and the Merger; Plans for the
Company; Other Matters................................ 27
13. Dividends and Distributions........................ 28
14. Conditions of the Offer............................ 28
15. Certain Legal Matters.............................. 30
16. Fees and Expenses.................................. 32
17. Miscellaneous...................................... 32
SCHEDULE I--Directors and Executive Officers of Parent and
Purchaser................................................. I-1
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<PAGE> 3
To the Holders of Common Stock of
ULTRA PAC, INC.:
INTRODUCTION
Package Acquisition, Inc., a Minnesota corporation (the "Purchaser") and an
indirect wholly-owned subsidiary of Ivex Packaging Corporation, a Delaware
corporation ("Parent"), hereby offers to purchase all outstanding shares of
Common Stock, no par value per share (the "Common Stock"), including the
associated preferred share purchase rights (the "Rights" and together with the
Common Stock, the "Shares"), issued pursuant to the Rights Agreement (as defined
below), of Ultra Pac, Inc., a Minnesota corporation (the "Company"), at $15.50
per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of Bankers Trust Company, which is
acting as the Depositary (the "Depositary"), and Innisfree M&A Incorporated,
which is acting as the Information Agent (the "Information Agent"), incurred in
connection with the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of March 23, 1998 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company pursuant to which, as soon as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions to the Merger (as defined below), the Purchaser will be merged with
and into the Company (the "Merger") and the Company will become an indirect
wholly-owned subsidiary of Parent. At the effective time of the Merger (the
"Effective Time"), each Share then outstanding (other than Shares held by
shareholders who perfect their dissenters' rights under Minnesota law) will be
converted into the right to receive $15.50 in cash or any higher price per Share
paid in the Offer (the "Offer Price"). The Merger Agreement is more fully
described in Section 11, and is set forth in full as an annex to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to shareholders of the Company herewith. The Offer and the
Merger are sometimes collectively referred to herein as the "Transaction."
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER
OF SHARES WHICH, WHEN ADDED TO ANY SHARES ACQUIRED PURSUANT TO THE TENDER
AGREEMENTS (AS DEFINED HEREIN), REPRESENTS AT LEAST A MAJORITY OF THE
OUTSTANDING SHARES ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). THE OFFER
IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO
PURCHASE. SEE SECTION 14.
IN CONNECTION WITH THE MERGER AGREEMENT, PARENT ENTERED INTO TENDER
AGREEMENTS WITH CERTAIN SHAREHOLDERS OF THE COMPANY WHO COLLECTIVELY OWN
APPROXIMATELY 13% OF THE OUTSTANDING SHARES, PURSUANT TO WHICH SUCH SHAREHOLDERS
AGREED, AMONG OTHER THINGS, TO TENDER THEIR SHARES IN THE OFFER AND GRANT AN
OPTION ON THEIR SHARES TO PARENT AT THE OFFER PRICE.
THE BOARD OF DIRECTORS OF THE COMPANY AND A DISINTERESTED COMMITTEE OF THE
BOARD OF DIRECTORS (AS CONTEMPLATED BY SECTIONS 302A.673 AND 302A.675 OF THE
MINNESOTA BUSINESS CORPORATION ACT (THE "MBCA")) HAVE EACH UNANIMOUSLY APPROVED
THE OFFER AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S SHAREHOLDERS,
AND UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND
TENDER ALL OF THEIR SHARES. SEE SECTION 11.
Wasserstein Perella & Co., Inc. ("WP&Co."), the Company's financial
advisor, has delivered to the Board of Directors of the Company its written
opinion to the effect that, as of the date of such opinion, the cash
consideration to be received in the Offer and the Merger, based upon and subject
to the assumptions and limitations set forth in such opinion, by the Company's
shareholders is fair to such shareholders from a financial point of view. Such
opinion is set forth in full as an annex to the Company's Schedule 14D-9 which
is being mailed to shareholders of the Company herewith.
<PAGE> 4
The Merger Agreement provides that, except as provided therein, following
satisfaction or waiver, if permissible, of the conditions to the Offer and
subject to the terms and conditions thereof, the Purchaser will accept for
payment, in accordance with the terms of the Offer, all Shares validly tendered
pursuant to the Offer and not withdrawn as soon as it is permitted to do so
pursuant to applicable law. The Offer will not remain open following the time
Shares are accepted for payment.
Under the MBCA, if the Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the outstanding Shares, the Purchaser will be able to
approve the Merger Agreement and the transactions contemplated thereby without a
vote of the shareholders. In such event, Parent, the Purchaser and the Company
have agreed in the Merger Agreement to take, at the request of Parent and
subject to the satisfaction of the conditions set forth in the Merger Agreement,
all necessary and appropriate action to cause the Merger to become effective as
soon as reasonably practicable after such acquisition, without a meeting of the
shareholders, in accordance with Sections 302A.621 and 302A.641 of the MBCA. If,
however, the Purchaser does not acquire at least 90% of the outstanding Shares
pursuant to the Offer or otherwise and a vote of the shareholders is required
under the MBCA, a significantly longer period of time would be required to
effect the Merger. In the Merger Agreement, Parent, Purchaser and the Company
have agreed that if immediately prior to the scheduled Expiration Date (as
defined below) the Shares tendered pursuant to the Offer are less than 90% of
the outstanding Shares, Purchaser may extend the Offer on one occasion for a
period not to exceed 20 business days. See Section 15.
The Purchaser presently intends to seek to cause the Company to make an
application for the termination of the registration of the Shares under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as
possible after the purchase of all validly tendered Shares pursuant to the Offer
if the requirements for termination of registration are met. See Section 7.
In connection with the execution of the Merger Agreement, Parent entered
into Tender and Option Agreements, each dated as of March 23, 1998 (the "Tender
Agreements"), with each of Calvin S. Krupa, President, Chief Executive Officer
and Chairman of the Board of the Company, and James A. Thole, Secretary of the
Company (the "Executive Shareholders"), who own an aggregate of 509,550 Shares,
or approximately 13% of the Shares outstanding on March 23, 1998, pursuant to
which the Executive Shareholders agreed, among other things and upon the terms
and conditions set forth therein, to tender their Shares in the Offer and grant
an option on their Shares to Purchaser at the Offer Price, to vote such Shares
in the manner specified in the Tender Agreements with respect to certain matters
and to appoint Parent as the Executive Shareholders' proxy to vote such Shares
in certain circumstances. The Tender Agreements are more fully described in
Section 11.
The Minimum Condition requires that the number of Shares validly tendered
and not withdrawn prior to the expiration of the Offer, when added to any Shares
acquired pursuant to the Tender Agreements, represent at least a majority of the
Shares outstanding on a fully diluted basis. According to the Company, as of
March 23, 1998, there were 3,893,791 Shares issued and outstanding, and there
were outstanding options and warrants to purchase an aggregate of 637,524
Shares. The Merger Agreement provides, among other things, that the Company will
not, without the prior written consent of Parent, issue any additional Shares
(except on the exercise of outstanding options and warrants and as otherwise
permitted under the Merger Agreement). Based on the foregoing and assuming that
all outstanding options and warrants are exercised, the Minimum Condition will
be satisfied if 2,265,658 Shares are validly tendered and not withdrawn prior to
the expiration of the Offer, including those Shares acquired pursuant to the
Tender Agreements. If the Minimum Condition is satisfied, Parent would be able
to effect the Merger without the affirmative vote of any other shareholder of
the Company.
The Company has distributed one Right for each outstanding Share pursuant
to the Rights Agreement, dated as of February 27, 1998, between the Company and
Norwest Bank Minnesota, N.A., as Rights Agent, as amended (the "Rights
Agreement"). Based on the information disclosed by the Company in connection
with and prior to the Company entering the Merger Agreement, on March 23, 1998,
the Company amended the Rights Agreement to provide that the execution of the
Merger Agreement and any amendments thereto and the Tender Agreements and the
consummation of the transactions contemplated by such agreements will
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<PAGE> 5
not cause (i) Parent and/or the Purchaser or their respective Affiliates or
Associates to become an Acquiring Person (as such terms are defined in the
Rights Agreement) unless the Merger Agreement and the Tender Agreements have
been terminated in accordance with their respective terms, or (ii) a
Distribution Date, a Shares Acquisition Date or a Triggering Event (as such
terms are defined in the Rights Agreement) to occur, irrespective of the number
of Shares acquired pursuant to the Offer, the Merger or the transactions
contemplated by the Merger Agreement and the Tender Agreements.
The Merger Agreement provides that, promptly upon the purchase of Shares by
Parent, the Purchaser or any of Parent's subsidiaries which represent at least a
majority of the outstanding Shares, Parent will be entitled to designate such
number of directors, rounded up to the next whole number, to the Board as will
give it representation equal to the product of the total number of directors on
the Board (giving effect to the directors designated by Purchaser) multiplied by
the percentage that the number of Shares so purchased bears to the total number
of Shares then outstanding. In the Merger Agreement, the Company has agreed,
upon the request of Purchaser, to use its best reasonable efforts promptly
either to increase the size of the Board or secure the resignation of such
number of incumbent directors, or both, as is necessary to enable Parent's
designees to be so elected to the Board, and to take all actions available to
the Company to cause Parent's designees to be so elected. However, until the
Effective Time, the Board must include at least one director who is not
affiliated with Parent and is designated in accordance with the terms of the
Merger Agreement.
The Purchaser estimates that the total funds required to purchase all
Shares validly tendered pursuant to the Offer, consummate the Merger and pay all
related costs and expenses will be approximately $87.7 million, including the
repayment of certain of the Company's indebtedness. The Purchaser will obtain
such funds from Parent by means of capital contributions, loans or a combination
thereof. Parent plans to obtain the funds for such capital contributions or
loans from available borrowings under its principal operating subsidiary's
existing credit facility. See Section 10.
The information contained in this Offer to Purchase concerning the Company
was supplied by the Company, and Parent and the Purchaser take no responsibility
for the accuracy of such information. The information contained in this Offer to
Purchase concerning the Offer, the Merger, Parent and the Purchaser was supplied
by Parent and the Purchaser, and the Company takes no responsibility for the
accuracy of such information.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
THE OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3 of
this Offer to Purchase. The term "Expiration Date" shall mean 12:00 Midnight,
New York City time, on Wednesday, April 22, 1998, unless and until the
Purchaser, in accordance with the terms of the Merger Agreement, shall have
extended the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition and the expiration or termination of all waiting periods
imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the regulations thereunder (the "HSR Act"). See Section 14. If such
conditions are not satisfied prior to the Expiration Date, the Purchaser
reserves the right (but shall not be obligated) to (i) decline to purchase any
of the Shares tendered and terminate the Offer, subject to the terms of the
Merger Agreement, (ii) waive any of the conditions to the Offer, to the extent
permitted by applicable law and the provisions of the Merger Agreement, and,
subject to complying with applicable rules and regulations of the Securities and
Exchange Commission (the "Commission"), purchase all Shares validly
3
<PAGE> 6
tendered or (iii) extend the Offer and, subject to the right of shareholders to
withdraw Shares until the Expiration Date, retain the Shares which will have
been tendered during the period or periods for which the Offer is extended.
Subject to the terms of the Merger Agreement, the Purchaser expressly
reserves the right, in its sole discretion, at any time or from time to time,
(i) to extend the Offer on one or more occasions beyond the then-scheduled
Expiration Date, if at the then-scheduled Expiration Date of the Offer any of
the conditions to Purchaser's obligation to accept for payment and pay for the
Shares have not been satisfied or waived, until such time as such conditions are
satisfied or waived, provided, however, that if the sole condition remaining
unsatisfied is the failure of the waiting period under the HSR Act to have
expired or been terminated, the Purchaser shall extend the expiration date from
time to time until two business days after the expiration of the waiting period
under the HSR Act, (ii) increase the Offer Price payable pursuant to the Offer
and extend the Offer for any period required by any rule, regulation,
interpretation or provision of the Commission or the staff thereof applicable to
the Offer, and (iii) extend the Offer on one occasion for an aggregate period of
not more than 20 business days beyond the latest Expiration Date that would
otherwise be permitted under clause (i) or (ii) of this sentence if there shall
not have been validly tendered and not withdrawn pursuant to the Offer at least
90% of the outstanding Shares. The rights reserved by the Purchaser in this
paragraph are in addition to the Purchaser's rights to terminate the Offer as
described in Section 14. Any extension, amendment or termination will be
followed as promptly as practicable by public announcement thereof, the
announcement in the case of an extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of Rule
14d-4(c) under the Exchange Act. Without limiting the obligation of the
Purchaser under such Rule or the manner in which the Purchaser may choose to
make any public announcement, the Purchaser currently intends to make
announcements by issuing a release to the Dow Jones News Service.
The Merger Agreement provides that, without the prior written consent of
the Company, neither Parent nor the Purchaser will decrease the Offer Price or
change the form of consideration payable in the Offer, decrease the number of
Shares sought to be purchased pursuant to the Offer, change the conditions
described in Section 14, impose additional conditions to the Offer or amend any
other term of the Offer in any manner materially adverse to the holders of
Shares.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described in Section 3. However, the ability of
the Purchaser to delay the payment for Shares which the Purchaser has accepted
for payment is limited by Rule 14e-l(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. In a public
release, the Commission has stated that in its view an offer must remain open
for a minimum period of time following a material change in the terms of the
Offer and that waiver of a material condition, such as the Minimum Condition, is
a material change in the terms of the Offer. The release states that an offer
should remain open for a minimum of five business days from the date a material
change is first published, sent or given to security holders and that, if
material changes are made with respect to information not materially less
significant than the offer price and the number of shares being sought, a
minimum of ten business days may be required to allow adequate dissemination and
investor response. The requirement to extend the Offer will not apply to the
extent that the
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<PAGE> 7
number of business days remaining between the occurrence of the change and the
then-scheduled Expiration Date equals or exceeds the minimum extension period
that would be required because of such amendment. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
The Company has provided the Purchaser with the Company's shareholder lists
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 by the Purchaser to record holders of Shares and will be
furnished by the Purchaser to brokers, dealers, banks and similar persons whose
names, or the names of whose nominees, appear on the shareholder lists or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message (as defined below), and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received by
the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
Book-Entry Confirmation (as defined below) received by the Depositary), in each
case prior to the Expiration Date, or (ii) the tendering shareholder must comply
with the guaranteed delivery procedures set forth below.
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company and the Philadelphia Depository Trust Company (each, a
"Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer
Facilities") 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
any of the Book-Entry Transfer Facilities' systems may make book-entry delivery
of Shares by causing a Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account in accordance with that Book-Entry Transfer Facility's
procedure for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering shareholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at a Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any
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<PAGE> 8
participant in any of the Book Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered therewith and such registered holder has not completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution" and, collectively, "Eligible Institutions"). In
all other cases, all signatures on Letters of Transmittal must be guaranteed by
an Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made or
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 for such Shares must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such shareholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all physically tendered Shares, in proper
form for transfer (or a Book-Entry Confirmation with respect to all such
Shares), 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
required documents 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 (the "NYSE")
is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) 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 (iii) 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
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering shareholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above, the
tendering shareholder will irrevocably appoint designees of the Purchaser, and
each of them, as such shareholder's attorneys-in-fact and proxies in the manner
set forth in the Letter of Transmittal, each with full power of substitution, to
the full extent of such shareholder's rights with respect to the Shares tendered
by such shareholder and accepted for payment by the Purchaser and with respect
to any and all other Shares or other securities or rights issued or
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<PAGE> 9
issuable in respect of such Shares on or after March 26, 1998. All such proxies
will be considered coupled with an interest in the tendered Shares. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts for payment Shares tendered by such shareholder as provided herein. Upon
such appointment, all prior powers of attorney, proxies and consents given by
such shareholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given by such shareholder (and, if
given, will not be deemed effective). The designees of the Purchaser will
thereby be empowered to exercise all voting and other rights with respect to
such Shares and other securities or rights, including, without limitation, in
respect of any annual, special or adjourned meeting of the Company's
shareholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Shares, the
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares and other related securities or rights, including voting
at any meeting of shareholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders of any Shares determined by it not to be in proper form or
the acceptance for payment of, or payment for which may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right, subject to the provisions of the Merger Agreement, to waive any of the
conditions of the Offer or any defect or irregularity in the tender of any
Shares of any particular shareholder, whether or not similar defects or
irregularities are waived in the case of other shareholders. No tender of Shares
will be deemed to have been validly made until all defects or irregularities
relating thereto have been cured or waived. None of the 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 incur any
liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
Backup Withholding. In order to avoid "backup withholding" of U.S. federal
income tax on payments of cash pursuant to the Offer, a shareholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such shareholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such shareholder is not subject to backup withholding. If a
shareholder does not provide such shareholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such shareholder and payment of cash to such shareholder
pursuant to the Offer may be subject to backup withholding of 31%. All
shareholders surrendering Shares pursuant to the Offer should complete and sign
the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proved in
a manner satisfactory to the Purchaser and the Depositary). Certain shareholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Foreign shareholders, if
exempt, should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
3. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after Sunday, May 24, 1998.
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 and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from
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<PAGE> 10
the name of the person who tendered the Shares. If certificates for Shares have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 2, any notice of withdrawal must also specify the name and number of the
account at the appropriate Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures. Withdrawals of tenders of Shares may not be rescinded, and any
Shares properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 2 any time on or prior to
the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
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
any notice of withdrawal or incur any liability for failure to give any such
notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT.
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), the Purchaser will accept for payment and will pay, promptly
after the Expiration Date, for all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 3. All
determinations concerning the satisfaction of such terms and conditions will be
within the Purchaser's discretion, which determinations will be final and
binding. See Sections 1 and 14. The Purchaser expressly reserves the right, in
its sole discretion, to delay acceptance for payment of or payment for Shares in
order to comply in whole or in part with any applicable law, including, without
limitation, the HSR Act. Any such delays will be effected in compliance with
Rule 14e-l(c) under the Exchange Act (relating to a bidder's obligation to pay
for or return tendered securities promptly after the termination or withdrawal
of such bidder's offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or a timely Book-Entry Confirmation with respect thereto), (ii) 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 (iii) any other documents required
by the Letter of Transmittal. The per Share consideration paid to any
shareholder pursuant to the Offer will be the highest per Share consideration
paid to any other shareholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares. 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
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering shareholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of, or payment
for, Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (including such rights as are set forth in Sections 1 and 14) (but
subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary
may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to exercise, and duly exercise, withdrawal rights as described in
Section 3.
8
<PAGE> 11
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned, without expense to
the tendering shareholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 2, such Shares will be
credited to an account maintained at the appropriate Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of the
Offer.
Subject to the terms of the Merger Agreement, the Purchaser reserves the
right to transfer or assign, in whole or from time to time in part, to Parent,
or to one or more direct or indirect wholly-owned subsidiaries of Parent, the
right to purchase Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve the Purchaser of its obligations under the Offer
and will in no way prejudice the rights of tendering shareholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes and also may be a
taxable transaction under state, local or foreign tax laws. Accordingly, a
shareholder who tenders Shares in the Offer or receives cash in exchange for
Shares in the Merger (including as a result of perfecting his dissenters' rights
under the MBCA) will recognize gain or loss for federal income tax purposes
equal to the difference, if any, between the amount of cash received and the
shareholder's tax basis in the Shares sold. Gain or loss will be determined
separately for each block of Shares (i.e., Shares acquired at the same time and
price) exchanged pursuant to the Offer or the Merger. Such gain or loss
generally will be capital gain or loss if the Shares disposed of were held as
capital assets by the shareholder, and will be long-term capital gain or loss if
the Shares disposed of were held for more than one year at the date of sale or
the Expiration Date (in the case of the Offer) or on the date of the Merger (in
the case of the Merger), as the case may be. In addition, the Taxpayer Relief
Act of 1997 could affect the federal income tax consequences of the Offer and
Merger in that, among other things, it reduces the maximum rate of federal
income tax on capital gains of individual taxpayers for capital assets held more
than 18 months. Shares held less than one year may be subject to ordinary income
tax rates of up to 39.6% for individuals.
The foregoing summary constitutes a general description of certain U.S.
federal income tax consequences of the Offer and the Merger without regard to
the particular facts and circumstances of each shareholder of the Company and is
based on the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Department Regulations issued pursuant thereto and published
rulings and court decisions in effect as of the date hereof, all of which are
subject to change, possibly with retroactive effect. Special tax consequences
not described herein may be applicable to certain shareholders subject to
special tax treatment (including insurance companies, tax-exempt organizations,
financial institutions or broker dealers, foreign shareholders and shareholders
who have acquired their Shares pursuant to the exercise of employee stock
options or otherwise as compensation). ALL SHAREHOLDERS SHOULD CONSULT THEIR TAX
ADVISORS WITH RESPECT TO SPECIFIC TAX EFFECTS APPLICABLE TO THEM OF THE OFFER
AND THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE
MINIMUM TAX AND ANY STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES.
The Shares are traded through the Nasdaq National Market under the symbol
"UPAC." The following table sets forth, for each of the periods indicated, the
high and low reported sales price per Share on the Nasdaq National Market.
9
<PAGE> 12
<TABLE>
<CAPTION>
HIGH LOW
------- ------
<S> <C> <C>
1996:
First Quarter................................... $ 4.000 $2.750
Second Quarter.................................. 4.438 2.750
Third Quarter................................... 3.750 2.500
Fourth Quarter.................................. 4.250 2.625
1997:
First Quarter................................... $ 6.000 $3.500
Second Quarter.................................. 7.500 5.375
Third Quarter................................... 10.000 6.688
Fourth Quarter.................................. 10.188 8.750
1998:
First Quarter (through March 25, 1998).......... $15.125 $6.375
</TABLE>
On March 20, 1998, the last full trading day prior to the public
announcement of the execution of the Merger Agreement by the Company, Parent and
Purchaser, the last reported sales price of the Shares on the Nasdaq National
Market was $6.688 per Share. On March 25, 1998, the last full trading day prior
to the commencement of the Offer, the last reported sales price of the Shares on
the Nasdaq National Market was $15.125 per Share. SHAREHOLDERS ARE URGED TO
OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company has never paid any cash dividends on the Shares. The Merger
Agreement provides that, without the prior written consent of Parent, the
Company will not declare, set aside or pay any dividend on or make any other
distribution in respect of its capital stock. See Section 11. The Company has
advised the Purchaser that the Company currently intends to retain earnings for
use in its operations and therefore does not intend to pay any cash dividends
for the foreseeable future. In addition, one of the Company's current loan
agreements prohibits the payment of dividends.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and, depending upon the number of Shares so purchased,
could adversely effect the liquidity and market value of the remaining Shares
held by the public.
Stock Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements for continued
inclusion in the Nasdaq National Market, which requires that there be at least
200,000 shares publicly held, with a market value of at least $1,000,000, held
by at least 400 stockholders or 300 stockholders of round lots. Shares held
directly or indirectly by directors, officers or beneficial owners of more than
10% of the Shares are not considered as being publicly held for this purpose. If
the Nasdaq National Market were to cease to publish quotations for the Shares,
it is possible that the Shares would continue to trade in the over-the-counter
market and that prices or other quotations would be reported by other sources.
The extent of the public market for such Shares and the availability of such
quotations would depend, however, upon such factors as the number of
stockholders and/or the aggregate market value of such securities remaining at
such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration under the Exchange
Act, as described below, and other factors.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin regulations
of the Federal Reserve Board and therefore could no longer be used as collateral
for loans made by brokers.
Exchange Act Registration. The Shares currently are registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission
10
<PAGE> 13
if the Shares are neither listed on a national securities exchange nor held by
300 or more holders of record. Termination of registration of the Shares under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to its shareholders and to the Commission 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 pursuant to Section 14(a) in connection with shareholders' meetings
and the related requirement of furnishing an annual report to shareholders and
the requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Company. Furthermore, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144 or
Rule 144A promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), may be impaired or eliminated. If registration of the Shares
under the Exchange Act were terminated, the Shares would no longer be "margin
securities" or be eligible for continued inclusion in the Nasdaq National
Market.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will cease to be reported on the Nasdaq National Market and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Merger.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption "Selected Financial
Information," has been furnished by the Company or has been taken from or based
upon publicly available documents and records on file with the Commission and
other public sources. Neither Parent nor Purchaser assumes responsibility for
the accuracy or completeness of the information concerning the Company contained
in such documents and records or for any failure by the Company to disclose
events which may have occurred or may affect the significance or accuracy of any
such information but which are unknown to Parent or Purchaser.
The Company designs, manufactures, markets and sells plastic containers and
packaging for the food industry, including supermarkets, distributors of food
packaging, wholesale bakery companies, fruit and vegetable growers,
delicatessens, processors and retailers of prepared foods, and foodservice
providers. The Company's packaging is primarily made from virgin or recycled
polyethylene terephthalate which the Company extrudes into plastic sheet and
thermoforms into various shapes. The Company is a Minnesota corporation with its
principal executive offices at 21925 Industrial Boulevard, Rogers, Minnesota
55374. The telephone number of the Company at such location is (612) 428-8340.
Selected Financial Information. Set forth below is certain selected
financial information with respect to the Company, excerpted or derived from the
Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1997,
and from the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended October 31, 1997, each filed with the Commission pursuant to the Exchange
Act.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the Commission. The following summary
is qualified in its entirety by reference to such reports and other documents
and all of the financial information (including any related notes) contained
therein. Such reports and other documents may be inspected and copies may be
obtained from the Commission in the manner set forth below.
11
<PAGE> 14
ULTRA PAC, INC.
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JANUARY 31,
----------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT FOR EARNINGS PER COMMON SHARE)
<S> <C> <C> <C> <C> <C>
Statements of Earnings Data
Net sales.................................... $61,719 $66,129 $57,250 $41,189 $27,572
Cost of products sold........................ 42,156 54,187 41,625 30,521 19,688
------- ------- ------- ------- -------
Gross profit.............................. 19,563 11,942 15,625 10,668 7,884
Operating expenses
Marketing and sales....................... 10,647 11,481 10,066 8,202 5,287
Administrative............................ 2,750 2,760 2,347 1,549 1,728
------- ------- ------- ------- -------
13,397 14,241 12,413 9,751 7,015
------- ------- ------- ------- -------
Operating profit (loss)................... 6,166 (2,299) 3,212 917 869
Interest expense and other................... 3,223 2,581 1,507 842 413
------- ------- ------- ------- -------
Earnings (loss) before income tax......... 2,943 (4,880) 1,705 75 456
Income tax provision (benefit)............... 1,144 (1,721) 654 16 186
------- ------- ------- ------- -------
Net Earnings (Loss)....................... $ 1,799 $(3,159) $ 1,051 $ 59 $ 270
======= ======= ======= ======= =======
Earnings (loss) per common share............. $ .47 $ (.84) $ .28 $ .02 $ .08
======= ======= ======= ======= =======
Weighted average number of shares
outstanding............................... 3,792 3,766 3,766 3,768 3,587
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
JANUARY 31,
-----------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Balance Sheet Data
Working capital.............................. $ 270 $ 2,685 $ 6,771 $ 5,632 $ 5,084
Total assets................................. 41,736 50,581 44,322 32,801 23,503
Long-term obligations........................ 15,978 27,235 20,227 13,652 6,564
Shareholders' equity......................... 11,528 9,427 12,587 11,533 11,474
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OCTOBER 31,
-------------------------
1997 1996
---- ----
(IN THOUSANDS, EXCEPT FOR
EARNINGS PER
COMMON SHARE)
<S> <C> <C>
Statements of Earnings Data
Net sales........................................... $ 47,499 $ 49,036
Cost of products sold............................... 28,674 34,283
---------- ----------
Gross profit..................................... 18,825 14,753
Operating expenses
Marketing and sales.............................. 9,724 8,085
Administrative................................... 2,387 2,074
---------- ----------
12,111 10,159
---------- ----------
Operating profit (loss).......................... 6,714 4,594
Interest expense and other.......................... (1,360) (2,802)
---------- ----------
Earnings (loss) before income tax................ 5,354 1,792
Income tax provision (benefit)...................... 2,015 716
---------- ----------
Net Earnings (Loss).............................. $ 3,339 $ 1,076
========== ==========
Earnings (loss) per common share.................... $ 0.83 $ 0.28
========== ==========
Weighted average number of shares outstanding....... 4,031,140 3,784,700
========== ==========
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 31, 1997
----------------
<S> <C>
Balance Sheet Data
Working capital........................................... $ 2,569
Total assets.............................................. 41,738
Long-term obligations..................................... 12,605
Shareholders' equity...................................... 15,178
</TABLE>
Certain Estimates Prepared by the Company. During the course of the
discussions between Parent and the Company that led to the execution of the
Merger Agreement, the Company provided Parent with certain information about the
Company which is not publicly available. The information provided included
financial forecasts which contain, among other things, the summary financial
information set forth below.
The Company does not, as a matter of course, publicly disclose
forward-looking information (such as the financial forecasts referred to below)
as to future revenues, earnings or other financial information. Such
forward-looking information was prepared by the Company solely for internal use
and not for publication or with a view to complying with the published
guidelines of the Commission regarding projections, or those of any other
regulatory or professional agency or body, generally accepted accounting
principles or consistency with the Company's audited financial statements or
with the American Institute of Certified Public Accountants Guide for
Prospective Financial Statements and are included in this Offer to Purchase only
because they were furnished to Parent. Although presented with numerical
specificity, the financial forecasts necessarily make numerous assumptions with
respect to industry performance, general business and economic conditions,
access to markets and distribution channels, availability and pricing of raw
materials and other matters, all of which are inherently subject to significant
uncertainties and contingencies and many of which are beyond the Company's
control. One cannot predict whether the assumptions made in preparing the
financial forecasts will be accurate, and actual results may be materially
higher or lower than those contained in the forecasts. THE INCLUSION OF THIS
FORWARD-LOOKING INFORMATION SHOULD NOT BE REGARDED AS FACT OR AN INDICATION THAT
PARENT, THE PURCHASER, THE COMPANY OR ANYONE WHO RECEIVED THIS INFORMATION
CONSIDERED IT A RELIABLE PREDICTOR OF FUTURE RESULTS, AND THIS INFORMATION
SHOULD NOT BE RELIED ON AS SUCH. NONE OF PARENT, THE PURCHASER OR THE COMPANY
ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR
COMPLETENESS OF THE FORECASTS.
13
<PAGE> 16
ULTRA PAC, INC.
SELECTED ESTIMATED FINANCIAL INFORMATION
(Prepared by Ultra Pac, Inc.)
(dollars in millions)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JANUARY 31,
-----------------------------------------------------
1998 1999 2000 2001
(UNAUDITED) (ESTIMATED) (ESTIMATED) (ESTIMATED)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales......................................... $62.1 $74.9 $84.8 $96.3
Gross profit...................................... 23.7 27.5 29.9 32.7
EBIT(1)........................................... 7.4 9.1 9.4 9.7
Net income........................................ 3.6 4.9 5.3 5.7
EBITDA(2)......................................... 11.6 13.7 14.5 15.6
</TABLE>
- -------------------------
(1) EBIT represents earnings before interest expense and taxes.
(2) EBITDA represents earnings before interest expense, taxes and depreciation
and amortization expenses.
Net sales were projected based on the Company's estimates of volume of
shipments of the Company's products, changes in the Company's product mix and
pricing assumptions for the projected periods. Gross profit was projected based
upon projected costs developed by the Company considering the Company's
operations and raw material costs.
Available Information. The Company is subject to the informational
requirements of the Exchange Act, and in accordance therewith, files reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, Suite 1300, New
York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material can also be
obtained at prescribed rates by writing to the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
The Commission maintains a Web site (located at http://www.sec.gov) which
includes reports, proxy statements and other information filed electronically by
registrants with the Commission.
9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER.
Parent is a vertically integrated speciality packaging company that designs
and manufactures value-added plastic and paper-based flexible packaging products
for consumer and industrial packaging markets. Parent focuses on niche markets
which management believes provide attractive margins and growth and where
Parent's integrated manufacturing capabilities can enhance its competitive
position. Parent serves a variety of markets, providing packaging for food,
medical devices and electronic goods and protective packaging for industrial
products.
Purchaser is a newly incorporated Minnesota corporation organized in
connection with the Offer and the Merger and has not carried on any activities
other than in connection with the Offer and the Merger. All of the outstanding
capital stock of Purchaser is owned indirectly by Parent. Until immediately
prior to the time Purchaser purchases Shares pursuant to the Offer, it is not
anticipated that Purchaser will have any significant assets or liabilities or
engage in activities other than those incident to its formation and
capitalization and the transactions contemplated by the Offer and the Merger.
The principal offices of Purchaser and Parent are located at 100 Tri-State
Drive, Lincolnshire, Illinois 60069. The telephone number of Parent and
Purchaser at such location is (847) 945-9100.
Pursuant to the Tender Agreements, Parent and Purchaser have acquired from
the Executives options to purchase an aggregate of 509,550 Shares, which
constitutes beneficial ownership of such Shares for certain
14
<PAGE> 17
purposes. See Section 11. Such Shares constitute approximately 13% of the total
currently outstanding Shares. See Section 11.
Except as set forth in this Offer to Purchase, neither the Purchaser,
Parent, any of their respective affiliates nor, to the best of their knowledge,
any of the persons listed on Schedule I, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss, or the giving or
withholding of proxies. The Company and certain subsidiaries of Parent have from
time to time engaged in commercial transactions in the ordinary course of their
respective businesses. Except as set forth in this Offer to Purchase, neither
the Purchaser nor Parent, nor to the best of the knowledge of the Purchaser and
Parent, any of the persons listed on Schedule I, has entered into any
transaction with the Company, or any of the Company's affiliates which are
corporations, since the commencement of the Company's third full fiscal year
preceding the date of this Statement, the aggregate amount of which was equal to
or greater than one percent of the consolidated revenues of the Company for (i)
the fiscal year in which such transaction occurred, or (ii) the portion of the
current fiscal year which has occurred if the transaction occurred in such year.
Except as set forth in this Offer to Purchase, neither the Purchaser, Parent,
any of their respective affiliates, nor, to the best of their knowledge, any of
the persons listed on Schedule I, has had, since December 31, 1994, any business
relationships or transactions with the Company or any of its executive officers,
directors or affiliates that would require reporting under the rules of the
Commission. Except as set forth in this Offer to Purchase, since December 31,
1994, there have been no contacts, negotiations or transactions between the
Purchaser, Parent, any of their respective affiliates or, to the best of their
knowledge, any of the persons listed on Schedule I, and the Company or its
affiliates concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, election of directors or a sale or other
transfer of a material amount of assets.
Additional information concerning Parent is set forth in Parent's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997, which report
may be obtained from the Commission in the manner set forth under "Available
Information," below.
Available Information. Parent is subject to the informational requirements
of the Exchange Act, and in accordance therewith, files reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, Suite 1300, New
York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material can also be
obtained at prescribed rates by writing to the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
In addition, such reports, proxy statements and other information concerning
Parent can be inspected at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005. The Commission maintains a Web site
(located at http://www.sec.gov) which includes reports, proxy statements and
other information filed electronically by registrants with the Commission.
10. SOURCE AND AMOUNT OF FUNDS.
The Purchaser estimates that the total funds required to purchase all
Shares validly tendered pursuant to the Offer, consummate the Merger and pay all
related costs and expenses will be approximately $87.7 million, including the
repayment of certain of the Company's indebtedness. The Purchaser will obtain
such funds from Parent by means of capital contributions, loans or a combination
thereof. Parent plans to obtain the funds for such capital contributions or
loans from available borrowings under the existing credit facility of IPC, Inc.,
Parent's principal operating subsidiary (the "Credit Facility"), which provides
for maximum borrowings of an aggregate principal amount of up to $475.0 million,
consisting of term loans of $300.0 million and a revolving credit facility of up
to $175.0 million. The transactions contemplated by the Merger Agreement would
violate certain provisions of the Credit Facility. Parent has requested the
consent of the required lenders under the
15
<PAGE> 18
Credit Facility to the Offer and Merger, and Parent anticipates that the
required lenders will provide such consent.
The Credit Facility is comprised of a $150.0 million Term A Loan, $150.0
million Term B Loan and $175.0 million revolving credit facility (up to $65.0
million of which may be in the form of letters of credit). The Term A Loan is
required to be repaid in quarterly payments totaling $3.75 million in 1997,
$16.25 million in 1998, $21.25 million in 1999, $25.0 million in 2000, $26.25
million in 2001, $31.25 million in 2002 and $26.25 million in 2003 and the Term
B Loan is required to be repaid in quarterly payments totaling $1.5 million per
annum through September 30, 2003 and four installments of $35.25 million on
December 31, 2003, March 31, 2004, June 30, 2004 and September 30, 2004. The
interest rate of the Credit Facility can be, at the election of IPC, Inc., based
upon LIBOR or the Adjusted Base Rate, as defined therein, and is subject to
certain performance pricing adjustments. The Term A Loan and loans under the
revolving credit facility bear interest at rates up to LIBOR plus 1.625% or the
Adjusted Base Rate plus 0.625%. As of December 31, 1997, such rates are 1.375%
plus LIBOR. The Term B Loan bears interest at rates up to LIBOR plus 2.00% or
the Adjusted Base Rate plus 1.0%. As of December 31, 1997, such rates are 1.75%
plus LIBOR. Borrowings are secured by substantially all the assets of Parent and
its subsidiaries. The revolving credit facility and Term A Loan will terminate
on September 30, 2003 and the Term B Loan will terminate on September 30, 2004.
Under the Credit Facility, IPC, Inc. is required to maintain certain financial
ratios and levels of net worth and future indebtedness and dividends are
restricted, among other things. No plans or arrangements have been made to
refinance or repay borrowings under the Credit Facility. It is anticipated that
any borrowings incurred by the Purchaser in connection with the Offer will be
repaid from internally generated funds of Parent, the Purchaser and the Company
and/or refinanced in the private or public markets.
11. BACKGROUND OF THE OFFER; THE MERGER AGREEMENT AND CERTAIN OTHER AGREEMENTS
The following description was prepared by Parent and the Company.
Information about the Company was provided by the Company and neither the
Purchaser nor Parent takes any responsibility for the accuracy or completeness
of any information regarding meetings or discussions in which Purchaser, Parent
or their representatives did not participate.
BACKGROUND OF THE OFFER
Over the last several years, from time to time, George V. Bayly, Chairman
of the Board, President and Chief Executive Officer of Parent, contacted Calvin
S. Krupa, Chairman of the Board, President and Chief Executive Officer of the
Company, to express Parent's interest in exploring the possibility of a business
combination with the Company. On these occasions, Mr. Krupa indicated that the
Company was not for sale. On January 22, 1998, Mr. Bayly called Mr. Krupa to
reiterate Parent's interest in a possible business combination with the Company
and to express his willingness to meet and discuss the terms of such a possible
transaction. Mr. Krupa again advised Mr. Bayly that the Company was not for sale
and declined to meet with Mr. Bayly, but said he would discuss with his Board of
Directors the possibility of having a meeting. On January 27, 1998, Mr. Bruce
Boehm, an advisor to the Company, called Mr. Bayly to inquire as to the nature
of Parent's interest in pursuing an acquisition with the Company. During the
next two weeks, Mr. Boehm and Mr. Tannura, Parent's Chief Financial Officer, had
several telephone conversations regarding the structure, process and valuation
of a possible acquisition and the timing for a possible meeting between the
management of the Company and Parent. Mr. Boehm and Mr. Tannura also discussed a
preliminary valuation for the Company's Common Stock, with Mr. Tannura
suggesting a value of $11.00 per share. On February 9, 1998, Mr. Bayly sent Mr.
Krupa a letter (reprinted below) again expressing an interest regarding a
potential business combination with the Company.
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The text of the letter sent by Mr. Bayly to Mr. Krupa on February 9, 1998
is as follows:
Via Federal Express
February 9, 1998
Mr. Calvin S. Krupa
Chairman of the Board, President
and Chief Executive Officer
Ultra Pac, Inc.
21925 Industrial Blvd.
Rogers, Minnesota 55374
Dear Mr. Krupa:
I have believed for quite some time that there is an important strategic role
for PET in Ivex's Consumer Packaging business. As you know from our January 22,
1998 telephone conversation, we are very interested in meeting with you to
discuss the possibility of combining our respective companies. Since our January
22nd telephone call, Frank Tannura, our CFO, and I have, at your request,
attempted to pursue these discussions with your advisor, Bruce Boehm, without
much success. Because of your inability or unwillingness to arrange a meeting
with us, I find it necessary to communicate to you in this letter.
I want you to know that given the success of Ivex's recently completed initial
public offering and the current breadth of our Consumer Packaging business
(various materials and international presence), our interest in significantly
expanding our PET business is greater today than it has ever been.
As you may or may not be aware, Ivex has been investing internally in PET
extrusion and thermoforming over the past few years and expects to invest
significant capital in our PET business (both internally and through
acquisition) during 1998 and 1999.
We believe that there are clear and compelling advantages to both Ivex and Ultra
Pac from the combination of our two companies and that such a transaction would
create significant value for each of our two companies and our respective
stockholders. We are extremely impressed with the business that you and your
management team have developed and the manner in which it would complement our
business. We believe that the complementary aspects of our two companies'
products, customers and distribution capabilities would enable the combined
entity to be an even more effective competitor.
As I have briefly discussed with you and as Frank Tannura has emphasized to Mr.
Boehm, we are prepared to meet with you and/or your representatives at your
earliest convenience to discuss our ideas and to negotiate a mutually
satisfactory merger transaction (at a significant premium over current market
value) which we are confident could be quickly and successfully concluded. We
have existing bank availability and/or Ivex stock to fund any proposed
transaction that best serves your shareholders.
We hope that you and your Board of Directors will view our proposal to combine
our respective companies as an excellent opportunity for the Ultra Pac
stockholders to realize the full value of their shares (to an extent not likely
to be available to them in the marketplace in the foreseeable future). In the
context of a negotiated, friendly transaction, we are prepared to discuss all
aspects of our proposal fully with you and would hope and expect that you and
your management team would manage our combined PET business.
At this point, we hope that you will agree that the best way to proceed would be
to begin confidential, non-public discussions to see if we can quickly negotiate
a transaction that can be presented to your stockholders as the joint effort of
Ivex's and Ultra Pac's Board of Directors and management. Therefore, at this
point, we hope
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<PAGE> 20
this letter and its contents will remain private between us, although we believe
that your shareholders may be interested in learning more about our ideas.
We would appreciate it if you and your Board of Directors will give this
proposal prompt and serious consideration. We would request a response as soon
as possible, and preferably no later than February 13, 1998.
Sincerely yours,
George V. Bayly
Chairman, President and
Chief Executive Officer
After receiving Mr. Bayly's letter, Frank Harvey, a Director of the
Company, called Parent to ascertain possible dates for a meeting between the
management of the Company and Parent.
On February 25, 1998, the Company retained WP&Co. as the Company's
financial advisor. On February 25, 1998 and February 26, 1998, the Company's
Board of Directors, its legal advisors and representatives of WP&Co. met to
discuss the Company's strategic alternatives in light of the potential values
that might be achieved for shareholders of the Company through the sale of the
Company, through continued implementation of the Company's strategic plan as an
independent company and through other possible strategies. At the conclusion of
the meeting, the Board of Directors authorized WP&Co. to approach a limited
number of potential acquirors to determine their level of interest regarding a
potential strategic transaction with the Company and directed management to meet
with and listen to a possible proposal from Parent. The Board of Directors also
adopted a shareholder rights plan and amendments to the Company's bylaws
regarding certain notice provisions.
On March 2, 1998, the Company and Parent entered into a confidentiality
agreement preceding Parent's review of confidential information regarding the
Company, and members of the Company's and Parent's management met. During such
meeting, Parent indicated that it would be interested in discussing the
acquisition of the Shares, pursuant to a merger transaction, at a price in the
range of $12.00 per share, subject to certain conditions.
Also on March 2, 1998, WP&Co., on behalf of the Company, began to approach
a limited number of potential acquirors to determine their level of interest
regarding a potential strategic transaction with the Company.
On March 8, 1998, the Company's Board held a special meeting to explore
further the Company's strategic alternatives. The Company's management and
representatives of WP&Co. reported to the Board the status of discussions with
Parent and the results of WP&Co.'s preliminary discussions with other potential
acquirors.
On March 10, 1998, WP&Co. met with representatives of Parent to discuss
possible purchase price ranges for the Company and the nature and extent of
Parent's proposed due diligence investigation of the Company. Thereafter,
representatives of the Company and the Company's financial advisors had several
telephone conversations with representatives of Parent to review business issues
with respect to a possible transaction with Parent.
On March 14, 1998, representatives of the Company, its legal advisors and
WP&Co. held a conference call to discuss the indications of interests received
to date from other potential acquirors.
On March 16, 1998, the Company delivered to Parent certain limited due
diligence information for Parent's review. The information shared with Parent
included financial projections prepared by the Company's management (see Section
8).
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<PAGE> 21
On March 18, 1998, a representative of Parent conducted certain financial
due diligence at the Company's auditors and on March 19, 1998, representatives
of Parent toured the Company's manufacturing facility in Rogers, Minnesota and
met with the Company's management to discuss further the nature and performance
of the Company's business. During the evening of March 19, 1998, members of
senior management of the Company and Parent met to continue discussions
concerning Parent's valuation of the Company. The parties discussed a range of
$15 to $18 per share in cash as merger consideration, as well as other terms of
a possible transaction. The parties considered that a value of $17.60 a share
was appropriate to discuss with their respective Boards and directed their
respective legal advisors to negotiate the terms of a definitive merger
agreement providing for Parent's acquisition of the Company for cash.
Negotiations between the Company and Parent continued from March 20 through
the early morning on March 23, 1998. Following meetings of its Board of
Directors, Parent presented the Company with an offer of $15.50 per Share, and,
after further negotiations between the parties and receipt of the opinion of
WP&Co., the Company's Board of Directors and a Special Committee established
pursuant to the MBCA approved the Merger Agreement and the transactions
contemplated thereby. Following this approval, the Merger Agreement and the
Tender Agreements were executed, and the transaction was publicly announced on
March 23, 1998.
MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
The summary is qualified in its entirety by reference to the Merger Agreement
which is incorporated herein by reference and a copy of which has been filed
with the Commission as an exhibit to the Schedule 14D-1. The Merger Agreement is
set forth in full as an annex to the Company's Schedule 14D-9 which is being
mailed to shareholders of the Company herewith. The Merger Agreement also may be
examined and copies may be obtained at the places and in the manner set forth in
Section 8 of this Offer to Purchase. Capitalized terms used but not defined in
this summary of the Merger Agreement have the meanings given to such terms in
the Merger Agreement.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, the Purchaser will purchase all Shares
validly tendered and not properly withdrawn pursuant to the Offer as soon as
legally permitted after the expiration date of the Offer. The Merger Agreement
provides that, without the prior written consent of the Company, neither the
Purchaser nor Parent may decrease the price per Share or change the form of
consideration payable in the Offer, decrease the number of Shares sought to be
purchased in the Offer, or amend any other condition of the Offer in any manner
adverse to the holders of the Shares; provided, however, that if on the initial
scheduled expiration date of the Offer which shall be 20 business days after the
date of the Offer is commenced, the sole condition remaining unsatisfied is the
failure of the waiting period under the HSR Act to have expired or been
terminated, the Purchaser shall extend the expiration date from time to time
until two business days after the expiration of the waiting period under the HSR
Act. The Purchaser shall, on the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, accept for payment and pay for the Shares
tendered as soon as it is legally permitted to do so under applicable law;
provided, however, that if, immediately prior to the initial expiration date of
the Offer (as it may be extended), the Shares tendered and not withdrawn
pursuant to the Offer equals less than 90% of the outstanding Shares, the
Purchaser may extend the Offer one time for a period not to exceed twenty
business days, notwithstanding that all conditions to the Offer are satisfied as
of such expiration date of the Offer.
Board of Directors. Promptly upon the purchase of Shares by Parent or any
of its Subsidiaries which represents at least a majority of the outstanding
Shares, the Purchaser will be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company as
is equal to the number of directors which is the product of (i) the total number
of directors on the Board (giving effect to the directors designated by the
Purchaser pursuant to this sentence) multiplied by (ii) the percentage that the
number of Shares so accepted for payment bears to the total number of Shares
then outstanding. In furtherance thereof, the Company will, upon request of the
Purchaser, use its best reasonable efforts promptly either to increase the size
of its Board or secure the resignations of such number of its incumbent
directors, or both, as is necessary to enable the Purchaser's designees to be so
elected to the Board, and shall take all
19
<PAGE> 22
actions available to the Company to cause the Purchaser's designees to be so
elected. At such time, the Company will, if requested by the Purchaser, also
cause persons designated by the Purchaser to constitute at least the same
percentage (rounded up to the next whole number) as is on the Board of each
committee of the Board. Notwithstanding the foregoing, the Company shall have at
least one independent director until the Effective Time. In the Merger
Agreement, the Company has agreed to promptly take all actions required pursuant
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in
order to fulfill its obligations under the Merger Agreement, including mailing
to shareholders the information required by such Section 14(f) and Rule 14f-1 as
is necessary to enable the Purchaser's designees to be elected to the Board. The
Purchaser or Parent will supply the Company and be solely responsible for any
information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof and in accordance with the MBCA, at the Effective Time, the
Purchaser will be merged with and into the Company. Following the Merger, the
separate corporate existence of the Purchaser will cease and the Company will
continue as the surviving corporation (the "Surviving Corporation"). The Merger
shall be effected by the filing at the time of Closing of properly executed
Articles of Merger or other appropriate documents with the Secretary of State of
the State of Minnesota.
The Merger Agreement provides that, at the Effective Time, by virtue of the
Merger and without any action on the part of Parent, the Purchaser, the Company
or the holders thereof the Shares will be converted into the right to receive
the Offer Price in cash, without interest thereon, as soon as is reasonably
practicable upon surrender of the certificate formerly representing such Shares
(other than any Shares in the treasury of the Company, which Shares, by virtue
of the Merger and without any action on the part of the holder thereof, shall be
cancelled and retired and shall cease to exist with no payment being made with
respect thereto, and other than Dissenting Shares). At the Effective Time, each
share of common stock, par value $.01 per share, of the Purchaser issued and
outstanding immediately prior to the Effective Time will, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and become one validly issued, fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
The Merger Agreement provides that the Articles of Incorporation of the
Purchaser, as in effect immediately prior to the Effective Time, will be the
Articles of Incorporation of the Surviving Corporation, until thereafter amended
in accordance with the provisions thereof and the MBCA. The By-Laws of the
Purchaser in effect at the Effective Time will be the By-Laws of the Surviving
Corporation, until thereafter amended in accordance with the provisions thereof
and the MBCA.
Vote Required to Approve the Merger. Pursuant to the Merger Agreement, the
Company will, if required by applicable law in order to consummate the Merger,
duly call, give notice of, convene and hold a special meeting of its
shareholders (the "Special Meeting") as soon as practicable following the
acceptance for payment and purchase of Shares by Parent or its affiliates
pursuant to the Offer for the purpose of considering and taking action upon the
Merger Agreement. The Merger Agreement provides that the Company will, if
required by applicable law in order to consummate the Merger, prepare and file
with the Commission a definitive proxy statement (the "Proxy Statement")
relating to the Merger and the Merger Agreement and cause such Proxy Statement
to be mailed to its shareholders, provided that no amendment or supplement to
the Proxy Statement will be made by the Company without consultation with Parent
and its counsel. If the Purchaser acquires at least a majority of the
outstanding Shares, the Purchaser will have sufficient voting power to approve
the Merger, even if no other shareholder votes in favor of the Merger.
The Merger Agreement provides that in the event that Parent, the Purchaser
or any other subsidiary of Parent acquires at least 90% of the outstanding
Shares pursuant to the Offer, the Tender Agreements or otherwise, the Purchaser
and the Company will take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after such acquisition,
without a meeting of shareholders of the Company, in accordance with the MBCA.
Conditions to the Merger. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger and the transactions
contemplated thereby are subject to the satisfaction, at or before
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<PAGE> 23
the Effective Time, of certain conditions, including: (i) if required by the
MBCA, the shareholders of the Company shall have duly approved the transactions
contemplated by the Merger Agreement; (ii) the consummation of the Merger shall
not be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any Governmental
Entity and there shall not have been any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger by any Governmental Entity which
prevents the consummation of the Merger; and (iii) Parent and/or the Purchaser
shall have purchased all Shares validly tendered and not withdrawn pursuant to
the Offer (however, this condition is not applicable to the obligations of
Parent or the Purchaser if Parent and/or the Purchaser fails to purchase Shares
tendered pursuant to the Offer in violation of the terms of the Merger Agreement
or the Offer).
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto, including representations
by the Company as to, among other things, (i) organization, qualification,
charter and bylaws; (ii) capitalization; (iii) enforceability, authorization of
the Company relative to the Merger Agreement and the transactions contemplated
thereby; (iv) no violation or conflict of the Merger Agreement and the
transactions contemplated thereby with the Company's organizational documents,
certain contracts and applicable law; (v) title to assets; (vi) litigation;
(vii) accounting records; (viii) company financial statements; (ix) absence of
certain changes; (x) buildings and equipment; (xi) performance of contracts;
(xii) employee benefit plans; (xiii) brokers; (xiv) taxes; (xv) real estate;
(xvi) governmental approvals; (xvii) no pending acquisitions; (xviii) labor
matters; (xix) existing permits and violations of law; (xx) intangible assets;
(xxi) customers and suppliers; (xxii) environmental protection; (xxiii) vote
required; (xxiv) returns; (xxv) SEC reports; (xxvi) content of proxy statement;
(xxvii) opinion of financial advisor; (xxviii) certain agreements; and (xxix)
the Rights Agreement.
Covenants. The Merger Agreement contains various covenants of the parties
thereto, including covenants as to, among other things, the conduct of the
business of the Company, as described in further detail below, during the period
from the date of the Merger Agreement to the Closing Date or termination of the
Merger Agreement.
Interim Covenants. Pursuant to the Merger Agreement, the Company has agreed
that during the period from the date of the Merger Agreement to the Closing Date
or termination of the Merger Agreement, the Company will (a) carry on its
business in the usual, regular and ordinary course substantially in the same
manner as heretofore carried on; (b) not (i) make payments or distributions
(other than normal salaries) to any Affiliate of the Company except for
transactions in the ordinary course of business upon commercially reasonable
terms; (ii) sell, lease, transfer or assign any of its assets, tangible or
intangible, other than for a fair consideration in the ordinary course of
business and other than the disposition of obsolete or unusable property; (iii)
enter into any Contract (other than purchase and sales orders in the ordinary
course of business in accordance with past practice) involving either more than
$50,000 or outside the ordinary course of business without the consent of the
Parent (which consent shall not be unreasonably withheld); (iv) accelerate,
terminate, modify in any material respect, or cancel any Contract (other than
purchase and sales orders in the ordinary course of business in accordance with
past practice) involving more than $50,000 to which the Company is a party or by
which any of them is bound without the consent of the Parent (which consent
shall not be unreasonably withheld); (v) make any capital expenditure (or series
of related capital expenditures) involving either more than $50,000 (unless such
expenditure is identified in the current business plan of the Company as
disclosed to Parent) or outside the ordinary course of business; (vi) delay or
postpone the payment of accounts payable and other liabilities outside the
ordinary course of business; (vii) cancel, compromise, waive or release any
right or claim (or series of related rights and claims) not covered by the
reserves or accruals relating to such claim in the Company Financial Statements
either involving more than $50,000 or outside the ordinary course of business
without the consent of the Parent (which consent shall not be unreasonably
withheld); (viii) grant any license or sublicense of any rights under or with
respect to any Intangible Assets; or (ix) make any loan to, or enter into any
other transaction with, any of its Affiliates, directors, officers and employees
outside the ordinary course of business; (c) use, operate, maintain and repair
all of its assets and properties in a normal business manner consistent with its
past practices; (d) use commercially reasonable efforts to preserve in all
material respects its business organization intact, to retain
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<PAGE> 24
the services of the Employees and to conduct business with suppliers, customers,
creditors and others having business relationships with the Company in the best
interests of the Company; (e) not knowingly do any act or knowingly omit to do
any act or, to the extent within the Company's reasonable control, knowingly
permit any act or omission to act, which will cause a breach of any of the
Contracts that would have a Material Adverse Effect; (f) use reasonable efforts
to maintain all of the Existing Insurance Policies (or policies substantially
equivalent thereto) in full force and effect; (g) not (i) except as required by
any Contract or in a manner consistent with past practice, grant any increase in
the rate of pay of any of the Employees; (ii) institute or amend any Employee
Benefit Plan unless required by Law; (iii) enter into or modify any written
employment agreement with any Person; or (iv) pay or accrue any bonus or
incentive compensation to any Person; (h) other than in the ordinary course of
business, not create, incur or assume any Indebtedness or make any Investment;
(i) not amend the Company Charter Documents; (j) not (i) issue any additional
shares of stock of any class (except pursuant to the Existing Options) or grant
any warrants, options or rights to subscribe for or acquire any additional
shares of stock of any class; (ii) declare or pay any dividend or make any
capital, surplus or other distributions (other than normal salaries) of any
nature to the Shareholders; or (iii) directly or indirectly redeem, purchase or
otherwise acquire, recapitalize or reclassify any of its capital stock or
liquidate in whole or in part; (k) timely and properly file, or timely and
properly file requests for extensions to file, all federal, state, local and
foreign tax returns which are required to be filed, and pay or make provision
for the payment of all taxes owed by it; and (l) not knowingly do any act or
omit to do any act that would result in a breach of any representation by the
Company set forth in the Merger Agreement.
No Solicitations. Prior to the Effective Time, the Company has agreed that
neither it, any of its Affiliates, nor any of the respective directors,
officers, employees, agents or representatives of the foregoing, will, directly
or indirectly, (i) solicit, initiate, facilitate or encourage (including by way
of furnishing or disclosing non-public information) any inquiries or the making
of any proposal with respect to any merger, consolidation or other business
combination involving the Company or the acquisition of all or any significant
part of the assets or capital stock of the Company (an "Acquisition
Transaction") or (ii) negotiate, explore or otherwise engage in discussions with
any Person (other than the Parent and its representatives) with respect to any
Acquisition Transaction, or which may reasonably be expected to lead to a
proposal for an Acquisition Transaction or enter into any agreement, arrangement
or understanding with respect to any such Acquisition Transaction or which would
require it to abandon, terminate or fail to consummate the Merger or any other
transaction contemplated by the Merger Agreement; provided, however, that the
Company may, in response to an unsolicited written proposal from a third party
regarding a Superior Proposal (as hereinafter defined), furnish information to
and engage in discussions and negotiations with such third party, but only if
the Board of Directors of the Company determines in good faith, after
consultation with its financial advisors and based upon the advice of outside
independent counsel, that failing to take such action would result in a breach
of the fiduciary duties of such Board of Directors under applicable Law. Without
limitation of the Company's obligations, any violation of the foregoing
restrictions by any director, officer, Affiliate, investment banker, financial
advisor, attorney or other advisor or representative of the Company, whether or
not such Person is purporting to act on behalf of the Company, or otherwise,
shall be deemed to be a breach of Section 3.4 of the Merger Agreement by the
Company.
The Company has agreed that, as of March 23, 1998, it, its Affiliates, and
the respective directors, officers, employees, agents and representatives of the
foregoing, shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Person (other than the Parent
and its representatives) conducted heretofore with respect to any Acquisition
Transaction. The Company has agreed to promptly advise the Parent in writing of
the existence of (x) any inquiries or proposals (or desire to make a proposal)
received by (or indicated to) after the date hereof, any such information
requested from, or any negotiations or discussions sought to be initiated or
continued with, the Company, its Affiliates, or any of the respective directors,
officers, employees, agents or representatives of the foregoing, in each case
from a Person (other than the Parent and its representatives) with respect to an
Acquisition Transaction, and (y) the terms thereof, including the identity of
such third party and the terms of any financing arrangement or commitment in
connection with such Acquisition Transaction, and to update on an ongoing basis
or upon the Parent's reasonable request, the status thereof. As used herein,
"Superior Proposal" means a bona fide, written and unsolicited proposal or offer
made by any Person (or group) (other than the Parent or any of its Subsidiaries)
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with respect to an Acquisition Transaction on terms which, as determined by the
Board of Directors of the Company in good faith and in the exercise of
reasonable judgment (based on the advice of independent financial advisors and
Katten Muchin & Zavis or outside independent Minnesota counsel), would
reasonably be likely to be more favorable to the Company and its Shareholders
than the transactions contemplated hereby.
Termination; Termination Fees. The Merger Agreement may be terminated and
the transactions contemplated thereby may be abandoned at any time prior to the
Closing (whether before or after the approval of the Merger Agreement by the
shareholders), as follows: (a) by mutual written agreement of the Parent and the
Company; (b) by either of the Company or Parent: (i) if (x) the Offer shall have
expired without any Shares being purchased therein or (y) the Purchaser shall
not have accepted for payment all Shares tendered pursuant to the Offer by
September 30, 1998; provided, however, that the right to terminate the Merger
Agreement under these provisions shall not be available to any party whose
failure to fulfill any obligation under the Merger Agreement has been the cause
of, or resulted in, the failure of Parent or the Purchaser, as the case may be,
to purchase the Shares pursuant to the Offer on or prior to such date; or (ii)
if any Governmental Entity shall have issued an order, decree or ruling or taken
any other action (which order, decree, ruling or other action the parties hereto
shall use their reasonable efforts to lift), which permanently restrains,
enjoins or otherwise prohibits the acceptance for payment of, or payment for,
Shares pursuant to the Offer or the Merger and such order, decree, ruling or
other action shall have become final and non-appealable; (c) by the Company: (i)
if Parent, the Purchaser or any of their affiliates shall have failed to
commence the Offer on or prior to five business days following the date of the
initial public announcement of the Offer; provided, that the Company may not
terminate the Merger Agreement pursuant to this clause of the Merger Agreement
if the Company is at such time in breach of its obligations under the Merger
Agreement; (ii) in connection with entering into a definitive agreement in
connection with an Acquisition Transaction, provided it has complied with all
provisions thereof, including the notice provisions therein, and that it makes
simultaneous payment of the termination fee payment referred to below, plus any
amounts then due as reimbursement of expenses; or (iii) if Parent or the
Purchaser shall have breached in any material respect any of their respective
representations, warranties, covenants or other agreements contained in the
Merger Agreement, which breach cannot be or has not been cured, in all material
respects, within 30 days after the giving of written notice to Parent or the
Purchaser, as applicable; (d) by Parent: (i) if, due to an occurrence, not
involving a breach by Parent or the Purchaser of their obligations hereunder,
which makes it impossible to satisfy any of the conditions set forth in Annex A
the Merger Agreement (which are set forth in Section 14 below), Parent, the
Purchaser, or any of their affiliates shall have failed to commence the Offer on
or prior to five business days following the date of the initial public
announcement of the Offer; (ii) if prior to the purchase of Shares pursuant to
the Offer, the Company shall have breached any representation, warranty,
covenant or other agreement contained in the Merger Agreement which (A) would
give rise to the failure of a condition set forth in paragraph (f) or (g) of
Annex A the Merger Agreement (which are set forth in paragraphs (f) and (g) of
Section 14 below) and (B) cannot be or has not been cured, in all material
respects, within 30 days after the giving of written notice to the Company; or
(iii) if either Parent or the Purchaser is entitled to terminate the Offer as a
result of the occurrence of any event set forth in paragraph (e) of Annex A to
the Merger Agreement (which are set forth in paragraph (e) of Section 14 below).
Notwithstanding any provision to the contrary contained in the Merger
Agreement, the Company will immediately pay to the Parent (x) the amount of
$2,500,000 and (y) all reasonably documented out-of-pocket expenses reasonably
incurred by the Parent and the Purchaser in connection with the Merger Agreement
and the Merger in an amount not to exceed $600,000 if the Merger Agreement is
terminated: (1) by the Company pursuant to clause (c)(ii) above, (2) by the
Parent pursuant to clause (d)(iii) above, (3) by Parent pursuant to clause
(d)(ii) above if the breach thereof is due to the Company's intentional or bad
faith acts, or (4) by either the Company or Parent pursuant to clause (b)(i)
above and (a) prior thereto there shall have been publicly announced another
Acquisition Transaction or an event set forth in paragraph (h) of Annex A to the
Merger Agreement (which is set forth in paragraph (h) of Section 14 below) shall
have occurred and (b) an Acquisition Transaction shall be consummated on or
prior to March 31, 1999. The amount in (x) above shall be paid concurrently with
any such termination and the amount in (y) above shall be paid within five (5)
business days after receipt by the Company of reasonably detailed evidence of
the same. Upon receipt of such payments, the Parent shall not be entitled to and
shall
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waive the right to seek damages or other amounts or remedies from the Company
for breach of, or otherwise in connection with, the Merger Agreement.
Stock Options and Warrants. The Merger Agreement provides that the Company
will not issue any additional Options and, as of the Effective Time, each
Existing Option which is outstanding at the Effective Time will be exchanged
for, and the holders of each such Existing Option will be entitled to receive at
the Closing (or thereafter, if necessary) upon surrender of such Existing Option
for cancellation, cash equal to (i) the product of (a) the difference between
the Offer Price and the exercise price of each such Existing Option, times (b)
the number of Shares covered by such Existing Option. It is presently
anticipated by the Company that the payment to be made at the Closing to the
Option holders in respect of the Existing Options will be approximately $6.6
million (before any income taxes and other required withholdings).
The Company will take all actions necessary to ensure that, from and after
the Effective Time, the Surviving Corporation will not be bound by any options,
warrants, rights or agreements which would entitle any person, other than Parent
or the Purchaser, to beneficially own shares of Surviving Corporation or Parent
or receive any payments (other than as set forth in the preceding paragraph
hereof) in respect of such options, warrants, rights or agreements. The Company
will take all actions necessary to terminate each plan with respect to Existing
Options as of the Effective Time.
Indemnification; Directors' and Officers' Insurance. Subsequent to the
Effective Time, the Purchaser shall cause the Surviving Corporation to, and the
Surviving Corporation and Parent, jointly and severally, shall, indemnify and
hold harmless each present and former director and officer of the Company
(collectively, the "Indemnified Parties") against all losses in connection with
any claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to any action or
omission in their capacity as director or officer occurring before the Effective
Time, whether asserted or claimed prior to, at or after the Effective Time, for
a period of six years after the Closing Date, in each case to the fullest extent
permitted under applicable Law (and shall pay any expenses in advance of the
final disposition of such action or proceeding to each Indemnified Party to the
fullest extent permitted under applicable Law, upon receipt from the Indemnified
Party to whom expenses are advanced of an undertaking to repay such advances as
required under applicable Law); provided, however, that, if any claim for
indemnification is asserted or made within such six year period, all rights to
indemnification in respect of such claim shall continue until the disposition of
such claim. Until the Effective Time, the Company shall keep in effect Article 7
of its Articles of Incorporation and Article 5 of its Bylaws, and thereafter for
a period of four years the Surviving Corporation shall keep in effect in its
Articles of Incorporation and Bylaws provisions which provide for
indemnification exculpation to the extent provided for in Article 7 and Article
5 of the Articles of Incorporation and Bylaws, respectively.
Parent and the Purchaser will cause to be maintained in effect for not less
than four years after the Effective Time the current policies, or substantially
similar policies, of directors' and officers' liability insurance maintained by
the Company with respect to matters existing or occurring at or prior to the
Effective Time; provided, however, that Parent and the Purchaser shall not be
required to expend an amount greater than 150% of the annual premium of the
current policy.
TENDER AGREEMENTS
The following is a summary of the material terms of the Tender Agreements.
This summary is qualified in its entirety by reference to the Tender Agreements,
each of which is incorporated herein by reference and a form of which has been
filed with the Commission as an exhibit to the Schedule 14D-1. The Tender
Agreements may be examined and a copy of each may be obtained at the place and
in the manner set forth in Section 9 of this Offer to Purchase.
Tender of Shares. On the terms and subject to the conditions set forth in
the Tender Agreements, each of the Executive Shareholders will (i) tender the
Shares owned by him (other than certain Shares pledged to a financial
institution, which Shares will be tendered as soon as practicable) into the
Offer promptly, and in any event no later than the fifth business day following
the commencement of the Offer, or, if the Shareholder has not received the offer
documents by such time, within two business days following receipt of such
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documents, and (ii) not withdraw any Shares so tendered (except in the event the
Stock Option (as defined herein) is exercised). The Executive Shareholders will
receive the same price per Share received by other shareholders of the Company
in the Offer with respect to Shares tendered by them in the Offer.
Grant of Stock Option. On the terms and subject to the conditions set forth
in the Tender Agreements, each Executive Shareholder has granted to Parent an
irrevocable option (the "Stock Option") to purchase the Shares owned by such
Executive Shareholder at a price per Share equal to the Offer Price, exercisable
at any time, in whole only, if on or after March 23, 1998: (i) any corporation,
partnership, individual, trust, unincorporated association, or other entity or
"person" (as defined in Section 13(d)(3) of the Exchange Act) other than Parent
or any of its "affiliates" (as defined in the Exchange Act) (a "Third Party"),
will have (A) commenced or announced an intention to commence a bona fide tender
offer or exchange offer for any shares of Common Stock, the consummation of
which would result in "beneficial ownership" (as defined in the Exchange Act) by
such Third Party (together with all such Third Party's affiliates and
"associates" (as defined in the Exchange Act)) of 50% or more of the then
outstanding voting equity of the Company (either on a primary or a fully diluted
basis), (B) acquired beneficial ownership of shares of Common Stock that, when
aggregated with any shares of Common Stock already owned by such Third Party,
its affiliates and associates, would result in the aggregate beneficial
ownership by such Third Party, its affiliates and associates of 15% or more of
the then outstanding voting equity of the Company (either on a primary or a
fully diluted basis); provided, however, that "Third Party" for purposes of this
clause (B) does not include any corporation, partnership, person, other entity
or group that beneficially owns more than 15% of the outstanding voting equity
of the Company (either on a primary or a fully diluted basis) as of the date
hereof and that does not, after the date hereof, increase such ownership
percentage by more than an additional 1% of the outstanding voting equity of the
Company (either on a primary or a fully diluted basis), (C) acquired assets
constituting 15% or more of the total assets or earning power of the Company
taken as a whole or (D) entered into an agreement with the Company that
contemplates the acquisition of (1) assets constituting 15% or more of the total
assets or earning power of the Company taken as a whole or (2) beneficial
ownership of 15% or more of the outstanding voting equity of the Company; or
(ii) any of the events described in Section 9.1(c)(ii) or 9.1(d)(iii) of the
Merger Agreement that would allow the Company or Parent to terminate the Merger
Agreement has occurred (after the passage of any time periods set forth in such
sections but without the necessity of the Company or Parent having terminated
the Merger Agreement).
Conditions to Closing. The Executive Shareholders' obligations to sell the
Shares owned by them upon exercise of the Stock Option and such shareholders'
obligations under the provisions described in the following paragraph are
subject (at the Executive Shareholder's election) to the further conditions that
there will have been no material breach of the representations, warranties,
covenants or agreements of Parent or the Purchaser contained in the applicable
Tender Agreement or contained in the Merger Agreement, which breach has not been
cured within ten business days of the receipt of written notice thereof from the
Executive Shareholder.
Voting Agreement; Proxy. Pursuant to the Tender Agreements, each of the
Executive Stockholders agreed that, so long as such Agreements are in effect, at
any meeting (whether annual or special and whether or not an adjourned or
postponed meeting) of the holders of Common Stock, however called, or in
connection with any written consent of the holders of Common Stock, such
Executive Shareholder will appear at the meeting or otherwise cause the Shares
owned by such Executive Shareholder to be counted as present thereat for
purposes of establishing a quorum and vote or consent (or cause to be voted or
consented) such Shares (i) in favor of the Merger and (ii) against any action or
agreement that would impede, interfere with or prevent the Merger, including any
other extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Company and a third party or any other proposal of a
third party to acquire the Company and (iii) if requested by Parent, in favor of
a shareholder resolution proposed by Parent in accordance with applicable
provisions of the MBCA the purpose of which is to cause the Offer and the Merger
to be consummated and which does not relate to the election of directors.
Each of the Executive Shareholders irrevocably granted to, and appointed,
Parent and any nominee thereof, his proxy and attorney-in-fact (with full power
of substitution) during the term of the applicable Tender Agreement, for and in
the name, place and stead of such Executive Shareholder, to vote the Shares
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owned by such Executive Shareholder, or grant a consent or approval in respect
of such Shares, in connection with any meeting of the shareholders of the
Company (i) in favor of the Merger and (ii) against any action or agreement that
would impede, interfere with or prevent the Merger, including any other
extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Company and a third party or any other proposal of a
third party to acquire the Company. Such proxy and power of attorney irrevocable
and coupled with an interest and is intended to be irrevocable in accordance
with the provisions of Section 302A.449(2) of the MBCA. Pursuant to the
applicable Tender Agreement, each Executive Shareholder also represented that
all proxies theretofore given by such Executive Shareholder in respect of the
Shares, if any, are not irrevocable, and revoked all such proxies given with
respect to the Shares.
Certain Representations and Warranties. In connection with the Tender
Agreements, the Executive Shareholders each made certain customary
representations and warranties, including with respect to (i) ownership of the
Shares and the absence of encumbrances on and in respect of the Executive
Shareholder's Shares, (ii) the Executive Shareholder's authority to enter into
and perform its obligations under the applicable Tender Agreement, (iii) the
absence of conflicts and requisite governmental consents and approvals, and (iv)
the absence of any broker, finder or investment banker relationship with respect
to the transactions contemplated by the applicable Tender Agreement except for
the engagement of Wasserstein Perella & Co., Inc. by the Company. In connection
with the Tender Agreements, each of Parent and the Purchaser made certain
customary representations and warranties to the Executive Shareholders,
including with respect to (i) authority to enter into and perform its
obligations under the applicable Tender Agreement, (ii) absence of conflicts and
requisite governmental consents and approvals, and (iii) the absence of any
broker, finder of investment banker relationship with respect to the
transactions contemplated by the Tender Agreements.
Certain Covenants. Pursuant to the Tender Agreements, each Executive
Shareholder covenanted and agreed that, except as contemplated by such Agreement
and except pursuant to the Offer, the Executive Shareholder will not offer to
sell, sell, pledge or otherwise dispose of or transfer any interest in or
encumber with any lien any of the Shares owned by such Executive Shareholder,
and will not (i) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares or any
interest therein, (ii) grant any proxy, power-of-attorney or other authorization
or consent in or with respect to such Shares, (iii) deposit such Shares into a
voting trust or enter into a voting agreement or arrangement with respect to
such Shares or (iv) take any other action with respect to such Shares that would
in any way restrict, limit or interfere with the performance of the Executive
Shareholder's obligations under the applicable Tender Agreement. Pursuant to the
Tender Agreements, each Executive Shareholder also agreed that he will notify
Parent immediately if any proposals are received by, any information is
requested from, or any negotiations or discussions are sought to be initiated or
continued with the Executive Shareholder or his attorneys, accountants or other
agents (each of such actions, an "Interest"), in each case in connection with
any Acquisition Transaction indicating, in connection with such notice, the name
of the person indicating such Interest and the terms and conditions of any
related proposals or offers. The Executive Shareholders also agreed to cease
immediately and cause to be terminated immediately any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Transaction. In addition, each Executive Shareholder agreed
to keep Parent informed, on a current basis, of the status and terms of any
Acquisition Transaction and to use his best efforts to ensure that his
attorneys, accountants and other agents do not, directly or indirectly: (i)
initiate, solicit or encourage, or take any action to facilitate the making of,
any offer or proposal that constitutes or is reasonably likely to lead to any
Acquisition Transaction, (ii) enter into any agreement with respect to any
Acquisition Transaction or (iii) in the event of an unsolicited written proposal
in respect of a Acquisition Transaction, engage in negotiations or discussions
with, or provide any information or data to, any person (other than Parent, any
of its affiliates or representatives and except for information that has been
previously publicly disseminated by the Company) relating to any Acquisition
Transaction.
Termination. Except as otherwise specifically provided therein, all
obligations under the Tender Agreements terminate on the earliest of (a) the
date the Merger Agreement is terminated in accordance with its terms or the date
the Offer is terminated by Parent or the Purchaser as a result of any failure of
a condition
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of the Offer; provided, however, that the provisions relating to the Stock
Option shall not terminate until 60 days thereafter (or such later time as
permitted by such provisions if the Merger Agreement was terminated pursuant to
Section 9.1(c)(ii) or 9.1(d)(iii) thereof), (b) the purchase of all the Shares
subject to the Stock Option pursuant to the Offer or pursuant to the Stock
Option, or (c) on September 30, 1998.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; OTHER MATTERS
The purpose of the Offer, the Merger, the Merger Agreement and the Tender
Agreements is for Parent to acquire control of, and the entire equity interest
in, the Company. Upon consummation of the Merger, the Company will become an
indirect wholly-owned subsidiary of Parent. The Offer is intended to increase
the likelihood that the Merger will be effected.
Plans for the Company
Parent is conducting a detailed review of the Company and its assets,
corporate structure, capitalization, operations, properties, policies,
management and personnel and will consider, subject to the terms of the Merger
Agreement, what, if any, changes would be desirable in light of the
circumstances which exist upon completion of the Offer. Such changes could
include changes in the Company's business, corporate structure, charter, bylaws,
capitalization, Board of Directors, management or dividend policy, although,
except as noted in this Offer to Purchase, Parent has no current plans with
respect to any of such matters.
Except as described in this Offer to Purchase, neither Parent nor the
Purchaser has any present plans or proposals that would result in an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation, relocation of operations, or sale or transfer of assets, involving
the Company or any material changes in the Company's corporate structure,
business or composition of its management or personnel.
Other Matters
Shareholder Approval. Under the MBCA and the Company's Articles of
Incorporation, the approval of the Board of Directors of the Company, and the
affirmative vote of the holders of a majority of the outstanding Shares,
including the Shares held by Purchaser and its affiliates, are required to
approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger.
The Company's Board of Directors and a disinterested committee of the Board
of Directors have each unanimously approved the Offer, the Merger and the Merger
Agreement and the transactions contemplated thereby. Unless the Merger is
consummated pursuant to the short-form merger provisions under the MBCA
described below (in which case no further corporate action by the shareholders
of the Company will be required to complete the Merger), the only remaining
required corporate action of the Company will be the approval and adoption of
the Merger Agreement and the transactions contemplated thereby by the
affirmative vote of the holders of a majority of the Shares.
Short Form Merger. Under Sections 302A.621 and 302A.641 of the MBCA, if the
Purchaser acquires at least 90% of the outstanding Shares, the Purchaser will be
able to approve the Merger without a vote of the Company's shareholders. In such
event, the Purchaser anticipates that it will take all necessary and appropriate
action to cause the Merger to become effective as soon as reasonably practicable
after such acquisition without a meeting of the Company's shareholders. If the
Purchaser does not acquire at least 90% of the outstanding Shares pursuant to
the Offer or otherwise, a significantly longer period of time may be required to
effect the Merger, because a vote or the consent of the Company's shareholders
would be required under the MBCA.
Pursuant to the Merger Agreement, the Company has agreed to take all action
necessary under the MBCA and its Articles of Incorporation and Bylaws to convene
a meeting of its shareholders promptly following consummation of the Offer to
consider and vote on the Merger, if a shareholders' vote is required. If the
Purchaser owns a majority of the outstanding Shares, approval of the Merger can
be obtained without the affirmative vote of any other shareholder of the
Company.
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Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, shareholders of the Company at the
time of the Merger will have certain rights under Sections 302A.471 and 302A.473
of the MBCA 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 of the Shares (excluding any element of value arising from the
accomplishment or expectation of the Merger) required to be paid in cash to such
dissenting holders for their Shares. Any such determination could be based upon
considerations other than, or in addition to, the market value of the Shares,
including, among other things, asset values and earning capacity of the Company.
Therefore, the value so determined in any appraisal proceeding could be
different from the price being paid in the Offer.
If any holder of Shares who demands appraisal under Sections 302A.471 and
302A.473 of the MBCA fails to perfect, or effectively withdraws or loses his
right to appraisal, as provided in the MBCA, the Shares of such holder will be
converted into the Merger Consideration in accordance with the Merger Agreement.
A shareholder may withdraw his demand for appraisal by delivery to Parent of a
written withdrawal of his demand for appraisal and acceptance of the Merger.
Failure to follow the steps required by Sections 302A.471 and 302A.473 of
the MBCA for perfecting appraisal rights may result in the loss of such rights.
Rule 13e-3. The Merger would have to comply with any applicable federal law
operative at the time. Rule 13e-3 under the Exchange Act is applicable to
certain "going private" transactions. The Purchaser does not believe that Rule
13e-3 will be applicable to the Merger. Rule 13e-3 requires, among other things,
that certain financial information concerning the Company, and certain
information relating to the fairness of the proposed transaction and the
consideration offered to minority shareholders in such a transaction, be filed
with the Commission and disclosed to minority shareholders prior to consummation
of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
As described above, the Merger Agreement provides that, prior to the
purchase of Shares by Purchaser pursuant to the Offer, without the prior written
consent of Parent, the Company will not (i) issue any additional shares of stock
of any class (except pursuant to the Existing Options) or grant any warrants,
options or rights to subscribe for or acquire any additional shares of stock of
any class; (ii) declare or pay any dividend or make any capital, surplus or
other distributions (other than normal salaries) of any nature to the
Shareholders; or (iii) directly or indirectly redeem, purchase or otherwise
acquire, recapitalize or reclassify any of its capital stock or liquidate in
whole or in part.
14. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's right to extend and amend the Offer at any
time in its sole discretion (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, including Rule 14e-1(c) under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), and may
terminate or amend the Offer as to any Shares not then paid for, if (i) any
applicable waiting period under the HSR Act has not expired or terminated, (ii)
the Minimum Condition has not been satisfied, or (iii) at any time on or after
the date of the Merger Agreement and before the time of acceptance for payment
for any such Shares, any of the following events shall have occurred:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity against the Purchaser, Parent or the
Company (i) seeking to prohibit or impose any material limitations on
Parent's or the Purchaser's ownership or operation (or that of Parent's
Subsidiaries or affiliates) of all or a material portion of their or the
Company's businesses or assets, or to compel Parent or the Purchaser or
Parent's Subsidiaries and affiliates to dispose of or hold separate any
material portion of the business or assets of the Company or Parent and
Parent's Subsidiaries, in each case taken as a whole, (ii) challenging the
acquisition by Parent or the Purchaser of any Shares under the Offer,
seeking to restrain or prohibit
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the making or consummation of the Offer or the Merger or the performance of
any of the other transactions contemplated by the Agreement, or seeking to
obtain from the Company, Parent or the Purchaser any damages that are
material in relation to the Company, (iii) seeking to impose material
limitations on the ability of the Purchaser, or render the Purchaser
unable, to accept for payment, pay for or purchase some or all of the
Shares pursuant to the Offer and the Merger, (iv) seeking to impose
material limitations on the ability of the 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 Company's shareholders, or (v) which otherwise is
reasonably likely to have a Material Adverse Effect (as defined in the
Merger Agreement);
(b) there shall be any statute, rule regulation, judgment, order or
injunction enacted, entered, enforced, promulgated, on behalf of a
Government Entity, to the Offer or the Merger, or any other action shall be
taken by any Governmental Entity, other than the application to the Offer
or the Merger of applicable waiting periods under HSR Act, that is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the NYSE for a period in
excess of 24 hours (excluding suspensions or limitations resulting solely
from physical damage or interference with such exchanges not related to
market conditions), (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or
not mandatory), (iii) a commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (iv) any limitation (whether or not mandatory) by any United
States governmental authority on the extension of credit generally by banks
or other financial institutions, or (v) a change in general financial, bank
or capital market conditions which materially and adversely affects the
ability of financial institutions in the United States to extend credit or
syndicate loans or (vi) in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or worsening
thereof;
(d) there shall have occurred any events after the date of the
Agreement which, either individually or in the aggregate, would have a
Material Adverse Effect; provided, however, that no event, change or effect
that materially results from the transactions contemplated by the Merger
Agreement, including the Offer and the Merger, or the announcement thereof
shall be deemed to cause either individually or in the aggregate, a
Material Adverse Effect;
(e) (i) the Board of Directors of the Company shall have withdrawn or
modified in a manner adverse to Parent or the Purchaser its approval or
recommendation of the Offer, the Merger or the Merger Agreement, or
approved or recommended any Acquisition Transaction or (ii) the Company
shall have entered into any agreement with respect to any Superior Proposal
in accordance with Section 3.4 of the Merger Agreement;
(f) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct, in each case (i) as of the
date referred to in any representation or warranty which addresses matters
as of a particular date, or (ii) as to all other representations and
warranties, as of the date of the Merger Agreement and as of the scheduled
expiration of the Offer, unless the inaccuracies (without giving effect to
any materiality or material adverse effect qualifications or materiality
exceptions contained therein) under such representations and warranties,
taking all the inaccuracies under all such representations and warranties
together in their entirety, do not, individually or in the aggregate,
result in a Material Adverse Effect;
(g) the Company shall have failed to perform any obligation or to
comply with any agreement or covenant to be performed or compiled with by
it under the Merger Agreement other than any failure which would not have,
either individually or in the aggregate, a Material Adverse Effect;
(h) any person acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act) of at least 15% of the outstanding
Shares (other than any person not required to file a Schedule 13D under the
rules promulgated under the Exchange Act); or
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(i) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such condition (including any action or inaction by
Parent or the Purchaser not in violation of the Merger Agreement) and may be
waived by Parent or the Purchaser in whole or in part at any time and from time
to time in the sole discretion of Parent or the Purchaser, subject in each case
to the terms of the Merger Agreement. The failure by Parent or the Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time from time to time.
15. CERTAIN LEGAL MATTERS.
Except as described in this Section 15, based on information provided by
the Company, none of the Company, the Purchaser or Parent is aware of any
license or regulatory permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely affected
by the Purchaser's acquisition of Shares as contemplated herein or of any
approval or other action by a domestic or foreign governmental, administrative
or regulatory agency or authority that would be required or desirable for the
acquisition and ownership of the Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required or desirable, the Purchaser
and Parent presently contemplate that such approval or other action will be
sought, except as described below under "State Takeover Laws." While, except as
otherwise described in this Offer to Purchase, the 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 below, the
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.
(a) State Takeover Laws. The Company is incorporated under the laws of the
State of Minnesota. No Minnesota takeover statute or similar statute or
regulation, including without limitation Sections 302A.671 to 302A.675 of the
MBCA, imposes restrictions materially adversely affecting (or materially
delaying) the consummation of the Offer or the Merger or would, as a result of
the Offer, the Merger, the transactions contemplated thereby or the acquisition
of securities of the Company or the Surviving Corporation by Parent or the
Purchaser, (A) restrict or impair the ability of Parent to vote, or otherwise to
exercise the rights of a shareholder with respect to, securities of the Company
or the Surviving Corporation that may be acquired or controlled by Parent or (B)
entitle any shareholder to acquire securities of the Company or the Surviving
Corporation on a basis not available to Parent. However, see the discussion of
the Minnesota Takeover Disclosure Law, below.
A number of other states throughout the United States have enacted takeover
statutes that purport, in varying degrees, to be applicable to attempts to
acquire securities of corporations that are incorporated or have assets,
shareholders, executive offices or places of business in such states. In Edgar
v. MITE Corp., the Supreme Court of the United Sates held that the Illinois
Business Takeover Act, which involved state securities laws that made the
takeover of certain corporations more difficult, imposed a substantial burden on
interstate commerce and therefore was unconstitutional. In CTS Corp. v. Dynamics
Corp. of America, however, the Supreme Court of the United States held that a
state may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining shareholders, provided that
such laws were applicable only under certain conditions.
Based on information supplied by the Company's representations in the
Merger Agreement, the Purchaser does not believe that any state takeover
statutes apply to the Offer or the Merger. Neither the
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Purchaser nor Parent has currently complied with any state takeover statute or
regulation. The Purchaser reserves the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer or the Merger and
nothing in this Offer to Purchase or any action taken in connection with the
Offer or the Merger is intended as a waiver of such right. If it is asserted
that any state takeover statute is applicable to the Offer or the Merger and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer or the Merger, the Purchaser might be required to file
certain information with, or to receive approvals from, the relevant state
authorities, and the Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer, or be delayed in consummating the Offer
or the Merger. In such case, the Purchaser may not be obligated to accept for
payment or pay for any Shares tendered pursuant to the Offer. See Section 14.
The Minnesota Takeover Disclosure Law, Minnesota Statutes Chapter
80B.01-80B.19 (the "Minnesota Statute"), by its terms requires certain
disclosures and the filing of certain disclosure material with the Minnesota
Commissioner of Commerce (the "Commissioner") with respect to any offer for a
corporation, such as the Company, that has its principal place of business in
Minnesota and a certain number of shareholders resident in Minnesota. Purchaser
will file disclosure material with the Commissioner on March 26, 1998. Although
the Commissioner does not approve such material, he does review it for the
adequacy of such disclosure and is empowered to suspend summarily the Offer in
Minnesota within three days of such filing if he determines that the material
does not (or the materials provided beneficial owners of the Shares residing in
Minnesota do not) provide full disclosure. If such summary suspension occurs, a
hearing must be held (within 10 days of the summary suspension) and a
determination made (within three days of the completion of such hearing, but not
more than 16 days after the initial summary suspension) as to whether to
permanently suspend the Offer in Minnesota, subject to corrective disclosure. If
the Commissioner takes action under the Minnesota Statute, then the Purchaser
may not be obligated to accept for payment or pay for Shares tendered pursuant
to the Offer because such action may have the effect of significantly delaying
the Offer. See Section 14 for certain conditions of the Offer, including
conditions with respect to governmental actions. In such event, the Purchaser
may, among other things, terminate the Offer or amend the terms and conditions
of the Offer.
(b) Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the Federal Trade
Commission (the "FTC") and certain waiting period requirements have been
satisfied.
Parent and the Company expect to file their Notification and Report Forms
with respect to the Offer under the HSR Act on or about March 30, 1998. The
waiting period under the HSR Act with respect to the Offer will expire at 11:59
p.m., New York City time, on the 15th day after the date Parent's form is filed
unless early termination of the waiting period is granted. However, the
Antitrust Division or the FTC may extend the waiting period by requesting
additional information or documentary material from Parent or the Company. If
such a request is made, such waiting period will expire at 11:59 p.m., New York
City time, on the tenth day after substantial compliance by Parent with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or the
FTC raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. The 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.
As discussed below, the HSR Act requirements with respect to the Merger
will not apply if certain conditions are met. In particular, the Merger may not
be consummated until 30 calendar days after receipt by the Antitrust Division
and the FTC of the Notification and Report Forms of both Parent and the Company
unless the Purchaser acquires 50% or more of the outstanding Shares pursuant to
the Offer (which would be the case if the Minimum Condition were satisfied) or
the 30-day period is earlier terminated by the Antitrust
31
<PAGE> 34
Division and the FTC. Within such 30-day period, the Antitrust Division or the
FTC may request additional information or documentary materials from Parent
and/or the Company. The Merger may not be consummated until 20 days after such
requests are substantially complied with by both Parent and the Company.
Thereafter, the waiting periods may be extended only by court order or with the
consent of Parent and the Company.
The FTC and the Antitrust Division periodically review the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger. At any time before or after the
Purchaser's acquisition 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 otherwise or seeking divestiture of Shares acquired by the
Purchaser or divestiture of substantial assets of Parent or its subsidiaries.
Private parties, as well as state governments, may also bring legal action under
the antitrust laws under certain circumstances. Based upon an examination of
publicly available information relating to the businesses in which Parent and
the Company are engaged, Parent and the Purchaser believe that the acquisition
of Shares by the Purchaser will not violate the antitrust laws. Nevertheless,
there can be no assurance that a challenge to the Offer or other acquisition of
Shares by the Purchaser on antitrust grounds will not be made or, if such a
challenge is made, of the result. See Section 14 for certain conditions to the
Offer, including conditions with respect to litigation and certain governmental
actions.
(c) Federal Reserve Board Regulations. Regulations G, U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or maintenance
of credit for the purpose of buying or carrying margin stock, including the
Shares, if the credit is secured directly or indirectly by margin stock. Such
secured credit may not be extended or maintained in an amount that exceeds the
maximum loan value of all the direct and indirect collateral securing the
credit, including margin stock and other collateral. All financing for the Offer
will be in full compliance with the Margin Regulations.
16. FEES AND EXPENSES.
The Purchaser has retained Innisfree M&A Incorporated to act as the
Information Agent and Bankers Trust Company to act as the Depositary in
connection with the Offer. Such firms each will receive reasonable and customary
compensation for their services. The Purchaser has also agreed to reimburse each
such firm for certain reasonable out-of-pocket expenses and to indemnify each
such firm against certain liabilities and expenses in connection with their
services, including certain liabilities under the federal securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Information Agent) for soliciting tenders of
Shares pursuant to the Offer. Brokers, dealers, banks and trust companies will
be reimbursed by the Purchaser for customary mailing and handling expenses
incurred by them in forwarding material to their customers.
17. MISCELLANEOUS.
The Offer is being made to all holders of Shares other than the Company.
The Purchaser is not aware of any jurisdiction in which the making of the Offer
or the tender of Shares in connection therewith would not be in compliance with
the laws of such jurisdiction. If the Purchaser becomes aware of any
jurisdiction in which the making of the Offer would not be in compliance with
applicable law, the Purchaser will make a good faith effort to comply with any
such law. If, after such good faith effort, the Purchaser cannot comply with any
such law, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares residing in such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of the Purchaser by one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of Parent or the Purchaser not contained herein or in
the Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
32
<PAGE> 35
The Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act furnishing certain additional
information with respect to the Offer. The Schedule 14D-1 and any amendments
thereto, including exhibits, may be examined and copies may be obtained from the
offices of the Commission in the manner set forth in Section 8 of this Offer to
Purchase (except that they will not be available at the regional offices of the
Commission).
PACKAGE ACQUISITION, INC.
March 26, 1998
33
<PAGE> 36
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF PARENT AND THE PURCHASER
I. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, business address and present principal occupation or employment,
and material occupations, positions, offices or employments for the past five
years of each director and executive officer of Parent. Unless otherwise
indicated, each such person is a citizen of the United States of America and the
business address of each such person is c/o Ivex Packaging Corporation, 100
Tri-State Drive, Lincolnshire, Illinois 60069. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with
Parent. Unless otherwise indicated, each such person has held his or her present
occupation as set forth below, or has been an executive officer at Parent, or
the organization indicated, for the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- ----------------------------------------------
<S> <C>
George V. Bayly................ Director, Chairman of the Board, President and Chief
Executive Officer of Parent since January 1991.
Frank V. Tannura............... Director of Parent since August 1995. Vice President and
Chief Financial Officer of Parent since October 1989.
Richard R. Cote................ Vice President and Treasurer of Parent since August 1994.
Mr. Cote was Assistant Vice President and Treasurer of
Parent from March 1992 to August 1994.
Robert W. Crichton............. Vice President and General Manager of Parent since February
1998. From February 1997 to February 1998, Mr. Crichton was
Vice President and General Manager of Parent's surface
protection business and prior to 1997, President of Sonoco
Products Company's Flexible Packaging Division.
Thomas S. Ellsworth............ Vice President and General Manager of Parent since 1994. Mr.
Ellsworth was Vice President of Parent's paper mill
operations from 1992 to 1994.
Robert W. George............... Vice President and General Manager of Parent since August
1996. From 1993 to 1996, Mr. George was President and Chief
Executive Officer of Plastofilm Industries, Inc. and prior
to 1993, President of Nitrobar Incorporated.
Gene J. Gentili................ Vice President and General Manager of Parent since 1994.
Vice President of Sales of Parent from 1993 to 1994. Mr.
Gentili was director of national accounts for Parent from
1991 to 1993.
Roger A. Kurinsky.............. Vice President and General Manager of Parent since 1994.
Vice President of Marketing of Parent from 1991 to 1994.
Jeremy S. Lawrence............. Vice President of Human Resources of Parent since May 1991.
G. Douglas Patterson........... Vice President and General Counsel of Parent since June
1991.
David E. Wartner............... Corporate Controller of Parent since 1994. Prior to 1994,
Mr. Wartner was associated with Price Waterhouse LLP.
Eugene M. Whitacre............. Vice President and General Manager of Parent since February
1991.
Glenn R. August................ Director of Parent since March 1993 and a Managing Director
of Oak Hill Partners, Inc. (Acadia's investment advisor) and
its predecessor since 1987. Since August 1996, Mr. August
has served as President of Oak Hill Advisors, Inc., the
exclusive advisor to the Oak Hill Securities Fund, L.P., a
$1.75 billion investment partnership.
</TABLE>
I-1
<PAGE> 37
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- ----------------------------------------------
<S> <C>
R. James Comeaux............... Director of Parent since December 1, 1997. President of
Petrochemical Management Inc. since 1993 and President and
Chief Executive Officer of Arcadian Corporation from 1989 to
1993. Mr. Comeaux is also a director of Energy BioSystems
Corporation.
Anthony P. Scotto.............. Director of Parent since August 1995. Managing Director of
Oak Hill Partners, Inc. (Acadia's investment advisor) and
its predecessor since March 1998. Mr. Scotto is also a
director of Specialty Foods Corporation and Holophane
Corporation.
William J. White............... Director of Parent since December 1, 1997. Professor at
Northwestern University since January 1998 and Chairman of
the Board of Bell & Howell Company from February 1993 to
December 1997 and of Bell & Howell Operating Company from
February 1990 to December 1997. He served as Chief Executive
Officer of Bell & Howell Company from February 1993 to
December 1997 and of Bell & Howell Operating Company from
February 1990 to December 1997. Mr. White is also a director
of Bell & Howell Company, Readers Digest Association, Inc.
and the Chicago Stock Exchange.
</TABLE>
II. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The following table
sets forth the name, business address and present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years of each director and executive officer of the Purchaser. Unless
otherwise indicated, each such person is a citizen of the United States of
America and the business address of each such person is c/o Ivex Packaging
Corporation, 100 Tri-State Drive, Lincolnshire, Illinois 60069. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with the Purchaser.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- ----------------------------------------------
<S> <C>
Frank V. Tannura............... Director and President of Purchaser. Director of Parent
since August 1995. Vice President and Chief Financial
Officer of Parent since October 1989.
G. Douglas Patterson........... Director and Secretary of Purchaser. Vice President and
General Counsel of Parent since June 1991.
</TABLE>
I-2
<PAGE> 38
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each shareholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at one of the addresses set forth below:
The Depositary for the Offer is:
BANKERS TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Mail or Courier:
BT Services Tennessee, Inc. Bankers Trust Company BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust & Agency Group Corporate Trust & Agency Group
P.O. Box 292737 Receipt & Delivery Window Reorganization Unit
Nashville, TN 37229-2737 123 Washington Street, 1st 648 Grassmere Park Road
Floor Nashville, TN 37211
New York, NY 10006
</TABLE>
Facsimile Copy Number:
(615) 835-3701
(For Eligible Institutions Only)
For Confirmation Telephone:
(615) 835-3572
Questions or requests for assistance or additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the Information Agent at its location and telephone numbers set
forth below. Shareholders may also contact their broker, dealer, commercial bank
or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
[INNISFREE M&A INCORPORATED LOGO]
501 Madison Avenue, 20th Floor
New York, New York 10022
Telephone (212) 750-5833
or
CALL TOLL FREE: (888) 750-5834
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
ULTRA PAC, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED MARCH 26, 1998
BY
PACKAGE ACQUISITION, INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
IVEX PACKAGING CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, APRIL 22, 1998, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
BANKERS TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Mail or Courier:
BT Services Tennessee, Inc. Bankers Trust Company BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust & Agency Corporate Trust & Agency Group
Group
P.O. Box 292737 Receipt & Delivery Window Reorganization Unit
Nashville, TN 37229-2737 123 Washington Street, 1st 648 Grassmere Park Road
Floor
New York, NY 10006 Nashville, TN 37211
</TABLE>
Facsimile Copy Number:
(615) 835-3701
(For Eligible Institutions Only)
For Confirmation Telephone:
(615) 835-3572
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or if delivery of Shares (as defined below) is to be made by
book-entry transfer to an account maintained by the Depositary at The Depository
Trust Company or the Philadelphia Depository Trust Company (hereinafter
collectively referred to as the "Book-Entry Transfer Facilities") pursuant to
the procedures set forth in Section 2 of the Offer to Purchase (as defined
below). Shareholders who deliver Shares by book-entry transfer are referred to
herein as "Book-Entry Shareholders" and other shareholders are referred to
herein as "Certificate Shareholders."
Shareholders whose certificates are not immediately available or who cannot
deliver their Shares and all other documents required hereby to the Depositary
or complete the procedures for book-entry transfer prior to the Expiration Date
(as defined in the Offer to Purchase) must tender their Shares according to the
guaranteed delivery procedure set forth in Section 2 of the Offer to Purchase.
See Instruction 2. Delivery of documents to a Book-Entry Transfer Facility does
not constitute delivery to the Depositary.
<PAGE> 2
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
- --------------------------------------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
- --------------------------------------------------------------------------------
Transaction Code Number
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s)
- --------------------------------------------------------------------------------
Window Ticket Number (if any)
- --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
-----------------------------------------------------------------
Name of Institution which Guaranteed Delivery
----------------------------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility, if Delivered by
Book-Entry Transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
- --------------------------------------------------------------------------------
Transaction Code Number
- --------------------------------------------------------------------------------
BOXES ABOVE FOR USE BY ELIGIBLE INSTITUTIONS ONLY
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) CERTIFICATE(S) TENDERED
ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE EVIDENCED BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total Shares
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
any certificate(s) delivered to the Depositary are being tendered. See
Instruction 4.
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF YOU CANNOT LOCATE YOUR CERTIFICATE(S) AND REQUIRE ASSISTANCE
IN REPLACING THEM. UPON RECEIPT OF NOTIFICATION BY THIS LETTER OF
TRANSMITTAL, THE COMPANY'S STOCK TRANSFER AGENT WILL CONTACT YOU DIRECTLY
WITH REPLACEMENT INSTRUCTIONS.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to Package Acquisition, Inc., a Minnesota
corporation (the "Purchaser") and an indirect wholly-owned subsidiary of Ivex
Packaging Corporation, a Delaware corporation ("Parent"), the above-described
shares of Common Stock, no par value per share (the "Common Stock"), including
the associated preferred share purchase rights (the "Rights" and, together with
the Common Stock, the "Shares"), of Ultra Pac, Inc., a Minnesota corporation
(the "Company"), pursuant to the Purchaser's offer to purchase all outstanding
Shares at a price of $15.50 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated March 26,
1998 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which, together with the Offer to Purchase,
constitute the "Offer"). The undersigned understands that the Purchaser reserves
the right to transfer or assign, in whole or in part from time to time, to one
or more direct or indirect wholly owned subsidiaries of Parent, the right to
purchase Shares tendered pursuant to the Offer.
The Company has distributed one Right for each outstanding Share pursuant
to the Rights Agreement, dated as of February 27, 1998, as amended, between the
Company and Norwest Bank Minnesota, N.A., as Rights Agent. The Rights are
currently evidenced by and trade with certificates evidencing the Common Stock.
The Company has amended the Rights Agreement to make the Rights Agreement
inapplicable to Parent, Purchaser, and their respective affiliates and
associates in connection with the transactions contemplated by the Merger
Agreement and the Tender Agreements (as such terms are defined in the Offer to
Purchase).
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), subject to, and effective upon, acceptance for payment of and
payment for the Shares tendered herewith, the undersigned hereby sells, assigns,
and transfers to, or upon the order of, the Purchaser all right, title and
interest in and to all the Shares that are being tendered hereby (and any and
all other Shares or other securities issued or issuable in respect thereof on or
after March 26, 1998 (collectively, "Distributions")) and irrevocably
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares and all
Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) deliver
certificates for such Shares and all Distributions, or transfer ownership of
such Shares and all Distributions on the account books maintained by any of the
Book-Entry Transfer Facilities, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchaser, upon receipt by the Depositary, as the undersigned's agent, of the
purchase price (adjusted, if appropriate, as provided in the Offer to Purchase),
(b) present such Shares and all Distributions for cancellation and transfer on
the Company's books and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares and all Distributions and that, when the same are accepted for payment by
the Purchaser, the Purchaser will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, claims, charges and
encumbrances, and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute any signature guarantees or additional
documents deemed by the Depositary or the Purchaser to be necessary or desirable
to complete the sale, assignment and transfer of the tendered Shares and all
Distributions. In addition, the undersigned shall promptly remit and transfer to
the Depositary for the account of the Purchaser any such Distributions issued to
the undersigned, in respect of the tendered Shares, accompanied by documentation
of transfer, and pending such remittance or appropriate assurance thereof, the
Purchaser shall be entitled to all rights and privileges as owner of any such
Distributions and, subject to the terms of the Merger Agreement (as defined in
the Offer to Purchase), may withhold the entire purchase price or deduct from
the purchase price the amount or value thereof, as determined by the Purchaser
in its sole discretion.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
<PAGE> 4
The undersigned hereby irrevocably appoints Frank V. Tannura or G. Douglas
Patterson, and each of them, and any other designees of the Purchaser, the
attorneys and proxies of the undersigned, each with full power of substitution,
to vote at any annual, special or adjourned meeting of the Company's
shareholders or otherwise act (including pursuant to written consent) in such
manner as each such attorney and proxy or his substitute shall in his sole
discretion deem proper, to execute any written consent concerning any matter as
each such attorney and proxy or his substitute shall in his sole discretion deem
proper with respect to, and to otherwise act with respect to, all the Shares
tendered hereby which have been accepted for payment by the Purchaser prior to
the time any such vote or action is taken (and any and all Distributions issued
or issuable in respect thereof) and with respect to which the undersigned is
entitled to vote. This appointment is effective when and only to the extent that
the Purchaser accepts for payment such Shares as provided in the Offer to
Purchase. This power of attorney and proxy is coupled with an interest in the
tendered Shares, is irrevocable and is granted in consideration of the
acceptance for payment of such Shares in accordance with the terms of the Offer.
Such acceptance for payment shall revoke all prior powers of attorney and
proxies given by the undersigned at any time with respect to such Shares and no
subsequent powers of attorney or proxies may be given by the undersigned (and,
if given, will not be deemed effective). The Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such Shares, the Purchaser must
be able to exercise full voting and other rights with respect to such Shares,
including voting at any meeting of shareholders then scheduled.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, the Purchaser may not be required to accept for payment any of the
tendered Shares. The Purchaser's acceptance for payment of Shares pursuant to
the Offer will constitute a binding agreement between the undersigned and the
Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price of any Shares purchased, and/or
return any certificates for Shares not tendered or accepted for payment, in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price of any Shares
purchased, and/or any certificates for Shares not tendered or accepted for
payment (and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under "Description of Shares Tendered." In the
event that both the Special Delivery Instructions and the Special Payment
Instructions are completed, please issue the check for the purchase price of any
Shares purchased, and/or return any certificates for Shares not tendered or
accepted for payment in the name(s) of, and mail said check and/or any
certificates to, the person or persons so indicated. In the case of a book-
entry delivery of Shares, please credit the account maintained at the Book-Entry
Transfer Facility indicated above with any Shares not accepted for payment. The
undersigned recognizes that the Purchaser has no obligation pursuant to the
Special Payment Instructions to transfer any Shares from the name of the
registered holder(s) thereof if the Purchaser does not accept for payment any of
the Shares so tendered.
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are to be
issued in the name of someone other than the undersigned.
Issue: [ ] Check [ ] Certificate(s) to:
Name
--------------------------------------------------------
(Please Print)
Address
----------------------------------------------
- -------------------------------------------------------
(Include Zip Code)
- -------------------------------------------------------
(Tax Identification or Social Security Number)
(See Substitute Form W-9 Included Herein)
- -------------------------------------------------------
(Account Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificate(s) for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are to be
delivered to someone other than the undersigned or to the undersigned at an
address other than that appearing under "Description of Shares Tendered."
Deliver: [ ] Check [ ] Certificate(s) to:
Name
--------------------------------------------------------
(Please Print)
Address
---------------------------------------------
- -------------------------------------------------------
(Include Zip Code)
- -------------------------------------------------------
(Tax Identification or Social Security Number)
(See Substitute Form W-9 Included Herein)
<PAGE> 5
SHAREHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Signature(s) of Owner(s))
(MUST BE SIGNED BY REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON
STOCK CERTIFICATE(S) OR ON A SECURITY POSITION LISTING OR BY PERSON(S)
AUTHORIZED TO BECOME REGISTERED HOLDER(S) BY CERTIFICATES AND DOCUMENTS
TRANSMITTED HEREWITH. IF SIGNATURE IS BY TRUSTEES, EXECUTORS, ADMINISTRATORS,
GUARDIANS, ATTORNEYS-IN-FACT, OFFICERS OF CORPORATIONS OR OTHERS ACTING IN A
FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE SET FORTH FULL TITLE. SEE
INSTRUCTION 5. FOR INFORMATION CONCERNING SIGNATURE GUARANTEES, SEE INSTRUCTION
1.)
Dated: , 1998
------------------------------------------------------------------------
Name(s) ----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity (full title)-----------------------------------------------------------
Address: -----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Daytime Area Code and Telephone Number --------------------------------
Tax Identification or Social Security Number --------------------------------
- --------------------------------------------------------------------------------
(See Substitute Form W-9 Below)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
AUTHORIZED SIGNATURE ---------------------------------------------------------
Name -------------------------------------------------------------------------
(Please Print)
Title---------------------------------------------------------------------------
Name of Firm ----------------------------------------------------------------
Address: -----------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number ------------------------------------------
Dated: , 1998
------------------------------------------------------------------------
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURE. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm which is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. ("NASD") or a commercial bank or trust
company having an office or correspondent in the United States which is a
participant in an approved Signature Guarantee Medallion Program (each an
"Eligible Institution," and collectively, "Eligible Institutions"). No signature
guarantee is required on this Letter of Transmittal (i) if this Letter of
Transmittal is signed by the registered holder(s) (which term, for purposes of
this document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares) of
Shares tendered herewith, unless such holder(s) has completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the facing page hereto or (ii) if such Shares are tendered for
the account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by stockholders either
if certificates for Shares are to be forwarded herewith or if a tender of Shares
is to be made pursuant to the procedures for delivery by book-entry transfer set
forth in Section 2 of the Offer to Purchase. For Shares to be validly tendered
pursuant to the Offer, (i) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees, or
an Agent's Message (as defined in the Offer to Purchase) in the case of a
book-entry delivery, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of the Depositary's
addresses set forth herein and either certificates or a timely Book-Entry
Confirmation for tendered Shares must be received by the Depositary at one of
such addresses, in each case prior to the Expiration Date (as defined in the
Offer to Purchase), or (ii) the tendering stockholder must comply with the
guaranteed delivery procedure set forth below.
Shareholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedure set forth in Section 2 of the Offer to Purchase. Pursuant to such
procedures, (i) such tender must be made by or through an Eligible Institution,
(ii) a properly completed and duly executed Notice of Guaranteed Delivery
provided by the Purchaser (or facsimile thereof) must be received by the
Depositary prior to the Expiration Date and (iii) the certificates for all
physically tendered Shares, or a Book-Entry Confirmation with respect to all
tendered Shares, together with this properly completed and duly executed Letter
of Transmittal (or facsimile thereof) with any required signature guarantees,
and any other documents required by this Letter of Transmittal, must be received
by the Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery, all as provided in Section 2 of the Offer to
Purchase. A "trading day" is any day on which the New York Stock Exchange is
open for business.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, CERTIFICATES FOR
SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY
BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING
SHAREHOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE SHAREHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered." In such case, new certificate(s) for the remainder
of the Shares that were evidenced by the old certificate(s) will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the expiration or
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
<PAGE> 7
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment or certificates for Shares not
tendered or accepted for payment are to be issued to a person other than the
registered owner(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the shares tendered hereby, the certificates evidencing
the Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case, signed exactly as the name(s) of the registered owner(s)
appear(s) on the certificates for such Shares. Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution. See Instruction
1.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay, or cause to be paid, any stock transfer taxes with respect
to the transfer and sale of Shares to it or its assignee pursuant to the Offer.
If, however, payment of the purchase price is to be made to, or if certificates
for Shares not tendered or accepted for payment are to be registered in the name
of, any persons other than the registered holder(s), or if tendered certificates
are registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder or such person) payable on the account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of and/or certificates for Shares not accepted for payment are to be
returned to a person other than the signer of this Letter of Transmittal or if a
check is to be sent and/or such certificates are to be returned to a person
other than the signer of this Letter of Transmittal or to an address other than
that shown above, the appropriate boxes on this Letter of Transmittal should be
completed. Any shareholder tendering Shares by book-entry transfer will have any
Shares not accepted for payment returned by crediting the account maintained by
such shareholder at the Book-Entry Transfer Facility from which such transfer
was made.
8. WAIVER OF CONDITIONS. Except as otherwise provided in the Offer to
Purchase, the Purchaser expressly reserves the absolute right in its sole
discretion to waive any of the specified conditions of the Offer or any defect
or irregularity in the tender with regard to any Shares tendered.
9. SUBSTITUTE FORM W-9. The tendering shareholder (or other payee) is
required to provide the Depositary with a correct Taxpayer Identification Number
("TIN"), generally the shareholder's social security or federal employer
identification number, and with certain other information, on Substitute Form
W-9, which is provided under "Important Tax Information" below, and to certify
that the shareholder (or other payee) is not subject to backup withholding. If a
tendering shareholder is subject to backup withholding, he or she must cross out
item (2) of the Certification Box on Substitute Form W-9 before signing such
Form. Failure to provide the information on the Substitute Form W-9 may subject
the tendering shareholder (or other payee) to a $50 penalty imposed by the
Internal Revenue Service and to 31% federal income tax withholding on the
payment of the purchase price. If the tendering shareholder has not been issued
a TIN and has applied for a number or intends to apply for a number in the near
future, he or she should write "Applied For" in the space provided for the TIN
in Part I, sign and date the Substitute Form W-9 and sign and date the
Certificate of Awaiting Taxpayer Identification Number. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN by the time of
payment, the Depositary will withhold 31% of all such payments for surrendered
Shares thereafter until a TIN is provided to the Depositary.
10. LOST OR DESTROYED CERTIFICATES. If any certificate(s) representing
Shares has been lost or destroyed, the shareholder should check the appropriate
box on the front of the Letter of Transmittal. The Company's stock transfer
agent will then instruct such shareholder as to the procedure to be followed in
order to replace the certificate(s). The shareholder will have to post a surety
bond of approximately 2% of the current market value of the stock. This Letter
of Transmittal and related documents cannot be processed until procedures for
replacing lost or destroyed certificates have been followed.
<PAGE> 8
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its location set forth below.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF)
TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF
GUARANTEED DELIVERY (OR A FACSIMILE COPY THEREOF) MUST BE RECEIVED BY THE
DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, a shareholder surrendering Shares must
provide the Depositary with his correct TIN on Substitute Form W-9 on this
Letter of Transmittal. If the shareholder is an individual, his TIN is his
social security number. If the correct TIN is not provided, the shareholder may
be subject to a $50 penalty imposed by the Internal Revenue Service and payments
made in exchange for the surrendered Shares may be subject to backup withholding
of 31%.
Certain persons (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding and
reporting requirements. In order for an exempt foreign shareholder to avoid
backup withholding, that person should complete, sign and submit a Form W-8,
Certificate of Foreign Status, signed under penalties of perjury, attesting to
his exempt status. A Form W-8 can be obtained from the Depositary. Exempt
shareholders, other than foreign shareholders, should furnish their TIN, write
"Exempt" on the face of the Substitute Form W-9 and sign, date and return the
Substitute Form W-9 to the Depositary. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
If federal income tax backup withholding applies, the Depositary is
required to withhold 31% of any payment made to payee. Backup withholding is not
an additional tax. Rather, the federal income tax liability of persons subject
to backup withholding will be reduced by the amount of tax withheld. If backup
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent Federal income tax backup withholding on payments that are made
to a shareholder with respect to Shares purchased pursuant to the Offer, the
shareholder is required to notify the Depositary of his or her correct TIN (or
the TIN of any other payee) by completing the Substitute Form W-9 included in
this Letter of Transmittal certifying (1) that the TIN provided on the
Substitute Form W-9 is correct (or that such payee is awaiting a TIN) and that
(2) the shareholder is not subject to backup withholding because (i) the
shareholder has not been notified by the Internal Revenue Service that the
shareholder is subject to federal income tax backup withholding as a result of a
failure to report all interest and dividends or (ii) the Internal Revenue
Service has notified the shareholder that the shareholder is no longer subject
to federal income tax backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the TIN, generally the
social security number or employer identification number of the record owner of
the Shares. If the Shares are in more than one name or are not in the name of
the actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the tendering shareholder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future, he or
she should write "Applied For" in the space provided for the TIN in Part I, sign
and date the Substitute Form W-9 and sign and date the Certificate of Awaiting
Taxpayer Identification Number, which appears in a separate box below the
Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% of all
payments of the purchase price until a TIN is provided to the Depositary.
<PAGE> 9
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--PLEASE PROVIDE YOUR CORRECT TIN IN THE --------------------------------------
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING Social Security Number
DEPARTMENT OF THE BELOW: OR
TREASURY Employer Identification Number
INTERNAL REVENUE SERVICE (If awaiting TIN write "Applied For")
----------------------------------------------------------------------------------------------
Payer's Request for PART II--For Payees NOT subject to backup withholding, see the enclosed Guidelines for
Taxpayer Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as
Identification Number instructed therein.
(TIN)
- -----------------------------------------------------------------------------------------------------------------------
CERTIFICATION--Under the penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be
issued to me), and
(2) I am not subject to backup withholding because either (a) I am exempt from backup withholding, (b) I have not been
notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure
to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject
to backup withholding because of underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed
guidelines.) THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN
THE CERTIFICATES REQUIRED TO AVOID BACKUP WITHHOLDING.
- -----------------------------------------------------------------------------------------------------------------------
SIGNATURE DATE __________________________ , 199
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND IN BACKUP WITHHOLDING OF 31%
OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
WROTE "APPLIED FOR" IN PART I OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within sixty (60) days, 31%
of all reportable payments made to me thereafter will be withheld until I
provide a number.
SIGNATURE DATE ________________________
<PAGE> 10
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be directed
to the Information Agent as set forth below:
The Information Agent for the Offer is:
[INNISFREE M&A INCORPORATED LOGO]
501 Madison Avenue,
20th Floor
New York, New York 10022
Telephone (212) 750-5833
Call Toll Free: 888-750-5834
<PAGE> 1
EXHIBIT (a)(3)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
ULTRA PAC, INC.
BY
PACKAGE ACQUISITION, INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY
OF
IVEX PACKAGING CORPORATION
AT
$15.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, APRIL 22, 1998, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Banks, Trust March 26, 1998
Companies and Other Nominees:
We have been engaged by Package Acquisition, Inc., a Minnesota corporation
(the "Purchaser"), which is an indirect wholly-owned subsidiary of Ivex
Packaging Corporation, a Delaware corporation ("Parent"), to act as the
Information Agent in connection with the Purchaser's offer to purchase all
outstanding shares of Common Stock, no par value per share (the "Common Stock"),
including the associated preferred share purchase rights (the "Rights," and
together with the Common Stock, the "Shares"), of Ultra Pac, Inc., a Minnesota
corporation (the "Company"), at $15.50 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Purchaser's Offer to Purchase dated March 26, 1998 (the "Offer to
Purchase") and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"). Please
furnish copies of the enclosed materials to those of your clients for whom you
hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated March 26, 1998;
2. Letter of Transmittal to be used by shareholders of the Company in
accepting the Offer;
3. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such clients' instructions with regard to
the Offer;
4. Notice of Guaranteed Delivery; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
The Offer is conditioned upon, among other things, there having been
validly tendered and not withdrawn prior to the Expiration Date (as defined in
the Offer to Purchase) that number of Shares which, when added to any Shares
acquired pursuant to the Tender Agreements (as defined in the Offer to
Purchase), represents at least a majority of all outstanding Shares on a fully
diluted basis on the date of purchase.
<PAGE> 2
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), the Purchaser will accept for payment and will pay promptly after
the Expiration Date (as defined in the Offer to Purchase) for all shares validly
tendered prior to the Expiration Date and not properly withdrawn as, if and when
the Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of such Shares. Payment for Shares accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares (or a timely Book-Entry Confirmation (as defined in
the Offer to Purchase) with respect thereto), (ii) 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 (as defined in the Offer to Purchase), and (iii) any other documents
required by the Letter of Transmittal.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to deliver their certificates on or prior to the Expiration Date or to
comply with the book-entry transfer procedures on a timely basis, a tender may
be effected by following the guaranteed delivery procedures specified in Section
2 of the Offer to Purchase.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS
PROMPTLY. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, APRIL 22, 1998, UNLESS EXTENDED.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent as described
in the Offer to Purchase) in connection with the solicitation of tenders of
Shares pursuant to the Offer. The Purchaser will, however, upon request,
reimburse brokers, dealers, commercial banks and trust companies for reasonable
and necessary costs and expenses incurred by them in forwarding materials to
their customers. The Purchaser will pay all stock transfer taxes applicable to
its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
Additional copies of the enclosed materials may be obtained by contacting
the Information Agent at its address and telephone numbers set forth on the back
cover of the enclosed Offer to Purchase.
Very truly yours,
Innisfree M&A Incorporated
501 Madison Avenue,
20th Floor
New York, New York 10022
Telephone: (212) 750-5833
or
Call Toll Free (888) 750-5834
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION
OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER
NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
<PAGE> 1
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
ULTRA PAC, INC.
BY
PACKAGE ACQUISITION, INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY
OF
IVEX PACKAGING CORPORATION
AT
$15.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY APRIL 22, 1998, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated March 26,
1998 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to the Offer by Package Acquisition, Inc., a Minnesota
corporation (the "Purchaser"), which is an indirect wholly-owned subsidiary of
Ivex Packaging Corporation, a Delaware corporation ("Parent"), to purchase for
cash all outstanding shares of Common Stock, no par value per share (the "Common
Stock"), including the associated preferred share purchase rights (the "Rights",
and together with the Common Stock, the "Shares"), of Ultra Pac, Inc., a
Minnesota corporation (the "Company"). We are the holder of record of Shares
held by us for your account. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS
THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF
TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED TO
TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request your instructions as to whether you wish to tender
any of or all of the Shares held by us for your account upon the terms and
subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The offer price is $15.50 per Share, net to the seller in cash, without
interest thereon.
2. The Offer is being made for all outstanding Shares.
3. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER AND THE MERGER AND DETERMINED THAT TERMS OF THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF
THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES.
4. The Offer and withdrawal rights expire at 12:00 midnight, New York City
time, on Wednesday, April 22, 1998, unless extended.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in
the Offer to Purchase) that number of Shares which, when added to any
Shares acquired pursuant to the Tender Agreements (as defined in the
Offer to
<PAGE> 2
Purchase), represents at least a majority of the Shares outstanding on
a fully-diluted basis on the date of purchase.
6. Any stock transfer taxes applicable to a sale of Shares to the
Purchaser pursuant to the Offer will be borne by the Purchaser, except
as otherwise provided in Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any of or all of the Shares held by us for
your account, please so instruct us by completing, executing and returning to us
the instruction form set forth on the reverse side of this letter. Your
instructions to us should be forwarded promptly to permit us to submit a tender
on your behalf prior to the expiration of the Offer. An envelope to return your
instructions to us is enclosed. If you authorize the tender of your Shares, all
such Shares will be tendered unless otherwise specified on the reverse side of
this letter.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal. The Offer is not being made to, nor will tenders be accepted from,
or on behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction. If the securities laws of any jurisdiction require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of the Purchaser by one or more registered brokers or dealers licensed
under the law of such jurisdiction.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
ULTRA PAC, INC.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase dated March 26, 1998 and the related Letter of Transmittal, in
connection with the offer by Package Acquisition, Inc., a Minnesota corporation
and an indirect wholly-owned subsidiary of Ivex Packaging Corporation, a
Delaware corporation, to purchase all outstanding shares of common stock, no par
value per share (the "Common Stock"), including the associated preferred share
purchase rights (the "Rights", and together with the Common Stock, the
"Shares"), of Ultra Pac, Inc., a Minnesota corporation.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in such Offer to Purchase and related Letter of
Transmittal.
Dated: __________, 1998
NUMBER OF SHARES TO BE TENDERED*
______________ SHARES
I (we) understand that if I (we) sign this instruction form without
indicating a lesser number of Shares in the space above, all Shares held by you
for my (our) account will be tendered.
-------------------------------------------------------------------
SIGNATURE(S)
-------------------------------------------------------------------
-------------------------------------------------------------------
PRINT NAME(S)
-------------------------------------------------------------------
-------------------------------------------------------------------
PRINT ADDRESS(ES)
-------------------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
-------------------------------------------------------------------
TAX ID OR SOCIAL SECURITY NUMBER
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by your
firm for my (our) account are to be tendered.
<PAGE> 1
EXHIBIT (a)(5)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
ULTRA PAC, INC.
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates for shares of Common Stock, no par value per
share (the "Common Stock"), including the associated preferred share purchase
rights (the "Rights," and together with the Common Stock, the "Shares"), of
Ultra Pac, Inc., a Minnesota corporation (the "Company"), are not immediately
available, or if the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary at the address set forth below prior to the Expiration Date (as
defined in the Offer to Purchase). This form may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution (as defined
in the Offer to Purchase). See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
BANKERS TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Mail or Courier:
BT Services Tennessee, Inc. Bankers Trust Company BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust & Agency Group Corporate Trust & Agency Group
P.O. Box 292737 Receipt & Delivery Window Reorganization Unit
Nashville, TN 37229-2737 123 Washington Street, 1st 648 Grassmere Park Road
Floor
New York, NY 10006 Nashville, TN 37211
</TABLE>
Facsimile Copy Number:
(615) 835-3701
(For Eligible Institutions Only)
For Confirmation Telephone:
(615) 835-3572
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Package Acquisition, Inc., a Minnesota
corporation (the "Purchaser"), which is an indirect wholly-owned subsidiary of
Ivex Packaging Corporation, a Delaware corporation, upon the terms and subject
to the conditions set forth in the Purchaser's Offer to Purchase dated March 26,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal, receipt
of which is hereby acknowledged, the number of Shares (as such term is defined
in the Offer to Purchase) set forth below, all pursuant to the guaranteed
delivery procedures set forth in Section 2 of the Offer to Purchase.
Number of Shares:
Certificate Nos. (if available):
- ------------------------------------------------------
- ------------------------------------------------------
(Check one box if Shares will be tendered by book-entry transfer)
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
- ----------------------------------
Dated:
- ----------------------------------------, 1998
Name(s) of Record Holder(s):
- ------------------------------------------------------
- ------------------------------------------------------
Please Print
Address(es):
- ---------------------------------------
- ------------------------------------------------------
Zip Code
Area Code and Tel. No.:
- ------------------------------------------------------
- ------------------------------------------------------
Signature(s)
Dated:
- --------------------------------------, 1998
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agent's Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation with respect to such
Shares, in any such case together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or an Agent's Message, and any other required documents within three
trading days (as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
All capitalized terms used herein have the meanings set forth in the Offer to
Purchase.
<TABLE>
<S> <C>
Name of Firm: ------------------------------------- -----------------------------------------------------
Authorized Signature
Address: -------------------------------------------- Name: ----------------------------------------------
Please Print
- -----------------------------------------------------
Zip Code
Area Code and Tel. No.: -------------------------- Title:
-----------------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
Dated: __________, 1998
<PAGE> 1
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under state law
8. Sole proprietorship account The owner(4)
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------------------------------------
<S> <C> <C>
9. A valid trust, estate, or pension The legal entity
trust (Do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use either your Social Security number or your Employer Identification
number.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
items (1) through (13) and a person registered under the Investment Advisers Act
of 1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends, and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under Section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
Section 852 of the Code).
- - Payments described in Section 6049(b)(5) of the Code to non-resident aliens.
- - Payments on tax-free covenant bonds under Section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL
REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 6045, and 6050A and 6050N
of the Code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
EXHIBIT (a)(7)
FOR IMMEDIATE RELEASE
FOR: MEDIA CONTACT:
Ivex Packaging Corporation Richard R. Cote
100 Tri-State Drive Ivex Packaging Corporation
Suite 200 (847) 945-9100
Lincolnshire, Illinois 60069
Ultra Pac, Inc. Brad Yopp
22051 Industrial Boulevard Ultra Pac, Inc.
Rogers, Minnesota 55374 (612) 428-8340
Ivex Packaging Corporation and Ultra Pac, Inc. Announce
Signing of a Definitive Merger Agreement
March 23, 1998 - Ivex Packaging Corporation (NYSE: IXX)
("Ivex") and Ultra Pac Inc. (NASDAQ: UPAC) ("Ultra Pac") today jointly
announced that the two companies have signed a definitive merger agreement for
the acquisition of Ultra Pac by Ivex.
Under the terms of the agreement, a subsidiary of Ivex will
commence a tender offer on March 26, 1998, to acquire all of the outstanding
shares of Ultra Pac for $15.50 per share in cash. Following the completion of
the tender offer, Ivex will consummate a second step merger in which remaining
Ultra Pac shareholders will also receive $15.50 per share in cash.
Calvin Krupa, Chief Executive Officer of Ultra Pac, stated
that "We are excited to be combining Ultra Pac with Ivex because Ivex is a
world class company that will help us continue to grow Ultra Pac's business.
We believe the transaction is in the best interests of the Ultra Pac
shareholders, our employees and our customers." George Bayly, President and
Chief Executive Officer of Ivex, stated "We are delighted to integrate Ultra
Pac's PET business into Ivex's product line thereby accelerating our strategic
growth in PET. Ultra Pac will operate as an independent business unit within
Ivex, and the management, employees and customers of Ultra Pac will be a
tremendous addition to the Ivex business. Ultra Pac is the market leader in
PET and will be highly complementary to our leadership position in OPS."
<PAGE> 2
The transaction has been approved unanimously by the board of directors
of each company. The tender offer and merger are subject to customary
conditions, including the tender of a majority of Ultra Pac's shares and
termination of the waiting period under U.S. anti-trust laws. The tender offer
will be made pursuant to definitive documents to be filed with the Securities
and Exchange Commission.
Ivex is a vertically integrated specialty packaging company that
designs and manufactures value-added plastic and paper based flexible packaging
products for consumer and industrial packaging markets.
Ultra Pac designs, manufactures, markets and sells plastic containers
and packaging for the food industry.
Statements contained in this press release which are not historical
facts are forward-looking statements. Such forward-looking statements are
necessary estimates reflecting the best judgment of the party making such
statements based upon current information and involve a number of risks and
uncertainties. Forward-looking statements contained in this press release or
in other public statements of the parties should be considered in light of
those factors. There can be no assurance that such factors or other factors
will not affect the accuracy of such forward-looking statements.
2
<PAGE> 1
EXHIBIT (a)(8)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer is made solely by the Offer
to Purchase dated March 26, 1998 and the related Letter of Transmittal and is
being made to all holders of Shares. The Offer is not being made to (nor will
tenders be accepted from or on behalf of) holders of Shares in any jurisdiction
in which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction or any administrative or judicial
action pursuant thereto. In any jurisdiction where securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Package Acquisition, Inc. by one
or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
ULTRA PAC, INC.
AT
$15.50 NET PER SHARE
BY
PACKAGE ACQUISITION, INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
IVEX PACKAGING CORPORATION
Package Acquisition, Inc., a Minnesota corporation (the "Purchaser"),
which is an indirect wholly-owned subsidiary of Ivex Packaging Corporation, a
Delaware corporation ("Parent"), is offering to purchase all outstanding shares
of Common Stock, no par value per share (the "Common Stock"), including the
associated preferred share purchase rights (the "Rights" and, together with the
Common Stock, the "Shares"), of Ultra Pac, Inc., a Minnesota corporation (the
"Company"), at a price of $15.50 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated March 26, 1998 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, APRIL 22, 1998, UNLESS THE OFFER IN EXTENDED.
The Offer is conditioned upon, among other things, (i) there having been
validly tendered and not withdrawn prior to the expiration of the Offer a
number of Shares which, when added to any Shares acquired pursuant to the
Tender Agreements (as defined in the Offer to Purchase), represents a majority
of all outstanding Shares on a fully-diluted basis and (ii) the expiration or
termination of any applicable waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). The
Offer is also subject to other terms and conditions.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of March 28, 1998 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company. The Merger Agreement provides that, following the
consummation of the Offer, the Purchaser will be merged with and into the
Company (the "Merger") and each outstanding Share (other than Shares held by
shareholders who perfect dissenters' rights under Minnesota law) will be
converted into the right to receive $15.50 in cash, without interest thereon,
or any higher price paid in the Offer (the "Offer Price"). The Company has
amended the Rights Agreement, dated as of February 27, 1998, between the
Company and Norwest Bank Minnesota, N.A., as Rights Agent, to make the Rights
Agreement inapplicable to Parent, Purchaser and their respective affiliates and
associates in connection with the transactions contemplated by the Merger
Agreement and the Tender Agreements.
<PAGE> 2
In connection with the Merger Agreement, Parent entered into Tender
Agreements with certain shareholders of the Company who collectively own
approximately 13.09% of the outstanding Shares, pursuant to which such
shareholders agreed, among other things, to tender their shares in the Offer
and grant an option on their shares to Parent at the Offer Price.
The Board of Directors of the Company and a disinterested committee of
the Board of Directors (as contemplated by Sections 302A.673 and 302A.675 of
the Minnesota Business Corporation Act) have each unanimously approved the
Offer and the Merger and determined that the terms of the Offer and the Merger
are fair to, and in the best interests of, the shareholders of the Company and
unanimously recommend that shareholders of the Company accept the Offer and
tender all of their shares.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, Shares properly tendered to the
Purchaser and not withdrawn as, if and when the Purchaser gives oral or written
notice to Bankers Trust Company (the "Depositary"), of the Purchaser's
acceptance for payment of such Shares. Upon the terms and subject to the
conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering shareholders for the purpose
of receiving payment from the Purchaser and transmitting payment to tendering
shareholders. In all cases, payment for Shares accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates for (or a timely Book-Entry Confirmation (as defined in the Offer
to Purchase) with respect to) such Shares, (ii) 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 (as defined in the offer to Purchase), and (iii) any other documents
required by the Letter of Transmittal. Under no circumstances will interest be
paid on the purchase price of the Shares, regardless of any extension of the
Offer or any delay in making such payment.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by
the Purchaser pursuant to the Offer, may also be withdrawn at any time after
Tuesday, May 26, 1998. 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 as set forth in the Offer to
Purchase and must specify the name of the person having tendered the Shares to
be withdrawn, the number of shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution (as defined in Section 2 of the Offer
to Purchase), the signatures on the notice of withdrawal must be guaranteed by
an Eligible Institution. If Shares have been delivered pursuant to the
procedure for book-entry transfer as set forth in Section 2 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of the
account at the appropriate Book-Entry Transfer Facility (as defined in the
Offer to Purchase) to be credited with the withdrawn Shares and otherwise
comply with such Book-Entry Transfer Facility's procedures. Withdrawals of
tenders of Shares may not be rescinded, and any Shares properly withdrawn will
thereafter be deemed not validly tendered for any purposes of the Offer.
However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt of notices of withdrawal) will be determined by the Purchaser in its
sole discretion, which determination will be final and binding.
Subject to the terms of the Merger Agreement, the Purchaser expressly
reserves the right, in its sole discretion, at any time or from time to time,
to extend the period of time during which the Offer is open by giving oral or
written notice of such extension to the Depositary.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 under the Securities Exchange Act of 1934, as amended, is contained
in the Offer to Purchase and is incorporated herein by reference.
The Company has supplied to the Purchaser the Company's shareholder
lists and security position listings for the purpose of disseminating the Offer
to holders of Shares. The Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares, and
will be furnished to brokers, dealers, banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the shareholder
lists, or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
The Offer to Purchase and the Letter of Transmittal contain important
information that should be read before any decision is made with respect to the
Offer.
Questions and requests for assistance or for copies of the Offer to
Purchase, the Letter of Transmittal and other tender offer documents may be
directed to the Information Agent as set forth below, and copies will be
furnished at the Purchaser's expense. No fees or commissions will be paid by
Parent or the Purchaser to brokers, dealers or other persons other than the
Information Agent for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[INNISFREE LOGO]
M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Telephone: (212) 750-5833
or
Call Toll Free: (888) 750-5834
March 26, 1998
<PAGE> 1
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
dated as of
March 23, 1998
among
IVEX PACKAGING CORPORATION,
PACKAGE ACQUISITION, INC.
and
ULTRA PAC, INC.
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS.......................................................... 1
ARTICLE 2
THE OFFER AND MERGER................................................ 6
2.1 The Offer......................................... 6
2.2 Company Actions................................... 8
2.3 Directors......................................... 10
2.4 The Merger........................................ 11
2.5 Effective Time; Filing of Articles of Merger...... 11
2.6 Articles of Incorporation......................... 12
2.7 By-Laws........................................... 12
2.8 Directors and Officers............................ 12
2.9 Additional Actions................................ 12
2.10 Time and Place of Closing......................... 12
2.11 Conversion of Company Common Stock................ 13
2.12 Exchange of Shares................................ 13
2.13 No Further Rights or Transfers; Cancellation of
Treasury Shares................................. 16
2.14 Dissenters' Rights................................ 16
2.15 Special Meeting of Shareholders................... 17
2.16 Merger Without Meeting of Shareholders............ 18
2.17 Commercially Reasonable Efforts................... 18
2.18 Existing Options.................................. 18
ARTICLE 3
OTHER AGREEMENTS.................................................... 19
3.1 Access............................................ 19
3.2 Disclosure Letter................................. 19
3.3 Deliveries of Information......................... 20
3.4 Acquisition Proposals............................. 20
3.5 Public Announcements.............................. 21
3.6 Confidentiality Agreement......................... 21
i
<PAGE> 3
Page
----
3.7 Regulatory and Other Approvals.................... 22
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................... 22
4.1 Organization; Business............................ 22
4.2 Capitalization.................................... 23
4.3 Authorization; Enforceability..................... 24
4.4 No Violation or Conflict.......................... 24
4.5 Title to Assets................................... 25
4.6 Litigation........................................ 25
4.7 Books and Records; Company Financial Statements... 26
4.8 Absence of Certain Changes........................ 26
4.9 Buildings and Equipment........................... 28
4.10 Performance of Contracts.......................... 28
4.11 Employee Benefit Plans............................ 28
4.12 Brokers........................................... 30
4.13 Taxes............................................. 30
4.14 Real Estate....................................... 31
4.15 Governmental Approvals............................ 31
4.16 No Pending Acquisitions........................... 31
4.17 Labor Matters..................................... 32
4.18 Existing Permits and Violations of Law............ 32
4.19 Intangible Assets................................. 33
4.20 Customers and Suppliers........................... 33
4.21 Environmental Protection.......................... 33
4.22 Vote Required..................................... 36
4.23 Returns........................................... 36
4.24 SEC Reports....................................... 36
4.25 Content of Proxy Statement........................ 37
4.26 Opinion of Financial Advisor...................... 37
4.27 Certain Agreements................................ 37
4.28 Rights Agreement.................................. 38
ii
<PAGE> 4
Page
----
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND ACQUISITION................................................ 38
5.1 Due Incorporation and Authority................... 38
5.2 Consents and Approvals............................ 39
5.3 No Broker's, Finder's or Similar Fees............. 39
5.4 No Violation or Conflict.......................... 39
5.5 Litigation........................................ 40
5.6 Sufficient Funds.................................. 40
ARTICLE 6
COVENANTS........................................................... 40
6.1 Conduct of Business by the Company................ 40
6.2 Shareholder Option Agreements..................... 42
ARTICLE 7
CONDITIONS.......................................................... 43
7.1 Conditions to Each Party's Obligation to Effect
the Merger...................................... 43
7.2 Condition to Parent's and Acquisition's Obligation
to Effect the Merger............................ 43
ARTICLE 8
NO SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION......................................... 44
8.1 No Survival of Representations and Warranties..... 44
8.2 Directors' and Officers' Indemnification.......... 44
ARTICLE 9
TERMINATION......................................................... 45
9.1 Termination....................................... 45
9.2 Rights on Termination............................. 47
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Page
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9.3 Termination Fee Payable to the Parent............. 47
9.4 Other Remedies.................................... 47
ARTICLE 10
MISCELLANEOUS....................................................... 48
10.1 Expenses.......................................... 48
10.2 Entire Agreement; Amendment....................... 48
10.3 Governing Law..................................... 48
10.4 Assignment........................................ 48
10.5 Notices........................................... 48
10.6 Counterparts; Headings............................ 50
10.7 Interpretation.................................... 50
10.8 Specific Performance.............................. 50
10.9 No Reliance....................................... 50
10.10 Exhibits and Schedules............................ 50
10.11 No Third Party Beneficiary........................ 51
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EXHIBITS
Exhibit 1 Articles of Merger
Exhibit 2 Form of Shareholder Option Agreement
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<PAGE> 7
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 23, 1998 (the
"Agreement"), among IVEX PACKAGING CORPORATION, a Delaware corporation (the
"Parent"), PACKAGE ACQUISITION, INC., a Minnesota corporation and a wholly owned
indirect subsidiary of Parent ("Acquisition"), and ULTRA PAC, INC., a Minnesota
corporation (the "Company"). The Company and Acquisition are hereinafter
sometimes collectively referred to as the "Constituent Corporations."
WHEREAS, the Boards of Directors of the Parent, Acquisition
and the Company have approved and deem it advisable and in the best interests of
their respective shareholders to consummate the acquisition of the Company by
the Parent upon the terms and subject to the conditions set forth herein;
WHEREAS, as a condition and inducement to Parent's and Acqui
sition's willingness to enter into this Agreement, concurrently with the
execution hereof, certain beneficial and record shareholders of the Company are
entering into tender and option agreements (each, a "Tender and Option
Agreement") obligating such shareholder to tender his shares of Company Common
Stock pursuant to the Offer (each as hereinafter defined) and granting an option
to Parent with respect to their respective shares of Company Common Stock,
substantially in the form attached hereto as Exhibit 2; and
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the Parent, Acquisition and the Company agree as follows:
ARTICLE 1
DEFINITIONS
When used in this Agreement, and in addition to the other
terms defined herein, the following terms shall have the meanings specified:
1.1 Accounts. "Accounts" shall mean all accounts receivable,
notes and associated rights owned by the Company.
<PAGE> 8
1.2 Affiliate. "Affiliate" shall mean, in relation to any
party hereto, any entity directly or indirectly controlling, controlled by or
under common control with such party.
1.3 Agreement. "Agreement" shall mean this Agreement and Plan
of Merger, together with the Exhibits attached hereto and the Disclosure Letter,
as the same may be amended from time to time in accordance with the terms
hereof.
1.4 Articles of Merger. "Articles of Merger" shall mean the
Articles of Merger in substantially the form of Exhibit 1 attached to this
Agreement.
1.5 Buildings. "Buildings" shall mean all buildings, fixtures,
structures and improvements leased or owned by the Company.
1.6 Code. "Code" shall mean the Internal Revenue Code of 1986,
as the same may be in effect from time to time.
1.7 Company. "Company" shall mean Ultra Pac, Inc., a
Minnesota corporation.
1.8 Company Common Stock. "Company Common Stock" shall
mean shares of common stock of the Company, no par value.
1.9 Company Financial Statements. "Company Financial
Statements" shall mean the audited Consolidated Balance Sheet, Consolidated
Statement of Operations, Consolidated Statement of Cash Flows and Consolidated
Statement Shareholders Equity of Company and related notes for each of the
fiscal years ended on January 31, 1995, January 31, 1996 and January 31, 1997.
1.10 Contracts. "Contracts" shall mean all of the material
contracts, agreements, and obligations, written or oral, to which the Company is
a party or by which the Company or any of its assets are bound, including,
without limitation, any loan, bond, mortgage, indenture, lease, instrument,
franchise or license.
1.11 Control. "Control" (including the terms "controlling,"
"controlled by," and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or
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<PAGE> 9
cause the direction of the management and policies of such Person, through the
ownership of voting securities or by contract.
1.12 Dissenting Shares. "Dissenting Shares" shall mean shares
of the Company Common Stock which dissent from the Merger in accordance with the
provisions of the MBCA.
1.13 Employees. "Employees" shall mean all of the employees
of the Company.
1.14 Employee Benefit Plans. "Employee Benefit Plans" shall
mean any pension plan, profit sharing plan, bonus plan, incentive compensation
plan, stock purchase plan, stock ownership plan, stock option plan, stock
appreciation plan, employee benefit plan, employee benefit policy, retirement
plan, fringe benefit program, insurance plan, severance plan, disability plan,
health care plan, sick leave plan, death benefit plan, or any other plan,
program or policy to provide retirement income, fringe benefits or other
benefits to former or current employees of the Company (including, without
limitation, any employee pension benefit plan, employee welfare plan or
multi-employer plan as each term is defined in ERISA).
1.15 Equipment. "Equipment" shall mean all machinery,
equipment, boilers, furniture, fixtures, motor vehicles, furnishings, parts,
tools, office equipment, computers and other items of tangible personal property
owned or used by the Company.
1.16 ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as the same may be in effect from time to time.
1.17 Existing Corporate Jurisdictions. "Existing Corporate
Jurisdictions" shall mean those states, provinces and foreign countries in which
the Company is qualified to do business as a foreign corporation.
1.18 Existing Insurance Policies. "Existing Insurance
Policies" shall mean all of the insurance policies currently in effect and owned
by the Company.
1.19 Existing Liens. "Existing Liens" shall mean those Liens
affecting any of the assets or properties of the Company.
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<PAGE> 10
1.20 Existing Options. "Existing Options" shall mean any of
the following relating to any capital stock or other equity interest of the
Company and as described in the Disclosure Letter (as defined in Section 3.2):
(a) options or warrants (whether vested or not) to purchase or other rights
(including registration rights), agreements, arrangements or commitments of any
character to which the Company is a party relating to the issued or unissued
capital stock or other equity or phantom equity interests of the Company to
grant, issue or sell any shares of the capital stock or other equity or phantom
equity interests of the Company by sale, lease, license or otherwise; (b) rights
to subscribe for or purchase any shares of the capital stock or other equity or
phantom equity interests of the Company; or (c) Contracts with respect to any
right to purchase, put or call.
1.21 Existing Permits. "Existing Permits" shall mean those
permits, licenses, approvals, qualifications, authorizations, and registrations
required by Law which the Company has or holds.
1.22 Existing Plans. "Existing Plans" shall mean all
material Employee Benefit Plans of the Company.
1.23 Indebtedness. "Indebtedness" shall mean all liabilities
or obligations of the Company, whether primary or secondary or absolute or
contingent, in excess of $50,000 as to any single item: (a) for borrowed money;
or (b) evidenced by notes, bonds, debentures or similar instruments; or (c)
secured by Liens on any assets of the Company.
1.24 Intangible Assets. "Intangible Assets" shall mean (a) any
invention, United States and foreign patents, pending patent applications, trade
names, trade dress, logos, corporate names, trademarks, service marks, trademark
registrations, service mark registrations, pending trademark applications,
pending service mark applications, registered copyrights, and pending copyright
applications, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith; (b)
proprietary software; and (c) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals).
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<PAGE> 11
1.25 Investment. "Investment" by the Company shall mean (a)
any transfer or delivery of cash, stock or other property or value by the
Company in exchange for equity, debt, preferred stock, partnership interest,
participation or any other security of another Person; (b) any loan or capital
contribution to or in any other Person; (c) any guaranty of any obligation to
pay money to, or perform an obligation, of any other Person; and (d) any
investments in any property or assets other than properties and assets acquired
and used in the ordinary course of the business of the Company.
1.26 Law. "Law" shall mean any foreign, federal, state or
local governmental law, rule, regulation or requirement, including any rules,
regulations and orders promulgated thereunder and any orders, decrees, consents
or judgments of any governmental regulatory agencies and courts having the force
of law, other than any Environmental Laws.
1.27 Lien. "Lien" shall mean, with respect to any asset (real,
personal or mixed): (a) any mortgage, pledge, lien, easement, lease, title
defect or imperfection or any other form of security interest, whether imposed
by Law or by Contract; and (b) the interest of a vendor or lessor under any
conditional sale agreement, financing lease or other title retention agreement
relating to such asset.
1.28 Material Adverse Effect. "Material Adverse Effect" shall
mean a material adverse effect on the business, condition (financial or
otherwise), results of operations, assets or liabilities of the Company taken as
a whole.
1.29 MBCA. "MBCA" shall mean the Minnesota Business
Corporation Act.
1.30 Merger. "Merger" shall mean the merger of Acquisition
with and into the Company pursuant to this Agreement.
1.31 Optionholders. "Optionholders" shall mean all Persons
holding the Existing Options.
1.32 Permitted Liens. "Permitted Liens" shall mean those of
the Existing Liens that do not materially detract from the value of the property
or assets of the Company taken as a whole subject thereto and do not materially
impair the business or operations of the Company taken as a whole.
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<PAGE> 12
1.33 Person. "Person" shall mean a natural person,
corporation, limited liability company, association, joint stock company, trust,
partnership, governmental entity, agency or branch or department thereof, or any
other legal entity.
1.34 Real Estate. "Real Estate" shall mean the parcels of
real property owned or leased by the Company.
1.35 Rights. "Rights" shall mean those Preferred Share
Purchase Rights issued pursuant to the Rights Agreement dated February 27, 1998.
1.36 Shareholders. "Shareholders" shall mean all Persons
owning any shares of Company Common Stock.
1.37 Subsidiary. "Subsidiary" shall mean any corporation, at
least a majority of the outstanding capital stock of which (or any class or
classes, however designated, having ordinary voting power for the election of at
least a majority of the board of directors of such corporation) shall at the
time be owned by the relevant Person directly or through one or more
corporations which are themselves Subsidiaries.
ARTICLE 2
THE OFFER AND MERGER
2.1 The Offer.
(a) As promptly as practicable (but in no event
later than five business days after the public announcement of the execution
hereof), Acquisition shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (collectively, the "Exchange Act")) a tender offer (the
"Offer") for all of the outstanding shares of Company Common Stock (including
the Rights) at a price of $15.50 per share of Company Common Stock, net to the
seller in cash (such price, or any such higher price per share as may be paid in
the Offer, being referred to herein as the "Offer Price"), subject to there
being validly tendered and not withdrawn prior to the expiration of the Offer,
that number of shares of Company Common Stock which represents at least a
majority of the Company Common Stock outstanding on a fully diluted basis (the
"Minimum Condition") and to the other conditions set forth in
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<PAGE> 13
Annex A hereto, and shall consummate the Offer in accordance with its terms
("fully diluted basis" means issued and outstanding Company Common Stock and
Company Common Stock subject to issuance under warrants and outstanding employee
stock options). The obligations of Acquisition to accept for payment and to pay
for any Company Common Stock validly tendered on or prior to the expiration of
the Offer and not withdrawn shall be subject only to the Minimum Condition and
the other conditions set forth in Annex A hereto. The Offer shall be made by
means of an offer to purchase (the "Offer to Purchase") containing the terms set
forth in this Agreement, the Minimum Condition and the other conditions set
forth in Annex A hereto. Acquisition shall not amend or waive the Minimum
Condition and shall not decrease the Offer Price or decrease the number of
shares of Company Common Stock sought, or amend any other condition of the Offer
in any manner adverse to the holders of the Company Common Stock without the
prior written consent of the Company; provided, however, that if on the initial
scheduled expiration date of the Offer which shall be 20 business days after the
date of the Offer is commenced, the sole condition remaining unsatisfied is the
failure of the waiting period under the HSR Act (as defined below) to have
expired or been terminated, Acquisition shall extend the expiration date from
time to time until two business days after the expiration of the waiting period
under the HSR Act. Acquisition shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Company Common Stock tendered as soon as it is legally permitted to do
so under applicable law; provided, however, that if, immediately prior to the
initial expiration date of the Offer (as it may be extended), the Company Common
Stock tendered and not withdrawn pursuant to the Offer equals less than 90% of
the outstanding Company Common Stock, Acquisition may extend the Offer one time
for a period not to exceed twenty business days, notwithstanding that all
conditions to the Offer are satisfied as of such expiration date of the Offer.
(b) As soon as practicable on the date the Offer is
commenced, Parent and Acquisition shall file with the United States Securities
and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
with respect to the Offer (together with all amendments and supplements thereto
and including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1
will include, as exhibits, the Offer to Purchase and a form of letter of
transmittal and summary advertisement (collectively, together with any
amendments and supplements thereto, the "Offer Documents"). The Offer Documents
will comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's shareholders, shall not contain any
untrue statement of a material fact or
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<PAGE> 14
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or Acquisition with respect to information furnished by the Company to Parent or
Acquisition, in writing, expressly for inclusion in the Offer Documents. The
information supplied by the Company to Parent or Acquisition, in writing,
expressly for inclusion in the Offer Documents and by Parent or Acquisition to
the Company, in writing, expressly for inclusion in the Schedule 14D-9 (as
hereinafter defined) will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(c) Each of Parent and Acquisition will take all
steps necessary to cause the Offer Documents to be filed with the SEC and to be
disseminated to holders of the Company Common Stock, in each case as and to the
extent required by applicable federal securities laws. Each of Parent and
Acquisition, on the one hand, and the Company, on the other hand, will promptly
correct any information provided by it for use in the Offer Documents if and to
the extent that it shall have become false or misleading in any material respect
and Parent and Acquisition will take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of the Company Common Stock, in each case as and to the extent required
by applicable federal securities laws. The Company and its counsel shall be
given the opportunity to review the Schedule 14D-1 before it is filed with the
SEC. In addition, Parent and Acquisition will provide the Company and its
counsel in writing with any comments, whether written or oral, Parent,
Acquisition or their counsel may receive from time to time from the SEC or its
staff with respect to the Offer Documents promptly after the receipt of such
comments.
2.2 Company Actions.
(a) The Company hereby approves of and consents to
the Offer and represents that its Board of Directors, at a meeting duly called
and held, acting upon the unanimous recommendation of the special committee of
all independent directors (the "Special Committee") of the Board of Directors
established pursuant to Section 302A.673(d) of the MBCA on March 22, 1998 has
(i) unanimously determined that each of the Agreement, the Offer and the Merger
are fair to and in the best interests of the shareholders of the Company, (ii)
approved this Agreement and the transactions contemplated hereby, including the
Offer and the
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<PAGE> 15
Merger (collectively, the "Transactions"), and such approval constitutes
approval of the Offer, this Agreement and the Transactions, including the
Merger, for purposes of Section 302A.673 of the MBCA, such that Section 302A.671
of the MBCA will not apply to the Transactions contemplated by this Agreement,
and (iii) resolved to recommend that the shareholders of the Company accept the
Offer, tender their Company Common Stock thereunder to Acquisition and approve
and adopt this Agreement and the Merger; provided, that such recommendation may
be withdrawn, modified or amended if, in the good faith opinion of the Board of
Directors, based upon the receipt of advice from outside independent legal
counsel, failure to withdraw, modify or amend such recommendation would result
in the Board of Directors violating its fiduciary duties to the Company's
shareholders under applicable Law.
(b) Concurrently with the commencement of the Offer,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-9") which shall, subject to
the proviso of Section 2.2(a), contain the recommendation referred to in clause
(iii) of Section 2.2(a) hereof. The Schedule 14D-9 will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the SEC and on the date first published, sent or given to the
Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Company with respect to information furnished by Parent or
Acquisition for inclusion in the Schedule 14D-9. The Company further agrees to
take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC
and to be disseminated to holders of Company Common Stock, in each case as and
to the extent required by applicable federal securities laws. Each of the
Company, on the one hand, and Parent and Acquisition, on the other hand, agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that it shall have become false and misleading in any
material respect, and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of Company Common Stock, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given the opportunity to review the Schedule 14D-9 before it is filed
with the SEC. In addition, the Company agrees to provide Parent, Acquisition and
their counsel with any comments, whether written or oral, that the Company or
its counsel may receive
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<PAGE> 16
from time to time from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments or other communications.
(c) In connection with the Offer, the Company will
promptly furnish or cause to be furnished to Acquisition mailing labels,
security position listings and any available listing, or computer file
containing the names and addresses of all recordholders of Company Common Stock
as of a recent date, and shall furnish Acquisition with such additional
information (including, but not limited to, updated lists of holders of Company
Common Stock and their addresses, mailing labels and lists of security
positions) and assistance as the Acquisition or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of the
Company Common Stock. Except for such steps as are necessary to disseminate the
Offer Documents, Parent and Acquisition shall hold in confidence the information
contained in any of such labels and lists and the additional information
referred to in the preceding sentence, will use such information only in
connection with the Offer, and, if this Agreement is terminated, will, upon
request of the Company, deliver or cause to be delivered to the Company all
copies of such information then in its possession or the possession of its
agents or representatives.
2.3 Directors.
(a) Promptly upon the purchase of and payment for
any Company Common Stock by Parent or any of its subsidiaries which represents
at least a majority of the outstanding Company Common Stock (on a fully diluted
basis, as defined in Section 2.1(a)), Parent shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as is equal to the next whole number, on the Board of
Directors of the Company as is equal to the product of the total number of
directors on such Board (giving effect to the directors designated by Parent
pursuant to this sentence) multiplied by the percentage that the number of
shares of Company Common Stock so accepted for payment bears to the total number
of shares of then outstanding. In furtherance thereof, the Company shall, upon
request of Acquisition, use its best reasonable efforts promptly either to
increase the size of its Board of Directors or secure the resignation of such
number of its incumbent directors, or both, as is necessary to enable Parents'
designees to be so elected to the Company's Board, and shall take all actions
available to the Company to cause Parent's designees to be so elected. At such
time, the Company shall, if requested by Parent, also cause persons designated
by Parent to constitute at least the same percentage (rounded up to the next
whole number) as is on the Company's Board of Directors of each committee of
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<PAGE> 17
the Company's Board of Directors. Notwithstanding the foregoing, the Company
shall have at least one independent director until the Effective Time.
(b) The Company shall promptly take all actions
required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under Section 2.3(a),
including mailing to shareholders the information required by such Section 14(f)
and Rule 14f-1 as is necessary to enable Parent's designees to be elected to the
Company's Board of Directors. Parent or Acquisition will supply the Company and
be solely responsible for any information with respect to either of them and
their nominees, offices, directors and affiliates required by such Section 14(f)
and Rule 14f-1. The provisions of this Section 2.3 are in addition to and shall
not limit any rights which the Acquisition, Parent or any of their affiliates
may have as a holder or beneficial owner of Company Common Stock as a matter of
law with respect to the election of directors or otherwise.
2.4 The Merger. Upon the terms and subject to the conditions
of this Agreement and in accordance with the MBCA, at the Effective Time (as
defined herein), Acquisition shall be merged with and into the Company, and the
Company shall (i) be the surviving corporation in the Merger (in such capacity,
the "Surviving Corporation"), (ii) succeed to and assume all the rights and
obligations of Acquisition in accordance with the MBCA, and (iii) continue its
corporate existence under the laws of the State of Minnesota. The Merger shall
have the effect set forth in Section 302A.641 of the MBCA. At the Effective
Time, the separate existence of Acquisition shall cease. The Merger shall be
pursuant to the provisions of, and shall be with the effect provided in, the
MBCA. In accordance with the MBCA, all of the rights, privileges, powers and
franchises of the Company and Acquisition shall vest in the Surviving
Corporation, and all of the debts, liabilities and duties of the Company and
Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
2.5 Effective Time; Filing of Articles of Merger. The Merger
shall be effected by the filing at the time of the Closing (as defined herein)
of a properly executed Articles of Merger or other appropriate documents (in the
form attached as Exhibit 1 hereto) with the Secretary of State of the State of
Minnesota in accordance with the provisions of the MBCA. The Merger shall become
effective at the time of such filing of the Articles of Merger with the
Secretary of State of the State of Minnesota or at such later date or time as
Acquisition and the Company shall agree and as specified in the Articles of
Merger (the "Effective Time"). At the Closing, the
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<PAGE> 18
Parent and the Constituent Corporations shall cause a properly executed Articles
of Merger to be filed with the Secretary of State of the State of Minnesota as
provided in the MBCA, and shall take any and all other lawful actions and do any
and all other lawful things to cause the Merger to become effective.
2.6 Articles of Incorporation. At the Effective Time, the
Articles of Incorporation of Acquisition as in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended in accordance with its terms and the MBCA.
2.7 By-Laws. The By-laws of Acquisition, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended in accordance with its terms and the MBCA.
2.8 Directors and Officers. The directors and officers of
Acquisition immediately prior to the Effective Time shall be the initial
directors and officers of the Surviving Corporation. Each director and officer
of the Surviving Corporation shall hold office in accordance with the Articles
of Incorporation and By-laws of the Surviving Corporation until his or her
successor is duly appointed and qualified.
2.9 Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that consistent
with the terms of this Agreement any further assignments or assurances in law or
any other acts are necessary or desirable (i) to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation, title to and possession of
any property or right of either Constituent Corporation acquired or to be
acquired by reason of, or as a result of, the Merger, or (ii) otherwise to carry
out the purposes of this Agreement, then, subject to the terms and conditions of
this Agreement, each such Constituent Corporation and its officers and directors
shall be deemed to have granted to the Surviving Corporation an irrevocable
power of attorney to execute and deliver all such deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such property or rights in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement; and the
officers and directors of the Surviving Corporation are fully authorized in the
name of either Constituent Corporation to take any and all such action.
2.10 Time and Place of Closing. The closing of the Merger (the
"Closing") shall take place (a) at the offices of Skadden, Arps, Slate, Meagher
& Flom (Illinois), 333 West Wacker Drive, Suite 2100, Chicago, Illinois 60606 as
soon
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as practicable and no later than the second business day following satisfaction
or waiver of all of the conditions set forth in Article 7, or (b) at such other
place, at such other time or on such other date as the Parent and the Company
may mutually agree (the date of the Closing is hereinafter sometimes referred to
as the "Closing Date").
2.11 Conversion of Company Common Stock.
(a) Each share of the Company Common Stock issued
and outstanding immediately prior to the Effective Time (except for Dissenting
Shares), shall, by virtue of the Merger and without any action on the part of
the Company, the Parent, Acquisition or the holder thereof, be converted into
the right to receive the Offer Price in cash, payable to the holder thereof,
without any interest thereon, as soon as reasonably practicable after the
surrender of the certificate(s) representing such Company Common Stock as
provided in Section 2.12.
(b) Each share of common stock, par value $0.01 per
share, of Acquisition issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into one share of common stock of the Surviving
Corporation. Each certificate evidencing ownership of any such shares shall,
following the Merger, evidence ownership of the same number of shares of common
stock of the Surviving Corporation.
(c) Payments in respect of the Existing Options are
provided for in Section 2.18 below.
2.12 Exchange of Shares.
(a) Prior to the Effective Time, the Company shall
appoint a Person that is reasonably acceptable to the Parent to act as the
exchange agent hereunder (the "Exchange Agent") to receive in trust the funds
which holders of Company Common Stock shall become entitled upon surrender of
the certificates for exchange in accordance with this Section 2.12.
As soon as reasonably practicable after the Effective Time,
the Exchange Agent shall mail to each holder of record of a share certificate
which immediately prior to the Effective Time represented outstanding Company
Common Stock (other than Parent, the Company, any Subsidiary of Parent and any
holder of Dissenting Shares): (1) a letter of transmittal (a "Letter of
Transmittal") which shall
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(x) specify that delivery shall be effected, and risk of loss and title to each
such certificate shall pass, only upon delivery of such certificates to the
Exchange Agent, (y) contain a representation in a form reasonably satisfactory
to the Parent as to the good and marketable title to the Company Common Stock
held by such holder free and clear of any Lien, and (z) contain such other
provisions as the Company and the Parent may reasonably specify; and (2)
instructions to effect the surrender of such certificate(s) in exchange for a
check in an amount equal to the Offer Price multiplied by the number of shares
of Company Common Stock represented by such certificate(s).
At the Closing, immediately prior to the Effective Time,
Parent shall cause Acquisition to deposit with the Exchange Agent, on behalf of
the Shareholders, an aggregate amount in cash equal to the Offer Price times the
number of shares of Company Common Stock outstanding as of the Closing (such
aggregate amount being hereinafter referred to as the "Exchange Fund"), and
then, upon surrender to the Exchange Agent of certificate(s) for cancellation
together with a duly executed Letter of Transmittal and such other documents as
the Exchange Agent may reasonably require, make payment of the Offer Price
provided for in Section 2.11(a) to the holder of such certificate(s) out of the
Exchange Fund. The Exchange Agent shall invest portions of the Exchange Fund as
Parent directs, provided that substantially all such investments shall be in
obligations of or guaranteed by the United States of America, in commercial
paper obligations receiving the highest rating from either Moody's Investors
Services, Inc. or Standard and Poor's Corporation, or in certificates of
deposit, bank repurchase agreements or banker's acceptances of commercial banks
with capital exceeding $250 million. The Exchange Fund shall not be used for any
other purpose, except as provided in this Agreement.
Thereafter (except as otherwise provided for in Section
2.12(c)), each holder of certificate(s) representing Company Common Stock may
surrender such certificate(s) to the Exchange Agent and (subject to applicable
abandoned property, escheat and similar laws) receive from the Exchange Agent in
exchange therefor an amount equal to the product of (x) the Offer Price and (y)
the number of shares of Company Common Stock represented by the certificate(s)
so surrendered, without interest, but such holder shall have no rights
whatsoever against the Surviving Corporation.
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Upon the surrender of any such certificate(s) to the Exchange
Agent, the Exchange Agent shall promptly surrender such certificate(s) to the
Surviving Corporation for cancellation.
(b) If the consideration payable for any Company
Common Stock is to be delivered to a person other than the person in whose name
the certificate(s) representing such Company Common Stock is registered, it
shall be a condition of such delivery that the certificate(s) so surrendered
shall be properly endorsed or accompanied by appropriate stock powers, in either
case signed exactly as the name of the record holder appears on such
certificate, and shall otherwise be in proper form for transfer, and that the
person requesting such delivery shall pay to the Exchange Agent or the Surviving
Corporation, as the case may be, any transfer or other taxes required by law as
a result of such delivery to a person other than the record holder of the
certificate(s) surrendered or shall establish to the Exchange Agent's and the
Surviving Corporation's reasonable satisfaction that such tax has been paid or
is not payable.
(c) Any portion of the Exchange Fund delivered upon
the Closing Date to the Exchange Agent pursuant to this Agreement that remains
unclaimed for one (1) year after the Closing Date shall be delivered by the
Exchange Agent to the Surviving Corporation, upon demand, and any Shareholders
who have not theretofore complied with Section 2.12(a) shall thereafter look
only to the Surviving Corporation for delivery of the Offer Price, subject in
all events to all applicable escheat and other similar laws.
(d) Until surrender as contemplated by this Section
2.12 of this Agreement, certificate(s) representing Company Common Stock shall
be deemed at all times after the Effective Time to represent only the right to
receive upon surrender the consideration to be paid therefor as specified in
this Agreement.
(e) No interest shall accrue or be payable with
respect to any amounts which any Shareholder or Optionholder shall be entitled
to receive pursuant to this Agreement. The Exchange Agent shall be authorized to
pay the Offer Price attributable to any certificate(s) representing Company
Common Stock which has been lost or destroyed upon receipt of evidence of
ownership of the Company Common Stock represented thereby and of appropriate
indemnification and/or bond in each case reasonably satisfactory to the Company
or the Surviving Corporation, as the case may be (but no bond shall be required
in cases of 25 shares or less).
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(f) Neither the Exchange Agent nor any party to this
Agreement shall be liable to any Shareholder or Optionholder for any Company
Common Stock, any Existing Options, the Offer Price or cash delivered to a
public official pursuant to any abandoned property, escheat or similar law.
(g) The Exchange Agent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
to any Shareholder or Optionholder such amounts as the Company reasonably
determines are required to be deducted and withheld with respect to the making
of such payment under the Code, or any provision of state, local or foreign tax
Law. To the extent that amounts are so withheld by the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the Shareholder or Optionholder in respect of which such deduction
and withholding was made by the Exchange Agent.
2.13 No Further Rights or Transfers; Cancellation of Treasury
Shares. Except for the surrender of the certificate(s) representing the Company
Common Stock in exchange for the right to receive the Offer Price with respect
to each share of Company Common Stock or the perfection of appraisal rights with
respect to the Dissenting Shares, at and after the Effective Time, the holder of
shares of Company Common Stock shall cease to have any rights as a shareholder
of the Company, and no transfer of shares of Company Common Stock shall
thereafter be made on the stock transfer books of the Surviving Corporation.
Each share of Company Common Stock held in the Company's treasury immediately
prior to the Effective Time shall, by virtue of the Merger, be canceled and
retired and cease to exist without any conversion thereof.
2.14 Dissenters' Rights. Shares of Company Common Stock which
immediately prior to the Effective Time are held by Shareholders who have
properly exercised and perfected appraisal rights under Section 302A.473 of the
MBCA (the "Dissenting Shares") shall, if required by the MBCA, but only to the
extent required thereby, not be converted into the right to receive the Offer
Price, but the holders of Dissenting Shares shall be entitled to receive such
consideration as shall be determined pursuant to Section 302A.473 of the MBCA;
provided, however, that if any such holder shall have failed to perfect or shall
withdraw or lose his right to appraisal and payment under the MBCA, such
holder's shares of Company Common Stock shall thereupon be deemed to have been
converted as of the Effective Time into the right to receive the Offer Price,
without any interest thereon, and such shares shall no longer be Dissenting
Shares. The Company shall give the Parent, Acquisition and
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the Exchange Agent prompt notice of any claim by a Shareholder for payment of
fair value for Dissenting Shares as provided in Section 302A.473 of the MBCA.
Prior to the Effective Time, the Company will not, except with the prior written
consent of Parent and Acquisition, make any payments with respect to, or settle
or offer to settle, any such demands.
2.15 Special Meeting of Shareholders.
(a) If required by applicable law in order to
consummate the Merger, the Company agrees to take all steps necessary to cause a
special meeting of the Shareholders (the "Special Meeting") to be duly called,
noticed, convened and held as soon as practicable following the acceptance for
payment and purchase of shares of Company Common Stock by the Parent or its
affiliates pursuant to the Offer for the purpose of voting to approve this
Agreement and the Merger. In connection with the Special Meeting, the Board of
Directors of the Company, acting upon the unanimous recommendation of the
Special Committee, shall unanimously recommend to the Shareholders that the
Shareholders vote in favor of the approval of this Agreement and the Merger.
(b) In connection with the Special Meeting, the
Company agrees to promptly prepare and cause to be filed with the SEC and mailed
to the Shareholders a notice of the Special Meeting and a definitive proxy
statement (the "Proxy Statement") and shall cause such notice to be mailed no
later than the time required by applicable law and the certificate of
incorporation and bylaws of the Company. The Parent and Acquisition agree to
provide the Company with any information for inclusion in the Proxy Statement
(or any amendments or supplements thereto) which is required by applicable law
or which is reasonably requested by the Company. The Company shall consult with
the Parent and Acquisition with respect to the Proxy Statement (and any
amendments or supplements thereto) and shall afford the Parent and Acquisition
reasonable opportunity to comment thereon prior to its finalization. If, at any
time prior to the Special Meeting, any event shall occur relating to Company or
the transactions contemplated by this Agreement which should be set forth in an
amendment or a supplement to the Proxy Statement, the Company will promptly
notify in writing the Parent and Acquisition of such event. In such case, the
Company, with the cooperation of the Parent and Acquisition, will promptly
prepare and mail such amendment or supplement and the Company shall consult with
the Parent and Acquisition with respect to such amendment or supplement and
shall afford the Parent and Acquisition reasonable opportunity to comment
thereon prior to such mailing. The Company agrees to notify the Parent
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and Acquisition at least three (3) days prior to the mailing of the Proxy
Statement (or any amendment or supplement thereto) to the Shareholders.
(c) The Parent agrees that if any event with respect
to the Parent, Acquisition or their officers or directors shall occur which is
required to be described in an amendment or supplement to the Proxy Statement or
any other filing with the Securities and Exchange Commission (the "SEC") that
may be required in connection with this Agreement, the Merger and all matters
related thereto, the Parent will promptly inform the Company thereof and the
Company will cause such event to be so described and such amendment or
supplement to be promptly filed with the SEC and, as required by law,
disseminated to the Shareholders; provided, however, that prior to such filing
or mailing the Company shall consult with the Parent and Acquisition with
respect to such amendment, supplement or other filing and shall afford the
Parent and Acquisition a reasonable opportunity to comment thereon.
2.16 Merger Without Meeting of Shareholders. Notwithstanding
Section 2.15 hereof, in the event that Parent, Acquisition and any other
Subsidiaries of Parent shall acquire in the aggregate at least 90% of the class
of capital stock of the Company Common Stock, pursuant to the Offer or
otherwise, the parties hereto shall, at the request of Parent and subject to
Article 7 hereof, take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after such acquisition, without a
meeting of shareholders of the Company, in accordance with Section 302A. 621 of
the MBCA.
2.17 Commercially Reasonable Efforts. So long as this
Agreement has not been terminated, the Company, the Parent and Acquisition
shall: (i) promptly make their respective filings and thereafter make any other
submissions required under all applicable laws with respect to this Agreement,
the Offer, the Merger and the other transactions contemplated hereby and (ii)
use their respective commercially reasonable efforts to promptly take, or cause
to be taken, all other actions and do, or cause to be done, all other things
necessary proper or appropriate to consummate and make effective the Merger as
provided for in this Agreement.
2.18 Existing Options.
(a) As of the Effective Time, each Existing Option
which is outstanding at the Effective Time will be exchanged for, and the
holders of each such Existing Option will be entitled to receive at the Closing
(or thereafter, if necessary)
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upon surrender of such Existing Option for cancellation, cash equal to (i) the
product of (a) the difference between the Offer Price and the exercise price of
each such Existing Option, times (b) the number of shares of Company Common
Stock covered by such Existing Option. It is presently anticipated by the
Company that the payment to be made at the Closing to the Optionholders in
respect of the Existing Options will be approximately $6.6 million (before any
income taxes and other required withholdings).
(b) The Company shall take all actions necessary to
ensure that from and after the Effective Time the Surviving Corporation will not
be bound by any options, warrants, rights or agreements which would entitle any
person, other than Parent or Acquisition, to beneficially own shares of
Surviving Corporation or Parent or receive any payments (other than as set forth
in (a)) in respect of such options, warrants, rights or agreements. The Company
shall take all actions necessary to terminate each plan with respect to Existing
Options as of the Effective Time.
ARTICLE 3
OTHER AGREEMENTS
3.1 Access. Subject to the provisions of the Confidentiality
Agreement referred to in Section 3.6 below, and so long as this Agreement has
not been terminated as herein provided, upon reasonable request, the Company
shall grant to the Parent, Acquisition and their agents, accountants, attorneys
and other advisers reasonable access during normal business hours to all of the
properties, facilities, books, records, financial statements and other documents
and materials relating to its financial condition, assets, liabilities and
business, including, without limitation, permitting the Parent (at its expense
and subject to the prior approval of the Company, which approval shall not be
unreasonably withheld) to: (a) conduct appraisals of the Equipment, Buildings,
Real Estate and other properties of the Company; and (b) conduct an
environmental and occupational safety inspection of the properties of the
Company. In addition, the Company shall confer and consult with representatives
of the Parent, as the Parent may reasonably request, to report on operational
matters, financial matters and the general status of ongoing business operations
of the Company.
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3.2 Disclosure Letter. The Company has delivered to the Parent
a disclosure letter (the "Disclosure Letter") which shall be signed by the
President and the Secretary of the Company stating that the Disclosure Letter
was delivered pursuant to this Agreement and is the Disclosure Letter referred
to in this Agreement. The Disclosure Letter is deemed to constitute an integral
part of this Agreement and to modify, as specified, the representations,
warranties, covenants or agreements of the Company contained in this Agreement.
3.3 Deliveries of Information. From time to time after the
date of this Agreement and prior to the Closing Date (unless this Agreement is
terminated), the Company shall furnish promptly to the Parent:
(a) a copy of each report, schedule and other
document filed by the Company or received by the Company after the date of this
Agreement pursuant to the requirements of federal or state securities Laws
promptly after such documents are available; and
(b) the monthly financial statements of the Company
(as prepared by the Company in accordance with its normal accounting procedures)
promptly after such financial statements are available.
3.4 Acquisition Proposals.
(a) Prior to the Effective Time, the Company agrees
that neither it, any of its Affiliates, nor any of the respective directors,
officers, employees, agents or representatives of the foregoing, will, directly
or indirectly, (i) solicit, initiate, facilitate or encourage (including by way
of furnishing or disclosing non-public information) any inquiries or the making
of any proposal with respect to any merger, consolidation or other business
combination involving the Company or the acquisition of all or any significant
part of the assets or capital stock of the Company (an "Acquisition
Transaction") or (ii) negotiate, explore or otherwise engage in discussions with
any Person (other than the Parent and its representatives) with respect to any
Acquisition Transaction, or which may reasonably be expected to lead to a
proposal for an Acquisition Transaction or enter into any agreement, arrangement
or understanding with respect to any such Acquisition Transaction or which would
require it to abandon, terminate or fail to consummate the Merger or any other
transaction contemplated by this Agreement; provided, however, that the Company
may, in response to an unsolicited written proposal from a third party regarding
a Superior Proposal (as hereinafter defined), furnish information to and
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engage in discussions and negotiations with such third party, but only if the
Board of Directors of the Company determines in good faith, after consultation
with its financial advisors and based upon the advice of outside independent
counsel, that failing to take such action would result in a breach of the
fiduciary duties of such Board of Directors under applicable Law. It is
understood and agreed, without limitation of the Company's obligations, that any
violation of this Section 3.4 by any director, officer, Affiliate, investment
banker, financial advisor, attorney or other advisor or representative of the
Company, whether or not such Person is purporting to act on behalf of the
Company, or otherwise, shall be deemed to be a breach of this Section 3.4 by the
Company.
(b) The Company agrees that, as of the date hereof,
it, its Affiliates, and the respective directors, officers, employees, agents
and representatives of the foregoing, shall immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any Person
(other than the Parent and its representatives) conducted heretofore with
respect to any Acquisition Transaction. The Company agrees to promptly advise
the Parent in writing of the existence of (x) any inquiries or proposals (or
desire to make a proposal) received by (or indicated to) after the date hereof,
any such information requested from, or any negotiations or discussions sought
to be initiated or continued with, the Company, its Affiliates, or any of the
respective directors, officers, employees, agents or representatives of the
foregoing, in each case from a Person (other than the Parent and its
representatives) with respect to an Acquisition Transaction, and (y) the terms
thereof, including the identity of such third party and the terms of any
financing arrangement or commitment in connection with such Acquisition
Transaction, and to update on an ongoing basis or upon the Parent's reasonable
request, the status thereof. As used herein, "Superior Proposal" means a bona
fide, written and unsolicited proposal or offer made by any Person (or group)
(other than the Parent or any of its Subsidiaries) with respect to an
Acquisition Transaction on terms which, as determined by the Board of Directors
of the Company in good faith and in the exercise of reasonable judgment (based
on the advice of independent financial advisors and Katten Muchin & Zavis or
outside independent Minnesota counsel), would reasonably be likely to be more
favorable to the Company and its Shareholders than the transactions contemplated
hereby.
3.5 Public Announcements. Any public announcement made by or
on behalf of either the Parent or the Company prior to the termination of this
Agreement pursuant to Article 9 hereof concerning this Agreement, the
transactions described herein or any other aspect of the dealings heretofore had
or hereafter to be
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had between the Company and the Parent and their respective Affiliates must
first be approved by the other party (any such approval not to be unreasonably
withheld), subject to either party's obligations under applicable Law (but such
party shall use its best efforts to consult with the other party as to all such
public announcements).
3.6 Confidentiality Agreement. The Company and the Parent
agree that the Confidentiality Agreement entered into between the Company and
the Parent, dated March 2, 1998, remains in effect, but shall at the Effective
Time be deemed to have terminated without further action by the parties.
3.7 Regulatory and Other Approvals.
(a) Subject to the terms and conditions herein
provided, the Company will (i) take all reasonable steps necessary or desirable,
and proceed diligently and in good faith and use all reasonable efforts to
obtain all approvals required by any Contract to consummate the transactions
contemplated hereby, (ii) take all reasonable steps necessary or desirable, and
proceed diligently and in good faith and use all reasonable efforts to obtain
all approvals, authorizations, and clearances of governmental and regulatory
authorities required of the Company to permit the Company to consummate the
transactions contemplated hereby, (iii) provide such other information and
communications to such governmental and regulatory authorities as such
authorities may reasonably request, and (iv) cooperate with Parent in obtaining
all approvals, authorizations, and clearances of governmental or regulatory
authorities and others required of Parent to consummate the transactions
contemplated hereby.
(b) The Company and Parent will (i) take all
reasonable actions necessary to file as soon as practicable, notifications under
the HSR Act, (ii) comply at the earliest practicable date with any request for
additional information received from the Federal Trade Commission or Antitrust
Division of the Department of Justice pursuant to the HSR Act, and (iii) request
early termination of the applicable waiting period.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company hereby represents and warrants to the Parent and
Acquisition on the date of this Agreement that:
4.1 Organization; Business.
(a) Organization. The Company is a corporation duly
and validly organized and existing under the Laws of the State of Minnesota, is
qualified to do business as a foreign corporation, is in good standing in the
Existing Corporate Jurisdictions. The Existing Corporate Jurisdictions (as
applicable) constitute all jurisdictions where the ownership or leasing of
property or the conduct of its business requires qualification as a foreign
corporation by the Company and where the failure to so qualify would have a
Material Adverse Effect. The Company is not in violation of any provision of its
Articles of Incorporation, By-laws or equivalent organizational documents.
(b) Powers. The Company has all requisite corporate
power and authority to carry on its business as it is now conducted and to own,
lease and operate its assets and properties unless the absence of same would not
have a Material Adverse Effect.
4.2 Capitalization.
(a) Capital Stock. The entire authorized capital
stock of the Company consists of 10,000,000 shares of common stock, no par
value, of which 3,893,791 shares are issued and outstanding as of the date
hereof. No shares are held by the Company as treasury shares and no shares of
the Company Common Stock have been acquired by the Company that are subject to
outstanding pledges to secure the future payment of the purchase price therefor.
(b) Issuance; Ownership. All of the outstanding
capital stock of the Company is duly authorized, validly issued, fully paid and
nonassessable and was not issued in violation of any preemptive rights. Other
than as disclosed in the Company SEC Documents, the Company does not own,
directly or indirectly, any capital stock or other ownership interest in any
corporation, partnership, trust, limited liability company or other entity. The
Company has no Subsidiaries. Except for the Existing Options, there are no
options, warrants, conversion rights or other rights to subscribe for or
purchase, or other contracts with respect to, any capital stock of the Company
and there are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to the Company. Except as
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set forth in this Agreement, to the knowledge of the Company, there are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of the Company.
(c) As of the date of this Agreement, (i) no bonds,
debentures, notes or other indebtedness having the right to vote under ordinary
circumstances (or convertible into securities having such right to vote)
("Voting Debt") of the Company are issued or outstanding, and (ii) there are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any rights.
4.3 Authorization; Enforceability.
(a) The execution, delivery and performance of this
Agreement are within the corporate power and authority of the Company and,
subject to the provisions hereof, have been duly authorized by the Board of
Directors of the Company. Except for the approval of the Shareholders as
required by Law, the Charter Documents and described in Section 4.22 hereof, no
other corporate proceeding or action on the part of the Company is necessary to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement is,
and the other documents and instruments required by this Agreement to be
executed and delivered by the Company will be, when executed and delivered by
the Company, the valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws generally affecting the rights of
creditors and subject to general equity principles.
(b) Prior to execution and delivery of this
Agreement, the Board of Directors of the Company and the Special Committee have
each (at a meeting duly called and held) unanimously (i) approved the
Transactions contemplated hereby, and such approval is sufficient to render the
provisions of Section 302.671 of the MBCA inapplicable to the Merger, (ii)
determined that the Transactions contemplated hereby are fair to and in the
best interests of the holders of the Company Common Stock and (iii) resolved to
recommend that the shareholders of the Company accept the Offer, tender their
Company Common Stock thereunder to Acquisition and approve and adopt this
Agreement.
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(c) No other state takeover statute or similar
statute or regulation in any jurisdiction in which the Company does business
applies or purports to apply to the Merger or to this Agreement, or any of the
transactions contemplated hereby or thereby.
4.4 No Violation or Conflict. Subject to the receipt of the
approvals and consents, if any, described in Section 7.1(a) of this Agreement,
the execution and delivery of this Agreement and all documents and instruments
required by this Agreement to be executed and delivered by the Company do not,
and the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, (i) except as disclosed in the Disclosure
Letter, result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any Contract or to the loss of a material benefit under any
Contract, or result in the creation of any Lien upon any of the properties or
assets of the Company, (ii) conflict or result in any violation of any provision
of the Certificate of Incorporation or By-Laws or other equivalent
organizational document, in each case as amended, of the Company, (iii) violate
any Existing Permits or any Law applicable to the Company or any of their
respective properties or assets, other than, in the case of clauses (i) and
(iii), any such violations, defaults, rights, losses or Liens that, individually
or in the aggregate, would not have a Material Adverse Effect or would not
affect adversely the ability of the Company to consummate the Merger and the
other transactions contemplated by this Agreement.
4.5 Title to Assets. The Company owns fee simple or valid
leasehold (as the case may be) title to the Real Estate and has valid title to
its other tangible assets and properties which it owns, free and clear of any
and all Liens, except for the Permitted Liens.
4.6 Litigation. (a) There are no actions, suits, claims,
worker's compensation claims, litigation or other governmental or judicial
proceedings or investigations, arbitrations and product warranty claims against
the Company or any of its properties, assets or business, or, to the knowledge
of the Company and if and to the extent the Company is, through indemnity or
otherwise, liable therefor, any of the Company's current or former directors or
officers or any other Person whom the Company has agreed to indemnify, as such,
that could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; (b) as of the date hereof, there are no such actions,
suits or proceedings pending or, to the knowledge of the Company, threatened,
against the Company by any Person which question the
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legality or validity of the transactions contemplated by this Agreement; and (c)
there are no outstanding orders, judgments, injunctions, awards or decrees of
any Governmental Entity against the Company, any of its or its properties,
assets or business, or, to the knowledge of the Company, any of the Company's
current or former directors or officers or any other person whom the Company has
agreed to indemnify, as such, that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
4.7 Books and Records; Company Financial Statements.
(a) Audited Company Financial Statements. The
Company Financial Statements comply in all material respects with the applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis by the Company during the
periods involved (except as may be indicated therein or in the notes thereto
(which are subject to completion)). The Company Financial Statements fairly
present the financial position of the Company as of the date set forth on each
of such Company Financial Statements and the results of operations of the
Company for the periods indicated on each of the Company Financial Statements.
The draft financial statements for the year ended January 31, 1998, which have
been provided to Parent, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis by the Company
during the periods involved (except as may be indicated therein or in the notes
thereto) and fairly present the financial position of the Company as of January
31, 1998.
(b) Unaudited Company Financial Statements. Those
financial statements which are unaudited and contained in the Company SEC
Documents fairly present in all material respects the financial position of the
Company as of the date set forth on each of such financial statements and the
results of operations and cash flows of the Company for the periods indicated on
each of such financial statements in accordance with generally accepted
accounting principles consistently applied by the Company except that such
financial statements do not reflect normal year-end adjustments and do not
contain footnotes.
(c) Accounting Records. The accounting books and
records of the Company: (i) are in all material respects correct and complete;
(ii) are current in a manner consistent with past practice; and (iii) to the
knowledge of the Company, have recorded therein all the properties, assets and
liabilities of the Company (except
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where the failure to so record would not violate generally accepted accounting
principles as consistently applied by the Company).
4.8 Absence of Certain Changes.
(a) To the knowledge of the Company, since January
31, 1998 there has not been any:
(i) Material Adverse Effect;
(ii) transactions by the Company outside the
ordinary course of business of the Company, except for the transactions
contemplated by this Agreement;
(iii) declaration or payment of any dividend
or any distribution in respect of the capital stock of the Company or
any direct or indirect redemption, purchase or other acquisition of any
such stock by the Company; or
(iv) payments or distributions, other than
normal salaries, to the Shareholders as such or, except for
transactions in the ordinary course of business upon commercially
reasonable terms of the Company, any Affiliate of the Company.
(b) Except as disclosed in the Disclosure Letter,
without limiting the generality of the foregoing, since January 31, 1998:
(i) the Company has not sold, leased,
transferred, or assigned any of its material assets, tangible or
intangible, other than for a fair consideration in the ordinary course
of business and other than the disposition of obsolete or unusable
property;
(ii) the Company has not made any capital
expenditure (or series of related capital expenditures) either
involving more than $50,000 (unless such expenditure is identified in
the current business plan of the Company as disclosed to Parent) or
outside the ordinary course of business;
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(iii) the Company has not experienced any material
damage, destruction, or loss (whether or not covered by insurance) from
fire or other casualty to its tangible property;
(iv) the Company has not materially increased
the base salary of any officer or employee of the Company, or adopted,
amended, modified, or terminated any bonus, profit-sharing,
incentive, severance, or other similar plan for the benefit of any of
its directors, officers or employees; and
(v) the Company has not entered into a binding
commitment to any of the foregoing.
4.9 Buildings and Equipment. The Company has not received any
written notice from any governmental authority that any of the Buildings or
Equipment fail to comply with any applicable building and zoning or other
similar Laws in effect at the date hereof which notice is still outstanding; and
the continuation of the Company Business as currently conducted will not result
in the enforcement or the threat of enforcement of any such Laws, except where
such enforcement or threat of enforcement would not result in a Material Adverse
Effect.
4.10 Performance of Contracts. Each of the Contracts is in
full force and effect and constitutes the legal and binding obligation of the
Company and, to the knowledge of the Company, constitutes the legal and binding
obligation of the other parties thereto. Except as disclosed in the Disclosure
Letter, there are no existing breaches or defaults by the Company or, to the
knowledge of the Company, any other party to a Contract under any Contract the
effect of which would constitute a Material Adverse Effect and, to the knowledge
of the Company, no event has occurred which, with the passage of time or the
giving of notice or both, could reasonably be expected to constitute such a
breach or default.
To the knowledge of the Company, the Existing Insurance
Policies are in full force and effect and the Company has not received notice of
any cancellation or threat of cancellation of such insurance.
4.11 Employee Benefit Plans.
(a) Existing Plans. Except as previously delivered
to Parent, neither the Company nor any Company ERISA Affiliate (defined below)
maintains
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or contributes to, nor is it bound by, nor has it maintained or contributed to
at any time during the six (6) years prior to the date hereof any Employee
Benefit Plan. All of the Existing Plans that are subject to ERISA or the Code
are in compliance in all material respects with ERISA and the Code. All of the
Existing Plans which are intended to meet the requirements of Section 401(a) of
the Code have been determined by the Internal Revenue Service to be "qualified"
within the meaning of the Code or have been filed with the Internal Revenue
Service with a request for a determination letter on or prior to the end of the
applicable remedial amendment period and, to the knowledge of the Company, there
are no facts which would adversely affect the tax qualified status of any of the
Existing Plans. "Company ERISA Affiliate" shall mean any Person which together
with the Company would be deemed a "single employer" within the meaning of
Section 4001 of ERISA.
(b) ERISA; Code. There is no accumulated funding
deficiency, within the meaning of Section 302 of ERISA or Section 412 of the
Code, in connection with the Existing Plans. No reportable event, as defined in
ERISA (other than reportable events for which the 30-day notice requirement has
been waived), has occurred in connection with the Existing Plans since January
1, 1995. The Existing Plans have not, nor has any trustee or administrator with
respect to the Existing Plans, engaged in any non-exempt prohibited transaction
as defined in ERISA or the Code. Neither the Company nor a Company ERISA
Affiliate is contributing to, and nor has it any material liability with respect
to, any multi-employer plan, as defined in ERISA.
(c) Compliance. Neither the Company nor any Company
ERISA Affiliate has incurred, directly or indirectly, any material liability to
or on account of an Existing Plan pursuant to Title IV of ERISA; no proceedings
have been instituted to terminate any Existing Plan that is subject to Title IV
of ERISA; and, to the knowledge of the Company, no condition exists that
presents a material risk to the Company or any Company ERISA Affiliate of
incurring a liability to or on account of a Existing Plan pursuant to Title IV
of ERISA.
(d) Funding. The current value of the assets of each
of the Existing Plans that is subject to Title IV of ERISA exceeds the present
value of the accrued benefits under each such Existing Plan, based upon the
actuarial assumptions (to the extent reasonable) presently used for funding
purposes in the most recent actuarial report prepared by such Existing Plan's
actuary with respect to such Existing Plan; and all contributions or other
amounts payable by the Company as of the Effective Time with respect to each
Existing Plan in respect of current or prior
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plan years have been either paid or accrued on the balance sheet of the Company.
There are no material pending or, to the knowledge of the Company, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Existing Plans or any trusts related thereto.
(e) Other Plan Obligations. To the knowledge of the
Company, neither the Company nor any Company ERISA Affiliate, nor any Existing
Plan, nor any trust created thereunder, nor any trustee or administrator thereof
has engaged in a transaction in connection with which the Company or any Company
ERISA Affiliate, any Existing Plan, any such trust, or any trustee or
administrator thereof, or any party dealing with any Existing Plan or any such
trust could be subject to either a civil penalty assessed pursuant to Section
409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the
Code. No Existing Plan provides death or medical benefits (whether or not
insured), with respect to current or former employees of the Company or any
Company ERISA Affiliate beyond their retirement or other termination of service
other than (i) coverage mandated by applicable Law or (ii) death benefits under
any "employee pension plan," as that term is defined in Section 3(2) of ERISA.
4.12 Brokers. Except for Wasserstein Perella & Co., Inc., the
Company has not incurred any brokers', finders' or any similar fee in connection
with the transactions contemplated by this Agreement. A true, correct and
complete copy of the engagement letter or other agreement between the Company
and Wasserstein Perella & Co., Inc. has been made available to Acquisition.
4.13 Taxes.
(a) Tax Returns. For all years for which the
applicable statutory period of limitation has not expired, the Company has
timely and properly filed, and will through the Closing Date timely and properly
file, all material federal, state, local and foreign tax returns (including but
not limited to income, franchise, sales, payroll, employee withholding and
social security and unemployment) which were or will be required to be filed.
The Company has paid all taxes (including interest and penalties) and
withholding amounts owed by the Company except where the failure to do so would
not cause a Material Adverse Effect. No tax deficiencies have been proposed or
assessed against the Company. To the knowledge of the Company, no issue has been
raised in any prior tax audit of the Company which, by application of the same
or similar principles, could reasonably be expected upon a future tax audit of
the Company to result in a proposed deficiency for any period and
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which deficiency would have a Material Adverse Effect. The Company is not liable
for any taxes attributable to any other Person, whether by reason of being a
member of another affiliated group, being a party to a tax sharing agreement, as
a transferee or successor, or otherwise.
(b) Audits. The Company has not consented to any
extension of the statute of limitation with respect to any open federal, state
or local tax returns.
(c) Liens. There are no tax Liens upon any property
or assets of the Company except for Liens for current taxes not yet due and
payable.
(d) Deliveries. The Company has delivered to the
Parent correct and complete copies of all tax returns and reports of the Company
filed for all periods not barred by the applicable statute of limitations
through the Effective Time. No examination or audit of any tax return or report
for any period not barred by the applicable statute of limitations has occurred,
no such examination is in progress and, to the knowledge of the Company, no such
examination or audit is planned.
(e) Withholding Taxes. The Company has properly
withheld and timely paid substantially all withholding and employment taxes
which it was required to withhold and pay relating to salaries, compensation and
other amounts heretofore paid to its employees or other Persons. All Forms W-2
and 1099 required to be filed with respect thereto have been timely and properly
filed except where the failure to file would not have a Material Adverse Effect.
(f) Other Representations. The Company has not and
will not make any elections under Section 341(f) of the Code and, except as
shown in the Disclosure Letter, has and will not be subject to Section 280G of
the Code.
4.14 Real Estate. The Real Estate: (a) constitutes all
real property and improvements leased or owned by the Company; and (b) is not
subject to any leases, tenancies, encumbrances or encroachments of any kind
except for Permitted Liens.
4.15 Governmental Approvals. No permission, approval,
determination, consent or waiver by, or any declaration, filing or registration
with, any federal, state, local or foreign court, arbitral tribunal,
administrative agency or commission or other governmental or regulatory
authority or administrative agency (a "Governmental Entity") is required by the
Company in connection with the
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execution and delivery of this Agreement by the Company or the consummation by
the Company of the Merger, except for: (a) the approvals described in Section
7.1(a) of this Agreement; and (b) the filing of the Articles of Merger as
described in this Agreement.
4.16 No Pending Acquisitions. Except for this Agreement and
previously executed confidentiality agreements, the Company is not a party to or
bound by any agreement, undertaking or commitment with respect to an Acquisition
Transaction.
4.17 Labor Matters.
(a) Employment Claims. To the knowledge of the
Company, there is no present or former employee of the Company who has any
material claim against the Company (whether under Law, under any employee
agreement or otherwise) on account of or for: (i) overtime pay, other than
overtime pay for the current payroll period; (ii) wages or salaries, other than
wages or salaries for the current payroll period; or (iii) vacations, sick
leave, time off or pay in lieu of vacation or time off, other than vacation,
sick leave or time off (or pay in lieu thereof) earned in the period immediately
preceding the date of this Agreement or incurred in the ordinary course of
business and appearing as a liability on the most recent Company Financial
Statements.
(b) Labor Disputes. (i) There are no pending and
unresolved material claims by any Person against the Company arising out of any
statute, ordinance or regulation relating to unfair labor practices,
discrimination or to employees or employee practices or occupational or safety
and health standards; (ii) there is no pending, nor has the Company experienced
since January 31, 1995 any, material labor dispute, strike or organized work
stoppage; and (iii) to the knowledge of the Company, there is no threatened
material labor dispute, strike or organized work stoppage against the Company.
(c) Union Matters. (i) To the knowledge of the
Company, no union organizing activities are in process or have been proposed or
threatened involving any employees of the Company; and (ii) no petitions have
been filed or, to the knowledge of the Company, have been threatened or proposed
to be filed, for union organization or representation of employees of the
Company not presently organized.
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4.18 Existing Permits and Violations of Law. The Existing
Permits constitute all licenses, permits, approvals, exemptions, orders,
approvals, franchises, qualifications, permissions, agreements and governmental
authorizations required by Law which the Company currently has and is required
to have for the conduct of the business of the Company as currently conducted,
except where the failure to have the same would not have a Material Adverse
Effect. No action or proceeding is pending or, to the knowledge of the Company,
threatened that is reasonably likely to result in a revocation, non-renewal,
termination, suspension or other material impairment of any material Existing
Permits. The business of the Company is not being conducted in violation of any
applicable Law, except for such violations which would not have a Material
Adverse Effect. No Governmental Entity has indicated to the Company an intention
to conduct an investigation or review with respect to the Company other than, in
each case, those which would not have a Material Adverse Effect.
4.19 Intangible Assets.
(a) Claims. (i) There are no material claims,
demands or proceedings instituted, pending or, to the knowledge of the Company,
threatened by any Person contesting or challenging the right of the Company to
use any of its Intangible Assets; (ii) each trademark registration, service mark
registration, copyright registration and patent which is owned by or licensed to
the Company and, with respect to those owned by the Company, has been maintained
in good standing and, with respect to those licensed to the Company, to the
Company's knowledge, has been maintained in good standing except where the
failure to so maintain would not have a Material Adverse Effect; (iii) there are
no Intangible Assets owned by a Person which the Company is using without
license to do so, except where the failure to possess such license could not
reasonably be expected to have a Material Adverse Effect; (iv) the Company owns
or possesses adequate licenses or other rights to use all Intangible Assets
necessary to conduct its business as now conducted, except where the failure to
possess such licenses could not reasonably be expected to have a Material
Adverse Effect; and (v) the consummation of the Merger and the transactions
contemplated by this Agreement will not impair the validity, enforceability,
ownership or right of the Company to use its Intangible Assets except, in each
case, where the impairment would not have a Material Adverse Effect.
4.20 Customers and Suppliers. Since January 31, 1997, there
has been no termination, cancellation or material curtailment of the business
relationship of the Company with any customer or supplier or group of affiliated
customers or
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suppliers which would result in a Material Adverse Effect nor, to the knowledge
of the Company, any notice of intent to so terminate, cancel or materially
curtail.
4.21 Environmental Protection.
(a) Definitions. As used in this Agreement:
(i) "Environmental Claim" shall mean any and all
administrative, regulatory or judicial actions, suits, demands,
demand letters, directives, claims, Liens investigations, proceedings
or notices of noncompliance or violation (written or oral) by any
Person alleging liability (including, without limitation, liability for
enforcement, investigatory costs, cleanup costs, governmental response
costs, removal costs, remedial costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of,
based on or resulting from: (A) the presence or environmental release
of any Hazardous Materials at any parcel of real property; or (B)
circumstances forming the basis of any violation or alleged violation,
of any Environmental Law; or (C) any and all claims by any Person
seeking damages, contribution, indemnification, cost, recovery,
compensation or injunctive relief resulting from the presence or
Environmental Release of any Hazardous Materials.
(ii) "Hazardous Materials" shall mean: (A) any
petroleum or petroleum products, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam
insulation, and transformers or other equipment that contain dielectric
fluid containing polychlorinated biphenyls ("PCBs") above regulated
levels and radon gas; and (B) any chemicals, materials or substances
which are now defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," or words of similar import, under any Environmental
Law; and (C) any other chemical, material, substance or waste, exposure
to which is now prohibited, limited or regulated by any governmental
authority.
(iii) "Environmental Laws" shall mean any federal,
state, local or foreign statute, Law, rule, ordinance, code,
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policy, rule of common law and regulations relating to pollution or
protection of human health (excluding OSHA) or the environment
(including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without
limitation, Laws and regulations relating to Environmental Releases or
threatened Environmental Releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials.
(iv) "Environmental Release" shall mean any release,
spill, emission, leaking, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the atmosphere, soil, surface
water or groundwater.
Except for violations of Sections (b), (c), (d) and (e) which would not cause a
Material Adverse Effect:
(b) Environmental Laws. The Company: (i) is in
compliance with all applicable Environmental Laws; and (ii) has not received any
communication (written or oral), from a governmental authority or third party
that alleges that the Company or any current or former Affiliate of the Company
is not in compliance with applicable Environmental Laws.
(c) Environmental Permits. The Company has obtained
all environmental, health and safety permits and governmental authorizations
(collectively, the "Environmental Permits") required for its operations, and all
such permits are in good standing and the Company is in substantial compliance
with all terms and conditions of the Environmental Permits.
(d) Claims. There is no Environmental Claim pending
or, to the knowledge of the Company, threatened against the Company or any
current or former Affiliate of the Company (to the extent such Environmental
Claim relates to the Company) or against any Person whose liability for any
Environmental Claim the Company has retained or assumed either contractually or
by operation of Law, or against any real or personal property or operations
which the Company owns, operates, leases, manages or controls or, to the
knowledge of the Company, which the Company owned, operated, leased, managed or
controlled.
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(e) Environmental Releases. There have been no
Environmental Releases of any Hazardous Material by the Company or any current
or former Affiliate of the Company on any parcel of real property or, to the
knowledge of the Company, by any Person on, beneath or adjacent to any parcel of
real property which the Company or any current or former Affiliate of the
Company owned, leased, operated, managed or controlled.
(f) CERCLA. The Company has not received any
written notice of potential liability from any Person under or relating to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"), or any similar state or local Law.
(g) Reports. The Company will make available for
inspection to Parent true, complete and correct copies and results of any
reports, studies, analyses, tests or monitoring possessed by the Company
pertaining to Hazardous Materials in, on, beneath or adjacent to any property
currently or formerly owned, operated or leased by the Company or any current or
former Affiliate of the Company, or regarding the Company's compliance with
applicable Environmental Laws.
(h) Tanks. The Real Estate does not contain any
underground storage tanks which contained or contain any Hazardous Material.
4.22 Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding shares of Company Common Stock entitled to
vote with respect to the Merger is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve the Merger, this
Agreement and the transactions contemplated hereby.
4.23 Returns. As of the date of this Agreement, to the
knowledge of the Company, there are no known claims against the Company to
return in excess of $50,000 (after giving effect to and exhausting any
applicable reserves and/or accruals therefor contained in the Company Financial
Statements) of merchandise by reason of alleged overshipments, defective
merchandise or otherwise, or of merchandise in the hands of customers under an
understanding that such merchandise would be returnable for credit. To the
knowledge of the Company, there is no reasonable basis for claims against the
Company to return in excess of $50,000 (after giving effect to and exhausting
any applicable reserves and/or accruals therefor contained in the
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Company Financial Statements) if the Company's finished good inventories were
sold to the intended customer therefor.
4.24 SEC Reports. The Company has filed with the SEC, and has
heretofore made available to the Parent true and complete copies of, all forms,
reports, schedules, statements and other documents required to be filed by it
since January 31, 1995 under the Exchange Act or the Securities Act of 1933, as
amended, and the rules and regulations thereunder (collectively, the "Securities
Act") (as such documents have been amended since the time of their filing,
collectively, the "Company SEC Documents"). As of their respective dates or, if
amended, as of the date of the last such amendment, the Company SEC Documents,
including, without limitation, any financial statements or schedules included
therein (a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder at such
time of filing.
4.25 Content of Proxy Statement. The Proxy Statement, if any
(or any amendment thereof or supplement thereto), will, at the date mailed to
Company shareholders and at the time of the meeting of Company shareholders to
be held in connection with the Merger, not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information supplied by Parent or Acquisition for inclusion in the
Proxy Statement. The Proxy Statement will comply in all material respects with
the provisions of the Exchange Act and the rules and regulations thereunder.
4.26 Opinion of Financial Advisor. The Company has received
the opinion of Wasserstein Perella & Co., Inc., its financial advisor, to the
effect that, as of March 22, 1998, the cash consideration to be received in the
Offer and the Merger, based upon and subject to the assumptions and limitations
set forth in such opinion, by the Company 's shareholders is fair to such
shareholders from a financial point of view, a copy of which opinion has been
delivered to Parent.
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4.27 Certain Agreements. Except as set forth in the Disclosure
Letter, the Company is not a party to any oral or written Agreement or plan,
including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. Except as described in the
Disclosure Letter, the transactions contemplated by this Agreement will not
constitute a "change of control" under, require the consent from or the giving
of notice to any third party pursuant to, or accelerate the vesting or
repurchase rights under, the terms, conditions or provisions of any loan or
credit agreement, note, bond, mortgage, indenture, license, lease, contract,
Agreement or other instrument or obligation to which the Company is a party or
by which any of them or any of their properties or assets may be bound. There
are no amounts payable by the Company to any officers of the Company (in their
capacity as officers) as a result of the transactions contemplated by this
Agreement.
4.28 Rights Agreement. The Company has taken all action which
may be necessary under the Rights Agreement, dated February 27, 1998, between
the Company and Norwest Bank Minnesota, N.A., as agent (the "Rights Agreement"),
so that the execution of this Agreement and any amendments thereto by the
parties hereto and the execution of one or both of the Tender and Option
Agreements and the consummation of the transactions contemplated hereby and
thereby shall not cause (i) Parent and/or Acquisition or their respective
Affiliates or Associates to become an Acquiring Person (as such terms are
defined in the Rights Agreement) unless this Agreement or one or both of the
Tender and Option Agreements have been terminated in accordance with their
respective terms or (ii) a Distribution Date, a Shares Acquisition Date or a
Triggering Event (as such terms are defined in the Rights Agreement) to occur,
irrespective of the number of shares of Company Common Stock acquired pursuant
to the Offer, the Merger or other transactions contemplated by the Merger
Agreement or either of the Tender and Option Agreements.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND ACQUISITION
The Parent and Acquisition represent and warrant to the
Company as follows:
5.1 Due Incorporation and Authority. Each of the Parent and
Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
requisite corporate power and authority to own, lease and operate its assets and
business and to carry on its business as now being and as heretofore conducted.
Each of the Parent and Acquisition has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the Merger. The execution, delivery and performance
by each of the Parent and Acquisition of this Agreement and, subject to the
provisions hereof, all of the documents and instruments required by this
Agreement to be executed and delivered by the Parent and/or Acquisition, and the
consummation by Acquisition of the Merger, have been duly authorized by all the
shareholders of Acquisition and the Board of Directors of the Parent and
Acquisition as required by Law and the organizational documents of each such
entity, and no other corporate proceedings on the part of the Parent or
Acquisition will be necessary to authorize the execution, delivery and
performance by each of the Parent and Acquisition of this Agreement, or the
consummation by Acquisition and Parent of the transactions contemplated hereby.
This Agreement is (and each of the documents and instruments required by this
Agreement to be executed and delivered by the Parent and/or Acquisition will be,
when executed and delivered by the Parent and/or Acquisition) the valid and
binding obligations of the Parent and Acquisition, as the case may be,
enforceable against the Parent and Acquisition, as the case may be, in
accordance with their respective terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
Laws generally affecting the rights of creditors and subject to general equity
principles.
5.2 Consents and Approvals. The execution and delivery by each
of the Parent and Acquisition of this Agreement and all documents and
instruments required by this Agreement to be executed and delivered by the
Parent and/or Acquisition, and the performance by each of the Parent and
Acquisition of its obligations hereunder and thereunder do not require the
Parent or Acquisition to
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obtain any consent, approval or action of, or make any filing with or give any
notice to, any person or any governmental or regulatory body, except (i)
compliance with applicable requirements of the HSR Act and (ii) the filing and
recordation of appropriate merger documents as required by the MBCA.
5.3 No Broker's, Finder's or Similar Fees. There are no
brokerage commissions, finder's fees or similar fees or commissions payable in
connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Parent and/or Acquisition, or any action
taken by the Parent and/or Acquisition.
5.4 No Violation or Conflict. Subject to the receipt of the
approvals and consents, if any, described in Section 7.1(a) of this Agreement
and except for the Amended and Restated Credit Agreement, dated as of October 2,
1997, by and among IPC, Inc., Parent, NationsBank, N.A. and Bankers Trust, as
agents, and other parties thereto, the execution, delivery and performance by
the Parent and Acquisition of this Agreement and all documents and instruments
required by this Agreement to be executed and delivered by the Parent and/or
Acquisition do not and will not conflict with or violate any Law, the
Certificate of Incorporation or Articles of Incorporation, as the case may be,
or By-laws of the Parent or Acquisition or any material contract or agreement to
which the Parent or Acquisition is a party or by which it is bound.
5.5 Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Parent, threatened against the Parent or
Acquisition or any shareholder of the Parent, by any Person which question the
validity, legality or propriety of the transactions contemplated by this
Agreement.
5.6 Sufficient Funds. Parent has, or will have at the time of
consummation of the Offer, sufficient funds available to purchase, or to cause
Acquisition to purchase, on a fully diluted basis, all the outstanding Shares
pursuant to the Offer and the Merger and pay all fees and expenses related to
the transactions contemplated by this Agreement.
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ARTICLE 6
COVENANTS
6.1 Conduct of Business by the Company. From and after the
date of this Agreement and until the termination of this Agreement or the
Closing Date (whichever first occurs), the Company shall:
(a) carry on its business in the usual, regular and
ordinary course substantially in the same manner as heretofore carried on;
(b) not (i) make payments or distributions (other
than normal salaries) to any Affiliate of the Company except for transactions in
the ordinary course of business upon commercially reasonable terms; (ii) sell,
lease, transfer or assign any of its assets, tangible or intangible, other than
for a fair consideration in the ordinary course of business and other than the
disposition of obsolete or unusable property; (iii) enter into any Contract
(other than purchase and sales orders in the ordinary course of business in
accordance with past practice) involving either more than $50,000 or outside the
ordinary course of business without the consent of the Parent (which consent
shall not be unreasonably withheld); (iv) accelerate, terminate, modify in any
material respect, or cancel any Contract (other than purchase and sales orders
in the ordinary course of business in accordance with past practice) involving
more than $50,000 to which the Company is a party or by which any of them is
bound without the consent of the Parent (which consent shall not be unreasonably
withheld); (v) make any capital expenditure (or series of related capital
expenditures) involving either more than $50,000 (unless such expenditure is
identified in the current business plan of the Company as disclosed to Parent)
or outside the ordinary course of business; (vi) delay or postpone the payment
of accounts payable and other liabilities outside the ordinary course of
business; (vii) cancel, compromise, waive or release any right or claim (or
series of related rights and claims) not covered by the reserves or accruals
relating to such claim in the Company Financial Statements either involving more
than $50,000 or outside the ordinary course of business without the consent of
the Parent (which consent shall not be unreasonably withheld); (viii) grant any
license or sublicense of any rights under or with respect to any Intangible
Assets; or (ix) make any loan to, or enter into any other transaction with, any
of its Affiliates, directors, officers and employees outside the ordinary course
of business;
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(c) use, operate, maintain and repair all of its
assets and properties in a normal business manner consistent with its past
practices;
(d) use commercially reasonable efforts to preserve
in all material respects its business organization intact, to retain the
services of the Employees and to conduct business with suppliers, customers,
creditors and others having business relationships with the Company in the best
interests of the Company;
(e) not knowingly do any act or knowingly omit to
do any act or, to the extent within the Company's reasonable control, knowingly
permit any act or omission to act, which will cause a breach of any of the
Contracts that would have a Material Adverse Effect;
(f) use reasonable efforts to maintain all of the
Existing Insurance Policies (or policies substantially equivalent thereto) in
full force and effect;
(g) (i) except as required by any Contract or in a
manner consistent with past practice, grant any increase in the rate of pay of
any of the Employees; (ii) institute or amend any Employee Benefit Plan unless
required by Law; (iii) enter into or modify any written employment agreement
with any Person; or (iv) pay or accrue any bonus or incentive compensation to
any Person;
(h) other than in the ordinary course of business,
not create, incur or assume any Indebtedness or make any Investment;
(i) not amend the Company Charter Documents;
(j) not (i) issue any additional shares of stock of
any class (except pursuant to the Existing Options) or grant any warrants,
options or rights to subscribe for or acquire any additional shares of stock of
any class; (ii) declare or pay any dividend or make any capital, surplus or
other distributions (other than normal salaries) of any nature to the
Shareholders; or (iii) directly or indirectly redeem, purchase or otherwise
acquire, recapitalize or reclassify any of its capital stock or liquidate in
whole or in part;
(k) timely and properly file, or timely and properly
file requests for extensions to file, all federal, state, local and foreign tax
returns which
42
<PAGE> 49
are required to be filed, and pay or make provision for the payment of all taxes
owed by it;
(l) not knowingly do any act or omit to do any act
that would result in a breach of any representation by the Company set forth in
this Agreement; and
6.2 Shareholder Option Agreements. On or before the date
hereof, the Company will use its reasonable best efforts to obtain and deliver
to Parent a Shareholder Option Agreement, in the form attached as Exhibit 2
hereto, executed by each of Calvin Krupa and James Thole.
ARTICLE 7
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to consummate the Merger shall
be subject to the satisfaction prior to or at the Closing as hereinafter
provided of the following express conditions precedent, each of which may be
waived in whole or in part by the Company, Parent or Acquisition, as the case
may be, to the extent permitted by law:
(a) Regulatory Approvals. Clearance from the
appropriate agencies, pursuant to the Hart-Scott-Rodino Antitrust Improvements
Act, as amended (the "HSR Act"), shall have been obtained by the Company and the
Parent or the waiting period thereby required shall have expired or been
terminated.
(b) Approval of Shareholders. This Agreement, the
Merger and the transactions contemplated by this Agreement shall (if necessary)
have received the requisite approval and authorization of the Shareholders.
(c) Statutes, Court Orders. No statute, rule or
regulation shall have been enacted or promulgated by any governmental authority
which prohibits the consummation of the Merger; and there shall be no order or
injunction of a court of competent jurisdiction in effect precluding
consummation of the Merger.
(d) Purchase of Company Common Stock in Offer.
Parent, Acquisition or their affiliates shall have purchased Company Common
Stock
43
<PAGE> 50
pursuant to the Offer, except that this condition shall not apply if Parent,
Acquisition or their affiliates shall have failed to purchase Company Common
Stock pursuant to the Offer in breach of their obligations under this Agreement.
7.2 Condition to Parent's and Acquisition's Obligation to
Effect the Merger. The obligations of Parent and Acquisition to consummate the
Merger are further subject to the fulfillment of the condition that all actions
contemplated by Section 2.18(b) hereto shall have been taken, which may be
waived in whole or part by Parent or Acquisition.
ARTICLE 8
NO SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
8.1 No Survival of Representations and Warranties. None of the
representations, warranties, covenants, agreements and certifications of the
Company and/or any officer of the Company contained herein shall survive the
Effective Time.
8.2 Directors' and Officers' Indemnification.
(a) Subsequent to the Effective Time, Acquisition
shall cause the Surviving Corporation to, and the Surviving Corporation and
Parent, jointly and severally, shall, indemnify and hold harmless each present
and former director and officer of the Company (collectively, the "Indemnified
Parties") against all losses in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission in their
capacity as director or officer occurring before the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, for a period of
six years after the Closing Date, in each case to the fullest extent permitted
under applicable Law (and shall pay any expenses in advance of the final
disposition of such action or proceeding to each Indemnified Party to the
fullest extent permitted under applicable Law, upon receipt from the Indemnified
Party to whom expenses are advanced of an undertaking to repay such advances as
required under applicable Law); provided, however, that, if any claim for
indemnification is asserted or made within such six year period, all rights to
indemnification in respect of such claim
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<PAGE> 51
shall continue until the disposition of such claim. Until the Effective Time,
the Company shall keep in effect Article 7 of its certificate and Article 5 of
its bylaws, and thereafter for a period of six years the Surviving Corporation
shall keep in effect in its certificate and bylaws provisions which provide for
indemnification exculpation to the extent provided for in Article 7 and Article
5 of the certificate and bylaws, respectively.
(b) In the event the Surviving Corporation or any of
its respective successors or assigns (i) consolidates with or merges into any
other Person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any Person, then, and in each such case, provision
shall be made by the Surviving Corporation so that the successors and assigns of
the Surviving Corporation shall assume the obligations set forth in this Section
8.2.
(c) Parent and Acquisition shall cause to be
maintained in effect for not less than four years after the Effective Time the
current policies, or substantially similar policies, of directors' and officers'
liability insurance maintained by the Company with respect to matters existing
or occurring at or prior to the Effective Time; provided, however, the Parent
and Acquisition shall not be required to expend an amount greater than 150% of
the annual premium of the current policy.
ARTICLE 9
TERMINATION
9.1 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing (whether before or after the approval of this Agreement by the
Shareholders), as follows:
(a) by mutual written agreement of the Parent and
the Company;
(b) by either of the Company or Parent:
(i) if (x) the Offer shall have expired without
any Company Common Stock being purchased therein or (y) Acquisition shall not
have accepted for payment all Company Common Stock tendered pursuant to the
Offer by
45
<PAGE> 52
September 30, 1998; provided, however, that the right to terminate this
Agreement under this Section 9.1(b)(i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of Parent or Acquisition, as the case may be, to
purchase the Company Common Stock pursuant to the Offer on or prior to such
date; or
(ii) if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their reasonable
efforts to lift), which permanently restrains, enjoins or otherwise prohibits
the acceptance for payment of, or payment for, Company Common Stock pursuant to
the Offer or the Merger and such order, decree, ruling or other action shall
have become final and non- appealable.
(c) by the Company:
(i) if Parent, Acquisition or any of their
affiliates shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the Offer;
provided, that the Company may not terminate this Agreement pursuant to this
Section 9.1(c)(i) if the Company is at such time in breach of its obligations
under this Agreement;
(ii) in connection with entering into a
definitive agreement in connection with an Acquisition Transaction, provided it
has complied with all provisions of Section 3.4, including the notice provisions
therein, and that it makes simultaneous payment of the $2,500,000 payment
referred to in Section 9.3 hereof, plus any amounts then due as a reimbursement
of expenses; or
(iii) if Parent or Acquisition shall have
breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement, which
breach cannot be or has not been cured, in all material respects, within 30 days
after the giving of written notice to Parent or Acquisition, as applicable.
(d) by Parent:
(i) if, due to an occurrence, not involving a
breach by Parent or Acquisition of their obligations hereunder, which makes it
impossible to satisfy any of the conditions set forth in Annex A hereto, Parent,
Acquisition, or any
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<PAGE> 53
of their affiliates shall have failed to commence the Offer on or prior to five
business days following the date of the initial public announcement of the
Offer;
(ii) if prior to the purchase of Company Common
Stock pursuant to the Offer, the Company shall have breached any representation,
warranty, covenant or other agreement contained in this Agreement which (A)
would give rise to the failure of a condition set forth in paragraph (f) or (g)
of Annex A hereto and (B) cannot be or has not been cured, in all material
respects, within 30 days after the giving of written notice to the Company; or
(iii) if either Parent or Acquisition is
entitled to terminate the Offer as a result of the occurrence of any event set
forth in paragraph (e) of Annex A hereto.
9.2 Rights on Termination. In the event of termination and
abandonment of the Merger by any party pursuant to Section 9.1, written notice
thereof shall forthwith be given to the other parties and this Agreement shall
terminate and the Merger and the other transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto. If this
Agreement is terminated and the transactions contemplated hereby are not
consummated pursuant to Section 9.1 of this Agreement, this Agreement shall
become void and of no further force and effect, except for (a) the provisions of
Section 3.1 relating to the obligation of the Parent and Acquisition to keep
confidential and not to use certain information obtained from the Company and
(b) the provisions of Section 9.3 relating to the Company's obligations to make
certain payments to the Parent.
9.3 Termination Fee Payable to the Parent. Notwithstanding any
provision to the contrary contained herein, the Company shall immediately pay to
the Parent (x) the amount of $2,500,000 and (y) all reasonably documented
out-of-pocket expenses reasonably incurred by the Parent and Acquisition in
connection with this Agreement and the Merger in an amount not to exceed
$600,000 if this Agreement is terminated: (1) by the Company pursuant to Section
9.1(c)(ii), (2) by the Parent pursuant to Section 9.1(d)(iii) hereof, (3) by
Parent pursuant to Section 9.1(d)(ii) if the breach thereof is due to the
Company's intentional or bad faith acts, or (4) by either the Company or Parent
pursuant to Section 9.1(b)(i) and (a) prior thereto there shall have been
publicly announced another Acquisition Proposal or an event set forth in
paragraph (h) of Annex A shall have occurred and (b) an Acquisition Proposal
shall be consummated on or prior to March 31, 1999. The amount in (x) above
shall be paid concurrently with any such termination and the
47
<PAGE> 54
amount in (y) above shall be paid within five (5) business days after receipt by
the Company of reasonably detailed evidence of the same. Upon receipt of such
payments, the Parent shall not be entitled to and shall waive the right to seek
damages or other amounts or remedies from the Company for breach of, or
otherwise in connection with, this Agreement.
9.4 Other Remedies. Notwithstanding any provision to the
contrary contained herein, if this Agreement is terminated pursuant to Article 9
or otherwise by the Company, on the one hand, or the Parent or Acquisition, on
the other hand, and the non-terminating party is not entitled to receive the
payments described in Section 9.3 (as the case may be), then the non-terminating
party shall be entitled to pursue any available legal rights to recover actual
damages, including, without limitation, its reasonable costs and expenses
incurred in pursuing such recovery (including, without limitation, reasonable
attorneys' fees).
ARTICLE 10
MISCELLANEOUS
10.1 Expenses. If this Agreement is not consummated, the
Parent and Acquisition, on the one hand, and the Company, on the other hand,
shall bear their respective legal fees and expenses.
10.2 Entire Agreement; Amendment. This Agreement and the
documents referred to in this Agreement and required to be delivered pursuant to
this Agreement constitute the entire agreement among the parties pertaining to
the subject matter of this Agreement, and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions of the
parties, whether oral or written, and there are no warranties, representations
or other agreements between the parties in connection with the subject matter of
this Agreement, except as specifically set forth in this Agreement. No
amendment, supplement, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement, whether or not
similar, nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
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<PAGE> 55
10.3 Governing Law. This Agreement shall be governed and
construed (i) with respect to the Merger, in accordance with the laws of the
State of Minnesota and (ii) with respect to all other transactions contemplated
hereunder, in accordance with the laws of the State of Illinois, applicable to
agreements made and to be performed entirely within such States.
10.4 Assignment. Prior to the Closing, this Agreement may not
be assigned by any party hereto, except with the prior written consent of the
other parties hereto.
10.5 Notices. All communications or notices required or
permitted by this Agreement shall be in writing and shall be deemed to have been
given at the earlier of the date personally delivered or sent by telephonic
facsimile transmission (with a copy via regular mail) or one day after sending
via nationally recognized overnight courier or five days after deposit in the
United States mail, certified or registered mail, postage prepaid, return
receipt requested, and addressed as follows, unless and until any of such
parties notifies the others in accordance with this Section of a change of
address:
If to the Parent: Ivex Packaging Corporation
100 Tri-State Drive
Suite 200
Lincolnshire, Illinois 60069
Telephone: (847) 945-9100
Telecopy: (847) 945-2355
Attention: General Counsel
With a copy to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker
Suite 2100
Chicago, Illinois 60606
Telephone: (312) 407-0700
Telecopy: (312) 407-0411
Attention: William R. Kunkel, Esq.
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<PAGE> 56
If to the Company: ULTRA PAC, Inc.
22051 Industrial Boulevard
Rogers, Minnesota 55374
Telephone: (612) 428-8340
Fax No.
Attention: Calvin Krupa
with a copy to:
Larkin Hoffman Daly & Lindren
7900 Xerxes Avenue South
Suite 1500
Bloomington, MN 55431
Telephone: (612) 896-3291
Fax No.: (612) 896-3333
Attention: Frank I. Harvey, Esq.
and
Katten Muchin & Zavis
525 W. Monroe
Suite 1600
Chicago, IL 60661
Telephone: (312) 902-5200
Fax No.: (312) 902-1061
Attention: David J. Kaufman, Esq.
10.6 Counterparts; Headings. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same Agreement. The
Article and Section headings in this Agreement are inserted for convenience of
reference only and shall not constitute a part hereof.
10.7 Interpretation. Unless the context requires otherwise,
all words used in this Agreement in the singular number shall extend to and
include the plural, all words in
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<PAGE> 57
the plural number shall extend to and include the singular, and all words in any
gender shall extend to and include all genders.
10.8 Specific Performance. The parties agree that the assets
and business of the Company as a going concern constitute unique property and,
accordingly, each party shall be entitled, at its option and in addition to any
other remedies available as herein provided, to the remedy of specific
performance to effect the Merger as provided in this Agreement.
10.9 No Reliance. Except for the parties to this Agreement:
(a) no Person is entitled to rely on any of the representations, warranties and
agreements of the parties contained in this Agreement; and (b) the parties
assume no liability to any Person because of any reliance on the
representations, warranties and agreements of the parties contained in this
Agreement.
10.10 Exhibits and Schedules. The Exhibits and Schedules are a
part of this Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
10.11 No Third Party Beneficiary. Except as provided pursuant
to Section 8.2 hereof, the terms and provisions of this Agreement are intended
solely for the benefit of the parties hereto and their respective successors and
assigns and it is not the intention of the parties to confer third-party
beneficiary rights upon any other Person.
51
<PAGE> 58
IN WITNESS WHEREOF, the parties have caused this Agreement and
Plan of Merger to be duly executed as of the day and year first above written.
IVEX PACKAGING CORPORATION
By: /s/ GEORGE V. BAYLY
------------------------------------
Name George V. Bayly
Title: Chairman of the Board,
Chief Executive Officer and
President
PACKAGE ACQUISITION, INC.
By: /s/ FRANK V. TANNURA
------------------------------------
Name Frank V. Tannura
Title: President
ULTRA PAC, INC.
By: /s/ CALVIN S. KRUPA
------------------------------------
Name Calvin S. Krupa
Title: Chairman, Chief Executive
Officer and President
<PAGE> 59
ANNEX A
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, and in
addition to (and not in limitation of) Acquisition's right to extend and amend
the Offer at any time in its sole discretion (subject to the provisions of the
Merger Agreement), Acquisition shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to Acquisition's obligation to pay for
or return tendered Company Common Stock promptly after termination or withdrawal
of the Offer), and may terminate or amend the Offer as to any Company Common
Stock not then paid for, if (i) any applicable waiting period under the HSR Act
has not expired or terminated, (ii) the Minimum Condition has not been
satisfied, or (iii) at any time on or after the date of the Merger Agreement and
before the time of acceptance for payment for any such Company Common Stock, any
of the following events shall have occurred:
(a) there shall be threatened or pending any suit,
action or proceeding by an Governmental Entity against Acquisition, Parent or
the Company (i) seeking to prohibit or impose any material limitations on
Parent's or Acquisition's ownership or operation (or that of Parent's
Subsidiaries or affiliates) of all or a material portion of their or the
Company's businesses or assets, or to compel Parent or Acquisition or Parent's
Subsidiaries and affiliates to dispose of or hold separate any material portion
of the business or assets of the Company or Parent and Parent's Subsidiaries, in
each case taken as a whole, (ii) challenging the acquisition by Parent or
Acquisition of any Company Common Stock under the Offer, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by the Agreement, or
seeking to obtain from the Company, Parent or Acquisition any damages that are
material in relation to the Company, (iii) seeking to impose material
limitations on the ability of Acquisition, or render Acquisition unable, to
accept for payment, pay for or purchase some or all of the Company Common Stock
pursuant to the Offer and the Merger, (iv) seeking to impose material
limitations on the ability of Acquisition or Parent effectively to exercise full
rights of ownership of the Company Common Stock, including, without limitation,
the right to vote the Company Common Stock purchased by it on all matters
properly presented to the Company's shareholders, or (v) which otherwise is
reasonably likely to have a Material Adverse Effect;
<PAGE> 60
(b) there shall be any statute, rule regulation,
judgment, order or injunction enacted, entered, enforced or promulgated on
behalf of a Government Entity, to the Offer or the Merger, or any other action
shall be taken by any Governmental Entity, other than the application to the
offer or the Merger of applicable waiting periods under HSR Act, that is
reasonably likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange for a period in excess of 24 hours (excluding suspensions or
limitations resulting solely from physical damage or interference with such
exchanges not related to market conditions), (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (iii) a commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States; (iv) any limitation (whether or not mandatory) by
any United States governmental authority on the extension of credit generally by
banks or other financial institutions, or (v) a change in general financial,
bank or capital market conditions which materially and adversely affects the
ability of financial institutions in the United States to extend credit or
syndicate loans or (vi) in the case of any of the foregoing existing at the time
of the commencement of the Offer, a material acceleration or worsening thereof;
(d) there shall have occurred any events after the
date of the Agreement which, either individually or in the aggregate, would have
a Material Adverse Effect; provided, however, that no event, change or effect
that materially results from the Transactions or the announcement thereof shall
be deemed to cause either individually or in the aggregate, a Material Adverse
Effect;
(e) (i) the Board of Directors of the Company shall
have withdrawn or modified in a manner adverse to Parent or Acquisition its
approval or recommendation of the Offer, the Merger or the Agreement, or
approved or recommended any Acquisition Proposal or (ii) the Company shall have
entered into any agreement with respect to any Superior Proposal in accordance
with Section 3.4 of the Agreement;
(f) the representations and warranties of the
Company set forth in the Agreement shall not be true and correct, in each case
(i) as of the date referred to in any representation or warranty which addresses
matters as of a particular date, or (ii) as to all other representations and
warranties, as of the date of the Agreement and as of the scheduled expiration
of the Offer, unless the inaccuracies (without giving effect to any
<PAGE> 61
materiality or material adverse effect qualifications or materiality exceptions
contained therein) under such representations and warranties, taking all the
inaccuracies under all such representations and warranties together in their
entirety, do not, individually or in the aggregate, result in a Material Adverse
Effect;
(g) the Company shall have failed to perform any
obligation or to comply with any agreement or covenant to be performed or
complied with by it under the Agreement other than any failure which would not
have, either individually or in the aggregate, a Material Adverse Effect;
(h) any person acquires beneficial ownership (as
defined in Rule 13d-3 promulgated under the Exchange Act) of at least 15% of the
outstanding Company Common Stock (other than any person not required to file a
Schedule 13D under the rules promulgated under the Exchange Act); or
(i) the Agreement shall have been terminated in
accordance with its terms.
The foregoing conditions are for the sole benefit of Parent
and Acquisition, may be asserted by Parent or Acquisition regardless of the
circumstances giving rise to such condition (including any action or inaction by
Parent or Acquisition not in violation of the Agreement) and may be waived by
Parent or Acquisition in whole or in part at any time and from time to time in
the sole discretion of Parent or Acquisition, subject in each case to the terms
of the Merger Agreement. The failure by Parent or Acquisition at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time from time to time.
<PAGE> 1
EXHIBIT (c)(2)
TENDER AND OPTION AGREEMENT
TENDER AND OPTION AGREEMENT, dated as of March , 1998 (the
"Agreement"), by and among Ivex Packaging Corporation, a Delaware corporation
("Parent"), Package Acquisition, Inc., a Minnesota corporation and an indirect
wholly-owned subsidiary of Parent ("Acquisition"), and (the "Shareholder").
WHEREAS, the Shareholder is the owner of _________ shares (the
"Shares") of Common Stock, no par value per share (the "Common Stock"), of Ultra
Pac, Inc. (the "Company");
WHEREAS, the Parent, Acquisition and the Company have entered
into an Agreement and Plan of Merger, dated as of the date hereof (as amended
from time to time, the "Merger Agreement"), which provides, among other things,
that, upon the terms and subject to the conditions therein, Acquisition will
make a cash tender offer (the "Offer") for all of the outstanding shares of
Common Stock and after expiration of the Offer will merge with and into the
Company (the "Merger"); and
WHEREAS, as a condition to the willingness of Parent and
Acquisition to enter into the Merger Agreement, Parent has requested that the
Shareholder agree, and in order to induce Parent and Acquisition to enter into
the Merger Agreement, the Shareholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the terms and conditions set forth herein,
the parties hereto hereby agree as follows:
1. Representations and Warranties of the Shareholder. The
Shareholder represents and warrants to the Parent as follows:
a. The Shareholder is the sole record and
beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of the Shares and, except for the pledge
of shares of common stock (the "Pledged Shares") to Norwest Bank, N.A., there
exist
<PAGE> 2
no liens, claims, security interests, options, proxies, voting agreements,
charges, obligations, understandings, arrangements or other encumbrances of any
nature hatsoever, except for restrictions applicable thereto under federal and
state securities laws ("Liens"), affecting the Shares.
b. The Shares and the certificates
representing the Shares are now and at all times during the term hereof will
be held by the Shareholder, or by a nominee or custodian for the benefit of the
Shareholder free and clear of all Liens, except for the Liens described in (a)
above and Liens arising hereunder. Upon transfer to Parent by the Shareholder
of the Shares hereunder, Parent will have good and marketable title to the
Shares, free and clear of all Liens.
c. This Agreement has been duly and validly
executed and delivered by the Shareholder and, assuming due authorization,
execution and delivery by Parent and Acquisition, constitutes a valid and
binding agreement of the Shareholder, enforceable against the Shareholder in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy or other laws affecting the enforcement of
creditors' rights generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
d. The execution and delivery of this Agreement
by the Shareholder does not, and the performance by the Shareholder of its
obligations hereunder will not, constitute a violation of, conflict with, result
in a default (or an event which, with notice or lapse of time or both, would
result in a default) under, or result in the creation of any Lien on any Shares
under, (i) any contract, commitment, agreement, partnership agreement,
understanding, arrangement or restriction of any kind to which the Shareholder
is a party or by which the Shareholder is bound, (ii) any judgment, writ,
decree, order or ruling applicable to the Shareholder or (iii) any law
applicable to the Shareholder.
e. To the Shareholder's knowledge, neither the
execution and delivery of this Agreement nor the performance by the Shareholder
of its obligations hereunder will require any consent, authorization or approval
of, filing with or notice to, any court, administrative agency or other
governmental body or authority, other than any required notices or filings
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the "HSR Act"),
state antitrust laws or the federal securities laws.
2
<PAGE> 3
2. Representations and Warranties of Parent and
Acquisition. Parent and Acquisition jointly and severally represent and warrant
to the Shareholder as follows:
a. Each of Parent and Acquisition is duly
organized and validly existing and in good standing under the laws of its
jurisdiction of incorporation, has the requisite corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby, and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement. This Agreement has
been duly and validly executed and delivered by each of Parent and Acquisition
and constitutes the legal, valid and binding obligation of each of Parent and
Acquisition, enforceable against each of Parent and Acquisition in accordance
with its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
b. The execution and delivery of this Agreement
by each of Parent and Acquisition does not, and the performance by each of
Parent and Acquisition of its obligations hereunder will not, constitute a
violation of, conflict with, or result in a default (or an event which, with
notice or lapse of time or both, would result in a default) under, its charter
or bylaws or any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which Parent or Acquisition is a party or by which
Parent or Acquisition is bound or any judgment, writ, decree, order or ruling
applicable to Parent or Acquisition.
c. Neither the execution and delivery of this
Agreement nor the performance by each of Parent and Acquisition of its
obligations hereunder will violate any order, writ, injunction, judgment, law,
decree, statute, rule or regulation applicable to Parent or Acquisition or
require any consent, authorization or approval of, filing with, or notice to,
any court, administrative agency or other governmental body or authority, other
than any required notices or filings pursuant to the HSR Act, state antitrust
laws or the federal securities laws.
3. Tender of Shares.
3
<PAGE> 4
a. Parent and Acquisition jointly and severally
agree:
i. subject to the conditions of the
Offer set forth in Annex A to the Merger Agreement and the other terms and
conditions of the Merger Agreement, that Acquisition will purchase all shares of
Common Stock tendered pursuant to the Offer as promptly as practicable following
commencement of the Offer and that Acquisition will consummate the Merger in
accordance with the terms of the Merger Agreement;
ii. not to decrease the price per share
to be paid to the Company's shareholders in the Offer below $15.50 per share
(the "Tender Offer Price"); and iii. to deliver, or to cause to be delivered,
the Offer Documents to the Shareholder. The provisions of Sections 3(a)(i) and
3(a)(ii) shall survive the termination of this Agreement.
b. The Shareholder will (i) tender the Shares
(other than the Pledged Shares which will be tendered as soon as practicable)
into the Offer promptly, and in any event no later than the fifth business day
following the com mencement of the Offer, or, if the Shareholder has not
received the Offer Documents by such time, within two business days following
receipt of such documents, and (ii) not withdraw any Shares so tendered (except
in the event the Stock Option is exercised). Upon the purchase of all the Shares
pursuant to the Offer in accordance with this Section 3, this Agreement will
terminate. The Shareholder will receive the same price per Share received by
other shareholders of the Company in the Offer with respect to Shares tendered
by it in the Offer. In the event that, notwithstanding the provisions of the
first sentence of this Section 3(b), any Shares are for any reason withdrawn
from the Offer or are not purchased pursuant to the Offer, such Shares will
remain subject to the terms of this Agreement. The Shareholder acknowledges that
Acquisition's obligation to accept for payment and pay for the Shares in the
Offer is subject to all the terms and conditions of the Offer. On the date the
Shares are accepted for payment and purchased by Acquisition pursuant to the
Offer, Acquisition or Parent, as the case may be, shall make payment by wire
transfer to the Shareholder of the purchase price for such Shares to an account
designated by the Shareholder.
c. The Shareholder hereby agrees to permit
Parent to publish and disclose in the Offer Documents and, if approval of the
shareholders of the Company is required under applicable law, the Proxy
Statement, its identity and
4
<PAGE> 5
ownership of Common Stock and the nature of its commitments, arrangements and
understandings under this Agreement.
4. Option to Purchase.
a. The Shareholder hereby grants to Parent,
subject to the terms and conditions hereof, an irrevocable option (the "Stock
Option") to purchase the Shares at a purchase price per share of $15.50 per
Share (the "Exercise Price") in cash, in the manner set forth in this Section 4.
At any time prior to the termination of the Stock Option hereunder, Parent (or a
wholly owned subsidiary of Parent) may exercise the Stock Option, in whole only,
if on or after the date hereof:
i. any corporation, partnership,
individual, trust, unincorporated association, or other entity or "person" (as
defined in Section 13(d)(3) of the Exchange Act) other than Parent or any of its
"affiliates" (as defined in the Exchange Act) (a "Third Party"), will have:
A. commenced or announced an
intention to commence a bona fide tender offer or exchange offer for any shares
of Common Stock, the consummation of which would result in "beneficial
ownership" (as defined in the Exchange Act) by such Third Party (together with
all such Third Party's affiliates and "associates" (as defined in the Exchange
Act)) of 50% or more of the then outstanding voting equity of the Company
(either on a primary or a fully diluted basis);
B. acquired beneficial
ownership of shares of Common Stock that, when aggregated with any shares of
Common Stock already owned by such Third Party, its affiliates and associates,
would result in the aggregate beneficial ownership by such Third Party, its
affiliates and associates of 15% or more of the then outstanding voting equity
of the Company (either on a primary or a fully diluted basis); provided,
however, that "Third Party" for purposes of this clause (B) does not include any
corporation, partnership, person, other entity or group that beneficially owns
more than 15% of the outstanding voting equity of the Company (either on a
primary or a fully diluted basis) as of the date hereof and that does not, after
the date hereof, increase such ownership percentage by more than an additional
1% of the outstanding voting equity of the Company (either on a primary or a
fully diluted basis);
5
<PAGE> 6
C. acquired assets
constituting 15% or more of the total assets or earning power of the Company
taken as a whole;
D. entered into an agreement
with the Company that contemplates the acquisition of (x) assets constituting
15% or more of the total assets or earning power of the Company taken as a whole
or (y) beneficial ownership of 15% or more of the outstanding voting equity of
the Company; or
ii. any of the events described in
Section 9.1(c)(ii) or 9.1(d)(iii) of the Merger Agreement that would allow the
Company or Parent to terminate the Merger Agreement has occurred (after the
passage of any time periods set forth in such sections but without the necessity
of the Company or Parent having terminated the Merger Agreement).
In the event that Parent wishes to exercise the Stock
Option, Parent shall give written notice (the "Option Notice", with the date of
the Option Notice being hereinafter called the "Notice Date") to the Shareholder
specifying the place and date (not earlier than three nor later than ten
Business Days from the Notice Date) for closing such purchase (a "Closing").
Parent's obligation to purchase the Shares upon any exercise of the Stock Option
and the Shareholder's obligation to sell the Shares upon any exercise of the
Stock Option are subject (at the election of Parent and the Shareholder,
respectively,) to the conditions that (i) no preliminary or permanent injunction
or other order prohibiting the purchase, issuance or delivery of the Shares
issued by any Governmental Authority will be in effect and (ii) any applicable
waiting period required for the purchase of Shares under the HSR Act will have
expired or been terminated or clearance from the appropriate agencies shares
have been obtained, provided that if such injunction or other order has become
final and nonappealable, the Stock Option shall terminate; and provided further,
that if the Stock Option is not exercisable because either of the circumstances
described in clauses (i) or (ii) exist, then the Stock Option shall be
exercisable for the ten business day period commencing on the date that the
circumstances set forth in clauses (i) or (ii) cease to exist, but in no event
shall the Stock Option be exercisable after the date set forth in Section 9(c).
Parent's obligation to purchase the Shares upon exercise of the Stock Option is
further subject (at Parent's election) to the condition that there will have
been no material breach of the representations, warranties, covenants or
agreements of the Shareholder contained in this Agreement or of the Company
contained in the Merger Agreement which breach has not been cured within ten
business days of the receipt of written notice thereof from the Parent. The
Share holder's obligation to sell the Shares upon exercise of the Stock Option
and the
6
<PAGE> 7
Shareholder's obligations under Section 7 are subject (at the Shareholder's
election) to the further conditions that there will have been no material breach
of the representations, warranties, covenants or agreements of Parent or
Acquisition contained in this Agreement or contained in the Merger Agreement,
which breach has not been cured within ten business days of the receipt of
written notice thereof from the Shareholder. Parent agrees to use its best
efforts to cause any such waiting period or injunction or order to be terminated
or lifted and to obtain all necessary regulatory approvals under the HSR Act.
b. At the Closing, (i) the Shareholder shall
deliver to Parent the certificate or certificates representing the Shares in
proper form for transfer upon exercise of the Stock Option in the denominations
designated by Parent in the Option Notice and (ii) Parent shall pay the
aggregate purchase price for the Shares by wire transfer of immediately
available funds to an account designated by the Shareholder in writing to Parent
in the amount equal to the product of the Exercise Price and the number of the
Shares.
c. In the event that Parent or Acquisition pays
a price higher than $15.50 per share for Shares tendered into the Offer, the
Exercise Price shall be increased to equal such higher price.
d. The Shareholder has granted the Stock Option
to Parent in order to induce Parent to enter into and consummate the
transactions contemplated by the Merger Agreement. Parent and Acquisition
covenant and agree that they will perform their respective obligations under the
Merger Agreement. The provisions of this Section 4(d) are intended both for the
benefit of the Shareholder and for the benefit of the Company and the other
shareholders of the Company and may not be modified, waived or amended without
the consent of the Company.
5. Transfer of the Shares.
a. During the term of this Agreement, the
Shareholder will not offer to sell, sell, pledge or otherwise dispose of or
transfer any interest in or encumber with any Lien any of the Shares, (ii) enter
into any contract, option or other agreement or understanding with respect to
any transfer of any or all of the Shares or any interest therein; (iii) grant
any proxy, power-of-attorney or other authorization or consent in or with
respect to the Shares; (iv) deposit the Shares into a voting trust or enter into
a voting agreement or arrangement with respect to the
7
<PAGE> 8
Shares; or (v) take any other action with respect to the Shares that would in
any way restrict, limit or interfere with the performance of its obligations
hereunder.
b. The Shareholder agrees to place the
following legend on any and all certificates evidencing the Shares:
THE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER PURSUANT TO THAT
CERTAIN TENDER AND OPTION AGREEMENT, DATED
AS OF MARCH 23, 1998, BY AND BETWEEN IVEX
PACKAGING CORPORATION, PACKAGE ACQUISITION
INC., AND . ANY TRANSFER OF SUCH SHARES
OF COMMON STOCK IN VIOLATION OF THE TERMS
OF SUCH AGREEMENT SHALL BE NULL AND VOID
AND OF NO EFFECT WHATSOEVER.
6. Certain Other Agreements. The Shareholder shall notify
Parent immediately if any proposals are received by, any information is
requested from, or any negotiations or discussions are sought to be initiated or
continued with the Shareholder or his attorneys, accountants or other agents
(each of such actions, an "Interest"), in each case in connection with any
Acquisition Transaction indicating, in connection with such notice, the name of
the person indicating such Interest and the terms and conditions of any related
proposals or offers. The Shareholder agrees to cease immediately and cause to be
terminated immediately any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any Acquisition Transaction. In
addition, the Shareholder agrees to keep Parent informed, on a current basis, of
the status and terms of any Acquisition Transaction. The Shareholder furthermore
agrees not to, and will use his best efforts to ensure that his attorneys,
accountants and other agents do not, directly or indirectly: (i) initiate,
solicit or encourage, or take any action to facilitate the making of, any offer
or proposal that constitutes or is reasonably likely to lead to any Acquisition
Transaction, (ii) enter into any agreement with respect to any Acquisition
Transaction or (iii) in the event of an unsolicited written proposal in respect
of a Acquisition Transaction, engage in negotiations or discussions with, or
provide any information or data to, any person (other than Parent, any of its
affiliates or representatives and except for information that has been
previously publicly disseminated by the Company) relating to any Acquisition
Transaction. The obligations provided for in this Section
8
<PAGE> 9
6 shall become effective immediately following the execution and delivery of
this Agreement by the parties hereto.
7. Voting of Shares; Grant of Irrevocable Proxy;
Appointment of Proxy.
a. The Shareholder hereby agrees that, during
the term of this Agreement, at any meeting (whether annual or special and
whether or not an adjourned or postponed meeting) of the holders of Common
Stock, however called, or in connection with any written consent of the holders
of Common Stock, the Shareholder will appear at the meeting or otherwise cause
the Shares to be counted as present thereat for purposes of establishing a
quorum and vote or consent (or cause to be voted or consented) the Shares (i) in
favor of the Merger and (ii) against any action or agreement that would impede,
interfere with or prevent the Merger, including any other extraordinary
corporate transaction, such as a merger, reorganization or liquidation
involving the Company and a third party or any other proposal of a third party
to acquire the Company and (iii) if requested by Parent, in favor of a
shareholder resolution proposed by Parent in accordance with applicable
provisions of the Minnesota Business Corporation Act (the "MBCA") the purpose of
which is to cause the Offer and the Merger to be consummated and which does not
relate to the election of directors.
b. The Shareholder hereby irrevocably grants
to, and appoints, Parent and any nominee thereof, its proxy and attorney-
in-fact (with full power of substitution) during the term of this Agreement, for
and in the name, place and stead of the Shareholder, to vote the Shares, or
grant a consent or approval in respect of the Shares, in connection with any
meeting of the shareholders of the Company (i) in favor of the Merger and (ii)
against any action or agreement that would impede, interfere with or prevent the
Merger, including any other extraordinary corporate transaction, such as a
merger, reorganization or liquidation involving the Company and a third party or
any other proposal of a third party to acquire the Company.
c. The Shareholder represents that all proxies
heretofore given in respect of the Shares, if any, are not irrevocable, and
hereby revokes all such proxies given with respect to the Shares.
d. The Shareholder hereby affirms that the
irrevocable proxy set forth in this Section 7 is given in connection with the
execution of the
9
<PAGE> 10
Merger Agreement and that such irrevocable proxy is given to secure the
performance of the duties of the Shareholder under this Agreement. The
Shareholder hereby further affirms that the irrevocable proxy set forth in this
Section 7 is coupled with an interest and is intended to be irrevocable in
accordance with the provisions of Section 302A.449(2) of the MBCA.
8. Adjustments. The number and types of securities
subject to this Agreement will be appropriately adjusted in the event
of any stock dividends, stock splits, recapitalization, combinations, exchanges
of shares or the like or any other action that would have the effect of
changing the Shareholder's ownership of the Company's capital stock.
9. Termination. Except as otherwise specifically
provided herein, all obligations under this Agreement will terminate on
the earliest of (a) the date the Merger Agreement is terminated in accordance
with its terms or the date the Offer is terminated by Parent or Acquisition as
a result of any failure of a condition of the Offer; provided, however, that
the provisions of Sections 4(a) shall not terminate until sixty (60) days
thereafter (or such later time as permitted by Section 4(a)) if the Merger
Agreement was terminated pursuant to Section 9.1(c)(ii) or 9.1(d)(iii) thereof,
(b) the purchase of all the Shares pursuant to the Offer in accordance with
Section 3 or pursuant to the Stock Option, or (c) on September 30, 1998. The
provisions of Section 13 shall survive any termination of this Agreement.
10. Effectiveness. This Agreement shall not be effective
unless and until the Merger Agreement shall have been approved by the Company's
Board of Directors.
11. Brokerage. Parent, Acquisition and the Shareholder
represent and warrant to the other that the negotiations relevant to this
Agreement have been carried on by Parent and Acquisition, on the one hand, and
the Shareholder, on the other hand, directly with the other, and that except for
Wasserstein Perella & Co., Inc. ("Wasserstein"), there are no claims for
finder's fees or brokerage commissions or other like payments in connection with
this Agreement or the transactions contemplated hereby. Except for the fees of
Wasserstein, which will be paid solely by the Company, Parent and Acquisition,
on the one hand, and Shareholder, on the other hand, will indemnify and hold
harmless the other from and against any and all claims or liabilities for
finder's fees or brokerage commissions or other like payments incurred by reason
of action taken by him, it or any of them, as the case may be.
10
<PAGE> 11
12. Miscellaneous.
a. Except for the representations and
warranties set forth in Section l(b), all representations and warranties
contained herein will terminate upon the termination of this Agreement.
b. Any provisions of this Agreement may be
waived at any time by the party that is entitled to the benefits thereof. No
such waiver, amendment or supplement will be effective unless in writing and is
signed by the party or parties sought to be bound thereby. Any waiver by any
party of a breach of any provision of this Agreement will not operate as or be
construed to be a waiver of any other breach of such provisions or of any breach
of any other provision of this Agreement. The failure of a party to insist upon
strict adherence to any term of this Agreement or one or more sections hereof
will not be considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
c. This Agreement contains the entire agreement
among the parties in respect to the subject matter hereof, and supersedes all
prior agreements among the parties with respect to such matters. This Agreement
may not be amended, changed, supplemented, waived or otherwise modified, except
upon the delivery of a written agreement executed by the parties hereto.
d. This Agreement will be governed by and
construed in accordance with the laws of the State of Minnesota applicable to
contracts made and performed in that state. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. It is accordingly agreed that the parties hereto
(i) will waive, in any action for specific performance, the defense of adequacy
of a remedy at law and (ii) will be entitled, in addition to any other remedy to
which they may be entitled at law or in equity, to compel specific performance
of this Agreement in any action instituted in any state or federal court sitting
in Minneapolis, Minnesota. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in the Merger Agreement.
e. The descriptive headings contained herein
are for convenience and reference only and will not affect in any way the
meaning or interpretation of this Agreement.
11
<PAGE> 12
f. All communications or notices required or
permitted by this Agreement shall be in writing and shall be deemed to have been
given at the earlier of the date personally delivered or sent by telephonic
facsimile transmission (with a copy via regular mail) or one day after sending
via nationally recognized overnight courier or five days after deposit in the
United States mail, certified or registered mail, postage prepaid, return
receipt requested, and addressed as follows, unless and until any of such
parties notifies the others in accordance with this Section of a change of
address:
If to Shareholder to:
[ ]
c/o ULTRA PAC, Inc.
22051 Industrial Boulevard
Rogers, Minnesota 55374
Telephone: (612) 428-8340
Fax No. (612) 428-2754
with a copy to:
Larkin Hoffman Daly & Lindren
7900 Xerxes Avenue South
Suite 1500
Bloomington, MN 55431
Telephone: (612) 896-3291
Fax No.: (612) 896-3333
Attention: Frank I. Harvey, Esq.
and
Katten Muchin & Zavis
525 W. Monroe
Suite 1600
Chicago, IL 60661
Telephone: (312) 902-5200
Fax No.: (312) 902-1061
Attention: David J. Kaufman, Esq.
If to Parent or Acquisition to:
12
<PAGE> 13
Ivex Packaging Corporation
100 Tri-State Drive
Suite 200
Lincolnshire, IL 60069
Telephone: (847) 945-9100
Telecopy: (847) 945-2355
Attention: G. Douglas Patterson, Esq.
With a copy to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker
Suite 2100
Chicago, IL 60606
Telephone: (312) 407-0700
Telecopy: (312) 407-0411
Attention: William R. Kunkel, Esq.
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.
g. This Agreement may be executed in any number
of counterparts, each of which will be deemed to be an original, but all of
which together will constitute one agreement.
h. This Agreement is binding upon and is
solely for the benefit of the parties hereto and their respective successors,
legal representatives and assigns. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement may be assigned by any of
the parties hereto without the prior written consent of the other parties.
i. If any term or other provision of this
Agreement is determined to be invalid, illegal or incapable of being enforced by
any rule of law or public policy, all other terms and provisions of this
Agreement will nevertheless remain in full force and effect as long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party hereto. Upon any such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto will negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
13
<PAGE> 14
possible in an acceptable manner to the end that the transactions contemplated
by this Agreement are consummated to the extent possible.
j. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity will be cumulative and not alternative, and the exercise of any thereof
by either party will not preclude the simultaneous or later exercise of any
other such right, power or remedy by such party.
13. Expenses. Except as provided in Section 4 hereof,
all fees and expenses incurred by any one party hereto shall be borne
by the party incurring such fees and expenses.
14. Further Assurances; Shareholder Capacity.
a. The Shareholder shall, upon request of
Parent or Acquisition, execute and deliver any additional documents and take
such further actions as may reasonably be deemed by Parent or Acquisition to be
necessary or desirable to carry out the provisions hereof and to vest the power
to vote the Shares as contemplated by Section 7 hereof in Parent.
b. Nothing in this Agreement shall be construed
to prohibit any affiliate of the Shareholder who is a member of the Board of
Directors of the Company from taking any action solely in his capacity as a
member of the Board of Directors of the Company to the extent specifically
permitted by the Merger Agreement or as required by applicable law.
14
<PAGE> 15
IN WITNESS WHEREOF, the Parent, Acquisition and the Share-
holder have caused this Agreement to be signed by their respective officers or
representatives thereunto duly authorized, all as of the date first written
above.
IVEX PACKAGING CORPORATION
By: ______________________________
Name:
Title:
PACKAGE ACQUISITION, INC.
By: ______________________________
Name:
Title:
__________________________________
, as Shareholder
15
<PAGE> 1
EXHIBIT (C)(3)
ULTRA PAC, INC.
21925 Industrial Boulevard
Rogers, Minnesota 55374
February 27, 1998
Ivex Packaging Corporation
100 Tri-State Drive
Suite 200
Lincolnshire, Il 60069
Attention: Frank V. Tannura
Vice President and Chief Financial Officer
Gentlemen:
In connection with your consideration of negotiations and/or a possible
transaction (a "Transaction") by you or one or more of your affiliates (as the
term "affiliate" is defined in the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), involving Ultra Pac, Inc. (the "Company"), the Company
and its advisors are prepared to make available to you certain information
which is confidential or proprietary in nature.
Except as required by law or regulation, you agree to treat confidentially
all such information whether written or oral (the "Evaluation Material") and to
observe the terms and conditions set forth herein. You agree that prior to
giving any of your agents or representatives (collectively, the
"Representatives") access to any of the Evaluation Material, you shall provide
each such Representative a copy of this letter (this "Agreement"). You further
agree to be responsible for any breach of this Agreement by any of your
Representatives. Except as required by law or regulation, you agree not to
disclose or allow disclosure to others of any Evaluation Material; provided
that you may disclose Evaluation Material to your Representatives to the extent
necessary to permit such Representatives to assist you in making the
determination referred to below. You agree that you will not use the Evaluation
Material for any purpose other than determining whether you wish to enter into
a Transaction and will not use the Evaluation Material in any way directly or
indirectly detrimental to the Company. For eighteen months from the date
hereof, you agree to not solicit the employment of or hire any executive
officers or sales directors of the Company.
For the purposes of this Agreement, Evaluation Material shall include,
without limitation, all confidential or proprietary information (whether
prepared by the Company or otherwise and in whatever form maintained),
regardless of the form of communication, that contain or otherwise reflect
information concerning the Company that you or your Representatives may be
provided by or on behalf of the Company in the course of your evaluation of a
possible Transaction, including all information, whether prepared by you, your
Representatives or others, that contain or otherwise reflect or are based upon
any such Evaluation Material (collectively, the "Notes"). This Agreement shall
be inoperative as to those particular portions of the Evaluation Material that
(i) become generally available to the public other than as result of a
disclosure by you or any of your Representatives, (ii) were available to you on
a non-confidential basis prior to the disclosure of such Evaluation Material to
you pursuant to this Agreement, provided that the source of such information
was not known by you to be bound by a confidentiality agreement, with or other
contractual, legal or fiduciary obligation of confidentiality to the Company or
any of its affiliates or (iii) become available to you on a non-confidential
basis from a source other than the Company or its agents, advisors or
representatives provided that the source of such information was not known by
you to be bound by a confidentiality agreement with or other contractual, legal
or fiduciary obligation of confidentiality to the Company or any of its
affiliates.
<PAGE> 2
We remind you that the securities laws of the United States prohibit any
person who has material, non-public information concerning the Company or a
possible transaction involving the Company from purchasing or selling
securities in reliance upon such information.
Although the Company has endeavored to include the Evaluation Material
information known to them which they believe to be relevant for the purpose of
your investigation, you understand and agree that neither the Company nor any
of its affiliates, agents, advisors or representatives (i) has made or makes
any representatives or warranty, expressed or implied, as to the accuracy or
completeness of the Evaluation Material or (ii) shall have any liability
whatsoever to you or your Representatives relating to or resulting from the use
of the Evaluation Material or any errors therein or omissions therefrom.
You agree that unless and until a definitive agreement between the Company
and you with respect to any Transaction has been executed, neither the Company
nor you will be under any legal obligation of any kind whatsoever with respect
to such Transaction, except for the obligations set forth in this Agreement.
If you decide that you do not wish to proceed with a Transaction, you will
promptly notify the Company of that decision. In that case or if the Company
shall elect at any time to terminate further access by you to the Evaluation
Material for any reason, you will promptly destroy or deliver to us all copies
of the Evaluation Material in the possession of you or your affiliates or your
Representatives, will destroy all Notes and will certify to the Company that
the requirements of this sentence have been satisfied in full. Notwithstanding
the return or destruction of Evaluation Material and Notes, you and your
Representatives will continue to be bound by your obligations of
confidentiality and other obligations hereunder.
In the event that you or anyone to whom you transmit any Evaluation
Material in accordance with this Agreement are requested or required by law to
disclose any Evaluation Material, you will give the Company prompt written
notice of such request or requirement so that the Company may seek an
appropriate protective order or other remedy and/or waive compliance with the
provisions of this Agreement. You (or such other persons to whom such request
is directed) will furnish only that portion of the Evaluation Material which,
in the opinion of your outside counsel, is legally required to be disclosed. It
is further agreed that, if in the absence of a protective order you (or such
other persons to whom such request is directed) are nonetheless legally
compelled to disclose such information, you may make such disclosure without
liability hereunder, provided that you give the Company notice of the
information to be disclosed as far in advance of its disclosure as is
practicable and, provided, further, that such disclosure was not caused by and
did not result from a previous disclosure by you or any or your Representative
not permitted hereunder.
You agree that money damages would not be a sufficient remedy for any
breach of this Agreement by you or your Representatives, that in addition to
all other remedies the Company shall be entitled to specific performance and
injunctive or other equitable relief as a remedy for any such breach, and you
further agree to waive, any requirement for the securing or posting of any bond
in connection with such remedy.
You hereby irrevocably and unconditionally submit to the exclusive
jurisdiction of any State or Federal court sitting in Minneapolis, Minnesota
over any suit, action or proceeding arising out of or relating to this letter.
You hereby agree that service of any process, summons, notice or document by
U.S. registered mail addressed to you shall be effective service of process,
for any action, suit or proceeding brought against you in any such court. You
hereby irrevocably and unconditionally waive any objection to the laying of
venue of any such suit action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum. You agree that a final judgment in any
such suit, action or proceeding brought in any such court shall be conclusive
and binding upon you and may be enforced in any other courts to whose
jurisdiction you are or may be subject, by suit upon such judgment.
All modifications of waivers of and amendments to this Agreement or any
part hereof must be in writing signed on behalf of you and the Company. It is
further understood and agreed that no failure or delay by the Company in
exercising any right, power or privilege under this Agreement shall operate as
a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise of any right, power or privilege hereunder. In the
event that any provision or portion of this letter is determined to be invalid
or unenforceable for any reason, in whole or in part, the remaining provisions
of this letter shall be unaffected thereby and shall
<PAGE> 3
remain in full force and effect to the fullest extent permitted by applicable
law. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Minnesota. This Agreement shall
terminate on March 1, 2001, unless any claims hereunder are asserted in writing
before March 1, 2001, in which case this Agreement shall survive until final
resolution of such claims.
If you are in agreement with the foregoing, please so indicate by signing,
dating and returning one copy of this Agreement, which will constitute our
agreement with respect to the matters set forth herein.
Very truly yours,
ULTRA PAC, INC.
By: /s/ Calvin S. Krupa
---------------------------
a duly authorized signatory
Agreed and Accepted:
IVEX PACKAGING CORPORATION
By: /s/ Frank V. Tannura
-------------------------------
a duly authorized signatory
Dated: February 27, 1998
--------------------------------
