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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AMWAY ASIA PACIFIC LTD.
(Name of Issuer)
NEW AAP LIMITED
(Bidder)
COMMON STOCK, $0.01 PAR VALUE PER SHARE
(Title of class of securities)
G0352M 10 8
(CUSIP Number of Class of Securities)
CRAIG N. MEURLIN, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
AMWAY CORPORATION
7575 FULTON STREET EAST
ADA, MICHIGAN 49355
(616) 787-6000
(Name, Address and Telephone Number of Person Authorized to
Receive Notice and Communications on Behalf of Bidder)
COPY TO:
THOMAS C. DANIELS, ESQ.
JONES, DAY, REAVIS & POGUE
NORTH POINT
901 LAKESIDE AVENUE
CLEVELAND, OHIO 44114
(216) 586-3939
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CALCULATION OF FILING FEE
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TRANSACTION VALUATION AMOUNT OF FILING FEE*
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$152,971,740.00 $30,595.00
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[ ] 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.
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AMOUNT PREVIOUSLY PAID: FILING PARTY:
FORM OR REGISTRATION NO.: DATE FILED:
</TABLE>
(Continued on following pages)
Page 1 of 7 Pages
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<PAGE> 2
SCHEDULE 14D-1
CUSIP No. G0352M 10 8 Page 1 of 7
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<S> <C> <C>
- ---------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
NEW AAP LIMITED
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCES OF FUNDS
BK
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(e) or 2(f)
N/A
- ---------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES [ ]
CERTAIN SHARES
- ---------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0
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10 TYPE OF REPORTING PERSON
CO
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</TABLE>
2
<PAGE> 3
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Amway Asia Pacific Ltd., and the
address of its principal executive office is 38/F The Lee Gardens, 33 Hysan
Avenue, Causeway Bay, Hong Kong.
(b) This Tender Offer Statement on Schedule 14D-1 relates to a tender offer
by New AAP Limited, a Bermuda corporation (the "Purchaser"), to purchase all the
outstanding shares of the Common Stock of Amway Asia Pacific Ltd., a Bermuda
corporation (the "Company"), par value $.01 per share (the "Common Stock" or
"Shares"), that are beneficially owned by the shareholders of the Company. The
Offer is being made pursuant to the Tender Offer and Amalgamation Agreement (the
"Amalgamation Agreement"), dated November 15, 1999, among the Company, Purchaser
and Apple Hold Co., L.P., a limited partnership organized under the laws of
Bermuda ("Hold Co."). Hold Co. is the parent of Purchaser and an entity
controlled and beneficially owned, directly and indirectly, by the principal
shareholders of the Company, along with certain corporations, trusts,
foundations and other entities established by or for the benefit of the
principal shareholders and their respective families. The Amalgamation Agreement
provides for, among other things, Purchaser to first conduct the Offer and then
for the Company and Purchaser to amalgamate, with the Company as the surviving
company. The purchase price for each share of Common Stock will be $18.00 in
cash (the "Purchase Price"). There will be deducted from the Purchase Price paid
to each holder any U.S. backup or other applicable withholding taxes which may
be required to be withheld. The Offer is for all Shares of the Company or any
lesser number of Shares tendered and not withdrawn. The Offer is for all Shares
of the Company or any lesser number of Shares tendered and not withdrawn. The
Offer will expire, unless extended, at 12:00 midnight, New York City time, on
December 17, 1999. The Offer is being made upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated November 18, 1999 (the
"Offer to Purchase"), and in a related Letter of Transmittal (the "Letter of
Transmittal," which, together with the Offer to Purchase, constitutes the
"Offer"). Copies of the Offer to Purchase and the related Letter of Transmittal
are filed as Exhibits (a)(1) and (a)(2), respectively, hereto. As of September
30, 1999, there were approximately 56,441,960 shares of Common Stock held by
approximately 2,166 record holders issued and outstanding. The information set
forth in "Introduction" in the Offer to Purchase is incorporated herein.
(c) The information set forth in "The Offer - Market Information; Dividends
and Dividend Policy" in the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (d), (g) This Statement is filed by Purchaser. The information set
forth in "The Offer - Certain Information Regarding Purchaser" in the Offer to
Purchase and in Schedule I - "PURCHASER EXECUTIVE OFFICERS AND DIRECTORS; AAP
EXECUTIVE OFFICERS AND DIRECTORS" thereto is incorporated herein by reference.
(e) - (f) During the last five years, none of Purchaser's executive
officers or directors were (i) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors); or (ii) party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding were or are subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal or
state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS, OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) - (b) The information set forth in "Introduction," "Special Factors -
The Offer, Amalgamation and Related Transactions; Amalgamation Agreement" and
"The Offer - Background of the Offer; Contacts with AAP" in 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 "The Offer - Source and Amount of
Funds" in the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
3
<PAGE> 4
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a), (d), (f) The information set forth in "Introduction," "Special Factors
- - The Offer, Amalgamation and Related Transactions; Amalgamation Agreement,"
"Special Factors - Purpose of the Offer and Amalgamation; Other Transactions,"
"Special Factors - Certain Effects of the Amalgamation" and "The Offer - Certain
Effects of the Offer" in the Offer to Purchase is incorporated herein by
reference.
(b) - (c), (e), (g) Not applicable.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) - (b) The information set forth in "Introduction," "Special Factors -
The Offer; Amalgamation and Related Transactions; Amalgamation Agreement,"
"Special Factors - Interests of Certain Persons," "The Offer - Interests of
Certain Persons" and "The Offer - Transactions and Agreements Concerning the
Shares" in 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 "Introduction," "Special Factors - The Offer,
Amalgamation and Related Transactions; Amalgamation Agreement," "The Offer -
Background of the Offer; Contacts with AAP" and in "The Offer - Transactions and
Agreements Concerning the Shares" in the Offer to Purchase is incorporated
herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction," "The Offer - Fees and
Expenses" and in "The Offer - Miscellaneous" in the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in "Introduction" and "Special
Factors -- Interests of Certain Persons" in the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth in "The Offer - Certain Legal Matters;
Regulatory Approvals" in the Offer to Purchase is incorporated herein by
reference.
(c) Not applicable.
(d) The information set forth in "The Offer - Certain Effects of the Offer"
in the Offer to Purchase is incorporated herein by reference.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
4
<PAGE> 5
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
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(a) (1) Form of Offer to Purchase, dated November 18, 1999.
(2) Form of Letter of Transmittal.
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(6) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(7) Form of Letter to the Company's Holders of Common Stock.
(8) Form of Press Release "Amway Asia Pacific's Principal
Shareholders to Commence Tender Offer for Outstanding Public
Shares" issued by the Company and the Principal Shareholders
on November 15, 1999.
(9) Form of Communications to Amway Distributors, dated November
15, 1999.
(10) Form of Tender Offer Announcement to Amway Management and
Employees, dated November 15, 1999.
(11) Form of Press Release "Amway Asia Pacific's Principal
Shareholders Commence Tender Offer For Outstanding Public
Shares" issued by the Company and the Public Shareholders on
November 18, 1999.
(12) Form of Summary Advertisement published on November 18,
1999.
(13) Form of Trustee Direction Form from the 401(k) Trustee.
(14) Form of Letter to Participants of the 401(k) Plan.
(b) (1) Form of Senior Bank Financing Commitment Letter, among
Purchaser, Hold Co., ALAP Hold Co., Ltd., N.A.J. Co., Ltd.,
Amway Corporation and Morgan Guaranty Trust Company of New
York, Tokyo Branch, dated November 15, 1999.
(2) Form of Term Sheet Regarding the Credit Facility.
(c) (1) Tender Offer and Amalgamation Agreement, dated November 15,
1999 among the Company, Purchaser and Hold Co.
(2) Shareholder and Voting Agreement, by and among Hold Co.,
Purchaser and Certain Shareholders of the Company, dated as
of November 15, 1999.
(d) Not applicable.
(e) Not Applicable.
(f) Not Applicable.
(g) Consent of KPMG LLP.
(h) Power of Attorney for Purchaser.
</TABLE>
5
<PAGE> 6
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: November 18, 1999 NEW AAP LIMITED
By: /s/ CRAIG N. MEURLIN
------------------------------------
Name: Craig N. Meurlin
Title: Vice President, Assistant
Secretary
6
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
(a) (1) Form of Offer to Purchase, dated November 18, 1999.
(2) Form of Letter of Transmittal.
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(6) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(7) Form of Letter to the Company's Holders of Common Stock.
(8) Form of Press Release "Amway Asia Pacific's Principal
Shareholders to Commence Tender Offer for Outstanding Public
Shares" issued by the Company and the Principal Shareholders
on November 15, 1999.
(9) Form of Communications to Amway Distributors, dated November
15, 1999.
(10) Form of Tender Offer Announcement to Amway Management and
Employees, dated November 15, 1999.
(11) Form of Press Release "Amway Asia Pacific's Principal
Shareholders Commence Tender Offer For Outstanding Public
Shares" issued by the Company and the Public Shareholders on
November 18, 1999.
(12) Form of Summary Advertisement published on November 18,
1999.
(13) Form of Trustee Direction Form from the 401(k) Trustee.
(14) Form of Letter to Participants of the 401(k) Plan.
(b) (1) Form of Senior Bank Financing Commitment Letter, among
Purchaser, Hold Co., ALAP Hold Co., Ltd., N.A.J. Co., Ltd.,
Amway Corporation and Morgan Guaranty Trust Company of New
York, Tokyo Branch, dated November 15, 1999.
(2) Form of Term Sheet Regarding the Credit Facility.
(c) (1) Tender Offer and Amalgamation Agreement, dated November 15,
1999 among the Company, Purchaser and Hold Co.
(2) Shareholder and Voting Agreement, by and among Hold Co.,
Purchaser and Certain Shareholders of the Company, dated as
of November 15, 1999.
(d) Not applicable.
(e) Not Applicable.
(f) Not Applicable.
(g) Consent of KPMG LLP.
(h) Power of Attorney for Purchaser.
</TABLE>
7
<PAGE> 1
Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH
BY
NEW AAP LIMITED
FOR
ALL OUTSTANDING SHARES OF COMMON STOCK
OF AMWAY ASIA PACIFIC LTD.
AT $18.00 PER SHARE OF COMMON STOCK
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME,
ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED.
New AAP Limited., a Bermuda corporation ("Purchaser"), hereby offers to
purchase all the outstanding shares of the Common Stock of Amway Asia Pacific
Ltd., a Bermuda corporation ("AAP"), par value $.01 per share (the "Common
Stock" or "Shares"), that are beneficially owned by shareholders (the
"Shareholders") of AAP in accordance with the terms and conditions described or
referred to in this Offer to Purchase and the accompanying Letter of Transmittal
(the "Offer"). The Offer is being made pursuant to the Tender Offer and
Amalgamation Agreement (the "Amalgamation Agreement"), dated November 15, 1999,
among AAP, Purchaser and Apple Hold Co., L.P., a limited partnership organized
under the laws of Bermuda ("Hold Co."). Hold Co. is the parent of Purchaser and
an entity controlled and beneficially owned, directly and indirectly, by the
principal shareholders of AAP, along with certain corporations, trusts,
foundations and other entities established by or for the benefit of the
principal shareholders and their respective families (collectively, the
"Principal Shareholders"). The Amalgamation Agreement provides for, among other
things, Purchaser to first conduct the Offer and then for AAP and Purchaser to
amalgamate (the "Amalgamation"), with AAP as the surviving company. The purchase
price for each share of Common Stock will be $18.00 in cash (the "Purchase
Price"). There will be deducted from the Purchase Price paid to each holder any
U.S. backup or other applicable withholding taxes which may be required to be
withheld. The Offer is for all Shares of AAP or any lesser number of Shares
tendered and not withdrawn. The Offer will expire, unless extended, at 12:00
midnight, New York City time, on December 17, 1999.
Purchaser has been informed by the Principal Shareholders that the they
will not tender their Shares in response to the Offer. The Principal
Shareholders will contribute their Shares ("Non-Tendered Shares") to Hold Co.
contemporaneously with the consummation of the Offer.
THE BOARD OF DIRECTORS OF AAP (WITH MESSRS. RICHARD M. DEVOS, JR., DOUGLAS
L. DEVOS AND STEPHEN A. VAN ANDEL NOT PARTICIPATING) (THE "DISINTERESTED
DIRECTORS") HAS UNANIMOUSLY (1) DETERMINED THAT THE OFFER AND THE AMALGAMATION
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES, OTHER THAN
NON-TENDERED SHARES (THE "PUBLIC SHAREHOLDERS"), (2) APPROVED THE AMALGAMATION
AGREEMENT AND (3) RESOLVED TO RECOMMEND THAT THE PUBLIC SHAREHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED OR SUBJECT TO ANY OTHER CONDITIONS.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
Questions and requests for assistance may be directed to Georgeson
Shareholder Communications Inc. (the "Information Agent") or Morgan Stanley &
Co. Incorporated and J.P. Morgan Securities Inc. (each a "Dealer Manager" and
collectively, the "Dealer Managers") at their respective addresses and telephone
numbers set forth on the back page of this Offer to Purchase. Additional copies
of this Offer to Purchase, the Letter of Transmittal and other related materials
may be obtained from the Information Agent or brokers, dealers, commercial banks
and trust companies.
The Common Stock is listed and principally traded on the New York Stock
Exchange (the "NYSE") under the symbol "AAP" and is also listed on the
Australian Stock Exchange Limited ("ASX") under the symbol "AMW." On November
12, 1999, the last full NYSE trading day prior to the public announcement of the
Offer, the closing sales price of the Common Stock on the NYSE was $11.75 per
share and on November 16, 1999, the last full trading day prior to the date of
this Offer to Purchase (the "Commencement Date") for which quotations could be
obtained, the closing sales price was $17.81. The Purchase Price is $18.00 per
share. On November 15, 1999, the last full ASX trading day prior to the public
announcement of the Offer, the closing sales price of the Common Stock on the
ASX was AU$17.50 per share and on November 17, 1999, the last full trading day
prior to the Commencement Date, the closing sales price was AU$30.0. HOLDERS ARE
URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMMON STOCK.
THE DEALER MANAGERS FOR THE OFFER ARE:
MORGAN STANLEY DEAN WITTER J.P. MORGAN & CO.
November 18, 1999
<PAGE> 2
IMPORTANT
Any shareholder desiring to accept the Offer should either (1) request the
holder's broker, dealer, commercial bank, trust company or nominee to effect the
transaction for the holder or (2) if the Shares are held in the holder's name,
complete and sign the Letter of Transmittal (or a facsimile thereof) and mail or
deliver it with the certificate(s) representing tendered Shares and any other
required documents to First Chicago Trust Company of New York (the "Depositary")
or tender such Shares pursuant to the procedures for book-entry transfer
described herein under "The Offer -- Procedure for Tendering 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
pursuant to the guaranteed delivery procedure described herein under "The
Offer -- Procedure for Tendering Shares -- Guaranteed Delivery."
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OR RECOMMENDATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH
RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY PURCHASER.
<PAGE> 3
TABLE OF CONTENTS
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PAGE
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INTRODUCTION................................................ 1
SPECIAL FACTORS............................................. 4
1. Background of the Offer; Recommendation of the
Special Committee and the Disinterested Directors;
Reasons for the Recommendation; Opinion of Financial
Advisor to the Special Committee................... 4
2. The Offer; Amalgamation and Related Transactions;
Amalgamation Agreement................................. 14
3. Purpose of the Offer and Amalgamation; Other
Transactions........................................... 15
4. Position of Purchaser Regarding Fairness of the
Offer.................................................. 16
5. Certain Effects of the Amalgamation.................. 16
6. Interests of Certain Persons......................... 16
7. Appraisal Rights in the Amalgamation................. 17
THE OFFER................................................... 18
1. Number of Shares; Expiration and Extension of
Offer.................................................. 18
2. Procedure for Tendering Shares....................... 18
3. Withdrawal Rights.................................... 20
4. Acceptance for Payment of Shares and Payment of
Purchase Price......................................... 21
5. Market Information; Dividends and Dividend Policy.... 21
6. Certain Effects of the Offer......................... 23
7. Source and Amount of Funds........................... 24
8. Certain Information Regarding AAP.................... 24
9. Certain Information Regarding Purchaser.............. 28
10. Background of the Offer; Contacts with AAP........... 28
11. Interests of Certain Persons......................... 28
12. Transactions and Agreements Concerning the Shares.... 29
13. Certain Legal Matters; Regulatory Approvals.......... 29
14. U.S. Federal Income Tax Consequences................. 29
15. Extension of Offer; Termination; Amendments.......... 31
16. Fees and Expenses.................................... 31
17. Miscellaneous........................................ 32
SCHEDULE I PURCHASER EXECUTIVE OFFICERS AND DIRECTORS;
AAP EXECUTIVE OFFICERS AND DIRECTORS........ S-1
SCHEDULE II FAIRNESS OPINION OF THE FINANCIAL ADVISOR
SCHEDULE III AUDITED FINANCIAL STATEMENTS OF AMWAY ASIA
PACIFIC LTD. FOR THE FISCAL YEARS ENDED
AUGUST 31, 1996, 1997 AND 1998 AND UNAUDITED
FINANCIAL STATEMENTS FOR THE NINE MONTHS
ENDED MAY 31, 1998 AND MAY 31, 1999......... F-1
</TABLE>
i
<PAGE> 4
TO THE HOLDERS OF COMMON STOCK OF AMWAY ASIA PACIFIC LTD.:
INTRODUCTION
New AAP Limited, a Bermuda corporation ("Purchaser"), hereby offers to
purchase all the outstanding shares of the Common Stock of Amway Asia Pacific
Ltd., a Bermuda corporation ("AAP"), par value $.01 per share (the "Common
Stock" or "Shares"), that are beneficially owned by all shareholders (the
"Shareholders") of AAP in accordance with the terms and conditions described or
referred to in this Offer to Purchase and the accompanying Letter of Transmittal
(the "Offer"). The purchase price for each share of Common Stock will be $18.00
in cash (the "Purchase Price"). There will be deducted from the Purchase Price
paid to each holder any U.S. or other applicable backup withholding taxes which
may be required to be withheld. The Offer is for all Shares of AAP or any lesser
number of Shares tendered and not withdrawn. The Offer will expire, unless
extended, at 12:00 midnight, New York City time, on December 17, 1999.
The Offer is being made to all holders of Common Stock. The Offer, however,
will not be made to a particular holder if (i) the Offer is prohibited by
applicable administrative or judicial action pursuant to a statutory provision
of the jurisdiction in which such holder resides or (ii) the laws or practices
of the jurisdiction in which such holder resides would impose significant costs
upon Purchaser or would materially delay the Offer.
As of September 30, 1999, the principal shareholders of AAP, along with
certain corporations, trusts, foundations and other entities established by or
for the benefit of the principal shareholders and their respective families
(collectively, the "Principal Shareholders"), beneficially owned 47,943,530
shares of Common Stock, constituting approximately 85% of all shares of Common
Stock issued and outstanding on such date. Purchaser has been informed by the
Principal Shareholders that they will not tender their Shares in response to the
Offer. The Principal Shareholders will contribute their shares ("Non-Tendered
Shares") to Hold Co. (as defined below) contemporaneously with the consummation
of the Offer.
The Offer is being made pursuant to the Tender Offer and Amalgamation
Agreement (the "Amalgamation Agreement"), dated November 15, 1999, among AAP,
Purchaser and Apple Hold Co., L.P., a limited partnership organized under the
laws of Bermuda ("Hold Co."). Hold Co. is the parent of Purchaser and an entity
controlled by the Principal Shareholders. The purpose of the Offer is to
facilitate Purchaser's acquisition of all Shares for cash, and thereby enable
the Principal Shareholders to obtain indirect control of 100% of the capital
stock of AAP. The Amalgamation Agreement provides for, among other things,
Purchaser to first conduct the Offer and then for AAP and Purchaser to
amalgamate (the "Amalgamation"), with AAP continuing as the amalgamated company.
Simultaneously with the execution of the Amalgamation Agreement, the Principal
Shareholders, Hold Co. and Purchaser entered into a Shareholder and Voting
Agreement (the "Shareholder Agreement"). Pursuant to the Shareholder Agreement,
the Principal Shareholders have agreed, and Hold Co. agreed, after transfer to
it of the Non-Tendered Shares by the Principal Shareholders, not to dispose of
or otherwise transfer the Non-Tendered Shares, and Purchaser has agreed not to
dispose of or otherwise transfer any Shares purchased by it in the Offer
("Purchased Shares"), in either case prior to consummation of the Amalgamation.
The Principal Shareholders also have agreed to cause Hold Co. and Purchaser, as
the case may be, to vote, and Hold Co. and Purchaser, as the case may be, have
agreed to vote the Non-Tendered Shares and Purchased Shares in favor of the
Amalgamation.
Because the Principal Shareholders will contribute their shares to Hold
Co., the Principal Shareholders, indirectly as limited partners of Hold Co.,
will beneficially own approximately 85% of the Shares. Under Bermuda law, an
amalgamation must be approved by a vote of three-fourths of those shareholders
voting at the shareholder meeting to approve such amalgamation provided that a
quorum representing at least one-third of the shareholders attend such meeting.
Because the Principal Shareholders will own, directly or indirectly, 85% of the
AAP Shares and 100% of the capital stock of Purchaser, the Principal
Shareholders will be able to effect the Amalgamation even if the Public
Shareholders (as defined below) do not tender any Shares. As a result of the
Amalgamation, those holders who do not tender their Shares in the Offer will
receive cash equal to the Purchase Price upon consummation of the Amalgamation.
If Shareholders tender their Shares in connection with the Offer, then they will
not have to wait for the Amalgamation to be completed to receive cash for their
Shares. The Amalgamation is expected to occur as soon as possible following
consummation of the Offer.
<PAGE> 5
Alternatively, if at any time after consummation of the Offer, Purchaser
and Hold Co. own, in the aggregate, 95 percent or more of the outstanding shares
of the Common Stock, then Purchaser may, if it elects to do so in lieu of the
Amalgamation, compulsorily purchase at the Purchase Price in cash the remaining
Shares from the remaining Shareholders pursuant to Section 103 of the Bermuda
Companies Act of 1981, as amended (the "Bermuda Act"). Accordingly, as a result
of the consummation of the Offer and the Amalgamation or alternatively, the
purchase of the Shares for cash in accordance with Section 103 of the Bermuda
Act, the Principal Shareholders will, indirectly as limited partners of Hold
Co., beneficially own 100 percent of the outstanding Shares. See, "Special
Factors -- The Offer, Amalgamation and Related Transactions; Amalgamation
Agreement".
Over the last several years, a variety of alternatives have been considered
by the Principal Shareholders and AAP management to increase shareholder value,
while at the same time enhance operations, results and business prospects of
AAP. After consideration of various alternatives and based on the difficult
business environment and the limited public float of Shares, the Principal
Shareholders and AAP concluded that it was unlikely that any meaningful
improvement in liquidity of AAP would occur or that the Public Shareholders
would realize the full potential of their investment in the foreseeable future.
AAP and the Principal Shareholders concluded that, as a private company, AAP
would have greater flexibility to invest in its future, realign the business
relationships with Amway Corporation, a privately held Michigan corporation
owned and controlled by the Principal Shareholders ("Amway"), and other Amway
affiliates and allow senior management of Amway and AAP to focus on the
long-term interests of AAP without concern for the impact that any action might
have on operating results or share price of AAP. The Principal Shareholders view
the Offer as an opportunity to create value for the Public Shareholders through
a premium purchase price and to provide flexibility for restructuring and
realignment of all Amway entities controlled by the Principal Shareholders.
Purchaser will pay for the Shares purchased pursuant to the Offer with
funds borrowed from Morgan Guaranty Trust Company of New York, Tokyo Branch, an
affiliate of J.P. Morgan & Co. Incorporated ("Morgan Guaranty"), and possibly
other commercial banks and lending institutions under a new senior credit
facility.
The Offer is not contingent upon receiving financing. The Offer will allow
those holders desiring to receive cash for their Shares an opportunity to do so
at a premium to the pre-Offer market price without the usual transaction costs
associated with open market sales.
THE BOARD OF DIRECTORS OF AAP (WITH MESSRS. RICHARD M. DEVOS, JR., DOUGLAS
L. DEVOS AND STEPHEN A. VAN ANDEL NOT PARTICIPATING) (THE "DISINTERESTED
DIRECTORS") HAS UNANIMOUSLY (1) DETERMINED THAT THE OFFER AND THE AMALGAMATION
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES, OTHER THAN
NON-TENDERED SHARES (THE "PUBLIC SHAREHOLDERS"), (2) APPROVED THE AMALGAMATION
AGREEMENT AND (3) RESOLVED TO RECOMMEND THAT THE PUBLIC SHAREHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER. SEE "SPECIAL
FACTORS -- BACKGROUND OF THE OFFER; RECOMMENDATION OF THE SPECIAL COMMITTEE AND
THE DISINTERESTED DIRECTORS; REASONS FOR THE RECOMMENDATION; OPINION OF
FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE" FOR FURTHER INFORMATION REGARDING
THE MATTERS CONSIDERED BY THE SPECIAL COMMITTEE AND THE DISINTERESTED DIRECTORS
IN REVIEWING THE TERMS OF AND FAIRNESS OF THE OFFER.
AAP has advised Purchaser that Goldman, Sachs & Co., an independent
investment bank and financial advisory firm (the "Financial Advisor" or "Goldman
Sachs"), has delivered to the Special Committee, its written opinion that, as of
the date of the Amalgamation Agreement, the Purchase Price in cash to be
received by the Public Shareholders in the Offer and the Amalgamation or the
compulsory purchase of the remaining Shares pursuant to Section 103 of the
Bermuda Act as contemplated by the Amalgamation Agreement is fair from a
financial point of view to such holders. See "Special Factors -- Background of
the Offer; Recommendation of the Special Committee and the Disinterested
Directors; Reasons for the Recommendation; Opinion of the Financial Advisor to
the Special Committee" for further information concerning the opinion of Goldman
Sachs.
AAP has filed with the Securities and Exchange Commission (the
"Commission") a Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), a copy of which is enclosed.
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All Shares validly tendered and not withdrawn on or prior to the Expiration
Date (as defined in "The Offer -- Number of Shares; Expiration and Extension of
Offer") will be purchased at the Purchase Price on the terms and subject to the
conditions of the Offer. Certificates representing Shares not validly tendered
and Shares validly withdrawn on or prior to the Expiration Date will be returned
without delay to the applicable holder. See "The Offer -- Number of Shares;
Expiration and Extension of Offer."
Tendering holders will not be obligated to pay brokerage commissions or
solicitation fees. Such brokerage commissions and solicitation fees, if
applicable, will be paid by Purchaser as expenses of the Offer. Purchaser will
pay all fees and certain expenses of the Dealer Managers, the Information Agent
and the Depositary incurred in connection with the Offer. See "The Offer -- Fees
and Expenses." However, any U.S. backup withholding taxes which may be required
to be withheld will be withheld from the Purchase Price to be paid to each
holder pursuant to the Offer. See "The Offer -- Acceptance for Payment of Shares
and Payment of Purchase Price," and "The Offer -- U.S. Federal Income Tax
Consequences."
Participants in the Direct Purchase and Sale of Amway Asia Pacific Ltd.
Common Stock (the "Dividend Reinvestment Plan") may tender part or all of the
shares credited to their accounts in the Dividend Reinvestment Plan by following
Instruction 10 of the Letter of Transmittal and submitting the Letter of
Transmittal to the Depositary. Participants in the Amway Corporation Profit
Sharing and 401(k) Plan ("401(k) Plan") may tender part or all of the shares
credited to their accounts in the 401(k) Plan by submitting the letter of
transmittal and the election form included in the materials sent by the trustee
in the 401(k) Plan. Participants may only use the letter of transmittal sent to
participants by the trustee for the 401(k) Plan to tender Shares credited to a
401(k) Plan account. See "The Offer -- Procedures for Tendering
Shares -- 401(k) Plan."
AAP has advised Purchaser that, as of September 30, 1999, there were
approximately 56,441,960 shares of Common Stock (including 40,954.247 shares of
Common Stock held in the 401(k) Plan) issued and outstanding. According to AAP's
records, there were approximately 2,166 holders of record of the issued and
outstanding shares of Common Stock.
AAP has advised Purchaser that AAP's Board of Directors has taken action so
that option rights to receive shares of Common Stock under the Amway Asia
Pacific Ltd. Long-Term Incentive Plan and the Amway Asia Pacific Ltd. Outside
Director Long-Term Award Plan (collectively, the "Option Plans") at the time of
the Amalgamation or consummation of the compulsory purchaser will be converted
into the right to receive cash in accordance with the terms of the Option Plans.
The determination of the amount of cash to be paid to participants in the Option
Plans will be based on the Black-Scholes Option Pricing Model.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED OR SUBJECT TO ANY OTHER CONDITIONS.
The United States federal income tax consequences of a sale by a holder of
Shares pursuant to the Offer depend upon the facts and circumstances of the
sale. U.S. backup withholding taxes may, in circumstances described herein, be
required to be withheld from the Purchase Price of any sale of Shares. See "The
Offer -- U.S. Federal Income Tax Consequences." EACH HOLDER IS URGED TO CONSULT
AND RELY ON SUCH HOLDER'S OWN TAX ADVISOR WITH RESPECT TO THE FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES TO SUCH HOLDER OF A SALE OF SHARES PURSUANT
TO THE OFFER.
The principal trading market for the Common Stock is the NYSE. On November
12, 1999, the last full NYSE trading day prior to the public announcement of the
Offer, the closing sales price of the Common Stock as reported on the NYSE was
$11.75 and on November 16, 1999, the last full day of trading prior to the
Commencement Date for which quotations could be obtained, the closing sale price
was $17.81. The Purchase Price is $18.00 per share. On November 15, 1999, the
last full ASX trading day prior to the public announcement of the offer, the
closing sales price of the Common Stock as reported on the ASX was AU$17.50 and
on November 17, 1999, the last full day of trading prior to the Commencement
Date the closing sale price was AU$30.0. See "The Offer -- Market Information;
Dividends and Dividend Policy" for historical prices of the Common Stock on the
NYSE and the ASX. HOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
COMMON STOCK.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH YOU SHOULD READ CAREFULLY BEFORE YOU MAKE ANY DECISION WITH
RESPECT TO THE OFFER.
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SPECIAL FACTORS
1. BACKGROUND OF THE OFFER; RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE
DISINTERESTED DIRECTORS; REASONS FOR THE RECOMMENDATION; OPINION OF FINANCIAL
ADVISOR TO THE SPECIAL COMMITTEE.
Background of the Offer. Over the last several years, a variety of
alternatives have been considered by the Principal Shareholders and AAP
management to increase shareholder value, while at the same time enhance the
operations, results and business prospects of AAP. Of particular focus was the
relatively illiquid and, at times, volatile market for the Common Stock. For
example, during the second half of 1996, AAP considered a possible secondary
offering in an effort to improve liquidity and expand ownership of shares of
Common Stock by investors. After consideration of this proposal, AAP's Board of
Directors, in January 1997, authorized AAP to conduct a secondary offering.
After submission of a registration statement to the Commission, AAP's Board of
Directors decided to delay this secondary offering due to deterioration in the
market conditions. Following the delay of the proposed secondary offering, AAP
authorized open market repurchases by AAP of shares of Common Stock valued up to
$50 million in the hope that this action would create value for shareholders.
Also considered was a realignment of AAP with other Amway affiliates either
by means of the combination of AAP and such other markets or the acquisition by
AAP of other Amway affiliates in the region. In particular, beginning in April
1997, AAP, representatives of Amway and financial and legal advisors reviewed
the possibility of forming a holding company which would own both Amway Japan
Limited, a Japanese corporation and a publicly held affiliate of Amway ("AJL"),
and AAP. In January 1998, there was a discussion regarding the possible creation
of such a holding company to acquire both AAP and AJL at a meeting of AAP's
Board of Directors. Following a presentation in April 1998 by financial advisors
regarding a proposed holding company structure, this alternative was rejected as
not feasible because of certain legal, structural and tax issues and accounting
concerns.
Starting in June of 1997, the Asian currency crisis impacted a number of
AAP's markets, particularly Malaysia, Thailand and Taiwan and to a lesser extent
Australia and New Zealand. This crisis exacerbated the concerns regarding share
value, market volatility and lack of liquidity for shareholders. In March of
1998, representatives of AAP and Amway, as well as legal, tax and financial
advisors, met to discuss alternatives to address share value, market volatility,
lack of liquidity and AAP's operating results. In order to address operating
results, AAP adopted more stringent cost cutting programs, as well as an
expansion of local sourcing opportunities. Further, compounding the market
volatility and adversely affecting operating results was the ban in China on
direct selling in the spring of 1998. Following the discussions in March of
1998, an alternative that was considered was whether shareholder value might be
best served by taking AAP private. As a private company, AAP would have greater
flexibility to invest in its future, realign the business relationship with
Amway and other Amway affiliates and allow senior management of Amway and AAP to
focus on the long-term interests of AAP without concern for the impact that any
action might have on operating results or share price in the short-term. In
addition, a going private transaction would minimize the impact of the legal,
structural and tax issues and accounting concerns associated with the
transactions previously considered as well as reduce costs through the
elimination of public company status.
Throughout 1998, senior executives of AAP and Amway, along with their
financial, legal, tax and accounting advisors worked on various aspects of a
potential going private transaction focusing, in particular, on legal,
structural, tax, accounting and other regulatory issues. During the second
calendar quarter of 1998, representatives of Amway and Morgan Stanley & Co.
Incorporated ("Morgan Stanley") had discussions regarding the financing of such
transaction. These earlier efforts did not result in any specific proposal or
range of proposals being made to AAP by or on behalf of the Principal
Shareholders, Amway or any other controlled company. From August through October
1998, representatives of Amway on behalf of the Principal Shareholders and its
legal and financial advisors began to have discussions with J.P. Morgan
Securities Inc. ("J.P. Morgan") regarding various financing options for a going
private transaction. A decision was made not to proceed at that time.
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<PAGE> 8
In July and August of 1999, senior executives of Amway and Morgan Stanley
prepared a strategic and financial analysis of a proposed going private
transaction as a part of a broad based realignment of entities controlled by the
Principal Shareholders, including Amway, AJL and AAP. The proposed transaction
was presented to the Principal Shareholders on August 11 and August 20.
Following these meetings, the Principal Shareholders instructed senior
executives of Amway to continue to analyze going private transactions involving
AJL and AAP. In addition, Morgan Stanley and J.P. Morgan were retained following
these meetings by the Principal Shareholders to advise them on, and to explore
opportunities for, a potential transaction and financing alternatives for any
such transaction.
On behalf of the Principal Shareholders, senior executives of Amway, Morgan
Stanley, J.P. Morgan, Jones Day, Reavis & Pogue ("Jones Day"), as legal
advisors, and White & Case LLP ("White & Case"), as tax advisors, met in Chicago
on September 2, 1999, to discuss various aspects of a potential transaction,
including financing, structures, due diligence and other issues.
On September 10, 1999, senior executives of Amway met with the independent
members of the Board of Directors of AAP to discuss a potential going private
transaction. At this meeting, the participants discussed, among other things,
the rationale for the transaction, the desirability of establishing a special
committee of independent directors of AAP to consider such a transaction, the
need for independent legal and financial advisors and other business issues.
Senior executives of Amway and their legal and financial advisors,
including Morgan Stanley, J.P. Morgan, Jones Day and White & Case, met in Tokyo
the week of September 13, 1999 to conduct due diligence, to review a broad range
of issues involved in a going private transaction, including legal, tax,
accounting, regulatory and financing, and to discuss process issues. In
addition, these representatives had telephone conferences with certain other
senior executives of AAP. AAP's five-year financial projections were shared with
the financial advisors at this time.
The Principal Shareholders met on September 21, 1999, in Ada, Michigan to
review the status of a potential transaction with their financial advisors. At
this meeting, Morgan Stanley and J.P. Morgan reviewed preliminary financial and
strategic conclusions. Based on a discounted cash flow analysis, a review of
comparable companies and precedent transactions, and a trading analysis, Morgan
Stanley and J.P. Morgan discussed with the Principal Shareholders and senior
executives of Amway possible financial terms of a going private transaction.
Following this meeting, the Principal Shareholders concluded that a going
private transaction was the best way to enhance shareholder value and to
implement the various changes believed necessary to effect a long term
improvement in the operating results of Amway and all of its affiliates,
including AAP. As a result, the Principal Shareholders instructed senior
executives of Amway and their advisors to continue working towards a potential
going private transaction.
On September 29, 1999, a representative of Amway and Eoghan McMillan, a
director of AAP and proposed chairman of the Special Committee (as defined
below), had a telephone conversation regarding the decision of the Principal
Shareholders to proceed with the transactions and discussed with Mr. McMillan
the retention of independent legal and financial advisers for the Special
Committee. Following these discussions, AAP and Purchaser executed a
confidentiality agreement related to the going private transaction.
On October 2, 1999, the Board of Directors of AAP formed the Special
Committee, comprised of Eoghan M. McMillan, Jack C.K. So and John C.C. Chan (the
"Special Committee"), each an independent, non-employee member of the Board of
Directors of AAP. The Special Committee was formed for the purpose of evaluating
the terms of any proposed going private transaction and was empowered to review,
evaluate and, if deemed appropriate, negotiate on behalf of the Company the
terms of a possible transaction and to report its actions and conclusions to the
Board of Directors. The Special Committee further was authorized to retain
independent legal and financial advisors in connection with the performance of
its mandate.
During the week of October 4, 1999, Mr. McMillan contacted Goldman, Sachs
and Cleary, Gottlieb, Steen & Hamilton ("Cleary") to discuss retention of these
firms by AAP to assist the Special Committee in analyzing the proposed
transaction. Goldman Sachs met with the Special Committee, Mr. McMillan and
senior executives of AAP during the week of October 11 to conduct financial due
diligence.
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<PAGE> 9
In September and October 1999, senior executives of Amway, in consultation
with the Principal Shareholder's tax and legal advisors, addressed structural
issues and the terms of the proposed loans to Purchaser to fund the Offer.
On October 13, 1999, representatives of the Principal Shareholders
delivered to Mr. McMillan a written proposal informing AAP that the Principal
Shareholders were interested in discussing a transaction to acquire all the
publicly traded shares of AAP. This written proposal indicated that the
Principal Shareholders would propose to purchase the Shares for $15.50 per share
(the "Proposal").
On October 15, 1999, the Special Committee met with representatives of
Goldman Sachs, Cleary and Conyers, Dill & Pearman ("Conyers Dill"), Bermuda
counsel to AAP, to discuss their duties under applicable law with respect to the
Proposal and appropriate procedures for responding to it.
On October 20, 1999, the Special Committee met, together with
representatives of Goldman Sachs, Cleary and Conyers Dill. At this meeting,
representatives of Goldman Sachs summarized the results of their due diligence
review and presented certain preliminary analyses they had performed with
respect to AAP and the Shares. Later the same day, a representative of Goldman
Sachs communicated to a representative of Morgan Stanley that at that time and
based on preliminary analysis, the Special Committee was continuing to review
the Proposal and were not prepared to provide a response to the Proposal.
Goldman Sachs reported to Morgan Stanley that the Special Committee wanted more
time to consider the Proposal in order, among other things, to allow AAP to
review with the Special Committee projections of AAP's future financial results.
Following the discussion with Goldman Sachs, Morgan Stanley consulted with the
representatives of the Principal Shareholders and their advisors; and management
of AAP had discussions with Mr. McMillan and Goldman Sachs regarding the
projections.
On October 22, 1999, the Special Committee met by teleconference with
representatives of Goldman Sachs and Cleary. Goldman Sachs reported on its
conversation with Morgan Stanley and reviewed certain further preliminary
analyses they had performed taking into account certain information received
during conversations with the Special Committee and representatives of Amway.
On October 27, 1999, advisers to the Principal Shareholders, senior
executives of Amway, Jones Day and White & Case met in Washington, D.C. to
address structural, tax, accounting and regulatory issues relating to the
proposed transaction. Among the structural issues discussed during this meeting
and in follow-up discussions was the desirability of a voting and shareholder
agreement among the Principal Shareholders relating to the Amalgamation.
On October 27, 1999, the Special Committee met via teleconference, together
with representatives of Goldman Sachs and Cleary. Goldman Sachs reviewed its
preliminary valuation and financial analyses. After discussing these analyses,
the Special Committee directed Goldman Sachs to inform the Principal
Shareholders that the Special Committee would be prepared to consider a revised
offer price of $18.00 per Share.
On October 28, 1999, representatives of Goldman Sachs delivered to
representatives of Morgan Stanley the Special Committee's response to the
Proposal, indicating the Special Committee was initially willing to consider the
Proposal if the Principal Shareholders would consider a purchase price of $18.00
per share. Morgan Stanley consulted with representatives of the Principal
Shareholders and their advisers in order to prepare a response to the Special
Committee's reply.
While negotiations regarding the offer price continued, the representatives
of the Principal Shareholders and the Special Committee and their respective
advisors negotiated and finalized the terms of the Amalgamation Agreement.
On November 11, 1999, the Principal Shareholders delivered to Mr. McMillan
a written offer meeting the $18.00 per share price proposed by the Special
Committee on October 28, 1999. The written offer was conditioned upon acceptance
by the disinterested directors of the Board of Directors of AJL of an offer
proposal made to it by the Principal Shareholders on the same day.
On November 12, 1999, the Special Committee met via teleconference to
discuss the revised Proposal, together with representatives of Goldman Sachs,
Cleary and Conyers Dill. Based upon the financial and
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<PAGE> 10
valuation analyses which Goldman Sachs had performed with respect to the
Proposal and previously presented to the Special Committee, Goldman Sachs
expressed an oral opinion as of the date of the meeting that the $18.00 in cash
proposed to be received by the Public Shareholders in the Offer and the
Amalgamation or the compulsory purchase of Shares pursuant to the Amalgamation
Agreement, is fair from a financial point of view to such holders. See
" -- Opinion of Financial Advisor to the Special Committee." Following
discussion, the Special Committee then adopted a resolution stating that the
Special Committee has determined that the Offer and the Amalgamation are fair to
and in the best interests of the Public Shareholders, and further resolved to
recommend to the Board of Directors that it approve the Amalgamation Agreement
and recommend that the Public Shareholders accept the Offer and tender their
Shares in response to the Offer. Goldman Sachs delivered its written opinion
dated November 15, 1999 confirming its oral opinion.
Immediately following the November 12, 1999 Special Committee meeting, the
Board of Directors of AAP (without the participation of Messrs. Richard M.
DeVos, Jr., Douglas L. DeVos and Stephan A. Van Andel), held a meeting via
teleconference, together with representatives of Goldman Sachs, Cleary and
Conyers Dill. Mr. McMillan described the background of the written offer to the
other Disinterested Directors and reported on the Special Committee's
recommendation with regard to the written offer. Following this report,
representatives of Cleary reviewed the terms of the Amalgamation Agreement
submitted with the written offer leading to the Proposal, representatives of
Conyers Dill reviewed the legal standards applicable to their deliberations
under Bermuda law and representatives of Goldman Sachs presented the financial
and valuation analyses which they had performed with respect to the written
offer and informed the Disinterested Directors that it had given its oral
fairness opinion to the Special Committee. The meeting of the Board of Directors
was then adjourned and reconvened on November 15, 1999.
At the reconvened meeting, after further discussion, the Disinterested
Directors unanimously determined that the Offer and Amalgamation are fair to
and, in the best interest, of the Public Shareholders, approved the Amalgamation
Agreement and resolved to recommend that the Public Shareholders accept the
Offer and tender their Shares in response to the Offer. See "-- Recommendation
of the Special Committee and the Disinterested Directors" and "-- Reasons for
the Recommendation" for a description of certain of the material factors
considered by the Disinterested Directors in connection with their
recommendation.
Recommendation of the Special Committee and the Disinterested Directors. As
described below, the Special Committee unanimously (1) determined that the Offer
and the Amalgamation are fair to, and in the best interests of, the Public
Shareholders and (2) recommended to the Disinterested Directors that they
approve the Amalgamation Agreement and recommend that the Public Shareholders
accept the Offer and tender their Shares in response to the Offer.
The Disinterested Directors have unanimously (1) determined that the Offer
and the Amalgamation are fair to, and in the best interests of, the Public
Shareholders; (2) approved the Amalgamation Agreement; and (3) determined to
recommend that Public Shareholders accept the Offer and tender their Shares in
response to the Offer.
Reasons for the Recommendation of the Special Committee and the
Disinterested Directors. The Special Committee considered the following material
factors, among others, in connection with making its determinations and
recommendations:
- The opinion of Goldman Sachs, the independent financial advisor to the
Special Committee, that, as of the date of such opinion, the Purchase
Price in cash to be received by the Public Shareholders in the Offer and
the Amalgamation or the compulsory purchase of the remaining Shares
pursuant to Section 103 of the Bermuda Act as contemplated by the
Amalgamation Agreement is fair from a financial point of view to such
holders and the financial and valuation analyses presented by Goldman
Sachs to the Special Committee in connection with its opinion. THE PUBLIC
SHAREHOLDERS ARE URGED TO READ GOLDMAN SACHS' OPINION IN ITS ENTIRETY,
WHICH IS ATTACHED AS SCHEDULE II TO THIS OFFER TO PURCHASE.
- The current and historical market prices for the Shares and the fact that
the Purchase Price represents a premium of approximately 53.2% over the
per share closing price of the Shares on November 12, 1999, the last
trading day prior to the public announcement of execution of the
Amalgamation
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Agreement and approximately 67.2% over the average price of the Shares
over the 52-week period prior to November 12, 1999. The Special Committee
also noted that the Purchase Price represents a multiple of 39.2x 1999
EBIT and 81.4x 1999 net income.
- The relatively low trading volume of the Shares and the fact that the
public float for the Shares consists of only approximately 15% of the
outstanding Shares. The Special Committee considered the uncertainty, in
the absence of the Offer, that the Public Shareholders would have the
opportunity in the foreseeable future to sell their Shares in the open
market for prices equal to or in excess of the Purchase Price.
- The Principal Shareholders' stated unwillingness to sell their Shares to
a third party, as well as the commercial relationships between AAP and
Amway, factors effectively precluding a sale of control of AAP or another
transaction that might be more favorable to AAP and the Public
Shareholders. In view of these factors, the Special Committee and Goldman
Sachs were not authorized to, and did not, solicit, nor did AAP receive,
third party indications of interest to acquire AAP as a whole or any of
its businesses, nor did they give any significant consideration to
theoretical prices which a hypothetical third party purchaser might be
willing to pay to acquire AAP.
- The commercial relationships between AAP and Amway and the value to the
Principal Shareholders of consummating the Offer and the Amalgamation,
including greater flexibility to invest in AAP, to realign AAP's business
relationship with Amway and to allow senior management of Amway and AAP
to focus on long-term interests without the short-term influence of the
equity markets.
- The recent and historical results of operations and financial condition
and the business strategy and prospects of AAP and recent and historical
economic, political and other developments in the direct distribution
industry and in the countries in which AAP conducts its business. In
particular, with respect to AAP's business prospects, the Special
Committee considered AAP's potential for expansion into new and within
existing markets, especially China, and the opportunities and risks
associated with those markets. The Special Committee also considered the
volatility of AAP's financial results in recent periods related to its
dependence on Asian regional markets.
- The fact that consummation of the transaction will preclude the Public
Shareholders from participating in any future growth of AAP. In the view
of the Special Committee, however, this loss of opportunity is adequately
reflected in the Purchase Price.
- The negotiations between the Special Committee and its representatives
and the Principal Shareholders and their representatives, including that
the negotiations that resulted in (1) an increase from the initial
proposed price of $15.50 per share at which Purchaser was prepared to
acquire the Shares, to the $18.00 per share Purchase Price and (2) the
Special Committee's belief, confirmed by Goldman Sachs in their
discussions with Morgan Stanley, that the Purchase Price was the highest
price that could likely be obtained from the Principal Shareholders under
the circumstances.
- The terms and conditions of the Amalgamation Agreement, the Offer and the
structure of the transaction generally, including that (1) the
transaction includes a first-step cash tender offer, enabling Public
Shareholders who accept the Offer to liquidate their investment in AAP
without waiting for the Amalgamation to be consummated, (2) Public
Shareholders who do not tender their Shares pursuant to the Offer will
receive in the Amalgamation the same cash price per share paid by the
Purchaser in the Offer (unless they elect to exercise appraisal rights
under Bermuda law), (3) the Offer and the Amalgamation are not subject to
any significant conditions and in particular that there is no financing
condition attached to either the Offer or the Amalgamation and (4)
without the consent of the Special Committee, the Purchaser may not
reduce the Purchase Price, impose additional conditions to the Offer or
amend or modify any other term of the Offer in a manner adverse to the
holders of the Shares.
- The availability of appraisal rights under Bermuda law pursuant to which
Public Shareholders who do not accept the Offer and properly dissent from
the Amalgamation may have the fair value of their Shares judicially
determined.
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In reaching their determinations referred to above, the Disinterested
Directors considered the following factors, each of which, in the view of the
Disinterested Directors, supported such determinations: (1) the recommendations
of the Special Committee; (2) the factors referred to above considered by the
Special Committee, and (3) the fact that the Purchase Price and the terms and
conditions of the Amalgamation Agreement were the result of negotiations among
the Special Committee and the Principal Shareholders and their respective
advisors.
The Disinterested Directors, including the members of the Special
Committee, also believe that the Offer and the Amalgamation are procedurally
fair because, among other things: (1) the Special Committee consisted of three
independent directors who are not employees of AAP or affiliated with the
Principal Shareholders and were appointed by the Directors to represent the
interests of the Public Shareholders; (2) the Special Committee retained and
received advice from independent legal counsel; (3) the Special Committee
retained an independent financial advisor, Goldman Sachs, and received financial
advice and assistance from Goldman Sachs in evaluating and negotiating a
potential transaction with the Purchaser, as well as an opinion from Goldman
Sachs.
The Disinterested Directors and the Special Committee recognized that
neither the Offer nor the Amalgamation was structured to require the approval of
a majority of the Shareholders of AAP, excluding the Principal Shareholders and
that the Principal Shareholders currently have sufficient voting power to
approve the Amalgamation without the affirmative vote of any other Shareholders
of AAP.
The foregoing discussion of the information and factors considered by the
Special Committee and the Disinterested Directors, respectively, is not meant to
be exhaustive, but includes the material factors considered by each body in
reaching its conclusions and recommendations. In view of the variety of factors
considered in reaching their determinations, neither the Special Committee nor
the Disinterested Directors found it practicable to, and did not, quantify or
otherwise assign relative weights to the specific factors considered in reaching
their respective conclusions and recommendations. In addition, individual
members of each body may have given different weights to different factors.
The opinions, views, beliefs and recommendations of the Disinterested
Directors, including members of the Special Committee, and of their advisors and
other individuals that made statements to them, do not purport to be the only
possible views on the Offer and the Amalgamation and no one view is presented
here as objectively correct. Except for the recommendation made by the
Disinterested Directors, no person or entity, including the legal or financial
advisors to the Special Committee, is making any recommendation to the Public
Shareholders as to whether they should tender Shares in response to the Offer.
Although the Disinterested Directors have made a recommendation, the adequacy,
fairness and acceptability of the Offer is for each Public Shareholder to
decide. Consequently, the Disinterested Directors strongly urge the Public
Shareholders to consider all available information.
Opinion of Financial Advisor to the Special Committee. Goldman Sachs has
acted as financial advisor to the Special Committee. On November 12, 1999,
Goldman Sachs delivered to the Special Committee its oral opinion, subsequently
confirmed in writing as of November 15, 1999, that as of such date the Purchase
Price in cash to be received by the Public Shareholders in the Offer and the
Amalgamation or compulsory purchase of the remaining Shares under Section 103 of
the Bermuda Act as contemplated by the Amalgamation Agreement is fair from a
financial point of view to such holders.
THE FULL TEXT OF THE GOLDMAN SACHS OPINION, DATED AS OF NOVEMBER 15, 1999,
WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED AND MATTERS
CONSIDERED IN, AND THE LIMITATIONS ON, THE REVIEW UNDERTAKEN IN CONNECTION WITH
ITS OPINION, IS ATTACHED HERETO AS SCHEDULE II. The Goldman Sachs opinion was
provided for the information and assistance of the Special Committee in
connection with its consideration of the Offer and the transactions contemplated
by the Amalgamation Agreement. It is does not constitute a recommendation to any
holder of Shares as to whether or not such holder should accept the Offer or
should vote in respect of the Amalgamation. The summary of the Goldman Sachs
opinion below is qualified by its full text. Shareholders of AAP should read the
Goldman Sachs opinion in its entirety.
9
<PAGE> 13
In connection with its opinion, Goldman Sachs reviewed, among other things:
the Amalgamation Agreement; Annual Reports to Stockholders and Annual Reports on
Form 20-F of AAP for the five fiscal years ended August 31, 1998; certain
interim reports to shareholders and Quarterly Reports on Form 6-K of AAP;
certain other communications from AAP to its shareholders; and certain internal
financial analyses and forecasts for AAP prepared by its management. Goldman
Sachs also held discussions with members of the senior management of AAP
regarding its past and current business operations, financial condition and
future prospects. In addition, Goldman Sachs reviewed the reported price and
trading activity for the Shares, compared certain financial and stock market
information for AAP with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations and performed such other studies and analyses as it
considered appropriate.
Goldman Sachs has relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and has assumed such accuracy and
completeness for purposes of rendering its opinion. In that regard, Goldman
Sachs has assumed with the consent of the Special Committee that the internal
financial forecasts prepared by the management of AAP have been reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of AAP. In addition, Goldman Sachs has not made an independent
evaluation or appraisal of the assets and liabilities of AAP or any of its
subsidiaries and Goldman Sachs has not been furnished with any such evaluation
or appraisal. Goldman Sachs notes that the Principal Shareholders own a majority
of the Shares, and that the Principal Shareholders have informed Goldman Sachs
and the Special Committee that the Principal Shareholders will not sell their
Shares to any third party. Accordingly, Goldman Sachs was not requested to
solicit, and did not solicit, interest from other parties with respect to an
acquisition of or other business combination with AAP.
The following is a summary of the material financial analyses used by
Goldman Sachs in connection with providing its written opinion to the Special
Committee. Some of the summaries of the financial analyses include information
presented in tabular format. The tables must be read together with the text
accompanying each summary.
Review of Summary Financial Information. Goldman Sachs reviewed certain
historical financial information for AAP for the years ended August 31, 1994
through 1999, and estimates prepared by AAP's management, in conjunction with
the SEC Reporting and Investor Relations Group of Amway, of AAP's financial
performance for the years ended August 31, 2000 through 2004.
Historical Stock Price Performance. Goldman Sachs reviewed the historical
closing stock prices and trading volume of the Shares for the period December
15, 1993 (the date of the Company's initial public offering (the "IPO")) through
October 29, 1999, and for the three-year, one-year and six-month periods ended
October 29, 1999. Goldman Sachs observed that the closing stock prices for
Shares have declined gradually from a high of $49.50 on January 21, 1997 to an
historic low of $7.125 on April 22, 1999. Over the one-year period ending
October 29, 1999 the Shares traded between a high of $14.375 on July 26, 1999
and a low of $7.125 on April 22, 1999. Goldman Sachs also reviewed the indexed
stock price of the Shares against a composite of two selected comparable public
companies in Asia, a composite of six selected comparable public companies in
the U.S., and a composite of five selected comparable public companies in Japan.
Future Trading Range Analysis. Assuming a range of forward price to
earnings ratios (20-30x) in four years' time and AAP's estimated 2004 earnings
per share, Goldman Sachs calculated a range of potential future stock prices for
AAP in November 2003. Assuming required annual returns to equity investors of 10
to 14% (assuming 2% in annual dividend yield with the remainder consisting of
annual share price appreciation), Goldman Sachs calculated the present value of
these potential future stock prices. The analysis indicated a range of $8.40 to
$14.57 per share today. Goldman Sachs also observed that, if an investor were to
invest in the Shares today at $18.00 per share, and exited the investment in
November 2003 at today's forward price to earnings ratio (25x on AAP's estimated
2000 earnings per share) as applied to AAP's current estimated 2004 earnings per
share, the annual return to such investor would be approximately (0.1)% over the
next four-year period. In addition, Goldman Sachs also observed that if an
investor were to invest in the Shares today at $18.00 per share, either AAP's
forward price earnings ratio or its estimated 2004 earnings per share at time of
10
<PAGE> 14
exit in November 2003 must be greater by approximately 60% than current levels
for such investor to obtain an annual return of 12% (assuming 2% annual dividend
yield) over the next four-year period.
Historical Public Market Valuation Performance. Based on historical prices
and reported EBIT and net debt, Goldman Sachs observed the market's valuation of
AAP, as defined by enterprise value as a multiple of last fiscal year EBIT, to
have a mean of 14.8x over the last 5 years. Similarly, Goldman Sachs observed
the historical equity multiple of International Broker Estimate System's
projected one-year forward EPS to have a mean of 23.9x over the same period.
AAP's historical dividend yield reflected a mean of 3.4% over the same period.
Transaction Premiums. Goldman Sachs observed that, based on the proposed
price per share of AAP Common Stock of $18.00, the following premiums were
applicable as of November 10, 1999:
<TABLE>
<CAPTION>
PERIOD TRANSACTION PREMIUM
------ -------------------
<S> <C>
November 10 market price................................. 55.7%
52-Week Average.......................................... 67.2%
52-Week High............................................. 24.7%
52-Week Low.............................................. 152.6%
All-Time High............................................ (63.6)%
</TABLE>
Goldman Sachs compared the premium over November 10, 1999 closing price
with premiums paid in selected tender offers in Japan, Asia and the United
States, and selected minority buyouts in the United States (measured as premium
over closing price one day prior to announcement). Mean premiums paid in recent
Asia tender offers was 23.0% (median 18.2%) for transactions including Australia
and New Zealand, which accounted for 75.6% of total Asia deals, and 8.6% (median
6.1%), excluding Australia and New Zealand. Premiums paid in recent Japanese
transactions ranged from a high of 95.2% to a low of 3.3%, with a mean of 30.2%
and a median of 18.5%. Mean premiums paid in recent U.S. tender offers and
selected minority buyout transactions were 29.2% (median 33.5%) and 26.0%
(median 21.4%), respectively. Additionally, in the case of minority buyout
offers which were increased subsequent to the initial offer, the mean increase
was 10.9% (median 8.5%).
Discounted Cash Flow Analysis. Based on estimates provided by AAP
management, Goldman Sachs performed a discounted cash flow analysis for the
years ended August 31, 2000 to 2004. Using a range of discount rates of 10% to
14%, based on an estimated cost of capital for AAP, and a range of terminal
multiples of 2004 EBIT of 10x to 20x, Goldman Sachs calculated a range of net
present values of estimated future cash flows of AAP as of November 30, 1999.
Based on these parameters, Goldman Sachs calculated the enterprise value of AAP
to range from $368 million to $806 million and its equity value per share to
range from $8.36 to $16.12.
Comparison of Selected Companies. Goldman Sachs reviewed and compared
certain financial information relating to AAP to corresponding financial
information, ratios and public market multiples of the fifteen comparable public
companies (eight in the U.S., two in Asia and five in Japan): Amway Japan
Limited, Avon Products, Inc., Nu Skin Enterprises, Inc., Tupperware Corporation,
Thomas Nelson, Inc., Herbalife International, Inc., Rexall Sundown, Inc.,
Nature's Sunshine Products, Inc., USANA, Inc., Cosway Corporation Berhad, Amway
(Malaysia) Holdings Berhad, Avon Products Co., Ivy Cosmetics Corporation, Noevir
and Shaklee Japan. Among other analyses, for each of the comparison companies,
Goldman Sachs calculated the ratio of their enterprise value as of November 10,
1999 to their respective revenues, EBITDA and EBIT during the most recent
12-month period and the ratios of their stock prices as of November 10,
11
<PAGE> 15
1999 to projected earnings per share for years 2000 and 2001. Results of those
analyses are summarized as follows:
ENTERPRISE VALUE MULTIPLES
<TABLE>
<CAPTION>
REVENUES EBITDA EBIT
-------- ------ ----
<S> <C> <C> <C>
AAP......................................................... 1.1x 13.9x 20.7x
U.S. Comparables:
Low.................................................... 0.2x 1.8x 2.3x
High................................................... 1.5 11.3 12.7
Mean................................................... 0.8 5.6 7.1
Median................................................. 0.8 5.6 6.5
Asia Comparables:
Low.................................................... 1.1x 14.3x 21.0x
High................................................... 2.9 20.7 21.6
Mean................................................... 2.0 17.5 21.3
Median................................................. 2.0 17.5 21.3
Japan Comparables:
Low.................................................... 0.5x 3.0x 3.6x
High................................................... 1.5 11.5 26.4
Mean................................................... 0.8 8.1 13.0
Median................................................. 0.7 10.1 10.7
</TABLE>
P/E MULTIPLES*
<TABLE>
<CAPTION>
2000E 2001E
----- -----
<S> <C> <C>
AAP:........................................................ 46.3x 17.8x
U.S. Comparables:
Low.................................................... 6.5x 1.5x
High................................................... 15.5 12.6
Mean................................................... 10.1 7.7
Median................................................. 10.1 8.2
Asia Comparables:
Low.................................................... 19.2x 15.9x
High................................................... 19.2 15.9
Mean................................................... 19.2 15.9
Median................................................. 19.2 15.9
Japan Comparables:
Low.................................................... 8.7x 15.3x
High................................................... 32.5 15.3
Mean................................................... 23.4 15.3
Median................................................. 29.1 15.3
</TABLE>
- ---------------
* Fiscal year-end except for U.S. companies, for which data has been
calendarized.
Goldman Sachs' comparative analysis also included a comparison of
International Broker Estimate System's estimated five-year earnings per share
rates, and comparisons of historical annual sales growth, EBIT
12
<PAGE> 16
margins for the most recent 12-month period and return on common equity. The
results of such analyses are summarized as follows:
- The International Broker Estimate System's estimated five-year projected
earnings per share growth for the comparison companies ranged from 2.0%
to 20.0%, with a median of 13.3% and mean of 11.5%, compared to 17.5% for
AAP.
- Historical annual sales growth for the comparison companies ranged from
(4.8)% to 99.3%, with a mean of 18.3% and median 9.4%, compared to (3.9)%
for AAP.
- EBIT margins for the comparison companies ranged from 1.8% to 17.5%, with
a mean of 11.0% and a median of 11.9%, compared to 5.2% for AAP, down
from a peak of 18.8% in 1993.
- Return on common equity for the comparison companies ranged from (0.3)%
to 55.6%, with a mean of 19.1% and median of 17.8%, compared to 8.5% for
AAP.
Comparison of Selected Transactions. Goldman Sachs reviewed certain
publicly available information relating to three selected transactions in the
direct sales industry from 1992 to 1999. The premium over market price (one day
prior to announcement) in such transactions were 39%, 28% and 19.1%,
respectively, compared to 55.7% for AAP (premium over November 10, 1999 closing
price). Ratio of offer price to the 52-week high ranged from (41)% to (0)% and
to 52-week low from 127% to 60%, compared to 24.7% and 152.6% for AAP.
Enterprise value as a multiple of last 12-month sales, EBIT and net income for
each transaction, and comparable figures for AAP, are as follows:
<TABLE>
<CAPTION>
TRANSACTION A TRANSACTION B TRANSACTION C AAP
------------- ------------- ------------- ---
<S> <C> <C> <C> <C>
EV Multiple of Sales......................... 0.2x 1.2x 1.1x 2.1x
EV Multiple of EBIT.......................... 5.0 9.6 12.9 39.2
EV Multiple of Net Income.................... 10.7 15.8 24.7 81.4
</TABLE>
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying the Goldman Sachs opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of each of these analyses in their totality
and did not attribute any particular weight to any analysis or factor considered
by it; rather Goldman Sachs made its determination as to fairness on the basis
of its experience and professional judgment, after considering the results of
all these analyses. No company or transaction used in the above analyses as a
comparison is directly comparable to AAP, the Offer or the Amalgamation. The
analyses were prepared solely for the purpose of Goldman Sachs' providing its
opinion to the Special Committee as to the fairness from a financial point of
view of the Purchase Price in cash to be received by the Public Shareholders in
the Offer and the Amalgamation or the compulsory purchase of the remaining
Shares as contemplated by the Amalgamation Agreement and do not purport to be
appraisals or necessarily reflect the prices at which businesses or securities
actually may be sold. Analyses based upon forecasts of future results are not
necessarily indicative of actual future results, which may be significantly more
or less favorable than suggested by those analyses. Because these analyses are
inherently subject to uncertainty, being based upon numerous factors or events
beyond the control of the parties or their advisors, none of AAP, the Special
Committee, the Disinterested Directors, Goldman Sachs or any other person
assumes responsibility if future results are different from those forecast.
As described above, Goldman Sachs' opinion to the Special Committee was one
of many factors taken into consideration by the Special Committee in making its
determination to recommend the approval of the Amalgamation Agreement and by the
Disinterested Directors in their determination to approve the Amalgamation
Agreement and recommendation to the Public Shareholders to tender their Shares
in response to the Offer. This summary is not a complete description of the
analysis performed by Goldman Sachs. You should read the entire opinion of
Goldman Sachs in Schedule II.
13
<PAGE> 17
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes.
Goldman Sachs may from time to time effect transactions and hold
securities, including derivative securities, of AAP for its own account and for
the accounts of its customers in the course of its normal trading activity. As
of November 11, 1999, which was the last trading day prior to the rendering of
its opinion, Goldman Sachs did not hold any positions in such securities.
Pursuant to a letter agreement dated October 8, 1999, the Special Committee
engaged Goldman Sachs to act as its financial advisor. Pursuant to the letter
agreement, AAP agreed to pay Goldman Sachs a fee totaling $2,000,000 for its
opinion and role as financial advisor to the Special Committee, upon delivery of
its opinion. In addition, AAP has agreed to reimburse Goldman Sachs for its
reasonable out-of-pocket expenses, including the fees and expenses of Goldman
Sachs' attorneys, and to indemnify Goldman Sachs and certain related persons
against various liabilities, including certain liabilities under the U.S.
federal securities laws, arising out of its engagement.
2. THE OFFER, AMALGAMATION AND RELATED TRANSACTIONS; AMALGAMATION AGREEMENT.
The Offer is being made pursuant to the Amalgamation Agreement. The purpose
of the Offer is to facilitate Purchaser's acquisition of all Shares for cash,
and thereby enable the Principal Shareholders to obtain indirect control of 100%
of the capital stock of AAP. The Amalgamation Agreement provides for, among
other things, Purchaser to first conduct the Offer to be followed by the
Amalgamation. Pursuant to the Shareholder Agreement, the Principal Shareholders
have agreed, and Hold Co. agreed, after transfer to it of the Non-Tendered
Shares by the Principal Shareholders, not to dispose of or otherwise transfer
the Non-Tendered Shares, and Purchaser has agreed not to dispose of or otherwise
transfer any Purchased Shares, in either case prior to consummation of the
Amalgamation. The Principal Shareholders have agreed to cause Hold Co. and
Purchaser, as the case may be, to vote, and Hold Co. and Purchaser, as the case
may be, have agreed to vote the Non-Tendered Shares and Purchased Shares in
favor of the Amalgamation.
Because the Principal Shareholders will contribute their shares to Hold
Co., the Principal Shareholders, indirectly as limited partners of Hold Co.,
will beneficially own approximately 85% of all Shares. Under Bermuda law, an
amalgamation must be approved by a vote of three-fourths of those shareholders
voting at the shareholder meeting to approve such amalgamation provided that a
quorum representing at least one-third of the shareholders attend such meeting.
Because the Principal Shareholders will own, directly or indirectly, 85% of the
AAP Shares and 100% of the capital stock of Purchaser, the Principal
Shareholders will be able to effect the Amalgamation even if the Public
Shareholders do not tender any Shares. As a result of the Amalgamation, those
holders who do not tender their Shares in the Offer will receive cash equal to
the Purchase Price upon consummation of the Amalgamation. If Shareholders tender
their Shares in connection with the Offer, then they will not have to wait for
the Amalgamation to be completed to receive cash for their Shares. The
Amalgamation is expected to occur as soon as possible following consummation of
the Offer.
Alternatively, if at any time after consummation of the Offer, Purchaser
and Hold Co. own, in the aggregate, 95 percent or more of the outstanding shares
of the Common Stock, then Purchaser may, if it elects to do so in lieu of the
Amalgamation, compulsorily purchase the remaining Shares for cash equal to the
Purchase Price from the remaining Shareholders pursuant to Section 103 of the
Bermuda Act. Accordingly, as a result of the consummation of the Offer and the
Amalgamation or alternatively, the purchase of the Shares for cash in accordance
with Section 103 of the Bermuda Act, the Principal Shareholders will, indirectly
as limited partners of Hold Co., beneficially own 100 percent of the outstanding
Shares. The Amalgamation and the transaction in accordance with Section 103 of
the Bermuda Act are collectively referred to as the "AAP Transaction."
Simultaneously with the Offer and Amalgamation, N.A.J. Co., Ltd., a
Japanese corporation (the "AJL Purchaser"), will be offering to purchase (the
"AJL Offer") shares of common stock, no par value of AJL (the "AJL Shares") from
the shareholders of AJL. The consummation of the AJL Offer and the Offer are
14
<PAGE> 18
not contingent upon each other. As of September 30, 1999, the Principal
Shareholders owned approximately 76% of the outstanding shares of AJL common
stock. The AJL Purchaser has been informed by the Principal Shareholders that
they will not tender their AJL Shares in response to the AJL Offer (other than
550,000 AJL Shares owned by one charitable foundation established by certain of
the Principal Shareholders). The Principal Shareholders will contribute
substantially all of their AJL Shares, including the AJL Shares that are not
tendered by the charitable foundation in response to the AJL Offer ("AJL Offer
Non-Tendered Shares"), to ALAP Hold Co., Ltd., a limited partnership organized
under the laws of Nevada ("ALAP"), or the AJL Purchaser contemporaneously with
the consummation of the Offer. ALAP is the parent of the AJL Purchaser and an
entity controlled and beneficially owned, directly and indirectly, by the
Principal Shareholders. In addition, no later than immediately prior to the
effectiveness of the AJL Merger (as defined below), the Principal Shareholders
will transfer to ALAP their AJL Shares that were not previously transferred
prior to the consummation of the AJL Offer (the "AJL Merger Non-Tendered
Shares", and, together with the AJL Offer Non-Tendered Shares, the "AJL
Non-Tendered Shares"). The AJL Offer will be made in accordance with the Tender
Offer Agreement, dated November 15, 1999 (the "AJL Agreement"), among ALAP, the
AJL Purchaser and AJL.
Pursuant to the AJL Agreement, the AJL Purchaser will first make the AJL
Offer and, after consummation of the AJL Offer, the AJL Purchaser will take all
steps required by law or as may be necessary or advisable to effect a merger
(the "AJL Merger") of AJL with and into the AJL Purchaser. Simultaneously with
the execution of the AJL Agreement, the Principal Shareholders, ALAP and the AJL
Purchaser executed a Shareholder and Voting Agreement (the "AJL Shareholder
Agreement"). Pursuant to the AJL Shareholder Agreement, the Principal
Shareholders have agreed, and ALAP agreed, after transfer to it of the AJL
Non-Tendered Shares by the Principal Shareholders, not to dispose of or
otherwise transfer the AJL Non-Tendered Shares, and the AJL Purchaser has agreed
not to dispose of or otherwise transfer any AJL Non-Tendered Shares transferred
to it by the Principal Shareholders (the "AJL Purchaser Non-Tendered Shares") or
Shares purchased by it in the AJL Offer (the "AJL Acquired Shares" and, together
with the AJL Purchaser Non-Tendered Shares, the "AJL Purchased Shares")), in
either case prior to consummation of the AJL Merger. In addition, the Principal
Shareholders have agreed to cause ALAP and the AJL Purchaser, as the case may
be, to vote, and the Principal Shareholders, ALAP and the AJL Purchaser, as the
case may be, have agreed to vote the AJL Merger Non-Tendered Shares, the AJL
Offer Non-Tendered Shares and the AJL Purchased Shares, respectively, in favor
of the AJL Merger.
As a result of the AJL Offer and the AJL Merger, the Principal Shareholders
will own, indirectly as limited partners of ALAP, all or substantially all of
the AJL Shares. In addition, as a result of the Offer and the AAP Transaction,
the Principal Shareholders will own, indirectly as the limited partners of Hold
Co., all the outstanding shares of Common Stock. Currently, the Principal
Shareholders are the sole beneficial owners of Amway and various affiliates and
subsidiaries of Amway (collectively, the "Amway Companies"). The Principal
Shareholders may desire at some point in the future to transfer all of their
ownership in the Amway Companies to Hold Co., ALAP or an affiliate of each of
Hold Co. or ALAP. After consummation of the AAP Transaction and the AJL Merger,
the Principal Shareholders may consider, from time to time, restructuring
transactions involving one or more Amway Companies in order to improve liquidity
and value of their investments. Such transactions could include one or more
public offerings by one or more of the Amway Companies over the next several
years.
3. PURPOSE OF THE OFFER AND AMALGAMATION; OTHER TRANSACTIONS.
Over the last several years, a variety of alternatives have been considered
by the Principal Shareholders and AAP management to increase shareholder value,
while at the same time enhance operations, results and business prospects of
AAP. After considerations of various alternatives and based on the difficult
business environment and the limited public float of Shares, the Principal
Shareholders and AAP concluded that it was unlikely that any meaningful
improvement in liquidity of AAP would occur or that the Public Shareholders
would realize the full potential of their investment in the foreseeable future.
As a result, AAP and the Principal Shareholders concluded that, as a private
company, AAP would have greater flexibility to invest in its future, realign the
business relationships with Amway and other markets and allow senior management
of
15
<PAGE> 19
Amway and AAP to focus on the long-term interests of AAP without concern for the
impact that any action might have on operating results or share price of AAP.
The Principal Shareholders see the Offer as an opportunity to create value for
the Public Shareholders through a premium purchase price and to create value for
the Principal Shareholders through a restructuring and realignment of all Amway
Companies.
4. POSITION OF PURCHASER REGARDING FAIRNESS OF THE OFFER.
Purchaser believes that the consideration to be received by the Public
Shareholders pursuant to the Offer is fair. Purchaser bases its belief on the
following facts: (i) the fact that the Special Committee concluded that the
Offer is fair to, and in the best interests of, the Public Shareholders, (ii)
notwithstanding the fact that Goldman Sachs' opinion was provided solely for the
information and assistance of the Special Committee and that Purchaser is not
entitled to rely on such opinion, the fact that the Special Committee received
an opinion from Goldman Sachs the date prior to the announcement of the Offer
that the $18.00 per share in cash to be received by the holders of Shares
pursuant to the Offer is fair to the Public Shareholders, (iii) the historical
and projected financial performance of AAP, (iv) Purchaser's assessment of
future economic conditions in the Asia-Pacific region, (v) the consideration to
be paid in the Offer represents a premium of 53.2% over the closing price for
November 12, 1999, the last full trading day prior to the public announcement of
the Offer, and (vi) the Offer will provide consideration to be paid to the
holders of Shares entirely in cash. Purchaser did not find it practicable to
assign, nor did it assign, relative weights to the individual factors considered
in reaching its conclusion as to fairness of the Offer.
5. CERTAIN EFFECTS OF THE AMALGAMATION.
Upon consummation of the Offer and the AAP Transaction, the Principal
Shareholders will, indirectly as limited partners of Hold Co., own 100 percent
of the shares of Common Stock.
6. INTERESTS OF CERTAIN PERSONS.
In considering the recommendations of the Disinterested Directors, based
upon the recommendation of the Special Committee, with respect to the Offer and
the Amalgamation Agreement, the Public Shareholders should be aware that certain
officers and directors of AAP have interests in connection with the Offer and
the Amalgamation Agreement which may present them with actual or potential
conflicts of interest as summarized below. The Disinterested Directors and the
Special Committee were aware of these interests and considered them among the
other matters described under "Background of the Offer; Recommendation of
Special Committee and the Disinterested Directors; Reasons for the
Recommendation; Opinion of Financial Advisor to the Special Committee." These
interests are described below.
The Board of Directors and Officers of AAP
Each of Messrs. Richard M. DeVos, Jr., Douglas L. DeVos and Stephen A. Van
Andel are Principal Shareholders and did not participate in meetings of the
Board of Directors relating to the transaction. In addition, as of November 1,
1999, the following individuals were the beneficial owners of the Shares as
follows:
16
<PAGE> 20
<TABLE>
<S> <C> <C>
Stephen A. Van Andel Chairman and a Director 26,666 Shares
Richard M. DeVos, Jr. Vice Chairman and Director 17,578,587 Shares
Douglas L. DeVos President and Director 2,955,185 Shares
Eoghan M. McMillan Director, Chairman of the compensation committee and Special
Committee and member of the audit committee 10,000 Shares
Jack C.K. So Director, Chairman of the audit committee and a member of
the Special Committee and compensation committee 10,000 Shares
John C.C. Chan Director, and member of the Special Committee and the
compensation and audit committees 7,000 Shares
L.H. Choong Director 33,000 Shares
Eva Cheng Executive Vice President and Director 62,333 Shares
Lawrence M. Call(1) Vice President 23,333 Shares*
Craig N. Meurlin(1) Vice President, General Counsel and Assistant Secretary 16,333 Shares*
John C. Brockman Vice President of Distributor Relations 200 Shares
Percy Chin Vice President and General Manager of Amway (China) Co.
Ltd. -- East China 5,333 Shares
Patrick Hau Vice President And General Manager of National Operations of
Amway (China) Co. Ltd. 7,666 Shares
Audie Wong Vice President and General Manager of Amway (China) Co.,
Ltd. -- North China 6,667 Shares
Martin Liou General Manager of Taiwan Company, Limited 2,333 Shares
Low Han Kee General Manager of Amway (Malaysia) Sdn. Bhd. 5,666 Shares
Preecha Prakobkit General Manager of Amway (Thailand) Ltd. 6,666 Shares
Peter Williams General Manager of Amway of Australia 4,000 Shares
Betty Yeung General Manager of Amway (China) Co. Ltd. -- South China 2,333 Shares
</TABLE>
- ---------------
* Amount represents less than 0.01% of the outstanding Shares
(1) Includes the following Shares which such persons have, or had the right to
acquire, within 60 days after November 1, 1999: Mr. Call, 23,333 Shares and Mr.
Meurlin, 13,333 Shares.
In addition, under the terms of the Amalgamation Agreement, the directors
are indemnified against certain various liabilities and Purchaser has agreed
subject to certain exceptions to retain after consummation of the Amalgamation
D&O insurance substantially similar to the existing D&O insurance.
7. APPRAISAL RIGHTS IN THE AMALGAMATION.
Amalgamations. Under Bermuda law, a company may amalgamate with another
Bermuda company. A dissenting shareholder is entitled to be paid the fair value
of his or her shares. Any shareholder who does not vote in favor of the
amalgamation and who is not satisfied that he has been offered fair value for
his shares may within one month of the date of this notice apply to the Supreme
Court of Bermuda to appraise the fair value of his shares. There are no
statutory rules prescribing the process of appraisal by the court and it is
generally considered that the court will apply the general common law with a
view to determining the fair market value of such shares.
Compulsory Acquisitions Under Section 103 Companies Act of 1981. Bermuda
law provides that the shareholders of a company representing in the aggregate at
least 95% of the issued and outstanding shares or class of shares in a company
(the "majority shareholders") may compulsorily purchase the shares of the
minority. In order to compulsorily purchase the Shares pursuant to Section 103
of the Bermuda Act, the majority shareholders must give notice (the "acquisition
notice") to the outstanding shareholders of the intention to acquire their
shares and the terms thereof. The minority are entitled, within one month of
receiving such notice, to apply to the Supreme Court of Bermuda for an appraisal
of the value of the shares which the majority propose to purchase. Once the
court has appraised the value of the shares, the majority shareholders are
entitled to either acquire the shares at the court's price or cancel the
acquisition notice. Where shares have already been acquired from certain
minority shareholders who did not seek an appraisal from the court, and the
price paid for their shares is less than that appraised by the court, then the
majority shareholders must either pay the difference to those shareholders or
return the shares they had acquired.
17
<PAGE> 21
THE OFFER
1. NUMBER OF SHARES; EXPIRATION AND EXTENSION OF OFFER.
Upon the terms and subject to the conditions described or referred to
herein and in the accompanying Letter of Transmittal, Purchaser will purchase
all Shares that are validly tendered and not withdrawn on or prior to the
Expiration Date (as defined below) or any lesser number of Shares validly
tendered and not so withdrawn. The term "Expiration Date" means 12:00 midnight,
New York City time, on December 17, 1999, unless and until Purchaser, in its
sole discretion will have extended the period of time during which the Offer
will remain open, in which event the term "Expiration Date" will refer to the
latest time and date at which the Offer as so extended by the Purchaser will
expire. For a description of Purchaser's right to extend the period of time
during which the Offer is open or to delay, terminate or amend the Offer, see
"-- Extension of Offer; Termination; Amendments." Only Shares validly tendered
and not withdrawn on or prior to the applicable Expiration Date will be eligible
for purchase. See "-- Description of Shares," "-- Procedure for Tendering
Shares" and "-- Withdrawal Rights."
All Shares purchased pursuant to the Offer will be purchased at the
Purchase Price. There will be deducted from the Purchase Price paid to each
holder any U.S. or other applicable backup withholding taxes which may be
required to be withheld. See "-- Acceptance for Payment of Shares and Payment of
Purchase Price."
Certificates representing Shares not purchased pursuant to the Offer
because they were not properly tendered will be returned to the tendering
holders at Purchaser's expense without delay following the Expiration Date.
Certificates for those Shares validly withdrawn on or prior to the Expiration
Date will be returned at Purchaser's expense without delay following such
withdrawal. See "-- Acceptance for Payment of Shares and Payment of Purchase
Price."
Purchaser expressly reserves the right, in its sole discretion, but shall
not be obligated, at any time or from time to time, to extend the period of time
during which the Offer is open by giving appropriate public notice of such
extension. See "-- Extension of Offer; Termination; Amendments." There can be no
assurance, however, that Purchaser will exercise its right to extend the Offer.
2. PROCEDURE FOR TENDERING SHARES.
Proper Tender of Shares. To tender Shares pursuant to the Offer, (a) the
Depositary must receive at one of its addresses set forth on the back cover of
this Offer to Purchase a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any other documents required
by the Letter of Transmittal, or an Agent's Message (as defined below) and (b)
either (i) certificates for the Shares must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase or (ii)
such Shares must be delivered pursuant to the procedures for book-entry transfer
described below and a confirmation of such delivery received by the Depositary,
in each case on or prior to the Expiration Date. Alternatively, the guaranteed
delivery procedure described below must be complied with. The term "Agent's
Message" means a message transmitted by the Book-Entry Transfer Facility (as
defined below) to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares which are the subject of the Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that such agreement may be enforced
against such participant.
Book Entry Delivery. The Depositary will cause a book-entry account in
respect of the Shares to be established at The Depository Trust Company (the
"Book-Entry Transfer Facility") for purposes of the Offer within two business
days after the date of this Offer to Purchase. Any financial institution that is
a participant in the system of the Book-Entry Transfer Facility may make
book-entry delivery of Shares by causing the Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account in accordance with the
procedures of the Book-Entry Transfer Facility. However, although delivery of
Shares may be effected through book-entry transfer, the Letter of Transmittal
(or facsimile thereof) properly completed and duly
18
<PAGE> 22
executed together with any required signature guarantees and any other required
documents or an Agent's Message must, in any case, be received by the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase on
or prior to the Expiration Date, or the guaranteed delivery procedure described
below must be complied with. DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL DOCUMENTS IS AT THE
ELECTION AND RISK OF THE TENDERING HOLDER AND THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES FOR SHARES ARE
SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
IS RECOMMENDED.
Signature Guarantees. Except as otherwise provided below, all signatures
on a Letter of Transmittal must be guaranteed by a financial institution
(including most banks, savings and loans associations and brokerage houses)
which is a participant in the Securities Transfer Agents Medallion Program, the
New York Stock Exchange Medallion Guarantee Program or the Stock Exchange
Medallion Program (an "Eligible Institution"). Signatures on a Letter of
Transmittal need not be guaranteed if (a) the Letter of Transmittal is signed by
the registered holder of the Common Stock tendered therewith and such holder has
not completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal or (b)
such Shares are tendered for the account of an Eligible Institution. See
Instructions 1 and 6 of the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Shares pursuant to the
Offer and such holder's certificates evidencing such Shares are not immediately
available or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date, or such holder cannot complete the procedure
for delivery by book-entry transfer on a timely basis, such Shares may
nevertheless be tendered if all of the following conditions are met:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided with this Offer to Purchase is
received by the Depositary (as provided below) by the Expiration Date; and
(c) the certificates for all Shares tendered in proper form for
transfer (or a confirmation of a book-entry transfer of such Shares into
the Depositary's account at the Book-Entry Transfer Facility), together
with (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantee and any other
documents required by the Letter of Transmittal or (ii) an Agent's Message,
are received by the Depositary within two NYSE trading days after the
Expiration Date.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in such Notice.
Dividend Reinvestment Plan. If you participate in the Dividend
Reinvestment Plan, and you want to tender Shares held under such plan pursuant
to the Offer, you should mark the appropriate box on the Letter of Transmittal
and follow the relevant instructions set out there. See Instruction 10 of the
Letter of Transmittal.
401(k) Plan. Participants in the 401(k) Plan who wish to have the trustee
of such plan tender Shares attributable to their accounts should so indicate by
completing, executing and returning to such trustee the election form included
in the materials sent by the trustee to such participants. The participants in
the 401(k) Plan may not use the Letter of Transmittal accompanying this Offer to
Purchase to direct the tender of such Shares. Participants may only use the
letter of transmittal and the separate election form sent to them by the
trustee. Participants are urged to carefully read the separate election form and
related materials sent to them by the trustee. See Instruction 11 of the Letter
of Transmittal.
19
<PAGE> 23
U.S. Federal Income Tax Withholding. Under U.S. federal income tax backup
withholding rules, 31% of the gross proceeds payable to a holder of Shares who
elects to tender Shares into the Offer or other payee pursuant to the Offer must
be withheld and remitted to the United States Treasury if the holder or other
payee does not provide its taxpayer identification number ("TIN"), employer
identification number ("EIN") or social security number ("SS No.") to the
Depositary and certify that such number is correct, or if the Internal Revenue
Service ("IRS") notifies the Depository that the TIN, EIN or SS No. is incorrect
or that backup withholding shall be imposed with respect to a particular holder.
Certain holders (including, among others, all corporations and certain
non-resident alien individuals) are not subject to these backup withholding and
reporting requirements ("exempt recipients").
All holders of Shares who elect to tender Shares into the Offer, other than
exempt recipients, should execute and return to the Depositary the Substitute
Form W-9 included as part of the Letter of Transmittal. In order for a foreign
individual to qualify as an exempt recipient, that individual must submit a
statement, signed under penalties of perjury, attesting to that individual's
exempt status. Such statements may be obtained from the Depositary or in
Australia from J.P. Morgan & Co. at the address and telephone number set forth
on the cover page of this Offer to Purchase. See "-- U.S. Federal Income Tax
Consequences" and Instruction 9 of the Letter of Transmittal.
ANY TENDERING HOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND SIGN
THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO
REQUIRED FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAID TO
SUCH HOLDER OR OTHER PAYEE PURSUANT TO THE OFFER.
Tender Constitutes An Agreement. The tender of Shares pursuant to any one
of the procedures described above will constitute the tendering holder's
acceptance of the terms and conditions of the Offer and an agreement by the
tendering holder to be subject to the terms and conditions of the Offer,
including the tendering holder's representation and warranty that the tender of
such Shares complies with Regulation 14D under the Securities Exchange Act of
1934 (the "Exchange Act"). Purchaser's acceptance for payment of Shares
represented by Shares validly tendered and not withdrawn pursuant to the Offer
will constitute a binding agreement with the tendering holder of Shares subject
to the terms and subject to the conditions of the Offer. See "-- Acceptance for
Payment of Shares and Payment of Purchase Price."
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the Purchase Price,
the number of Shares accepted, the form of documents and the validity,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser, in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any or all Shares tendered which it determines not to
be in proper form, or the acceptance of which or payment for which may, in the
opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the
absolute right to waive any defect or irregularity in any tender of particular
Shares, and Purchaser's interpretation of the terms of the Offer, including the
instructions in the Letter of Transmittal, will be final and binding on all
parties. No tender of Shares will be deemed to be properly made until all
defects and irregularities have been cured or waived. Unless waived, any defects
or irregularities in connection with tenders must be cured within such time as
Purchaser shall determine. NONE OF PURCHASER, THE DEALER MANAGERS, THE
INFORMATION AGENT, THE DEPOSITARY OR ANY OTHER PERSON WILL BE UNDER ANY DUTY TO
GIVE NOTIFICATION OF ANY DEFECT OR IRREGULARITY IN TENDERS OR INCUR ANY
LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION.
3. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 3, tenders of Shares made
pursuant to the Offer are irrevocable. The Shares tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and, unless they have
been accepted for payment by Purchaser, may also be withdrawn at any time after
60 days from the Commencement Date. See "-- Acceptance for Payment of Shares and
Payment of Purchase Price." If Purchaser extends the period of time during which
the Offer is open, is delayed in accepting for payment or paying for Shares or
is unable to accept for payment or pay for Shares pursuant to the Offer for
20
<PAGE> 24
any reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, on behalf of Purchaser, retain all Shares tendered, and such
Shares may not be withdrawn except as otherwise described under this caption.
However, in any event, Purchaser will comply with Rule 14e-1 under the Exchange
Act, which provides that settlement for the purchase of securities pursuant to a
tender offer must take place promptly after the expiration or termination of
such offer.
In order to withdraw Shares, a written or facsimile transmission notice of
withdrawal must be received by the Depositary on or prior to the Expiration Date
at one of its addresses set forth on the back cover of this Offer to Purchase
and must specify the name of the person who tendered the Shares to be withdrawn
and the number of Shares to be withdrawn. If the Shares to be withdrawn have
been delivered to the Depositary, a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution (except in the case of Shares tendered by
an Eligible Institution) must be submitted prior to the release of such Shares.
In addition, such notice must specify, in the case of Shares tendered by
delivery of Shares, the name of the registered holder (if different from that of
the tendering holder) and the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn or, in the case of Shares
tendered by book-entry transfer, the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares.
Withdrawals may not be rescinded and Shares withdrawn will thereafter be
deemed not validly tendered for purposes of the Offer. However, withdrawn Shares
may be tendered into the Offer again by following one of the procedures
described in "-- Procedure for Tendering Shares" at any time on or prior to the
applicable Expiration Date.
ALL QUESTIONS AS TO THE FORM AND VALIDITY (INCLUDING TIME OF RECEIPT) OF
ANY NOTICE OF WITHDRAWAL WILL BE DETERMINED BY PURCHASER, IN ITS SOLE
DISCRETION, WHICH DETERMINATION SHALL BE FINAL AND BINDING. NONE OF PURCHASER,
THE DEALER MANAGERS, THE INFORMATION AGENT, THE DEPOSITARY OR ANY OTHER PERSON
WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECT OR IRREGULARITY IN ANY
NOTICE OF WITHDRAWAL OR INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH
NOTIFICATION.
4. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, and without
delay after the Expiration Date, Purchaser will, subject to withdrawal
provisions of the Offer, accept for payment, and thereby purchase, and pay for
Shares validly tendered and not withdrawn.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares that are validly tendered and not
withdrawn as, if and when it gives written notice to the Depositary of its
acceptance for payment of the aggregate number of Shares to be purchased
pursuant to the Offer. It is presently anticipated that this notification will
be made as promptly as practicable after the Expiration Date. Under no
circumstances will interest be paid on amounts to be paid to tendering holders
by Purchaser by reason of any delay in making any such payment.
All Shares purchased pursuant to the Offer will be purchased at the
Purchase Price. There will be deducted from the Purchase Price paid to each
holder any U.S. backup withholding taxes which may be required to be withheld.
See "-- U.S. Federal Income Tax Consequences."
Certificates representing Shares not properly tendered will be returned to
the tendering holders at Purchaser's expense without delay following the
Expiration Date. Certificates representing those Shares validly withdrawn on or
prior to the Expiration Date will be returned at Purchaser's expense without
delay following such withdrawal.
5. MARKET INFORMATION; DIVIDENDS AND DIVIDEND POLICY.
Market Information. The principal market for the shares of Common Stock is
the NYSE, such shares having been traded since December 14, 1993. The Common
Stock is also listed on the ASX, such shares having been listed on the ASX since
December 23, 1993. The high and low sales prices of AAP's shares of
21
<PAGE> 25
Common Stock on the NYSE and the ASX during each fiscal quarterly period shown
is set forth in the following table. AAP's fiscal year ends August 31 in each
year.
<TABLE>
<CAPTION>
NYSE
-------------
HIGH LOW
---- ---
<S> <C> <C>
FY 1997
First Quarter............................................. $42 5/8 $29 5/8
Second Quarter............................................ 49 5/8 40 1/4
Third Quarter............................................. 47 1/4 34 3/4
Fourth Quarter............................................ 48 32 5/16
FY 1998
First Quarter............................................. 34 19 1/2
Second Quarter............................................ 22 15/16 15 3/4
Third Quarter............................................. 21 1/16 12 15/16
Fourth Quarter............................................ 16 1/2 9 3/6
FY 1999
First Quarter............................................. 13 3/16 8 1/4
Second Quarter............................................ 13 1/2 7
Third Quarter............................................. 14 1/2 6 7/8
Fourth Quarter............................................ 14 15/16 9 15/16
FY 2000
First Quarter (through November 12, 1999)................. 13 3/8 10 7/8
</TABLE>
<TABLE>
<CAPTION>
ASX
--------------------
HIGH LOW
-------- --------
<S> <C> <C>
FY 1997
First Quarter............................................. AU$49.00 AU$36.10
Second Quarter............................................ 60.60 48.00
Third Quarter............................................. 60.00 47.00
Fourth Quarter............................................ 62.00 47.01
FY 1998
First Quarter............................................. AU$46.50 AU$36.50
Second Quarter............................................ 36.00 26.00
Third Quarter............................................. 32.51 23.00
Fourth Quarter............................................ 28.50 19.50
FY 1999
First Quarter............................................. AU$21.00 AU$14.50
Second Quarter............................................ 21.00 12.00
Third Quarter............................................. 20.80 11.80
Fourth Quarter............................................ 24.00 15.90
FY 2000
First Quarter (through November 12, 1999)................. AU$20.50 AU$17.00
</TABLE>
On November 12, 1999, the last full NYSE trading day prior to the public
announcement of the Offer, the closing sales price of the Common Stock as
reported on the NYSE was $11.75 and on November 16, 1999, the last full day of
trading prior to the Commencement Date for which quotations could be obtained,
the closing sale price was $17.81. The Purchase Price is $18.00 per share. On
November 15, 1999, the last full ASX trading day prior to the public
announcement of the Offer, the closing sales price of the Common Stock as
reported on the ASX was AU$17.50 and on November 17, 1999, the last full day of
trading prior to the Commencement Date for which quotations could be obtained,
the closing sale price was AU$30.0. HOLDERS ARE URGED TO OBTAIN A CURRENT MARKET
QUOTATION FOR THE COMMON STOCK.
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<PAGE> 26
Dividends and Dividend Policy. AAP's Board of Directors suspended AAP's
quarterly dividend on October 14, 1998, because of adverse economic conditions
in AAP's markets at that time, declining profitability and uncertainty as to
whether either of these two factors would improve. The AAP Board of Directors
has regularly reviewed AAP's ability to pay a quarterly dividend and based on
the continuation of weak profitability and the need to use cash flow in China
has not reinstated the dividend. The Company does not intend to pay any future
dividends.
6. CERTAIN EFFECTS OF THE OFFER.
As of September 30, 1999, AAP had issued and outstanding (i) 56,441,960
shares of Common Stock (held by approximately 2,166 holders of record). The
Principal Shareholders held approximately 85% of the issued and outstanding
shares of Common Stock as of that date.
Elimination of Public Float. The purchase of Shares pursuant to the Offer
will reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly. Consequently, depending upon the number of Shares
tendered pursuant to the Offer, the liquidity and market value of the remaining
publicly held Shares might also be reduced. In any event, after consummation of
the Amalgamation, the Shares will no longer be publicly traded.
NYSE and ASX Delisting. Depending on the number of Shares purchased
pursuant to the Offer, it is anticipated that the shares of Common Stock will no
longer meet the standards for continued inclusion in the NYSE and the ASX. If
the shares of Common Stock no longer meet the standards for inclusion in the
NYSE and the ASX, then the shares of Common Stock will be delisted after
consummation of the Offer. In any event, after consummation of the Amalgamation,
the shares of Common Stock will no longer be outstanding and as a result will no
longer satisfy the standards for inclusion in the NYSE and the ASX. As a result,
the shares of Common Stock will be delisted.
Potential Exchange Act Deregistration. The shares of Common Stock are
currently registered under the Exchange Act. Such registration may be terminated
following application by AAP to the Commission if, following the Offer, the
shares of Common Stock are not listed on a national securities exchange and
there are fewer than 300 holders of record of the shares of Common Stock. After
consummation of the Amalgamation, AAP will apply for deregistration of the
shares of Common Stock. See "--NYSE Delisting and ASX Delisting". The
termination of the registration of the shares of Common Stock under the Exchange
Act will substantially reduce the information required to be furnished by AAP to
holders of the shares of Common Stock and to the Commission, and will result in
the future inapplicability of certain provisions of the Exchange Act to the
shares of Common Stock, including, among other things, the requirements of Rule
13e-3 under the Exchange Act with respect to "going private transactions." When
the registration of the shares of Common Stock under the Exchange Act is
terminated, certain affiliates of AAP or Purchaser, as the case may be, will be
deprived of the ability to dispose of any shares of capital stock held by them
pursuant to Rule 144 promulgated under the Exchange Act.
Status of Shares as "Margin Securities." The shares of Common Stock are
currently "margin securities" under the rules of the Federal Reserve Board. This
has the effect, among other things, of allowing brokers to extend credit on the
collateral of the shares of Common Stock. After consummation of the Offer and
the Amalgamation, the shares of Common Stock will no longer constitute "margin
securities" for purposes of the margin regulations of the Federal Reserve Board,
and therefore such shares of Common Stock may no longer be used as collateral
for loans made by brokers.
Concentration of Shares with Affiliates of AAP. The Principal Shareholders
will contribute their shares of Common Stock to Hold Co. contemporaneously with
the consummation of the Offer and so they will not tender any shares of Common
Stock owned by them in the Offer. Following the Offer, assuming that all Shares
owned by persons other than the Principal Shareholders are tendered pursuant to
the Offer, the Principal Shareholders will own, as a result of the contribution
of their shares of Common Stock to Hold Co., beneficially, indirectly as limited
partners of Hold Co., 100 percent of the outstanding Shares.
23
<PAGE> 27
As discussed above in "Special Factors -- The Offer, Amalgamation, and
Related Transactions; Amalgamation Agreement," the Offer is being made in
accordance with the terms and conditions of the Amalgamation Agreement. Pursuant
to the Amalgamation Agreement, after consummation of the Offer, Purchaser and
AAP will amalgamate. As a result of the transfer of their shares of Common
Stock, the Principal Shareholders will, indirectly as limited partners of Hold
Co., beneficially own 85% of all shares of Common Stock. Hold Co. will be able
to effect the Amalgamation even if the Public Shareholders do not tender any
Shares. As a result of the Amalgamation, those holders who do not tender their
Shares in the Offer will receive cash equal to the Purchase Price after
consummation of the Amalgamation. However, if the Public Shareholders tender
their Shares in connection with the Offer, then they will not have to wait for
the Amalgamation to be completed to receive cash for their Shares. The
Amalgamation is expected to occur as soon as possible following consummation of
the Offer. Alternatively, if at any time after consummation of the Offer,
Purchaser and Hold Co. own, in the aggregate, 95 percent or more of the
outstanding shares of Common Stock, then Purchaser may, if it elects to do so in
lieu of the Amalgamation, compulsorily purchase the remaining Shares from the
remaining Shareholders pursuant to Section 103 of the Bermuda Act. Accordingly,
as a result of the consummation of the Offer and the Amalgamation or
alternatively, the purchase of the Shares for cash equal to the Purchase Price
in accordance with Section 103 of the Bermuda Act, the Principal Shareholders
will, beneficially own 100 percent of the outstanding Shares. See "Special
Factors-- Interests of Certain Persons" for a discussion of management's and the
Principal Shareholders' beneficial ownership of Shares prior to the Offer and
the potential effect of their participation in the Offer.
ALTHOUGH THE DISINTERESTED DIRECTORS, BASED ON THE RECOMMENDATION OF THE
SPECIAL COMMITTEE, HAVE RECOMMENDED THAT HOLDERS OF SHARES ACCEPT THE OFFER,
EACH HOLDER MUST MAKE ITS OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER.
7. SOURCE AND AMOUNT OF FUNDS.
Assuming that Purchaser purchases all outstanding Shares pursuant to the
Offer at the Purchase Price, Purchaser estimates that the total amount of funds
required to purchase such Shares and pay related fees and expenses will be
approximately $150.0 million all of which will be from funds borrowed from
Morgan Guaranty and possibly other commercial banks and lending institutions
under a new senior credit facility (the "Credit Facility"). It is expected that
the Credit Facility will be unsecured and will consist of one or more term
loans. Repayments under the Credit Facility will begin in November 2000 and end
in November 2005. The interest rate of the facility will be the LIBO Rate plus a
margin equal to 6.35% for amounts borrowed in the first eight months of the
facility and determined by Morgan Guaranty based on Purchaser's credit
worthiness thereafter. The Credit Facility will contain covenants that will
restrict each of Purchaser and its subsidiaries from, among other things,
selling substantially all of its assets, incurring liens on its assets (subject
to dollar limit exceptions) and incurring debt (subject to dollar limit
exceptions). In addition, the Credit Facility will require Purchaser to maintain
or limit, as the case may be, dividend levels, consolidated net worth,
consolidated interest coverage ratios, cash flow ratios and restricted payments
to shareholders. Finally, each of Hold Co. and ALAP has, jointly and severally,
guaranteed the obligations of Purchaser and the AJL Purchaser under the Credit
Facility. Other conditions of the Credit Facility are expected to be those
customary for similar debt transactions. The Offer is not contingent upon
receipt of the financing.
Following the Offer and Amalgamation, Purchaser (together with AJL or the
AJL Purchaser) may be required to dedicate a substantial portion of its cash
flows from operations to pay principal and interest under the Credit Facility.
8. CERTAIN INFORMATION REGARDING AAP.
Except as otherwise set forth herein, the information concerning AAP
contained in this Offer to Purchase, including financial information, has been
furnished to Purchaser by AAP or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources.
24
<PAGE> 28
General. AAP is a Bermuda corporation, whose principal executive office is
located at 38/F The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong. AAP
is the exclusive distribution vehicle for Amway Corporation in Australia,
Brunei, the People's Republic of China, Hong Kong, Macau, Malaysia, New Zealand,
Taiwan and Thailand.
Financial Information. Provided below is certain selected financial
information relating to AAP which has been excerpted or derived from the audited
financial statements contained in AAP's Annual Report on Form 20-F for the
fiscal year ended August 31, 1998 (the "Form 20-F") and AAP's Form 6-K for the
fiscal quarter ended May 31, 1999 (the "Form 6-K"). More comprehensive
information is included in the Form 20-F and Form 6-K and other reports and
documents filed by AAP with the Commission. The financial information that
follows is qualified in its entirety by reference to such reports and other
documents as may be examined at the offices of the Commission in the manner set
forth below. In addition, Schedule III sets forth AAP's audited financial
statements for the fiscal year ended August 31, 1998, including comparative
statements as contained in the Form 20-F for the fiscal year ended August 31,
1998, as well as AAP's unaudited financial statements for the nine months ended
May 31, 1999, including comparative statements as contained in the Form 6-K for
the fiscal quarter ended May 31, 1999. The financial statements and notes
thereto contained in the Form 20-F and the Form 6-K for the period ended May 31,
1999 are hereby incorporated by reference herein.
25
<PAGE> 29
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(U.S. DOLLARS IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31, NINE MONTHS ENDED MAY 31,
---------------------- ------------------------------
1998 1997 1999 1998
--------- --------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................. $587,579 $845,166 $365,929 $463,403
Cost of sales............................. 257,220 313,287 159,542 201,800
-------- -------- -------- --------
330,359 531,879 206,387 261,603
-------- -------- -------- --------
Distributor incentives.................... 157,018 219,111 97,063 125,621
Distribution expenses..................... 45,199 49,662 28,315 35,569
Selling and administrative expenses....... 102,849 114,523 70,269 80,163
-------- -------- -------- --------
Total operating expenses.................. 305,066 383,296 195,647 241,353
-------- -------- -------- --------
Operating income.......................... 25,293 148,583 10,740 20,250
Other income -- net....................... 9,683 24,707 1,689 5,851
-------- -------- -------- --------
Income before income taxes and minority
interest................................ 34,976 173,290 12,429 26,101
Income taxes.............................. 23,508 54,909 9,798 19,520
-------- -------- -------- --------
Income before minority interest........... 11,468 118,381 2,631 6,581
Minority interest in net income of
consolidated subsidiaries............... 10,015 14,350 4,478 7,812
-------- -------- -------- --------
Net income (loss)......................... $ 1,453 $104,031 $ (1,847) $ (1,231)
======== ======== ======== ========
Basic and diluted earnings (loss) per
share(1)................................ $ 0.03 $ 1.76 $ (0.03) $ (0.02)
======== ======== ======== ========
Cash dividends per share.................. $ 0.88 $ 0.84 $ -- $ 0.66
======== ======== ======== ========
Weighted average number of shares
outstanding (in thousands).............. 56,442 59,124 56,442 56,442
======== ======== ======== ========
Ratio of earnings to fixed charges(2)..... 7.5 46.5 4.8 9.1
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
AUGUST 31, MAY 31,
-------------------- --------------------------
1998 1997 1999 1998
-------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................... $102,128 $186,451 $100,289 $105,954
Total assets.................................. 387,073 520,143 361,763 388,729
Non-current liabilities....................... 184 1,079 248 422
Total shareholders' equity.................... 176,098 252,484 180,721 188,885
Book value per share(3)....................... 3.12 4.47 3.20 3.35
</TABLE>
- ---------------
(1) The computation of earnings per share is based on the weighted average
number of shares of Common Stock outstanding during the period.
(2) The ratio of earnings to fixed charges was computed by dividing income
before income taxes and minority interest plus fixed charges by the fixed
charges. Fixed charges consist of interest expense and that portion of
operating lease rental expense that is representative of the interest
factor.
(3) Book value per share was computed by dividing shareholders' equity by the
shares of Common Stock outstanding. Shares of Common Stock consist of the
number of fully paid shares outstanding at the end of the period.
26
<PAGE> 30
1999 Fiscal Year Results and Fiscal 2000 Outlook. In October 1999, AAP
reported its results for the fiscal year ended August 31, 1999. Net sales for
the fiscal year declined 14.7% compared to the prior year; net income was $12.5
million compared to $1.5 million for fiscal 1998. In contrast, AAP's net sales
in the fourth quarter increased 9.2% compared to the prior year period and net
income was $14.3 million compared to $2.7 for the fourth quarter of fiscal 1998.
These improved fourth quarter results were primarily due to strong sales in
China and Malaysia. The performance in China reflected the positive impact of
the China Business Revitalization Program in that market, while Malaysia's net
sales increase was driven by the very favorable distributor response to a
benefits program and various promotions on high ticket items.
In October 1999, AAP reported that it expected positive sales growth in
fiscal 2000 primarily due to the expected continuation of stronger sales in
China as the business there continues to attain a higher level of acceptance and
expanded manufacturing capabilities result in an increase in the number of
product launches in China. Increased sales in Malaysia and Thailand are also
expected to favorably impact AAP's overall net sales.
The statements contained herein that are not historical facts, including
the statements in the preceding paragraph, are forward looking statements. These
forward looking statements involve risks and uncertainties with respect to AAP's
markets. With respect to operations in China, these risks and uncertainties
include AAP's ability to manage effectively transition issues associated with
the modification and refinement of its marketing plan and its distribution
system. AAP is still in the process of obtaining the necessary approvals from
certain provinces and cities for all aspects of its new mode of operations,
including the use of independent sales agents. In addition, AAP is also trying
to obtain licenses for new cities and branches. Obtaining these approvals and
licenses involves regular discussions with national, provincial and city
government officials; AAP believes that it has good relations with governmental
officials, but there can be no assurance that the approvals and licenses will be
obtained. In addition, operations can always be adversely affected by new or
existing government regulations, or interpretations thereof, or by other
governmental action. In addition, risks and uncertainties in China include: (i)
AAP's ability to source materials necessary to achieve portions of its fiscal
2000 product launch schedule; and (ii) the possibility that because of AAP's
relationship with Amway, it can be affected by changes in the US-China
relationship.
In addition, the forward looking statements, including the statements in
this second paragraph under "--1999 Fiscal Year Results and Fiscal 2000
Outlook," contained herein are subject to other risks and uncertainties with
respect to AAP's markets, which could cause results to differ materially such
as, without limitation, a worsening of economic turmoil in AAP's markets, such
as the occurrence of further adverse currency volatility in the markets in which
AAP operates, the creation of adverse government regulation or the occurrence of
adverse government action in AAP's markets related to either AAP's Sales and
Marketing Plan or its products, import or price restrictions in any of AAP's
markets, the possibility of adverse publicity directed at AAP in its markets,
the difficulty in passing on the full impact of the cost increases to
distributors, given the economic situation in AAP's markets and a deterioration
of AAP's positive relationship with its distributor leadership. The most
significant uncertainty, with respect to currencies that impact AAP, is whether
the Chinese yuan will be devalued against the dollar; in addition to its impact
on operations in China, that could in turn lead to further weakening of other
Asian currencies. These and other risks and uncertainties are further detailed
in AAP's Annual Report on Form 20-F for the fiscal year ended August 31, 1998,
filed with the U.S. Securities and Exchange Commission, in the sections titled
"Description of Business -- Government Regulation" and "Description of
Business -- Risks and Uncertainties."
Additional Information About AAP. The Schedule 14D-9, Form 20-F and the
Form 6-K, together with certain other documents and reports concerning AAP
(collectively, the "AAP Filings") have been filed by AAP with the Commission.
Copies of the AAP Filings may be obtained from Ms. Holly Clemente, Director of
Investor Relations, AAP, at (914) 961-1564 or as described immediately below.
AAP is subject to the informational filing requirements of the Exchange Act
and, in accordance therewith, is required to file periodic reports and other
information with the Commission relating to its business, financial condition
and other matters. Information as of particular dates concerning AAP's directors
and officers, their remuneration, stock options granted to them, the principal
holders of AAP's securities and
27
<PAGE> 31
any material interest of such persons in transactions with AAP is required to be
disclosed in periodic reports filed with the Commission. Such reports and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the Commission's regional offices located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and the Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Information regarding
the public reference facilities may be obtained from the Commission by
telephoning 1-800-SEC-0330. Copies of such materials may also be obtained by
mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. Certain reports and other
information concerning AAP may also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
9. CERTAIN INFORMATION REGARDING PURCHASER.
General. Purchaser was incorporated under the laws of Bermuda in October
1999 for the principal purpose of acquiring all of the outstanding shares of AAP
and has no prior operating history. The principal executive offices of Purchaser
are currently located at 7575 Fulton Street, East, Ada, Michigan 49355,
telephone number (616) 787-6000. Purchaser does not have any significant assets
or liabilities and it has not engaged in activities other than those incidental
to its formation and capitalization, its execution of the Amalgamation Agreement
and preparation for the Offer. Because Purchaser is acquiring the Shares for
cash, financial information regarding it is not meaningful.
During the last five years none of Purchaser's officers or directors were
(1) convicted in a criminal proceeding, or (2) party to a civil proceeding of a
judicial or administrative body and as a result of the proceeding were or are
subject to a judgment enjoining future violations of or prohibiting activities
subject to, Federal or state securities laws or finding any violation of such
laws. Schedule I attached hereto sets forth information regarding Purchaser's
officers and directors.
The Principal Shareholders are certain corporations, trusts, foundations
and other entities established by or for the benefit of Richard M. DeVos and Jay
Van Andel, and their respective families. As of the Commencement Date, the
Principal Shareholders beneficially own, in the aggregate, 47,943,530 shares of
Common Stock, approximately 85% of the outstanding Common Stock of AAP. See
"-- Interests of Certain Persons."
Additional Information About Purchaser. Purchaser is not subject to the
informational filing requirements of the Exchange Act.
Purchaser has filed with the Commission a Tender Offer Statement on
Schedule 14D-1 (the "Schedule 14D-1") and a Rule 13e-3 Transaction Statement on
Schedule 13E-3 (the "Schedule 13E-3") that contain additional information with
respect to the Offer. The Schedule 14D-1 and the Schedule 13E-3, and any
amendments thereto, may be examined and copies may be obtained at the same
places and in the same manner as set forth above except that the Schedule 14D-1
and the Schedule 13E-3 and such amendments may not be available in the regional
offices of the Commission.
10. BACKGROUND OF THE OFFER; CONTACTS WITH AAP.
See "Special Factors."
11. INTERESTS OF CERTAIN PERSONS.
As noted above, the Principal Shareholders are certain corporations,
trusts, foundations and other entities established by or for the benefit of the
Principal Shareholders and their respective families. As of the Commencement
Date, the Principal Shareholders, beneficially own, in the aggregate, 47,943,530
shares (approximately 85%) of the outstanding shares of Common Stock. As of the
Commencement Date, directors and executive officers of AAP, other than those who
are Principal Shareholders, own beneficially and of record, in the aggregate,
202,863 Shares, less than 0.01% of the outstanding Common Stock. Based on a
review of information provided by directors and executive officers of AAP, it is
not anticipated, however, that any material amount of shares will be tendered by
the directors and executive officers. In the event such
28
<PAGE> 32
individuals do not tender their shares, they will receive cash in the
Amalgamation. See "Special Factors -- Certain Effects of the Offer."
As a result of the Offer and the Amalgamation, 100 percent of the shares of
Common Stock will be owned, indirectly as limited partners of Hold Co., by the
Principal Shareholders.
12. TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES.
Based upon Purchaser's records and upon information provided to its and
AAP's directors, executive officers and affiliates, neither Purchaser nor, to
Purchaser's knowledge, any director or executive officer of Purchaser or AAP any
person controlling Purchaser or AAP any director or executive officer of any
corporation ultimately in control of Purchaser or AAP or any associate or
subsidiary of any of the foregoing, including any director or executive officer
of any such subsidiary, has effected any transactions in the Common Stock during
the 60 business day period prior to the Commencement Date. Except as described
in this Offer to Purchase, neither Purchaser or AAP nor, to Purchaser's or AAP's
knowledge, any director or executive officer of Purchaser or AAP any person
controlling Purchaser or AAP or any director or executive officer of any
corporation ultimately in control of Purchaser is a party to any contract,
arrangement, understanding or relationship with any other person relating,
directly or indirectly, to the Offer with respect to the Common Stock
(including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any such securities, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies, consents or
authorizations).
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
Except with respect to matters in Australia described herein, Purchaser is
not aware of any approval or other action by any government or governmental,
administrative or regulatory authority or agency, domestic or foreign, that
would be required for Purchaser's acquisition or ownership of Shares as
contemplated by the Offer or of any license or regulatory permit that appears to
be material to its business that might be adversely affected by its acquisition
of Shares as contemplated in the Offer. Foreign investment in Australia is
regulated by the Foreign Acquisitions and Takeovers Act 1975 ("FTA"). Certain
foreign investments and takeovers in Australia require that the Foreign
Investment Review Board ("FIRB") be notified. FIRB is the body responsible for
reviewing and approving foreign investments under FTA. Generally, FIRB will
approve a proposal unless it considers it to be against the national interest.
Because the Offer by Purchaser is technically an acquisition under the FTA, a
FIRB notice relating to the Offer will be lodged, as the proposed Offer by
Purchaser is a foreign to foreign acquisition involving an Australian
subsidiary, Amway of Australia, a wholly owned subsidiary of AAP. This
notification will be filed with the FIRB contemporaneously with the commencement
of the Offer and it is expected that FIRB will have no objection to this
transaction.
Should any other such approval or other action be required, Purchaser
currently contemplates that it will seek such approval or other action.
Purchaser cannot predict whether it may determine that it is required to delay
the acceptance 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 action, if needed, would be obtained or would be obtained without substantial
conditions.
14. U.S. FEDERAL INCOME TAX CONSEQUENCES.
General. The following discussion addresses the U.S. federal income
taxation of a United States person (i.e., a United States citizen or resident, a
United States corporation, a United States estate or trust subject to United
States tax on all of its income regardless of source (a "U.S. Shareholder")) who
has Shares purchased pursuant to the Offer. The following discussion does not
address the tax consequences to a person who holds, directly or indirectly, 10%
or more of the Shares (a "10% Shareholder"). Non-United States persons and 10%
Shareholders are urged to consult their own tax advisors regarding the tax
considerations incident to a sale of Shares pursuant to the Offer.
In addition, this summary does not address the U.S. tax treatment of
certain types of U.S. Shareholders (e.g., individual retirement and other
tax-deferred accounts, life insurance companies and tax-exempt
29
<PAGE> 33
organizations) or of persons other than U.S. Shareholders, all of whom may be
subject to tax rules that differ significantly from those summarized below.
The discussion below, as it relates to U.S. federal income tax
consequences, is based upon the provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), and regulations, rulings and judicial decisions
thereunder as of the date of this Offer to Purchase, and such authorities may be
repealed, revoked or modified so as to result in U.S. federal income tax
consequences different from those discussed below. Each holder is advised to
consult such holder's own tax advisor with respect to federal, state, local and
foreign tax law consequences of a sale of Shares pursuant to the Offer.
Purchases of Shares by Purchaser pursuant to the Offer will generally be
taxable transactions to U.S. Shareholders for federal income tax purposes under
the Code, and may also be taxable transactions under applicable state, local and
foreign tax laws.
Tax Treatment of Proceeds from Sale. The sale of Shares pursuant to the
Offer will generally be accorded sale or exchange treatment for federal income
tax purposes and gain or loss (rather than dividend income) will be recognized
by a tendering U.S. Shareholder if the U.S. Shareholder satisfies one of the
following tests: (i) its interest in AAP is completely sold; (ii) its percentage
interest in AAP is reduced (as measured before Purchaser's purchase of any
Shares pursuant to the Offer) by more than 20% (as measured after Purchaser's
purchase of all Shares redeemed pursuant to the Offer); or (iii) it is
demonstrated that the disposition of Shares to Purchaser is "not essentially
equivalent to a dividend." A U.S. Shareholder's contemporaneous dispositions or
acquisitions of Shares deemed for federal income tax purposes to be part of an
integrated transaction with the Offer may be taken into account in determining
whether the holder satisfied any of these tests.
If sale or exchange treatment applies, any gain or loss recognized will be
equal to the difference between the amount of cash received in the exchange and
the U.S. Shareholder's tax basis in the Shares purchased. Provided that the
Shares constitute a capital asset in the hands of the U.S. Shareholder and have
a holding period of more than one year, this gain or loss generally will be
long-term capital gain or loss.
If sale or exchange treatment does not apply, the gross proceeds received
from Purchaser for Shares purchased pursuant to the Offer will be treated as a
taxable dividend to the extent of AAP's current or accumulated earnings and
profits. In that event, the tax basis of Shares purchased by Purchaser pursuant
to the Offer will generally be added to the tax basis of the Shares that the
tendering U.S. Shareholder continues to own, and such increase in basis may
cause any subsequent taxable disposition of retained Shares to give rise to a
loss, which would be a capital loss if such Shares were held as a capital asset.
A U.S. Shareholder who intends to avoid dividend treatment of the gross
proceeds received by demonstrating that such proceeds are "not essentially
equivalent to a dividend" is urged to consult its tax advisor because this test
will be met only if the reduction in its proportionate interest in AAP is a
"meaningful reduction" given the particular facts and circumstances in the
context of the Offer. The Internal Revenue Service has indicated in published
rulings that any reduction in the percentage interest of a U.S. Shareholder
whose relative stock interest is minimal (e.g., less than 1%) in a publicly-held
corporation who exercises no control over corporate affairs may constitute such
a "meaningful reduction."
Backup Withholding. Under U.S. federal income tax backup withholding
rules, 31% of the gross proceeds payable to a holder of Shares who elects to
tender Underlying Shares into the Offer or other payee pursuant to the Offer
must be withheld and remitted to the United States Treasury if the holder or
other payee does not provide its taxpayer identification number ("TIN"),
employer identification number ("EIN") or social security number ("SS No.") to
the Depositary and certify that such number is correct, or if the IRS notifies
the Depositary that the TIN, EIN or SS No. is incorrect or that backup
withholding should be imposed with respect to a particular holder. Certain
holders (including, among others, all corporations and certain non-resident
alien individuals) are not subject to these backup withholding and reporting
requirements ("exempt recipients").
All holders of Shares who elect to tender Shares pursuant to the Offer,
other than exempt recipients, should execute and return to the Depositary the
Substitute Form W-9 included as part of the Letter of
30
<PAGE> 34
Transmittal. In order for a foreign individual to qualify as an exempt
recipient, that individual must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. See Instruction 9 of the Letter of Transmittal.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. EACH HOLDER IS URGED TO CONSULT ITS OWN TAX ADVISOR TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES TO IT OF THE OFFER, INCLUDING THE APPLICABILITY AND
EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
15. EXTENSION OF OFFER; TERMINATION; AMENDMENTS.
Purchaser expressly reserves the right, in its sole discretion, but shall
not be obligated, at any time or from time to time, to extend the period of time
during which the Offer is open by giving appropriate public notice of such
extension. During any such extension, all Shares previously tendered and not
purchased or withdrawn will remain subject to the Offer, except to the extent
that such Shares may be withdrawn as set forth in "-- Withdrawal Rights."
Subject to compliance with applicable law and the terms of the Amalgamation
Agreement, Purchaser further reserves the right, in its sole discretion, to
amend the Offer. Any amendment to the Offer may be made at any time or from time
to time by giving appropriate public notice thereof. Any public announcement
made pursuant to the Offer will be disseminated promptly to holders in a manner
reasonably designed to inform holders of such change. Without limiting the
manner in which Purchaser may choose to make a public announcement, except as
required by applicable law, Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement with respect to
the Shares other than by making a release to the Dow Jones News Service.
If Purchaser materially changes the terms of the Offer or the information
concerning the Offer, Purchaser will extend the Offer to the extent required by
Rules 14e-1(a) and 14e-1(d) promulgated under the Exchange Act. These rules
provide that the minimum period during which an 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 in the dealer's soliciting fee) will depend on
the facts and circumstances, including the relative materiality of such terms or
information.
Pursuant to the Amalgamation Agreement, Purchaser may not amend the Offer
to reduce the number of Shares subject to the Offer, reduce the Offer Price,
change the form of consideration payable in the Offer to amend, alter, add or
waive any term of the Offer in any manner adverse to the holders of the Shares,
in each case without the express written consent of AAP as authorized by the
Special Committee.
16. FEES AND EXPENSES.
Other than as described below, no fees will be paid to brokers, dealers or
others by Purchaser in connection with the Offer.
Dealer Managers. Morgan Stanley and J.P. Morgan have been retained by
Purchaser to act as dealer managers (each a "Dealer Manager" and collectively,
the "Dealer Managers") in connection with the Offer. Morgan Stanley and J.P.
Morgan will receive reasonable and customary compensation for their services as
Dealer Managers. Morgan Stanley and J.P. Morgan will also be reimbursed by
Purchaser for certain out-of-pocket expenses, including attorneys' fees, and
will be indemnified by Amway against certain liabilities, including liabilities
under the federal securities laws, in connection with the Offer. Morgan Stanley
and J.P. Morgan have from time to time provided investment banking services to
AAP and other affiliates of Purchaser for which Morgan Stanley and J.P. Morgan
have received, or will receive, reasonable and customary compensation. It is
expected that Morgan Stanley and J.P. Morgan will continue to provide such
services to Purchaser and its affiliates in the future. Morgan Guaranty Trust
Company of New York, Tokyo Branch, an affiliate of J.P. Morgan & Co.
Incorporated, is providing funds to Purchaser in connection with the Offer. See
"-- Source and Amount of Funds."
The fees Purchaser will pay to the Dealer Managers consist of advisory
fees, an exposure fee and a transaction fee. Morgan Stanley's advisory fees are
$62,500 per month for the months of September, October
31
<PAGE> 35
and November of 1999 and $37,500 per month thereafter until the transaction is
terminated. The exposure fee that will be paid to Morgan Stanley is $750,000 and
the transaction fee paid to Morgan Stanley is $2,000,000. J.P. Morgan's exposure
fee is $375,000 and its transaction fee is $1,000,000. The total fees estimated
to be paid by Purchaser to Morgan Stanley and J.P. Morgan are set forth below.
The monthly advisory fees for Morgan Stanley and the exposure fees for Morgan
Stanley and J.P. Morgan are creditable against the applicable transaction fees.
Depositary. Purchaser has retained First Chicago Trust Company of New York
to act as depositary in connection with the Offer (the "Depositary"). The
Depositary will receive reasonable and customary compensation for its services
as Depositary. The Depositary will be reimbursed by Purchaser for certain out-
of-pocket expenses and will be indemnified against certain liabilities,
including liabilities under the federal securities laws, in connection with the
Offer.
Information Agent. Purchaser has retained Georgeson Shareholder
Communications Inc. to act as the Information Agent in connection with the
Offer. The Information Agent will receive reasonable and customary compensation
for its services as Information Agent. The Information Agent will be reimbursed
by Purchaser for certain out-of-pocket expenses in connection with the Offer.
Expenses. Purchaser will pay all expenses of the Offer, including, without
limitation, brokerage commissions and solicitation fees. Brokers, dealers,
commercial banks and trust companies will, upon request, be reimbursed by
Purchaser for reasonable and necessary costs and expenses incurred by them in
forwarding materials to their customers. Holders of Shares will have withheld
from the Purchase Price payable to them with respect to Shares accepted for
purchase pursuant to the Offer any applicable U.S. backup withholding taxes, if
any. See "-- U.S. Federal Income Tax Consequences."
It is estimated that expenses incurred by Purchaser and AAP in connection
with the Offer will be approximately as set forth below.
<TABLE>
<S> <C>
Filing Fees................................................. $ 30,595
Financial Advisory Fees and Expenses of Purchaser
Morgan Stanley............................................ $2,000,000
J.P. Morgan............................................... $1,000,000
Financial Advisory Fees and Expenses of AAP................. $2,050,000
Financial and Commitment Fees............................... $ 875,000
Accounting and Legal Fees and Expenses...................... $ 444,243
Printing and Mailing........................................ $ 479,782
Miscellaneous............................................... $ 444,280
----------
Total.................................................. $7,323,900
==========
</TABLE>
17. MISCELLANEOUS.
The Offer is not being made to, nor will Purchaser accept tenders from,
holders of Shares in any state of the United States or any foreign jurisdiction
in which the Offer or the acceptance thereof would not be in compliance with the
laws of such state or foreign jurisdiction. Purchaser is not aware of any state
or foreign jurisdiction the laws of which would prohibit the Offer or such
acceptance. In those jurisdictions whose laws require the Offer to be made by a
licensed broker or dealer, the Offer is being made on behalf of Purchaser by the
Dealer Managers or one or more registered brokers or dealers licensed under the
laws of such jurisdictions.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OR RECOMMENDATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE
CONTAINED HEREIN, IN THE LETTER OF TRANSMITTAL OR IN THE EXPLANATORY STATEMENT.
IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PURCHASER.
NEW AAP LIMITED
32
<PAGE> 36
SCHEDULE I
PURCHASER EXECUTIVE OFFICERS AND DIRECTORS; AAP EXECUTIVE
OFFICERS AND DIRECTORS
PURCHASER DIRECTORS
Lawrence M. Call
Craig N. Meurlin
PURCHASER EXECUTIVE OFFICERS
Lawrence M. Call -- President
Craig N. Meurlin -- Vice President, Assistant Secretary
E.J. Thompson -- Secretary
May Coye -- Assistant Secretary
Messrs. Call and Meurlin are U.S. citizens.
The business address of the directors and executive officers of Purchaser is
7575 Fulton Street, East, Ada, Michigan 45355.
AAP DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
DIRECTOR/EXECUTIVE
NAME AGE POSITION OFFICER SINCE
- ---- --- -------- ------------------
<S> <C> <C> <C>
Stephen A. Van Andel............. 43 Chairman, Director 1994
Richard M. DeVos, Jr. ........... 43 Vice Chairman, Director 1994
Douglas L. DeVos................. 34 President and Director 1999
Eoghan M. McMillan............... 64 Director 1994
Jack C.K. So..................... 54 Director 1994
John C.C. Chan................... 56 Director 1996
L.H. Choong...................... 52 Director 1993
Eva Cheng........................ 46 Executive Vice President; Director 1993
Lynn Lyall....................... 46 Chief Financial Officer, Vice
President and Treasurer 1999
Lawrence M. Call................. 57 Vice President 1993
Craig N. Meurlin................. 47 Vice President, General Counsel and
Assistant Secretary 1993
John C. Brockman................. 55 Vice President, Distributor Relations 1997
Percy Chin....................... 44 Vice President, General Manager --
East China 1996
Patrick Hau...................... 47 Vice President, General Manager --
National Operations 1996
Audie Wong....................... 47 Vice President, General Manager --
North China 1995
Martin Liou...................... 41 General Manager -- Taiwan 1997
Low Han Kee...................... 40 Regional Manager -- Malaysia 1997
Preecha Prakobkit................ 51 General Manager -- Thailand 1997
Peter Williams................... 45 General Manager -- Australia 1997
Betty Yeung...................... 50 General Manager -- South China 1997
John C.R. Collis................. 41 Secretary 1993
</TABLE>
Stephen A. Van Andel, age 43, has been Chairman of AAP since January 1995
and a Director since 1994. Since January 1995, Mr. Van Andel has been Vice
Chairman of Amway Japan Limited. Mr. Van Andel has been Chairman of Amway since
1995 and was a member of the Policy Board of Amway from 1992 through August 31,
1999. He has been on the Board of Directors of Amway since September 1, 1999.
Mr. Van Andel
S-1
<PAGE> 37
was Chairman of the Executive Committee of Amway and Vice President -- Corporate
Affairs of Amway from 1993 to 1995. He was appointed Vice President -- Marketing
of Amway in 1988 and in 1991, became Vice President -- Americas. Prior to 1988,
Mr. Van Andel held various administrative and management positions with Amway.
He holds a Bachelor's Degree from Hillsdale College and a Master's of Business
Administration from Miami University. Mr. Van Andel is also a director of
Michigan National Bank Corp. and Amway Japan Limited.
Richard M. DeVos, Jr., age 43, has been a Director of AAP since 1994 and
Vice Chairman since October 15, 1999. He served as President from January 1995
through October 15, 1999. Since January 1995, Mr. DeVos has been Chairman of
Amway Japan Limited. He has been President of Amway since 1993 and was a member
of the Policy Board of Amway from 1992 through August 31, 1999. He has been on
the Board of Directors of Amway since September 1, 1999. Mr. DeVos was President
and Chief Executive Officer of the Orlando Magic Ltd. from 1991 to 1993. He is
Chairman of the Windquest Group, a multi-company management group which he
founded in 1989. Prior to that, Mr. DeVos was Vice President -- International of
Amway since 1984. Previously, he held various research and development,
manufacturing, distribution, marketing, finance, public relations and government
affairs positions with Amway. Mr. DeVos holds a Bachelor of Business
Administration Degree from Northwood University and has attended the Executive
Study Program at the Wharton School of the University of Pennsylvania. He is
also a director of Old Kent Financial Corporation and Amway Japan Limited.
Douglas L. DeVos, age 34, has been a director of AAP since April 14, 1999
and President since October 15, 1999. Since June 1998, Mr. DeVos has been Senior
Vice President -- Asia Pacific Region, Global Distributor Relations of Amway and
a member of the Policy Board of Amway since 1989. Mr. DeVos has been on the
Board of Directors of Amway since September 1, 1999. He was appointed Vice
President, North American Sales, of Amway in 1993 and became Senior Vice
President, Managing Director -- Americas of Amway from 1996 to 1998. Prior to
1993, Mr. DeVos held various administrative and management positions with Amway.
He holds a Bachelor of Science Degree from Purdue University Krannert School of
Management. Mr. DeVos is also a director of National City Bank.
Eoghan M. McMillan, age 64, has been a director of AAP and the Chairman of
the Compensation Committee and a member of the Audit Committee since 1994. Mr.
McMillan has also been chairman of AAP's Special Committee since October 1999.
Mr. McMillan is the Chairman of Rodamco Asia N.V. incorporated in the
Netherlands, and Chairman of Rodamco Asia Management Pte Ltd. Prior thereto, he
practiced with Arthur Andersen & Co. since 1959 and served as Country Managing
Partner for its practices in Hong Kong and China from 1979 until September 1993
and as Regional Managing Partner for Southeast Asia for most of this period.
From 1989 to 1992, Mr. McMillan was Chairman of the Hong Kong Futures Exchange
and a director of its wholly-owned subsidiary, Hong Kong Futures Exchange
Clearing Corporation. He is a Certified Public Accountant, a Fellow of the
Chartered Association of Certified Accountants in the United Kingdom and a
Fellow of the Hong Kong Society of Accountants. Mr. McMillan was appointed by
the Hong Kong government as a Director of the Board of Hong Kong Securities
Clearing Company Limited. He is also a director of Vitasoy International
Holdings Ltd., Sun Hung Kai Development (China) Ltd., Shangri-la Asia Ltd., Land
Development Corporation, Pengursan Danaharta Nasional Berhad, Huan He Pacific
Limited, RoProperty Investment Management Pacific Limited, Hong Kong Securities
Clearing Company Ltd., Port Moresby Investments and several other entities in
which Rodamco holds investments, principally in countries in the Asia Pacific
region.
Jack C.K. So, age 54, has been a director of AAP and the Chairman of the
Audit Committee and a member of the Compensation Committee since 1994. Mr. So
has also been a member of AAP's Special Committee since October 1999. Mr. So is
Chairman of the Hong Kong Mass Transit Railway Corporation and has held such
position since 1995. From 1992 to 1995, he served as Managing Director of Sun
Hung Kai Development (China) Ltd. Previously, Mr. So served as Executive
Director of the Hong Kong Trade Development Council since 1985. Prior to that,
he spent seven years in the private sector and held various senior posts in
stockbrokering, trade and banking. Before joining the private sector, Mr. So
served as Administrative Officer and held significant positions in various
departments of the Hong Kong government. Mr. So holds a Bachelor's Degree from
the University of Hong Kong.
S-2
<PAGE> 38
John C.C. Chan, age 56, has been a director of AAP and a member of the
Compensation and Audit Committees since 1996. Mr. Chan has also been a member of
AAPs Special Committee since October 1999. Since 1993, Mr. Chan has been
Managing Director of The Kowloon Motor Bus Company, one of the largest privately
owned and operated bus companies in the world. He served in many governmental
positions in Hong Kong from 1967 to 1993. Mr. Chan is a director of Hang Seng
Bank Limited and of Guangdong Investment Limited, Hong Kong, a member of the
Council of the Stock Exchange of Hong Kong, Director of Hong Kong Exchanges and
Clearing Limited and a Chairman of the Hong Kong Securities Clearing Company
Limited. He holds degrees in English literature and management studies from the
University of Hong Kong.
L.H. Choong, age 52, has been a Director of AAP since its formation in
1993. Mr. Choong was an Executive Vice President of AAP from 1993 to 1998 and
held the positions of Managing Director of Amway (Malaysia) Sdn. Bhd. from 1981
to 1998 and Amway (Thailand) Limited from 1987 through August 31, 1997. He
joined Amway (Malaysia) Sdn. Bhd. in 1978. Before joining Amway (Malaysia) Sdn.
Bhd., Mr. Choong held various marketing, sales and product management positions
with ESSO Malaysia Berhad, Diethelm (Malaysia) Sdn. Bhd. and Colgate-Palmolive
(Malaysia) Sdn. Bhd. He holds a Bachelor's Degree from the University of Malaya.
Eva Cheng, age 46, has been Executive Vice President and a Director of AAP
since its formation in 1993. Ms. Cheng serves as Managing Director of the
Greater China Region. She joined Amway International, Inc. in 1977 and was named
General Manager of the Hong Kong operation in 1980, serving as Managing Director
of its Hong Kong and Taiwan operations from 1987 to 1993. Prior to joining
Amway, Ms. Cheng worked in various executive officer positions in the Hong Kong
government. She has a Bachelor's Degree and a Master's of Business
Administration from the University of Hong Kong.
Lynn Lyall, age 46, has been Chief Financial Officer, Vice President and
Treasurer of AAP since July 1, 1999. Mr. Lyall has also served as Vice President
of Finance of Amway since July 1, 1999. Prior to joining Amway, he had been
Executive Vice President and Chief Financial Officer of Blockbuster
Entertainment, Inc. since 1997. Before becoming Chief Financial Officer of
Blockbuster, Mr. Lyall held various financial positions with Cadbury Schweppes,
PLC from 1990 until 1997. He also held financial positions with Bordo Citrus
Products, Inc., Kraft, Inc. and Coca-Cola Company. Prior to that, Mr. Lyall
spent six years in public accounting with Arthur Anderson & Co. He is a
certified Public Accountant and holds a Bachelor's Degree from Northwestern
University.
Lawrence M. Call, age 57, has been Vice President of AAP since its
formation in 1993. Mr. Call served as Chief Financial Officer and Treasurer of
AAP until July 1, 1999. He has also served as Chief Financial Officer of Amway
since 1991. Prior to joining Amway, Mr. Call had been Treasurer of PPG
Industries, a manufacturer of flat glass, fiberglass, coatings, resins
industrial and special chemicals, since 1984. Before becoming Treasurer of PPG
Industries, he had held various other financial control positions with PPG
Industries. Prior to that, Mr. Call spent 15 years in public accounting with
Deloitte, Haskins and Sells (the predecessor to Deloitte and Touche). He is a
Certified Public Accountant and holds a Bachelor's Degree from Loyola
University.
Craig N. Meurlin, age 47, has been Vice President, General Counsel and
Assistant Secretary of AAP since 1993. Mr. Meurlin is Senior Vice President,
General Counsel and Secretary of Amway and has held such positions since 1993.
Prior to that, Mr. Meurlin was a partner in the law firm of Jones, Day, Reavis &
Pogue. Mr. Meurlin holds a Bachelors of Arts Degree from the University of
Vermont and a Juris Doctor from the University of Virginia.
John C. Brockman, age 55, is Vice President -- Distributor Relations of AAP
and has held such position since October 29, 1997. Mr. Brockman is also Director
of Worldwide Sale Plan Administration for Amway Corporation. He joined Amway in
1973 as a coordinator in the Meeting and Travel Department and was promoted to
Manager of that department in 1975. Mr. Brockman was named Regional Manager for
Amway's Western Sales Region in 1977. In November 1981, Mr. Brockman was
promoted to the position of Director -- International Sales, holding such
position until his promotion to his current position. He holds a Bachelor's
Degree in Business Administration from the University of Southern California.
S-3
<PAGE> 39
Percy Chin, age 44, is Vice President and General Manager of Amway (China)
Co. Ltd. C East China and has held such position since January 1996. Mr. Chin
joined Amway China in 1992 as financial controller and was promoted to Regional
Director of Finance and Administration in 1995. Prior to joining Amway, he held
the position as Director of Finance at Heinz China, China Dyeing Holding Ltd.,
and with the Canadian Government -- Department of Education. Mr. Chin is a
member of Canadian Certified Management Accountants and holds Bachelor's Degrees
in Science and Communication from the University of Saskatchewan, Canada.
Patrick Hau, age 47, is Vice President and General Manager -- National
Operations of Amway (China) Co. Ltd. Mr. Hau joined Amway Hong Kong in 1987 as
Financial Controller, serving as General Manager from 1991 to 1996. Prior to
joining AAP, he was employed as financial controller at Pearl & Dean Ltd. in
Hong Kong and Australia and was a tax consultant with Price Waterhouse and a tax
officer of the Inland Revenue Department. Mr. Hau holds a diploma in Business
Studies from Hong Kong Polytechnic, a post-graduate diploma in Accounting &
Finance from the New South Wales Institute of Technology, and a Master's of
Business Administration Degree from Oklahoma City University. He is a member of
the Hong Kong Society of Accountants, the Chartered Association of Certified
Accountants, the Australia Society of Accountants and the Chartered Institute of
Secretaries & Administrators.
Audie Wong, age 47, is Vice President and General Manager of Amway (China)
Co. Ltd. -- North China and has held such position since May 1997. Mr. Wong
joined Amway Hong Kong in 1981 as Marketing Coordinator and was promoted to
Marketing Manager in 1986. From 1991 to 1994, Mr. Wong was General Manager of
Amway Taiwan and served as General Manager of South China from 1994 until April
1997. He holds a Bachelor of Arts Degree from State University of New York at
Buffalo, a Master's Degree from the University of Oregon and a Master's of
Business Administration from the University of Oklahoma City.
Martin Liou, age 41, is General Manager of Amway Taiwan Company, Limited
and has held such position since May 1997. Mr. Liou joined Amway Taiwan in 1985
as Distribution Manager, becoming Distribution Director of the Greater China
Region in 1994. In 1995, he assumed dual roles, Operations Director for Amway
Taiwan and Director of Planning and Development for Greater China, which he held
until March 1997 when he assumed the responsibilities as Deputy General Manager
of Amway Taiwan. Prior to joining Amway Taiwan, he was Production Supervisor for
ISI Company. Mr. Liou is a member of the Taiwan Direct Selling Association and
holds a Bachelor's Degree in Chemical Engineering from National Taiwan
University.
Low Han Kee, age 40, is General Manager of Amway (Malaysia) Sdn. Bhd, and
has held such position since 1993. Mr. Low joined Amway Malaysia in 1990 as
Divisional Manager, Finance & Administration. Prior to joining Amway Malaysia,
he worked for five years in various financial positions for companies listed on
the Kuala Lumpur Stock Exchange. From 1984 to 1985, Mr. Low worked for First
Allied Corporation Berhad and as Group Chief Accountant for Mulpha International
Trading Corporation Berhad from 1985 to 1990. Mr. Low is a Certified Public
Accountant and a member of The Malaysian Association of Certified Public
Accountants.
Preecha Prakobkit, age 51, is General Manager of Amway (Thailand) Ltd. and
has held such position since 1990. Mr. Prakobkit joined Amway Thailand in 1988
as Sales and Marketing Manager and was promoted to Sales Manager in 1990. Prior
to joining Amway Thailand, he worked as Marketing Manager for the Mall
Department Store and Product Manager for Philips Electrical Company. Mr.
Prakobkit is the Secretary General of the Thai Direct Selling Association and
holds a Bachelor's Degree in Marketing from Walter E. Heller School of Business.
Peter Williams, age 45, is General Manager of Amway of Australia and has
held such position since June 1997. Mr. Williams joined Amway of New Zealand in
March 1988 as the Northern Region Sales Manager and was promoted to National
Sales Manager in November 1988. He became General Manager in 1996, serving until
his promotion to his current assignment at Amway of Australia. Prior to joining
Amway of New Zealand, Mr. Williams worked for Enzed Fluid Connectors as Export
Sales Manager in the Middle East and as London Branch Manager for Extraman/OPS.
He has been an Executive Member of the New Zealand
S-4
<PAGE> 40
Direct Selling Association. Mr. Williams attended Northcote College and holds a
Diploma in Business (Marketing) from the University of Auckland.
Betty Yeung, age 50, is General Manager of Amway (China) Co. Ltd. C South
China and has held such position since May 1997. Mrs. Yeung joined Amway Hong
Kong as Marketing Coordinator in 1979, and was promoted to Sales/Marketing
Manager in 1980 and Sales/Public Relations Manager in 1985. She joined Amway
Canada as Distributor Relation Manager in 1991. Mrs. Yeung rejoined Amway China
in 1994 as Director of External Affairs and was appointed Director of Sales,
South China in 1996, General Manager, South China in 1996 and General Manager
National Sales in 1999. Prior to joining Amway Hong Kong, Mrs. Yeung worked at
Rediffusion Co. in customer service related positions. She holds a Bachelor's
Degree from the Chinese University of Hong Kong and a Diploma in Management
Studies from Hong Kong Polytechnic.
John C.R. Collis, age 41, is an attorney at Conyers, Dill & Pearman,
Hamilton, Bermuda.
S-5
<PAGE> 41
Goldman, Sachs & Co. | 85 Broad Street | New York, New York 10004
Tel: 212-902-1000
[GOLDMAN SACHS LOGO]
SCHEDULE II
FAIRNESS OPINION OF THE AAP FINANCIAL ADVISOR
PERSONAL AND CONFIDENTIAL
November 15, 1999
Special Committee of the Board of Directors
Amway Asia Pacific, Ltd.
38/F, The Lee Gardens
33 Hysan Avenue
Causeway Bay, Hong Kong
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders (other than the Controlling Shareholders (as defined below))
of the outstanding shares of Common Stock, par value US$.01 per share (the
"Shares"), of Amway Asia Pacific, Ltd. (the "Company") of the US$18.00 per Share
in cash (the "Acquisition Price") to be received by such holders in the Tender
Offer and the Amalgamation or the Compulsory Acquisition (each as defined below)
pursuant to the Tender Offer and Amalgamation Agreement, dated as of November
15, 1999, among Apple Hold Co., L.P. ("Hold Co."), New AAP Limited ("Buyer") and
the Company (the "Agreement"). The Agreement provides for a tender offer (the
"Tender Offer") for all of the Shares, other than Shares owned by the DeVos and
Van Andel families and their affiliates (the "Controlling Shareholders"),
pursuant to which Buyer will pay the Acquisition Price for each Share accepted.
Buyer is an entity controlled and beneficially owned directly and indirectly by
the Controlling Shareholders of the Company, who currently beneficially own
84.9% of the Shares in the aggregate. The Agreement further provides that
following completion of the Tender Offer, the Company will be amalgamated with
Buyer, with the Company continuing as the amalgamated company (the
"Amalgamation"), and each outstanding Share (other than Shares already owned by
Hold Co. or the Controlling Shareholders) will be converted into the right to
receive the Acquisition Price. The Agreement also provides, however, that if
following Buyer's purchase of Shares pursuant to the Tender Offer Buyer has
purchased in the Tender Offer and/or owns a sufficient number of Shares
compulsorily to acquire the remaining outstanding Shares from the remaining
public holders of Shares pursuant to the Bermuda Companies Act of 1981, as
amended (the "Act"), the Company and Buyer may not consummate the Amalgamation
and instead Buyer will purchase the remaining outstanding Shares from the
remaining public holders of Shares pursuant to the Act for the Acquisition Price
(the "Compulsory Acquisition").
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having acted as financial advisor to the Special
Committee of the Board of Directors in connection with, and having participated
in certain of the negotiations leading to, the Agreement. Goldman, Sachs & Co.
also provides a full range of financial advisory and securities services and, in
the course of its normal trading activities, may from time to time effect
transactions and hold securities, including derivative securities, of the
Company for its own account and for the accounts of customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 20-F of the
Company for the five fiscal years ended August 31, 1998; certain interim reports
to stockholders and Quarterly Reports on Form 6-K of the Company; certain
<PAGE> 42
Special Committee of the Board of Directors
Amway Asia Pacific, Ltd.
November 15, 1999
Page Two
other communications from the Company to its stockholders; and certain internal
financial analyses and forecasts for the Company prepared by its management. We
also have held discussions with members of the senior management of the Company
regarding its past and current business operations, financial condition and
future prospects. In addition, we have reviewed the reported price and trading
activity for the Shares, compared certain financial and stock market information
for the Company with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations and performed such other studies and analyses as we
considered appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. In that regard, we have
assumed with your consent that the internal financial forecasts prepared by the
management of the Company have been reasonably prepared on a basis reflecting
the best currently available estimates and judgments of the Company. In
addition, we have not made an independent evaluation or appraisal of the assets
and liabilities of the Company or any of its subsidiaries and we have not been
furnished with any such evaluation or appraisal. We note that the Controlling
Shareholders own a majority of the Shares, and that the Controlling Shareholders
have represented to Goldman Sachs and the Special Committee of the Board of
Directors of the Company that the Controlling Shareholders will not sell their
Shares to any third party. Accordingly, we were not requested to solicit, and
did not solicit, interest from other parties with respect to an acquisition of
or other business combination with the Company. Our advisory services and the
opinion expressed herein are provided for the information and assistance of the
Special Committee of the Board of Directors of the Company in connection with
its consideration of the transactions contemplated by the Agreement and such
opinion does not constitute a recommendation as to whether or not any holder of
Shares should tender such Shares in connection with such transaction or should
vote in respect of the Amalgamation.
Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that as of the date hereof the
US$18.00 per Share in cash to be received by the holders of Shares (other than
the Controlling Shareholders) in the Tender Offer and the Amalgamation or the
Compulsory Acquisition is fair from a financial point of view to such holders.
Very truly yours,
/s/ Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
<PAGE> 43
SCHEDULE III
AUDITED FINANCIAL STATEMENTS OF AMWAY ASIA PACIFIC LTD.
FOR THE FISCAL YEARS ENDED AUGUST 31, 1996, 1997 AND 1998 AND
UNAUDITED FINANCIAL STATEMENTS FOR THE NINE MONTHS
ENDED MAY 31, 1999
AMWAY ASIA PACIFIC LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT AUDITORS:
Report of independent auditors.............................. F-2
Consolidated balance sheets at August 31, 1998 and 1997..... F-3
Consolidated statements of income for the years ended August
31, 1998, 1997 and 1996................................... F-4
Consolidated statements of shareholders' equity for the
years ended August 31, 1998, 1997 and 1996................ F-5
Consolidated statements of cash flows for the years ended
August 31, 1998, 1997 and 1996............................ F-6
Notes to consolidated financial statements.................. F-7
UNAUDITED INTERIM FINANCIAL STATEMENTS:
Consolidated statements of income for the nine months ended
May 31, 1999 and 1998..................................... F-21
Consolidated balance sheets at May 31, 1999 and August 31,
1998...................................................... F-22
Consolidated statements of cash flows for the nine months
ended May 31, 1999 and 1998............................... F-23
Notes to consolidated financial statements.................. F-24
</TABLE>
F-1
<PAGE> 44
INDEPENDENT AUDITORS REPORT
The Board of Directors and Shareholders
Amway Asia Pacific Ltd.:
We have audited the accompanying consolidated balance sheets of Amway Asia
Pacific Ltd. and subsidiaries as of August 31, 1998 and 1997, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the years in the three-year period ended August 31, 1998. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Amway Asia
Pacific Ltd. and subsidiaries as of August 31, 1998 and 1997, and the results of
their operations and their cash flows for each of the years in the three-year
period ended August 31, 1998, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
--------------------------------------
KPMG LLP
Detroit, Michigan
October 2, 1998
F-2
<PAGE> 45
AMWAY ASIA PACIFIC LTD.
CONSOLIDATED BALANCE SHEETS
AUGUST 31, 1998 AND 1997
(U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $157,157 $207,915
Short-term investments (note 4)........................... 143 48,613
Accounts receivable, net of allowance for doubtful
accounts of $2,144 and $2,093, respectively............ 21,264 17,995
Inventories (note 5)...................................... 75,104 106,227
Prepaid expenses and other current assets (notes 9 and
11).................................................... 23,234 28,913
-------- --------
Total current assets.............................. 276,902 409,663
Property, plant and equipment, net (note 6)................. 104,346 94,590
Other assets................................................ 5,825 15,890
-------- --------
Total assets...................................... $387,073 $520,143
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable (note 9)................................. $ 59,799 $ 85,628
Short-term borrowings (note 17)........................... 18,573 --
Accrued expenses and income taxes (notes 7 and 11)........ 92,150 128,023
Distributor deposits...................................... 4,252 9,561
-------- --------
Total current liabilities......................... 174,774 223,212
Deferred income taxes (note 11)............................. 184 1,079
-------- --------
Total liabilities................................. 174,958 224,291
-------- --------
Minority interests (note 14)................................ 36,017 43,368
-------- --------
Shareholders' equity (note 15):
Preferred stock, $0.01 par value -- authorized 20,000,000
shares, none issued.................................... -- --
Common stock, $0.01 par value -- authorized 110,000,000
shares; issued and outstanding: 56,441,960 shares...... 564 564
Additional paid-in capital................................ 79,246 79,605
Unrealized gain on marketable equity securities........... -- 582
Cumulative foreign currency translation adjustments....... (44,182) (16,955)
Retained earnings......................................... 140,470 188,688
-------- --------
Total shareholders' equity........................ 176,098 252,484
-------- --------
Commitments and contingencies (notes 8, 13 and 15)
Total liabilities and shareholders' equity........ $387,073 $520,143
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-3
<PAGE> 46
AMWAY ASIA PACIFIC LTD.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED AUGUST 31, 1998, 1997 AND 1996
(U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net sales.................................................. $587,579 $845,166 $716,757
Cost of sales (note 9)..................................... 257,220 313,287 269,377
-------- -------- --------
330,359 531,879 447,380
-------- -------- --------
Operating expenses (note 9):
Distributor incentives................................... 157,018 219,111 186,092
Distribution expenses.................................... 45,199 49,662 40,777
Selling and administrative expenses...................... 102,849 114,523 93,367
-------- -------- --------
Total operating expenses......................... 305,066 383,296 320,236
-------- -------- --------
Operating income...................................... 25,293 148,583 127,144
Other income -- net (note 10).............................. 9,683 24,707 19,781
-------- -------- --------
Income before income taxes and minority interest...... 34,976 173,290 146,925
Income taxes (note 11)..................................... 23,508 54,909 55,709
-------- -------- --------
Income before minority interest....................... 11,468 118,381 91,216
Minority interest in income of consolidated subsidiaries
(note 14)................................................ 10,015 14,350 8,983
-------- -------- --------
Net income............................................ $ 1,453 $104,031 $ 82,233
======== ======== ========
Basic and diluted earnings per share (note 16)............. $ 0.03 $ 1.76 $ 1.37
======== ======== ========
Dividends per share paid to Company shareholders........... $ 0.88 $ 0.84 $ 1.02
======== ======== ========
Weighted average number of shares outstanding (000s)....... 56,442 59,124 60,039
======== ======== ========
Weighted average number of shares outstanding including the
effect of dilutive securities (000s) (note 16)........... 56,446 59,176 60,097
======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-4
<PAGE> 47
AMWAY ASIA PACIFIC LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED AUGUST 31, 1998, 1997 AND 1996
(U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UNREALIZED CUMULATIVE
GAIN ON FOREIGN
ADDITIONAL MARKETABLE CURRENCY TOTAL
COMMON PAID-IN EQUITY TRANSLATION RETAINED SHAREHOLDERS'
STOCK CAPITAL SECURITIES ADJUSTMENTS EARNINGS EQUITY
------ ---------- ---------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances at August 31, 1995.......... $600 $213,443 $ -- $ (875) $116,448 $ 329,616
Net income........................... -- -- -- -- 82,233 82,233
Dividends of $1.02 per share......... -- -- -- -- (61,163) (61,163)
Net change in fair value of
marketable equity securities....... -- -- 134 -- -- 134
Net change in cumulative foreign
currency translation adjustments... -- -- -- 1,700 -- 1,700
Stock options exercised for 10,000
common shares...................... -- 180 -- -- -- 180
Issuance of 9,000 restricted common
shares............................. -- 315 -- -- -- 315
Unearned portion of restricted common
stock.............................. -- (182) -- -- -- (182)
Distribution to majority shareholders
for purchase of Amway (B) Sdn. Bhd.
in excess of book value............ -- -- -- -- (3,196) (3,196)
Amount resulting from issuance of
Amway (Malaysia) common stock...... -- 14,579 -- -- -- 14,579
---- -------- ----- -------- -------- ---------
Balances at August 31, 1996.......... 600 228,335 134 825 134,322 364,216
Net income........................... -- -- -- -- 104,031 104,031
Dividends of $0.84 per share......... -- -- -- -- (49,665) (49,665)
Stock options exercised for 84,217
common shares...................... 1 1,863 -- -- -- 1,864
Purchase of common stock for
retirement......................... (37) (150,736) -- -- -- (150,773)
Net change in cumulative foreign
currency translation adjustments... -- -- -- (17,780) -- (17,780)
Net change in fair value of
marketable equity securities....... -- -- 448 -- -- 448
Amortization of unearned portion of
restricted common stock............ -- 143 -- -- -- 143
---- -------- ----- -------- -------- ---------
Balances at August 31, 1997.......... 564 79,605 582 (16,955) 188,688 252,484
Net income........................... -- -- -- -- 1,453 1,453
Dividends of $0.88 per share......... -- -- -- -- (49,671) (49,671)
Amway (Malaysia) repurchase of common
stock held by minority shareholders
(note 14).......................... -- (397) -- -- -- (397)
Amortization of unearned portion of
restricted common stock............ -- 38 -- -- -- 38
Realization of gain upon sale of
securities......................... -- -- (582) -- -- (582)
Net change in cumulative foreign
currency translation adjustments... -- -- -- (27,227) -- (27,227)
---- -------- ----- -------- -------- ---------
Balances at August 31, 1998.......... $564 $ 79,246 $ -- $(44,182) $140,470 $ 176,098
==== ======== ===== ======== ======== =========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-5
<PAGE> 48
AMWAY ASIA PACIFIC LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED AUGUST 31, 1998, 1997 AND 1996
(U.S. DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996
-------- --------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 1,453 $ 104,031 $ 82,233
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................ 13,516 13,009 10,896
Deferred income taxes................................ (2,662) (4,934) 4,518
Loss (gain) on sale or disposal of property and
equipment.......................................... 1,582 (44) 22
Loss (gain) on sales of investments.................. (637) 5 --
Changes in assets and liabilities:
Accounts receivable................................ (7,932) (7,522) (2,385)
Inventories........................................ 18,162 (31,984) 17,293
Prepaid expenses and other current assets.......... 2,964 (5,658) 10,138
Accounts payable................................... (18,894) 46,838 4,798
Accrued expenses and income taxes.................. (15,106) 10,611 17,105
Distributor deposits............................... (4,033) (1,617) 4,281
Other.............................................. 21,361 23,248 7,966
-------- --------- --------
Net cash provided by operating activities....... 9,774 145,983 156,865
-------- --------- --------
Cash flows from investing activities:
Capital expenditures.................................... (33,155) (28,546) (9,956)
Proceeds from sale of equipment......................... 375 701 415
Purchases of short-term investments..................... (80,851) (98,612) (35,376)
Proceeds from maturity of investments................... 117,548 78,284 85,353
Issuance of note receivable............................. -- (1,126) --
Payments received on notes receivable................... 273 -- --
-------- --------- --------
Net cash provided by (used in) investing
activities.................................... 4,190 (49,299) 40,436
-------- --------- --------
Cash flows from financing activities:
Net short-term borrowings............................... 18,529 -- --
Principal payments on notes payable and capital lease
obligations.......................................... -- (27,564) (8,953)
Dividends paid to shareholders.......................... (49,671) (49,665) (61,163)
Dividends paid by subsidiaries to minority
shareholders......................................... (5,976) (3,112) (3,648)
Proceeds from issuance of common stock.................. -- 1,864 180
Purchase of common stock for retirement................. -- (150,773) --
Amway (Malaysia) purchase for retirement of common stock
held by minority shareholders........................ (2,129) -- --
Net cash received from acquisition of Amway (B) Sdn.
Bhd. ................................................ -- -- 1,818
Proceeds from issuance of Amway (Malaysia) common
stock................................................ -- -- 33,265
-------- --------- --------
Net cash used in financing activities................ (39,247) (229,250) (38,501)
-------- --------- --------
Effect of exchange rate changes on cash................... (25,475) (20,201) 1,028
-------- --------- --------
Net increase (decrease) in cash and cash equivalents...... (50,758) (152,767) 159,828
Cash and cash equivalents at beginning of year............ 207,915 360,682 200,854
-------- --------- --------
Cash and cash equivalents at end of year.................. $157,157 $ 207,915 $360,682
======== ========= ========
Supplemental disclosures of cash flow information:
Interest paid........................................... $ 118 $ 51 $ 273
======== ========= ========
Income taxes paid....................................... $ 35,768 $ 60,772 $ 54,486
======== ========= ========
Non-cash investing activities:
Purchase of Amway (B) Sdn. Bhd. ..................... $ -- $ -- $ 4,809
======== ========= ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-6
<PAGE> 49
AMWAY ASIA PACIFIC LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1998, 1997 AND 1996
(U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(1) BASIS OF PRESENTATION
Amway Asia Pacific Ltd. ("AAP"), a Bermuda corporation, was incorporated on
September 7, 1993. On December 21, 1993, AAP completed its initial public
offering of common stock. AAP has subsidiaries in Australia, Brunei, China (the
Mainland, the Hong Kong Special Administrative Time Region, Macau and Taiwan),
Malaysia, New Zealand, and Thailand. Each subsidiary is wholly owned, except
Malaysia, in which AAP has a 51.7% ownership equity position (see note 14), and
Thailand, a partnership in which AAP is a general partner with a 99.0% economic
interest.
On April 30, 1996, all outstanding shares in Amway (B) Sdn. Bhd., the
exclusive distribution vehicle for Amway in Brunei, were acquired by Amway
(Malaysia) Sdn. Bhd. from Amway International Development, Inc. for a purchase
price of $4.8 million which was paid from the proceeds of the initial public
offering of the Malaysian subsidiary (see note 14). Both Amway (Malaysia) Sdn.
Bhd. and Amway International Development are considered entities under common
control as the ultimate controlling shareholders for both entities are the same
parties. As a result, the difference between the purchase price and the net
asset value of Amway (B) Sdn. Bhd. at April 30, 1996 of $3.2 million was
recorded as a distribution to these common shareholders. The results of
operations for Amway (B) Sdn. Bhd. subsequent to the date of acquisition are
included in the consolidated statements of income.
The consolidated financial statements include AAP and its subsidiaries. All
significant intercompany transactions and balances have been eliminated. Certain
prior year amounts have been reclassified to conform to the current year
presentation.
(2) DESCRIPTION OF BUSINESS
AAP is the exclusive distribution vehicle for Amway in Australia, Brunei,
China, Malaysia, New Zealand, and Thailand.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Cash Equivalents
For purposes of the consolidated balance sheets and statements of cash
flows, AAP considers all highly liquid debt instruments with maturities of three
months or less at the time of purchase to be cash equivalents.
(b) Short-term Investments
Management determines the proper classifications of investments in
obligations with fixed maturities and marketable equity securities at the time
of purchase and reevaluates such designations as of each balance sheet date. All
securities covered by Statement of Financial Accounting Standards ("SFAS") No.
115, "Accounting for Certain Investments in Debt and Equity Securities," are
designated as either held to maturity or available for sale. Securities
designated as held to maturity are stated at amortized cost, and securities
designated as available for sale are stated at fair value, with unrealized gains
and losses reported in a separate component of shareholders' equity. The
remaining investments at August 31, 1998 and 1997 consist of time deposits with
varied maturity dates within one year. These investments, which are not subject
to the provisions of SFAS No. 115, are carried at cost, which approximates
market value. Realized gains and losses on sales of investments, as determined
on a specific identification basis, are included in the consolidated statements
of income.
F-7
<PAGE> 50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(c) Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method.
(d) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Equipment held under
capital lease is stated at the present value of minimum lease payments at the
inception of the lease.
Depreciation is calculated primarily on the straight-line method over the
estimated useful lives. Equipment held under capital lease and leasehold
improvements are amortized straight-line over the shorter of the lease term or
estimated useful life of the asset.
(e) Long-Lived Assets
AAP adopted the provisions of SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", on September
1, 1996. This Statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Adoption of this Statement did not have an impact on AAP's
financial position, results of operations or liquidity.
(f) Other Assets
Other assets at August 31, 1998 and 1997 are stated at cost, net of
amortization, if any. At August 31, 1998, other assets primarily consist of
deposits, land use rights, and employee loans. At August 31, 1997, other assets
primarily consisted of deposits, land use rights, and employee loans as well as
prepaid royalties totaling $9,165.
(g) Minority Interests
Minority interest represents the minority shareholders' share of the equity
and net income in the Malaysia subsidiary and the minority partners' share of
the equity and net income in the Thailand subsidiary.
(h) Accounting for Sales or Repurchase of Stock by a Subsidiary
Gains or losses arising from the issuance or repurchase of stock by a
subsidiary is accounted for as a capital transaction in the consolidated
financial statements.
(i) Stock Based Compensation
Prior to September 1, 1996, AAP accounted for its stock option awards in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees", and related interpretations.
As such, compensation expense would be recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price. On
September 1, 1996, AAP adopted SFAS No. 123, "Accounting for Stock-Based
Compensation", which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in fiscal
years beginning after December 15, 1994 as if the fair-value-based method
defined in SFAS No. 123 had been applied. AAP has elected to continue to apply
the provisions of APB Opinion No. 25 and provide the pro forma disclosure
provisions of SFAS No. 123.
F-8
<PAGE> 51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(j) Revenue Recognition
AAP recognizes sales when products are shipped to or through distributors.
A reserve for sales returns is accrued based on historical experience.
(k) Earnings Per Share
On September 1, 1997, AAP adopted SFAS No. 128 "Earnings per Share". This
Statement, which supersedes APB Opinion No. 15, requires the presentation of
basic and diluted earnings per share. Basic earnings per share is computed by
dividing income available to common shareholders by the weighted average number
of common shares outstanding during the year. Diluted earnings per share is
calculated similarly to basic earnings per share except that the denominator is
increased to include the effect of additional common shares that would have been
outstanding if all dilutive potential common shares had been issued.
(l) Foreign Currency Translation
All operations of AAP occur outside of the United States. Each operation's
local currency is considered its functional currency. No currency is dominant
within the group and transactions in Bermuda are minimal. Therefore, the U.S.
dollar is used for translation purposes since most merchandise purchase
transactions, as discussed below, are conducted in U.S. dollars. All assets and
liabilities are translated into U.S. dollars at the current exchange rate as of
the balance sheet date. Revenues and expenses are translated at average currency
exchange rates. Shareholders' equity is recorded at historical exchange rates.
The resulting translation adjustment is recorded as a separate component of
shareholders' equity. Transaction gains and losses are included in other income.
All of AAP's subsidiaries, except Australia and New Zealand, pay for their
purchases of products from Amway in U. S. dollars and bear the risk of foreign
currency exchange fluctuations. Australia and New Zealand pay for their
purchases of products from Amway in local currencies, thereby transferring the
immediate risk of foreign currency exchange rate fluctuations to Amway. Amway
has the right to modify its prices at any time on at least 30 days advance
notice to its affiliates.
(m) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make reasonable estimates
and assumptions in certain circumstances that affect the amounts reported in the
accompanying consolidated financial statements and notes. Ultimate resolution of
uncertainties could cause actual results to differ from those estimates.
(n) New Accounting Pronouncements
The Financial Accounting Standards Board ("FASB") issued SFAS No. 130,
"Reporting Comprehensive Income" in 1997. This Statement requires the reporting
of comprehensive income in addition to net income from operations. Comprehensive
income is a more inclusive financial reporting methodology that includes
disclosure of certain financial information that historically has not been
recognized in the calculation of net income. This statement is effective for
periods beginning after December 15, 1997. AAP will adopt this statement in the
first quarter of fiscal 1999.
The FASB also issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" in 1997. This Statement requires that public
companies report certain information about operating segments. It also requires
the reporting of certain information about AAP's products and services, the
geographic areas in which AAP operates and AAP's major customers. This statement
is effective for fiscal years beginning after December 15, 1997 and will affect
the disclosure requirements for the fiscal 1999 annual financial statements. AAP
is currently evaluating the impact of this statement.
F-9
<PAGE> 52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The FASB also issued SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities" in 1998. This Statement establishes comprehensive
accounting and reporting standards for derivative instruments and hedging
activities and is effective for fiscal years beginning after June 15, 1999. AAP
is currently evaluating the impact of this statement.
(4) INVESTMENTS
Securities subject to the provisions of SFAS No. 115 at August 31, 1998 and
1997 are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED
HOLDING HOLDING MARKET
COST GAINS LOSSES VALUE
------- ---------- ---------- -------
<S> <C> <C> <C> <C>
AUGUST 31, 1998:
Held to maturity:
Banker's acceptances.................... $15,154 $ -- $-- $15,154
Commercial paper........................ 255 -- -- 255
------- ---- -- -------
Total held to maturity.................. $15,409 $ -- $-- $15,409
======= ==== == =======
AUGUST 31, 1997:
Available for sale:
Common stock............................ $ 1,007 $582 $-- $ 1,589
======= ==== == =======
Held to maturity:
Banker's acceptances.................... $39,444 -- -- $39,444
Commercial paper........................ 1,368 -- -- 1,368
------- ---- -- -------
Total held to maturity.................. $40,812 $ -- $-- $40,812
======= ==== == =======
</TABLE>
All securities displayed in the above table at August 31, 1998 have
original maturities of 3 months or less and, accordingly, are classified on the
balance sheet as cash equivalents. All debt securities held at August 31, 1997
have original maturities between 3 months and 1 year and are classified on the
balance sheet as short-term investments. The common stock available for sale
investments at August 31, 1997 are also classified as short-term investments.
Short-term investments at August 31, 1998 and 1997 also include time deposits of
$143 and $6,212, respectively, and are stated at cost, which approximates market
value.
(5) INVENTORIES
Inventories consist of the following at August 31:
<TABLE>
<CAPTION>
1998 1997
------- --------
<S> <C> <C>
Raw materials............................................... $ 6,996 $ 15,263
Manufactured finished goods and finished goods purchased for
resale...................................................... 68,108 90,964
------- --------
Total..................................................... $75,104 $106,227
======= ========
</TABLE>
F-10
<PAGE> 53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(6) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following at August 31:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Land and improvements....................................... $ 7,633 $ 9,654
Buildings and improvements.................................. 46,151 28,630
Machinery and equipment..................................... 70,111 72,720
Leasehold improvements...................................... 15,760 16,585
Construction in progress.................................... 14,144 11,846
-------- --------
153,799 139,435
Less accumulated depreciation and amortization.............. (49,453) (44,845)
-------- --------
Net property, plant and equipment......................... $104,346 $ 94,590
======== ========
</TABLE>
(7) ACCRUED EXPENSES AND INCOME TAXES
Accrued expenses and income taxes consist of the following at August 31:
<TABLE>
<CAPTION>
1998 1997
------- --------
<S> <C> <C>
Distributor incentives...................................... $29,837 $ 35,028
Distributor seminars........................................ 13,581 20,527
Income taxes................................................ 16,329 27,884
Deferred taxes.............................................. 3,029 4,900
Other taxes................................................. 2,362 2,766
Employee compensation and retirement........................ 7,565 6,998
Sales returns............................................... 6,491 15,861
Other....................................................... 12,956 14,059
------- --------
Total..................................................... $92,150 $128,023
======= ========
</TABLE>
(8) LEASES
AAP leases real estate under noncancelable operating leases which expire at
various dates through 2004. Future minimum annual rentals under these
noncancelable operating leases as of August 31, 1998, are as follows:
<TABLE>
<S> <C>
Year ending August 31:
1999........................................................ $ 9,579
2000...................................................... 7,650
2001...................................................... 4,019
2002...................................................... 3,462
2003...................................................... 1,724
Thereafter................................................ 233
-------
Total minimum lease payments................................ $26,667
=======
</TABLE>
Rental expense charged to operations for the years ended August 31, 1998,
1997 and 1996, approximated $11,801, $10,953 and $9,775 respectively, including
amounts paid under short-term cancelable leases.
F-11
<PAGE> 54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(9) RELATED PARTY TRANSACTIONS
AAP, as the distribution vehicle for Amway in the Asia Pacific markets in
which AAP operates, has a number of contractual relationships with Amway (1) for
the right to purchase Amway products which Amway makes available to its
international affiliates (the "Product Purchase Agreements"), (2) for the right
to manufacture and sell Amway licensed products in the PRC (the "PRC Technical
Agreement"), (3) for the right to use Amway's trade name and trademark along
with certain other intellectual property rights (the "Trademark License
Agreements"), (4) for receiving various executive management, administrative
support and information services (the "Amended and Restated Support Service
Agreements") and (5) for the right to use the Hong Kong and Taiwan distributor
lists (the "Distributor List and Certain Other Intangibles License Agreements").
Purchases from and other transactions with Amway for the years ended August
31 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Product purchases.................................. $151,560 $190,031 $141,001
PRC Technical royalty.............................. 885 3,725 1,960
Trademark license royalty.......................... 275 390 367
Support service and license fees................... 5,294 650 538
Distributor list royalty........................... 9,165 9,111 9,326
</TABLE>
Prices for products are governed by a price schedule which Amway
establishes periodically based upon a U.S. dollar "cost plus" base price
calculation. At August 31, 1998 and 1997, AAP owed Amway $31,337 and $30,061,
respectively, for the purchase of inventory. These amounts are included in
accounts payable.
On August 31, 1994, AAP entered into two non-interest bearing notes
aggregating $18,365 payable to Amway over two years for the prepayment of
royalties on the Hong Kong and Taiwan distributor lists. The notes were recorded
at their discounted present value of $17,368. The notes were paid in full in
fiscal 1996.
On July 31, 1995, AAP entered into seven non-interest bearing negotiable
promissory notes aggregating $27,946 payable to Amway over three years beginning
in fiscal 1997 for the prepayment of fiscal 1997, 1998 and 1999 royalties on the
Hong Kong and Taiwan distributor lists. One note totaling $4,480 was payable in
six equal semiannual installments commencing February 28, 1997; while the other
six notes, each totaling $3,911, were to become payable in six-month intervals,
with the first note payable on February 28, 1997. Each of the notes is
denominated in the local currency of the country to which they relate, thereby
transferring the risk of foreign currency exchange rate fluctuations to Amway.
AAP prepaid these notes in full on February 27, 1997.
Prepaid royalties totaling $9,165 are included as a component of prepaid
expenses at August 31, 1998 and 1997. Prepaid royalties totaling $9,165 are also
included as a component of other assets at August 31, 1997.
Under Amended and Restated Support Services Agreements between Amway, AAP
and its affiliates, Amway provides information systems, executive management,
investor relations services and certain administrative support services
including legal, accounting, tax, treasury, marketing, insurance, inventory
control and human resources services to AAP. AAP pays Amway software license
fees and maintenance charges with respect to information systems provided by
Amway; AAP pays Amway for other services based on the internal labor and other
direct and indirect costs incurred by Amway in providing such services. These
charges were instituted by Amway effective September 1, 1997. Prior to September
1, 1997, AAP paid Amway for providing executive management and investor
relations services; other administrative support services were provided by Amway
at no charge to AAP.
F-12
<PAGE> 55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(10) OTHER INCOME -- NET
Other income -- net consists of the following for the years ended August
31:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Interest income....................................... $11,792 $18,800 $17,979
Dividend income....................................... 411 3,661 2,212
Gain (loss) on foreign exchange....................... (3,914) (2,554) 82
Interest expense...................................... (1,329) (155) (273)
Other, net............................................ 2,723 4,955 (219)
------- ------- -------
Other income -- net................................. $ 9,683 $24,707 $19,781
======= ======= =======
</TABLE>
(11) INCOME TAXES
Income is subject to taxation in each country where AAP operates and it
files separate income tax returns in each country. Income taxes consist of the
following for the years ended August 31:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Current............................................... $25,403 $59,532 $51,191
Deferred.............................................. (1,895) (4,623) 4,518
------- ------- -------
Total............................................... $23,508 $54,909 $55,709
======= ======= =======
</TABLE>
The significant components of deferred income tax expense attributable to
income before income taxes for the years ended August 31 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- ------
<S> <C> <C> <C>
Deferred taxes on undistributed earnings............... $(1,937) $(4,798) $7,345
Valuation reserves..................................... 168 (257) (956)
Other.................................................. (126) 432 (1,871)
------- ------- ------
Total................................................ $(1,895) $(4,623) $4,518
======= ======= ======
</TABLE>
The statutory tax rates by country are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Australia................................................... 36.0% 36.0% 36.0%
Brunei...................................................... 30.0% 30.0% 30.0%
Mainland China(1)........................................... 0.0% 0.0% 0.0%
Hong Kong................................................... 16.0% 16.5% 16.5%
Macau....................................................... 16.5% 16.5% 16.5%
Malaysia.................................................... 28.0% 30.0% 30.0%
New Zealand................................................. 33.0% 33.0% 33.0%
Taiwan...................................................... 25.0% 25.0% 25.0%
Thailand.................................................... 30.0% 30.0% 30.0%
</TABLE>
- ---------------
(1) In Mainland China the current tax laws allow AAP's subsidiary to carry
forward losses up to five years and provide for no tax on profits for two
years once an accumulated profit is realized. After that point, AAP's
subsidiary pays a tax on profits at a rate of 7.5% for the first three
years, 10% for the subsequent three years and 15% thereafter. During the
1997 tax year, AAP's Mainland China subsidiary attained such an accumulated
profit for the first time. In order for AAP to continue to qualify for this
tax holiday,
F-13
<PAGE> 56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Amway China must derive a specified percentage of its revenue from the
products manufactured by it in Mainland China.
As described above, AAP's subsidiary in Mainland China was not subject to
income tax in fiscal 1998. This subsidiary recorded a net operating loss in
fiscal 1998, causing AAP's weighted-average statutory tax rate to be above the
statutory rate of any one of AAP's markets. A reconciliation of the
weighted-average statutory tax rate to the weighted-average effective tax rate
is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Weighted average statutory tax rate......................... 51.9% 25.3% 29.1%
Add tax effect of non-deductible meals and entertainment.... 4.0% 1.0% 0.9%
Add dividend withholding tax................................ 11.8% 5.1% 8.6%
All other................................................... (0.5)% 0.3% (0.7)%
---- ---- ----
Weighted average effective tax rate......................... 67.2% 31.7% 37.9%
==== ==== ====
</TABLE>
Taiwan and Thailand require a withholding tax of 20% and 10%, respectively,
on dividends paid to the Bermuda parent.
The tax effects of temporary differences which give rise to significant
portions of the deferred tax assets and deferred tax liabilities at August 31,
1998 and 1997, are presented below.
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Deferred tax assets:
Inventories................................................. $ 1,420 $ 1,325
Sales returns............................................. 1,212 1,475
Accrued expenses.......................................... 1,675 1,346
Other.................................................. (126) 906
------- -------
Total deferred tax assets.............................. 4,181 5,052
------- -------
Deferred tax liabilities:
Withholding taxes......................................... (2,965) (4,902)
Other..................................................... (248) (1,077)
------- -------
Total deferred tax liabilities......................... (3,213) (5,979)
------- -------
Net deferred tax asset (liability)..................... $ 968 $ (927)
======= =======
The net deferred tax asset (liability) is included in the
consolidated balance sheet as follows:
Prepaid expenses and other current assets................. $ 3,960 $ 4,736
Other assets.............................................. 221 316
Accrued expenses and income taxes......................... (3,029) (4,900)
Deferred income taxes..................................... (184) (1,079)
------- -------
Net deferred tax asset (liability)..................... $ 968 $ (927)
======= =======
</TABLE>
AAP had no valuation allowance for deferred tax assets as of, or for, the
years ended August 31, 1998 and 1997. In assessing the realizability of deferred
tax assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Based upon the
level of historical taxable income and projections of future taxable income,
management believes it is more likely than not that AAP will realize the benefit
of these deferred tax assets.
F-14
<PAGE> 57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(12) EMPLOYEE BENEFIT PENSION PLANS
For all periods presented, AAP's China (Mainland, Macau, Taiwan and the
Hong Kong Special Administrative Region) subsidiaries each sponsored a pension
plan that covers substantially all employees, primarily under defined benefit
pension plans.
Net periodic pension expense for the defined benefit plans included the
following components:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Components of net periodic pension costs:
Service cost................................................ $751 $702 $732
Interest cost............................................. 461 342 303
Actual return on plan assets.............................. 513 (422) (400)
Net amortization and deferral............................. (950) (26) 53
---- ---- ----
Net periodic pension cost................................... $775 $596 $688
==== ==== ====
</TABLE>
The following information details the funded status of the defined pension
plans:
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Status of obligations:
Actuarial present value of benefit obligation:
Vested benefit obligation.............................. $ 4,064 $ 3,070
======= =======
Accumulated benefit obligation............................ $ 4,545 $ 3,590
======= =======
Projected benefit obligation for service rendered to date... $(5,960) $(5,255)
Plan assets at fair value................................... 4,836 5,630
------- -------
Plan assets in excess of (less than) projected benefit
obligation................................................ (1,124) 375
Unrecognized net loss....................................... 886 139
Unrecognized prior service costs............................ 465 32
Unrecognized net assets at date of initial application...... 41 (35)
Adjustment required to recognize minimum liability.......... (605) --
------- -------
Prepaid pension costs (liability)........................... $ (337) $ 511
======= =======
</TABLE>
The weighted average discount rate used in determining the actuarial
present value of projected benefit obligation for defined benefit pension plans
ranged from 7% to 8% and from 7% to 10% for the fiscal years ended August 31,
1998 and 1997, respectively. The rate of increase in compensation levels ranged
from 5% to 7% and 7% to 9% for the fiscal years ended August 31, 1998 and 1997,
respectively. The expected long-term rate of return on assets ranged from 7% to
8% and 7% to 10% for the fiscal years ended August 31, 1998 and 1997,
respectively.
(13) CONTINGENCIES
AAP is a party to certain routine litigation incidental to its business,
none of which is currently expected to have a material adverse effect on AAP's
financial condition and results of operations.
(14) SALE OF STOCK BY A SUBSIDIARY
The government of Malaysia has policies that set forth certain local
ownership requirements for foreign companies which required Amway Malaysia Sdn.
Bhd. ("Amway Malaysia") to reduce its foreign equity to 51%.
F-15
<PAGE> 58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In accordance with the directive given by the Foreign Investment Committee
("FIC"), Amway Malaysia, AAP and Amway entered into a Sale of Shares and
Restructuring Agreement ("Agreement") for the sale of the 30% interest of Amway
Malaysia that Amway had retained as part of a previous reorganization of AAP.
Pursuant to the terms of the Agreement, Amway sold its retained 30% interest in
Amway Malaysia to Bumiputras (the indigenous people of Malaysia) on September
28, 1994. In July 1995, Amway Malaysia issued additional shares for
consideration to Bumiputra investors increasing the Bumiputras ownership level
to 40.8%. In May 1996, the shareholders of Amway Malaysia exchanged their stock
in Amway Malaysia for stock in a newly formed company, Amway (Malaysia) Holdings
Berhad ("AMHB"). In August 1996, AMHB issued additional shares for consideration
to Malaysian citizens, as part of an initial public offering on the Kuala Lumpur
Stock Exchange, increasing the local ownership level (minority interest) to
49.0%.
In fiscal 1998, the Malaysia affiliate obtained regulatory and shareholder
approval to repurchase up to 10% of the outstanding shares of its own common
stock, subject to certain regulatory limitations. During fiscal 1998, the
Malaysia affiliate repurchased and cancelled 1,365,000 of its shares on the open
market at an aggregate price of Malaysian ringgit 8.6 million, decreasing the
local ownership level (minority interest) to 48.3%.
(15) STOCK OPTION/INCENTIVE AWARD PLANS
During fiscal 1994, AAP adopted the Long-term Incentive Plan which
authorizes the granting of stock-based awards of up to an aggregate of 500,000
shares of AAP's common stock to officers and key employees of or consultants to
AAP who demonstrate superior performance or achieve management objectives. The
plan is administered by the Compensation Committee of the Board of Directors who
determine the terms and conditions of each award within the guidelines
established by the plan.
During fiscal 1996 and 1997, non-qualified stock options for 24,000 and
149,500 shares, respectively, were granted at a price equal to the market value
on the date the options were granted. The weighted average fair value of these
options at the date of grant was $11 and $17 per share, respectively. These
options become exercisable over a period of three years and expire no later than
10 years after the date of grant. No such options were granted during fiscal
1998.
During fiscal 1995, AAP adopted an Outside Director Long-term Award Plan
which authorizes the granting of stock-based awards of up to an aggregate of
50,000 shares of AAP's common stock. During fiscal 1996 and 1997, AAP granted
non-qualified stock options for 11,000 and 9,000 shares, respectively, at a
price equal to the market value on the date the options were granted. The
weighted average fair value of these options at the date of grant was $12 and
$16 per share, respectively. No such options were granted during fiscal 1998.
F-16
<PAGE> 59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The options issued under the Long-term Incentive Plan and the Outside
Director Long-term Award Plan are summarized in the table below.
<TABLE>
<CAPTION>
OPTIONS OPTIONS OPTIONS
OUTSTANDING OUTSTANDING EXERCISABLE
AT BEGINNING FORFEITED OR AT END AT END
OF YEAR GRANTED EXERCISED EXPIRED OF YEAR OF YEAR
------------ ------- --------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FISCAL 1996
Number of options............ 216,000 35,000 10,000 -- 241,000 95,333
Weighted average exercise
price...................... $ 24 $ 31 $ 18 $ -- $ 25 $ 21
FISCAL 1997
Number of options............ 241,000 158,500 84,217 3,278 312,005 101,672
Weighted average exercise
price...................... $ 25 $ 42 $ 22 $ 20 $ 35 $ 22
FISCAL 1998
Number of options............ 312,005 -- -- -- 312,005 194,672
Weighted average exercise
price...................... $ 35 $ -- $ -- $ -- $ 35 $ 31
</TABLE>
The exercise prices for options outstanding at August 31, 1998 range from
$18 to $46 per share. The weighted average remaining contractual life for
options outstanding at August 31, 1998 is 6.6 years.
AAP during fiscal 1995 also granted stock appreciation rights for 5,000
shares at a price equal to the market value on the date the rights were granted
of $33 per share. The fair value of these stock appreciation rights at the date
granted was $11 per share. These stock appreciation rights for all 5,000 shares
expired during fiscal 1997.
During fiscal 1995 and 1996, pursuant to the Long-term Incentive Plan, AAP
granted 3,000 and 6,000 shares, respectively, of restricted common stock to an
officer at a cost of $0.01 per share. Of this restricted common stock, 2,000,
3,000 and 4,000 shares vested and became nonforfeitable on June 1, 1997, June
30, 1997 and June 1, 1998, respectively. The fair value of the restricted stock
awards at the date of grant, based on the stock's market value at the grant
date, was $36 and $34 per share, respectively. The cost of these restricted
stock awards, based on the stock's fair market value at the award date was
charged to shareholders' equity and amortized against earnings over the vesting
period.
As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation",
AAP has elected not to adopt the fair value based method to measure compensation
cost related to stock-based awards in determining net income in the basic
financial statements. If AAP had elected to adopt the fair value based method,
AAP's net income for the years ended August 31, 1998, 1997 and 1996 would have
been $403, $103,697 and $82,201, respectively, and earnings per share would have
been $0.01, $1.75 and $1.37 per share, respectively.
The options pricing model used to estimate the fair value of the
stock-based awards for purposes of this disclosure included the following
assumptions: Expected life of 7.5 years; 8.5% risk-free interest rate; 2% annual
rate of dividends; and expected volatility of 7% in fiscal 1994 and fiscal 1995,
17% in fiscal 1996 and 24% to 31% in fiscal 1997.
F-17
<PAGE> 60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(16) EARNINGS PER SHARE
AAP's stock options represent potential dilutive common shares for the
purposes of computing diluted earnings per share in accordance with SFAS No.
128. The effect of these stock options on AAP's earnings per share computations
is summarized in the following table.
<TABLE>
<CAPTION>
W.A. SHARES
OUTSTANDING
NET INCOME (000S) PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
FISCAL 1998
Basic earnings per share............................... $ 1,453 56,442 $0.03
Effect of dilutive securities -- stock options....... 4
------
Diluted earnings per share............................. $ 1,453 56,446 $0.03
======== ====== =====
FISCAL 1997
Basic earnings per share............................... $104,031 59,124 $1.76
Effect of dilutive securities -- stock options....... 52
------
Diluted earnings per share............................. $104,031 59,176 $1.76
======== ====== =====
FISCAL 1996
Basic earnings per share............................... $ 82,233 60,039 $1.37
Effect of dilutive securities -- stock options....... 58
------
Diluted earnings per share............................. $ 82,233 60,097 $1.37
======== ====== =====
</TABLE>
Options to purchase 255,000 shares of common stock at a weighted-average
exercise price of $38 per share were outstanding during fiscal 1998 but were not
included in the computation of fiscal 1998 diluted earnings per share because
the options' exercise price was greater than the average market price of the
common shares. Such options expire at various dates during fiscal 2005, 2006 and
2007.
(17) SHORT-TERM BORROWINGS
AAP's subsidiary in Mainland China had short-term borrowings of $11,473 at
August 31, 1998 under unsecured revolving line of credit agreements with two
local banks. The agreements are guaranteed by Standard Chartered Bank and
Societe Generale of China in the form of standby letters of credit which in turn
are guaranteed by AAP. The interest rates on loans under these agreements are
based on the published rates determined by the Central Bank in China for short
or medium-term loans. The weighted-average interest rate on these borrowings was
approximately 6.8% at August 31, 1998. There are no commitment fees on these
credit facilities. Unused credit available under these agreements at August 31,
1998 was $6,643.
AAP also had borrowings of $7,100 at August 31, 1998 under an unsecured
revolving line of credit agreement in the United States with Standard Chartered
Bank. The interest rates on loans under this credit facility are based on LIBOR
plus 0.25% at the time of loan. The weighted-average interest rate on these
borrowings was approximately 5.9% at August 31, 1998. There are no commitment
fees on these credit facilities. Unused credit available under these agreements
at August 31, 1998 was $17,900.
F-18
<PAGE> 61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(18) UNAUDITED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
1998
Net sales........................... $169,124 $160,678 $133,601 $124,176 $587,579
Gross profit........................ 103,227 93,907 64,469 68,756 330,359
Operating income.................... 16,590 13,185 (9,525) 5,043 25,293
Income before income taxes and
minority interest................. 19,684 13,866 (7,449) 8,875 34,976
Net income.......................... $ 8,525 $ 5,539 $(15,295) $ 2,684 $ 1,453
======== ======== ======== ======== ========
Basic and diluted earnings per
share............................. $ 0.15 $ 0.10 $ (0.27) $ 0.05 $ 0.03
======== ======== ======== ======== ========
Weighted average number of shares
outstanding (000s):
For basic EPS..................... 56,442 56,442 56,442 56,442 56,442
======== ======== ======== ======== ========
For diluted EPS................... 56,461 56,449 56,442 56,442 56,446
======== ======== ======== ======== ========
1997
Net sales........................... $225,200 $205,201 $230,925 $183,840 $845,166
Gross profit........................ 143,303 129,002 146,663 112,911 531,879
Operating income.................... 44,724 34,815 43,200 25,844 148,583
Income before income taxes and
minority interest................. 51,387 40,817 49,226 31,860 173,290
Net income.......................... $ 29,890 $ 24,714 $ 31,018 $ 18,409 $104,031
======== ======== ======== ======== ========
Basic and diluted earnings per
share............................. $ 0.50 $ 0.41 $ 0.52 $ 0.33 $ 1.76
======== ======== ======== ======== ========
Weighted average number of shares
outstanding (000s):
For basic EPS..................... 60,047 60,055 59,985 56,438 59,124
======== ======== ======== ======== ========
For diluted EPS................... 60,120 60,156 60,060 56,497 59,176
======== ======== ======== ======== ========
</TABLE>
(19) INDUSTRY AND GEOGRAPHIC SEGMENTS
AAP operates in a single industry which is the direct selling of cleaning
and other household products, personal care products and vitamins and dietary
supplements. Information related to AAP's geographic segments for each of the
years in the three-year period ended August 31, 1998 is presented below.
F-19
<PAGE> 62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
GEOGRAPHIC AREAS
Net Sales:
China (Mainland, the Hong Kong Special Administrative
Region, Macau and Taiwan)............................. $241,636 $377,226 $295,850
Brunei, Malaysia and Thailand............................ 199,032 316,818 279,157
Australia and New Zealand................................ 146,911 151,122 141,750
-------- -------- --------
$587,579 $845,166 $716,757
======== ======== ========
Operating Income:
China (Mainland, the Hong Kong Special Administrative
Region, Macau and Taiwan)............................. $(16,152) $ 50,538 $ 35,373
Brunei, Malaysia and Thailand............................ 31,947 83,683 72,451
Australia and New Zealand................................ 11,381 16,706 19,688
Corporate expenses and miscellaneous, net................ (1,883) (2,344) (368)
-------- -------- --------
$ 25,293 $148,583 $127,144
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
AUGUST 31,
--------------------
1998 1997
-------- --------
<S> <C> <C>
Identifiable assets:
China (Mainland, the Hong Kong Special Administrative
Region, Macau and Taiwan)................................... $192,411 $261,418
Brunei, Malaysia and Thailand............................. 137,360 174,421
Australia and New Zealand................................. 48,808 61,216
Corporate(1).............................................. 22,250 30,039
Eliminations.............................................. (13,756) (6,951)
-------- --------
$387,073 $520,143
======== ========
</TABLE>
- ---------------
(1) Corporate identifiable assets are principally receivables from AAP's
subsidiaries (which are deducted from total assets through eliminations) and
cash and cash equivalents.
F-20
<PAGE> 63
AMWAY ASIA PACIFIC LTD.
CONSOLIDATED STATEMENTS OF INCOME
(U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
MAY 31, MAY 31,
-------------------- --------------------
1999 1998 1999 1998
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net sales....................................... $131,648 $133,601 $365,929 $463,403
Cost of sales................................... 57,554 69,132 159,542 201,800
-------- -------- -------- --------
74,094 64,469 206,387 261,603
-------- -------- -------- --------
Operating expenses:
Distributor incentives........................ 34,772 37,511 97,063 125,621
Distribution expenses......................... 9,372 11,038 28,315 35,569
Selling and administrative expenses........... 23,487 25,445 70,269 80,163
-------- -------- -------- --------
Total operating expenses................... 67,631 73,994 195,647 241,353
-------- -------- -------- --------
Operating income (loss).................... 6,463 (9,525) 10,740 20,250
Other income -- net............................. 1,366 2,076 1,689 5,851
-------- -------- -------- --------
Income (loss) before income taxes and
minority interest........................ 7,829 (7,449) 12,429 26,101
Income taxes.................................... 4,091 5,347 9,798 19,520
-------- -------- -------- --------
Income (loss) before minority interest..... 3,738 (12,796) 2,631 6,581
Minority interest in net income of consolidated
subsidiaries.................................. 1,627 2,499 4,478 7,812
-------- -------- -------- --------
Net income (loss).......................... $ 2,111 $(15,295) $ (1,847) $ (1,231)
======== ======== ======== ========
Basic earnings (loss) per share................. $ 0.04 $ (0.27) $ (0.03) $ (0.02)
======== ======== ======== ========
Earnings (loss) per share assuming dilution..... $ 0.04 $ (0.27) $ (0.03) $ (0.02)
======== ======== ======== ========
Dividends per share............................. $ -- $ 0.22 $ -- $ 0.66
======== ======== ======== ========
Weighted average number of shares outstanding
(000s)........................................ 56,442 56,442 56,442 56,442
======== ======== ======== ========
Weighted average number of shares outstanding
including dilutive potential shares (000s).... 56,442 56,442 56,452 56,452
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-21
<PAGE> 64
AMWAY ASIA PACIFIC LTD.
CONSOLIDATED BALANCE SHEETS
(U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MAY 31, AUGUST 31,
1999 1998
----------- ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $146,680 $157,157
Short-term investments.................................... 6,471 143
Accounts receivable, net.................................. 19,929 21,264
Inventories (note 2)...................................... 57,921 75,104
Prepaid expenses and other current assets................. 16,023 23,234
-------- --------
Total current assets................................... 247,024 276,902
Property, plant and equipment, net.......................... 105,421 104,346
Other assets................................................ 9,318 5,825
-------- --------
Total assets........................................... $361,763 $387,073
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 46,128 $ 59,799
Short-term borrowings..................................... 15,341 18,573
Accrued expenses and income taxes......................... 80,952 92,150
Distributor deposits...................................... 4,314 4,252
-------- --------
Total current liabilities.............................. 146,735 174,774
Deferred income taxes....................................... 248 184
-------- --------
Total liabilities...................................... 146,983 174,958
-------- --------
Minority interests.......................................... 34,059 36,017
-------- --------
Shareholders' equity:
Preferred stock, $0.01 par value -- authorized: 20,000,000
shares, none issued.................................... -- --
Common stock, $0.01 par value -- authorized: 110,000,000
shares; issued and outstanding: 56,441,960 shares...... 564 564
Additional paid-in capital................................ 79,246 79,246
Accumulated other comprehensive income.................... (37,759) (44,182)
Retained earnings......................................... 138,670 140,470
-------- --------
Total shareholders' equity............................. 180,721 176,098
-------- --------
Total liabilities and shareholders' equity............. $361,763 $387,073
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-22
<PAGE> 65
AMWAY ASIA PACIFIC LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MAY 31,
---------------------
1999 1998
-------- ---------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................... $ (1,847) $ (1,231)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization.......................... 9,637 9,857
Deferred income taxes.................................. (1,044) (3,043)
Loss on sale of equipment.............................. 1,234 367
Gain on sale of investments............................ -- (510)
Changes in assets and liabilities...................... 5,775 (19,611)
-------- ---------
Net cash provided by (used in) operating
activities.......................................... 13,755 (14,171)
-------- ---------
Cash flows from investing activities:
Capital expenditures...................................... (9,782) (29,443)
Proceeds from sale of equipment........................... 344 218
Purchase of held-to-maturity investments.................. (29,605) (79,288)
Proceeds from maturity of investments..................... 20,408 82,349
Net decrease (increase) in notes receivable............... (38) 128
-------- ---------
Net cash used in investing activities................ (18,673) (26,036)
-------- ---------
Cash flows from financing activities:
Principal payments on notes payable and capital lease
obligations............................................ -- (30)
Dividends paid to shareholders............................ -- (37,252)
Dividends paid by subsidiaries to minority shareholders... (8,626) (5,977)
Net increase (decrease) in short term borrowings.......... (3,257) 4,826
Subsidiary's purchase for retirement of common stock held
by minority shareholders............................... -- (426)
Investment in subsidiary by minority shareholder.......... 2,219 --
-------- ---------
Net cash used in financing activities................ (9,664) (38,859)
-------- ---------
Effect of exchange rate changes on cash..................... 4,105 (28,266)
-------- ---------
Net decrease in cash and cash equivalents................... (10,477) (107,332)
Cash and cash equivalents at beginning of year.............. 157,157 207,915
-------- ---------
Cash and cash equivalents at end of period.................. $146,680 $ 100,583
======== =========
Supplemental disclosures of cash flow information:
Interest paid............................................. $ 732 $ 34
======== =========
Income taxes paid......................................... $ 17,192 $ 26,564
======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-23
<PAGE> 66
AMWAY ASIA PACIFIC LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements of Amway Asia Pacific
Ltd. and subsidiaries ("AAP") have not been audited by independent accountants,
except for the balance sheet at August 31, 1998. In the opinion of AAP's
management, the consolidated financial statements reflect all adjustments,
including the use of management's estimates, necessary to present fairly, in
accordance with U.S. generally accepted accounting principles, AAP's results of
operations for the third quarter and nine months ended May 31, 1999 and 1998,
the financial position at May 31, 1999 and August 31, 1998, and cash flows for
the nine months ended May 31, 1999 and 1998. All such adjustments are of a
normal recurring nature. The results of operations for the nine months ended May
31, 1999 are not necessarily indicative of the results for the entire fiscal
year ending August 31, 1999.
These consolidated financial statements should be read in conjunction with
the consolidated financial statements (including Notes thereto) contained in
AAP's Form 20-F for the fiscal year ended August 31, 1998.
(2) INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method. Inventories consist of:
<TABLE>
<CAPTION>
MAY 31, AUGUST 31,
1999 1998
----------- ----------
(UNAUDITED)
<S> <C> <C>
Raw materials............................................... $ 6,306 $ 6,996
Work in process............................................. 51 --
Manufactured finished goods and finished goods purchased for
resale.................................................... 51,564 68,108
------- -------
$57,921 $75,104
======= =======
</TABLE>
(3) COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130
Reporting Comprehensive Income which, for interim reporting purposes, requires
that an enterprise report a total for comprehensive income. AAP adopted this
statement effective September 1, 1998. Comprehensive income includes all changes
in equity during a period except those resulting from investments by and
distributions to AAP's shareholders. For AAP, this primarily represents net
income plus or minus the change in cumulative foreign currency translation
adjustments. Cumulative foreign currency translation adjustments, which were
previously identified separately in the equity section of AAP's balance sheets,
are now included in "Accumulated other comprehensive income" in the equity
section of AAP's balance sheets in accordance with SFAS No. 130. Total
comprehensive income (loss), net of related tax effects, was $4,576 and
$(26,065) for the nine months ended May 31, 1999 and 1998, respectively.
F-24
<PAGE> 67
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal, certificates representing the Shares and any other required
documents should be sent or delivered by each holder of Shares or such holder's
broker, dealer, commercial bank or trust company to the Depositary at one of its
addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
BY MAIL: BY HAND:
FIRST CHICAGO TRUST COMPANY OF NEW YORK FIRST CHICAGO TRUST COMPANY OF NEW YORK
CORPORATE ACTIONS C/O SECURITIES TRANSFER AND REPORTING SERVICES
SUITE 4660 INC.
P.O. BOX 2569 ATTN: CORPORATE ACTIONS
JERSEY CITY, NJ 07303-2569 100 WILLIAM STREET, GALLERIA
NEW YORK, NY 10038
BY OVERNIGHT COURIER: BY FACSIMILE TRANSMISSION:
FIRST CHICAGO TRUST COMPANY OF NEW YORK (201) 324-3402 OR (201) 324-3403
CORPORATE ACTIONS, SUITE 4660
525 WASHINGTON BLVD CONFIRM BY TELEPHONE:
JERSEY CITY, NJ 07310
(201) 222-4707
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective addresses and telephone numbers
set forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other related materials may be obtained from the Information
Agent or brokers, dealers, commercial banks and trust companies.
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 STATE STREET
NEW YORK, NY 10004
BANKS AND BROKERS CALL COLLECT: (212) 440-9800
OR
ALL OTHERS CALL TOLL-FREE: (800) 223-2064
THE DEALER MANAGERS FOR THE OFFER ARE:
<TABLE>
<S> <C>
MORGAN STANLEY DEAN WITTER J.P. MORGAN & CO.
Morgan Stanley & Co. Incorporated 60 Wall Street
One Financial Place New York, NY 10260
440 South LaSalle Street (877) 576-0606 (call toll free)
Chicago, IL 60605
(322) 706-4411 (call collect)
</TABLE>
FOR INFORMATION IN AUSTRALIA:
<TABLE>
<S> <C>
Morgan Stanley Dean Witter Australia Limited J.P. Morgan & Co.
Level 33, the Chifley Tower Level 20, One O'Connel Street
22 Chifley Square Sydney, New South Wales, Australia 2061
Sydney, New South Wales, Australia 2000 (800) 872-2881 -- 877-576-4529
(612) 9770-1590 (call toll free)
</TABLE>
<PAGE> 1
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
AMWAY ASIA PACIFIC LTD.
PURSUANT TO THE OFFER TO PURCHASE,
DATED NOVEMBER 18, 1999
BY
NEW AAP LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED.
TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
BY MAIL: BY HAND:
First Chicago Trust Company of New York First Chicago Trust Company of New York
Corporate Actions c/o Securities Transfer and Reporting Services
Suite 4660 Inc.
P.O. Box 2569 Attn: Corporate Actions
Jersey City, NJ 07303-2569 100 William Street, Galleria
BY OVERNIGHT COURIER: New York, NY 10038
First Chicago Trust Company of New York BY FACSIMILE TRANSMISSION:
Corporate Actions, Suite 4660 (201) 324-3402 or (201) 324-3403
525 Washington Blvd.
Jersey City, NJ 07310 CONFIRM BY TELEPHONE:
(201) 222-4707
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN THOSE AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
This Letter of Transmittal is to be used only if certificates representing
shares of Common Stock, par value $0.01 per share, of Amway Asia Pacific Ltd.
(the "Common Stock"), are to be forwarded herewith unless an Agent's Message (as
defined in the Offer to Purchase) is utilized or if delivery of shares of Common
Stock is to be made by book-entry transfer to the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedures set forth in "The Offer -- Procedure for Tendering Shares" in the
Offer to Purchase. See Instruction 2. Delivery of documents to the Book-Entry
Transfer Facility does not constitute delivery to the Depositary. Participants
in the Amway Corporation Profit-Sharing and 401(k) Plan who wish to have the
trustee of such Plan tender Shares attributable to their accounts may not use
this Letter of Transmittal to direct the tender of such Shares. Participants may
only use the separate election form sent to them by the trustee. See Instruction
11.
Shareholders who cannot deliver their shares and all other documents
required hereby to the Depository by the Expiration Date (as defined in the
Offer to Purchase), or who are unable to comply with the procedures for
book-entry transfer on a timely basis, and who wish to tender their Shares must
do so pursuant to the guaranteed delivery procedure set forth in "The
Offer -- Procedure for Tendering Shares" in the Offer to Purchase. See
Instruction 2.
No alternative, conditional or contingent tenders will be accepted, and no
fractional shares will be purchased.
<PAGE> 2
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S), IF ANY) (ATTACHED ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL
- ------------------------------------------------------------------------------------------------------------------------
* Need not be completed by holders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all shares evidenced by any certificates delivered to the
Depositary are being tendered. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
DIVIDEND REINVESTMENT PLAN SHARES
(SEE INSTRUCTION 10)
To be completed ONLY if shares held in the Direct Purchase and Sale Plan for
Amway Asia Pacific Ltd. Common Stock (the "Dividend Reinvestment Plan") are to
be tendered.
[ ] By checking this box, the undersigned represents that the undersigned is a
participant in the Dividend Reinvestment Plan and hereby instructs the
Depositary to tender on behalf of the undersigned the following number of
Shares credited to the Dividend Reinvestment Plan account of the
undersigned:
------------ Shares*
* The undersigned understands and agrees that all Shares held in the Dividend
Reinvestment Plan account(s) of the undersigned will be tendered if the above
box is checked and the space above is left blank.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution
DTC Account No.
Transaction Code No.
[ ] 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 Tendering Shareholder(s)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution that Guaranteed Delivery
If delivery is by book-entry transfer:
Name of Tendering Institution
DTC Account No.
Transaction Code No.
NOTE: SIGNATURES MUST BE PROVIDED BELOW AND MAY BE REQUIRED
TO BE GUARANTEED.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to the Depositary, on behalf of New AAP
Limited, a Bermuda corporation (the "Company") and an entity controlled,
directly or indirectly, by the DeVos and Van Andel families and certain
corporations, trusts, foundations and other entities established by or for the
benefit of such families, the number of shares of Common Stock indicated above,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated November 18, 1999 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which, together with the Offer
to Purchase, constitutes the "Offer").
Subject to and effective upon the Company's acceptance for payment of and
payment for the shares of Common Stock tendered herewith in accordance with the
terms and subject to the conditions of the Offer (including, if the Offer is
extended or amended, the terms and conditions of such extension or amendment),
the undersigned hereby sells, assigns and transfers to or upon the order of the
Company all right, title and interest in and to all the shares of Common Stock
that are being tendered hereby and irrevocably constitutes and appoints the
Depositary the true and lawful agent and attorney-in-fact of the undersigned
with respect to such shares of Common Stock, with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) deliver certificates evidencing such shares, or transfer
ownership of such shares on the account books maintained by the Book-Entry
Transfer Facility, together, in any such case, with all accompanying evidences
of transfer and authenticity, to or upon the order of the Company and (b)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such shares, all in accordance with the terms and subject to the conditions
of the Offer. The Depositary will act as agent for tendering holders for the
purpose of receiving payment from the Company and transmitting payment to the
tendering holders.
The undersigned hereby represents and warrants that the undersigned will,
upon request, execute and deliver all additional documents deemed by the
Depositary or the Company to be necessary or desirable to complete the sale,
assignment and transfer of the shares tendered hereby and has read, understands
and agrees to be bound by, all terms and conditions of the Offer.
The undersigned understands that under certain circumstances set forth in
the Offer to Purchase, the Company may amend the Offer or may postpone the
acceptance for payment of, or payment for, shares of Common Stock tendered or
may accept for payment fewer than all of the shares of Common Stock tendered
hereby. The undersigned understands that tenders of shares of Common Stock
pursuant to any one of the procedures described in "The Offer -- Procedure for
Tendering Shares" in the Offer to Purchase and in the instructions hereto will
constitute an agreement by the undersigned to be subject to the terms and
conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the Purchase Price (as defined in the
Offer to Purchase) of any shares of Common Stock purchased (less the amount of
any U.S. backup or other applicable withholding tax which may be required to be
withheld) and return any shares not validly tendered and not purchased, in the
name(s) of the undersigned, and in the case of shares tendered by book-entry
transfer, by credit to the account at the Book-Entry Transfer Facility through
which the shares were originally tendered. Similarly, unless otherwise indicated
herein in the box entitled "Special Delivery Instructions," please mail the
check for the Purchase Price of any shares of Common Stock purchased (less the
amount of any U.S. backup or other applicable withholding tax which may be
required to be withheld) and return any shares not validly tendered and not
purchased (and accompanying documents, as appropriate) to the undersigned at the
address shown below the undersigned's signature(s). In the event that both
"Special Payment Instructions" and "Special Delivery Instructions" are
completed, please issue the check for the Purchase Price of any shares of Common
Stock purchased (less the amount of any U.S. backup or other applicable
withholding tax which may be required to be withheld), and return any shares not
validly tendered and not purchased in the name(s) of, and deliver said check and
any shares to, the person(s) so indicated. The undersigned recognizes that the
Company has no obligation, pursuant to the "Special Payment Instructions," to
transfer any shares from the name(s) of the registered holder(s) thereof, or to
order the registration or transfer of such shares tendered by book-entry
transfer, if the Company does not accept for payment any of the shares of Common
Stock represented by shares so tendered.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, trustees
in bankruptcy, personal and legal representatives, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
<PAGE> 4
---------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 8)
To be completed ONLY if the check for the Purchase Price of shares
purchased (less the amount of any U.S. backup or other applicable
withholding tax which may be required to be withheld) or certificates
evidencing shares not validly tendered and not purchased are to be issued
in the name of someone other than the undersigned, or if shares delivered
by book-entry transfer that are not validly tendered and not purchased are
to be returned by credit to an account maintained by the Book-Entry
Transfer Facility.
Issue [ ] Check [ ] Certificate(s) to:
Name
--------------------------------------------------------
(PLEASE PRINT)
Address
------------------------------------------------------
---------------------------------------------------------------
(INCLUDE ZIP CODE)
---------------------------------------------------------------
(TAXPAYER IDENTIFICATION NO.
OR SOCIAL SECURITY NO.)
[ ] Credit unpurchased shares tendered by book-entry transfer and not
purchased to the account set forth below:
DTC Account Number:
------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 8)
To be completed ONLY if the check for the Purchase Price of shares
purchased (less the amount of any U.S. backup or other applicable
withholding tax which may be required to be withheld) or certificates
evidencing shares not validly tendered and not purchased are to be mailed
to someone other than the undersigned or to the undersigned at an address
other than that shown in the box entitled "Description of Shares
Tendered."
Mail [ ] Check [ ] Certificate(s) to:
Name
--------------------------------------------------------
(PLEASE PRINT)
Address
------------------------------------------------------
---------------------------------------------------------------
(INCLUDE ZIP CODE)
---------------------------------------------------------------
<PAGE> 5
---------------------------------------------------------------
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9)
---------------------------------------------------------------
---------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Name(s)
-----------------------------------------------------
---------------------------------------------------------------
(PLEASE PRINT)
---------------------------------------------------------------
Capacity (full title)
Address
------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
----------------------------
Dated , 1999
Taxpayer ID No. or Social Security No.
-----------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, agent, officer of a corporation
or other person acting in a fiduciary or representative capacity, please
set forth full title and see Instruction 6.)
---------------------------------------------------------------
---------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED; SEE INSTRUCTIONS 1 AND 6)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized Signature:
-----------------------------------------
Name:
--------------------------------------------------------
Title:
---------------------------------------------------------
Name of Firm:
-----------------------------------------------
Address:
------------------------------------------------------
Area Code and Telephone Number:
---------------------------------------------------------------
Dated
-------------------------------------------------- , 1999
---------------------------------------------------------------
<PAGE> 6
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE Enter your identification number in the appropriate box. Social Security Number OR
FORM W-9 For most individuals, this is your Social Security Number. Employer Identification Number
DEPARTMENT OF THE If you do not have a number, see How to Obtain a TIN in --------------------------------
TREASURY, INTERNAL the enclosed GUIDELINES.
REVENUE SERVICE
PAYER'S REQUEST
FOR
TAXPAYER
IDENTIFICATION
NO.
---------------------------------------------------------------------------------------------
NOTE: If the account is in more than one name, see the chart on page 2 of enclosed Guidelines
for guidelines on which number to give the payer.
---------------------------------------------------------------------------------------------
Certificate: Under penalties of perjury, I certify that:
For Payees Exempt From Backup
(1) The number shown on this form is my correct Taxpayer Withholding (see enclosed
Identification Number (or I am waiting for a number to Guidelines)
be issued to me), and
(2) I am not subject to backup withholding either because
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 the IRS has notified me that I am no
longer subject to backup withholding.
SIGNATURE
DATED , 1999
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE> 7
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING A PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required if (a) this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of shares) of the shares tendered
herewith unless such holder(s) have completed either the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on
this Letter of Transmittal or (b) if such shares are tendered for the account of
a participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Guarantee Program or the Stock Exchange Medallion
Program (an "Eligible Institution"). In all other cases, all signatures on this
Letter of Transmittal must be guaranteed by a financial institution (including
most banks, savings and loan associations and brokerage houses) which is an
Eligible Institution. See Instruction 6.
2. Delivery of Letter of Transmittal and Shares. This Letter of
Transmittal is to be used only if shares are to be tendered herewith unless an
Agent's Message is utilized or if delivery of shares is to be made by book-entry
transfer pursuant to the procedures set forth in "The Offer -- Procedure for
Tendering Shares" in the Offer to Purchase. For a holder to validly tender
shares, certificates for all physically delivered shares, or a timely
confirmation of a book-entry transfer of all shares delivered electronically
into the Depositary's account at the Book-Entry Transfer Facility, as well as a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the front page of this Letter of Transmittal on or prior to the
Expiration Date (as defined in the Offer to Purchase).
Shareholders who cannot deliver their shares and all other documents
required hereby to the Depository by the Expiration Date, or who are unable to
comply with the procedures for book-entry transfer on a timely basis, and who
wish to tender their shares must do so pursuant to the guaranteed delivery
procedure set forth in "The Offer -- Procedure for Tendering
Shares -- Guaranteed Delivery" in the Offer to Purchase. Pursuant to such
procedure (i) such tender must be made by or through an Eligible Institution,
(ii) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Company (with any required signature
guarantees) must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all physically delivered shares in proper form for
transfer by delivery, or a confirmation of a book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of all shares delivered
electronically, in each case together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by this Letter of Transmittal or an Agent's Message must be received by
the Depositary within two New York Stock Exchange trading days after execution
of the Notice of Guaranteed Delivery. See "The Offer -- Procedure for Tendering
Shares -- Guaranteed Delivery" in the Offer to Purchase.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION
AND RISK OF THE TENDERING HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED FOR SUCH DOCUMENTS TO REACH THE DEPOSITARY.
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional shares will be purchased. By executing this Letter of Transmittal (or
a manually signed facsimile thereof), the tendering holder waives any right to
receive any notice of the acceptance for payment of their shares.
3. Inadequate Space. If the space provided in the box captioned
"Description of Shares Tendered" is inadequate, the certificates and/or the
number of shares evidenced by such certificates and the number of shares
tendered should be listed on a separate signed schedule and attached hereto.
4. Partial Tenders (not applicable to holders who tender by book-entry
transfer). If fewer than all shares evidenced by any certificates delivered to
the Depositary are to be tendered, fill in the number of shares that are to be
tendered in the box entitled "Number of Shares Tendered." In such case, a new
certificate for the remainder of the shares evidenced by the old certificate
will be sent to the person(s) signing this Letter of Transmittal, unless
otherwise provided in the appropriate box on this Letter of Transmittal, without
delay after the Expiration Date or the termination of the Offer as described in
"The Offer -- Acceptance for Payment of Shares and Payment of Purchase Price" in
the Offer to Purchase.
All shares evidenced by certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. Lost, Destroyed or Stolen Shares. If any certificate(s) evidencing
shares has been lost, destroyed or stolen, the holder should promptly notify the
Depositary. The holder will then be instructed as to the steps that must be
taken in order to replace the certificate(s). This Letter of Transmittal and
related documents cannot be processed until the procedures for replacing lost,
destroyed or stolen certificates have been followed.
<PAGE> 8
6. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the
certificates evidencing the shares of Common Stock tendered hereby, the
signature(s) must correspond with the name(s) as written on the face of the
certificates without any change whatsoever.
If any of the certificates representing shares tendered hereby are held of
record by two or more persons, all such persons must sign this Letter of
Transmittal.
If any of the certificates representing shares tendered hereby are
registered in different names of different holders, it will be necessary to
complete, sign and submit as many separate Letters of Transmittal as there are
different registrations of shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
certificates evidencing the shares tendered hereby, no endorsement of
certificates or separate stock powers are required unless payment of the
Purchase Price (less the amount of any U.S. backup withholding tax or other
applicable withholding which may be required to be withheld) is to be made, or
shares not validly tendered and not purchased are to be returned, in the name of
any person other than the registered holder(s). Signatures on any such
certificates or stock powers must be guaranteed by an Eligible Institution. If
this Letter of Transmittal is signed by a person other than the registered
holder(s) of the shares of Common Stock tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
evidencing such shares. Signature(s) on any such certificates or stock powers
must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Company of the authority of such person so to act must be submitted.
7. Stock Transfer Taxes. Except as provided in this Instruction, the
Company will pay any stock transfer taxes with respect to the sale and transfer
of any shares of Common Stock to it or its order pursuant to the Offer. If,
however, payment of the Purchase Price (less the amount of any U.S. backup or
other applicable withholding tax which may be required to be withheld) is to be
made to, or shares not validly tendered and not purchased are to be returned, in
the name of any person other than the registered holder(s), or tendered shares
of Common Stock are registered in the name of a person other than the name of
the person(s) signing this Letter of Transmittal, then the amount of any stock
transfer taxes (whether imposed on the registered holder(s), such other person
or otherwise) payable on account of the transfer to such person will be deducted
from the Purchase Price unless satisfactory evidence of the payment of such
taxes, or exemption therefrom is submitted.
8. Special Payment and Delivery Instructions. If the check for the
Purchase Price of shares purchased (less the amount of any U.S. backup or other
applicable withholding tax which may be required to be withheld) is to be
issued, or any shares not validly tendered and not purchased are to be returned,
in the name of a person other than the person(s) signing this Letter of
Transmittal or if the check for any shares not validly tendered and not
purchased are to be mailed to someone other than the person(s) signing this
Letter of Transmittal or to the person(s) signing this Letter of Transmittal at
an address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Holders tendering shares by book-entry transfer
may request that shares not purchased be credited to such account at the
Book-Entry Transfer Facility as such shareholder may designate under "Special
Payment Instructions."
9. United States Federal Income Tax Withholding. Under U.S. federal
income tax laws, the Depositary is required to withhold 31% of the amount of any
payments made pursuant to the Offer unless certain requirements are satisfied.
In order to avoid such withholding, a tendering holder of shares must complete
the Substitute Form W-9 set forth above and return it to the Depositary, unless
the holder is an "exempt recipient" (including, among others, all corporations
and certain foreign individuals). In order to satisfy the Depositary that a
foreign individual qualifies as an exempt recipient, such holder of shares must
submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Such statements can be obtained from the Depositary.
For further information concerning backup withholding and instructions for
completing the Substitute Form W-9 (including how to obtain a taxpayer
identification number if you do not have one and how to complete the Substitute
Form W-9 if shares are held in more than one name), consult the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9. If the Depositary is not provided with the correct taxpayer
identification number and the tendering holder is not an exempt recipient, the
holder may be subject to both civil and criminal penalties, and payments that
are made to such holder pursuant to the Offer may be subject to backup
withholding.
Failure to complete the Substitute Form W-9 will not, by itself, cause
shares to be deemed invalidly tendered, but may require the Depositary to
withhold 31% of the amount of any payments made pursuant to the Offer. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained. See "The Offer -- U.S. Federal Income Tax Consequences"
in the Offer to Purchase.
<PAGE> 9
10. Dividend Reinvestment Plan. If a tendering holder desires to have the
Depositary tender pursuant to the Offer shares credited to such holder's account
under the Dividend Reinvestment Plan, the box captioned "Dividend Reinvestment
Plan Shares" should be completed. If a holder authorizes the tender of shares
held in the Dividend Reinvestment Plan, all such shares credited to such
holder's account(s), including fractional shares, will be tendered, unless
otherwise specified in the appropriate space in the box captioned "Dividend
Reinvestment Plan Shares." In the event that the box captioned "Dividend
Reinvestment Plan Shares" is not completed, no shares held in the tendering
holder's account(s) will be tendered. See "The Offer -- Procedure for Tendering
Shares -- Dividend Reinvestment Plan."
11. 401(k) Plan. Participants in the Amway Corporation Profit-Sharing and
401(k) Plan (the "401(k) Plan") who wish to have the 401(k) Plan trustee tender
shares attributable to their accounts should so indicate by completing,
executing and returning the election form included in the materials sent to such
participants by the trustee. A participant in the 401(k) Plan may direct the
tender of all or a portion of shares allocated to the participant's 401(k) Plan
account. If a participant's 401(k) Plan shares are purchased pursuant to the
Offer, the number of shares allocated to the participant's 401(k) Plan account
will be reduced by the number of such participant's shares so purchased.
Participants in the 401(k) Plan may not use this Letter of Transmittal to direct
the tender of the shares attributable to the participant's 401(k) Plan account,
but must use the separate election form sent to them by the trustee.
Participants in the 401(k) Plan are urged to read the separate election form and
related materials carefully. See "The Offer -- Procedure for Tendering Shares --
401(k) Plan."
12. Irregularities. All questions as to the Purchase Price, the
deductions to be made from the Purchase Price, the number of shares of Common
Stock tendered and accepted, the form of documents, and the validity,
eligibility (including time of receipt) and acceptance for payment of any tender
of shares will be determined by the Company in its sole discretion, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders of shares it determines not to
be in proper form or the acceptance of which or payment for which may, in the
opinion of the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any defect or irregularity in the tender of any
particular shares, and the Company's interpretations of the terms of the Offer
(including these instructions) will be final and binding on all parties. No
tender of shares will be deemed to be properly made until all defects and
irregularities have been cured or waived. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as the
Company shall determine. None of the Company, the Dealer Managers, the
Depositary, the Information Agent or any other person is or will be obligated to
give notice of any defects or irregularities in tenders and none of them will
incur any liability for failure to give any such notice.
13. Requests for Assistance or Additional Copies. Questions and requests
for assistance may be directed to the Information Agent or the Dealer Managers
at their respective addresses and telephone numbers set forth below.
Additional copies of the Offer to Purchase, this Letter of Transmittal and
other related materials may be obtained from the Information Agent or brokers,
dealers, commercial banks and trust companies.
The Information Agent for the Offer is:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 State Street
New York, NY 10004
Banks and Brokers Call Collect: (212) 440-9800
or
All Others Call Toll Free: (800) 223-2064
The Dealer Managers for the Offer are:
<TABLE>
<S> <C>
MORGAN STANLEY DEAN WITTER J.P. MORGAN & CO.
Morgan Stanley & Co. Incorporated 60 Wall Street
One Financial Place New York, NY 10260
440 South LaSalle Street (877) 576-0606 (call toll free)
Chicago, IL 60605
(212) 706-4411 (call collect)
For information in Australia:
Morgan Stanley Dean Witter Australia Limited J.P. Morgan & Co.
Level 33, The Chifley Tower Level 20, One O'Connell Street
22 Chifley Square Sydney, New South Wales, Australia 2061
Sydney, New South Wales, Australia 2000 (800) 872-2881
(612) 9770-1590 (call collect) (877) 576-4529
(call toll-free)
</TABLE>
<PAGE> 1
Exhibit (a)(3)
NOTICE OF GUARANTEED DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
TO TENDER SHARES OF COMMON STOCK
OF
AMWAY ASIA PACIFIC LTD.
PURSUANT TO THE OFFER TO PURCHASE, DATED NOVEMBER 18, 1999
OF
NEW AAP LIMITED
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates for
shares of Common Stock, par value $.01 per share, of Amway Asia Pacific Ltd.,
and all other documents required by the Letter of Transmittal cannot be
delivered to the Depositary by the expiration of the Offer or if the procedure
for book-entry transfer cannot be completed by the expiration of the Offer. Such
form may be delivered by hand, facsimile transmission, or mailed to the
Depositary. See "The Offer -- Procedure for Tendering Shares" in the Offer to
Purchase.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Mail: By Hand:
FIRST CHICAGO TRUST COMPANY OF NEW YORK FIRST CHICAGO TRUST COMPANY OF NEW YORK
C/O SECURITIES TRANSFER AND REPORTING SERVICES
CORPORATE ACTIONS INC.
SUITE 4660 ATTN: CORPORATE ACTIONS
P.O. BOX 2569 100 WILLIAM STREET, GALLERIA
JERSEY CITY, NJ 07303-2569 NEW YORK, NY 10038
By Overnight Courier: By Facsimile Transmission:
FIRST CHICAGO TRUST COMPANY OF NEW YORK (201) 324-3402 OR (201) 324-3403
CORPORATE ACTIONS, SUITE 4660 Confirm by Telephone:
525 WASHINGTON BLVD. (201) 222-4707
JERSEY CITY, NJ 07310
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
FOR THIS NOTICE OF GUARANTEED DELIVERY TO BE EFFECTIVE, IT MUST BE SIGNED
BY BOTH THE TENDERING HOLDER AND THE GUARANTOR.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED.
<PAGE> 2
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 THAT SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
------------------------------
Ladies and Gentlemen:
The undersigned hereby tenders to the Depositary, on behalf of New AAP
Limited, a Bermuda corporation (the "Purchaser") and an entity controlled,
directly or indirectly, by the DeVos and Van Andel families and certain
corporations, trusts, foundations and other entities established by or for the
benefit of such families, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated November 18, 1999 (the "Offer to Purchase"), and
the related Letter of Transmittal (which, together with the Offer to Purchase,
constitutes the "Offer"), receipt of which is hereby acknowledged, the number of
shares indicated below of Common Stock, par value $.01 per share (the "Common
Stock"), of Amway Asia Pacific., Ltd., pursuant to the guaranteed delivery
procedure set forth in "The Offer -- Procedure for Tendering Shares" in the
Offer to Purchase.
(SEE INSTRUCTION 2 OF THE LETTER OF TRANSMITTAL)
NUMBER OF SHARES TO BE TENDERED:
------------------------
-------------------------------------------------------------
NUMBER OF SHARES
-----------------------------------------
CERTIFICATE NOS. (IF AVAILABLE):
-------------------------------------------------------------
-------------------------------------------------------------
IF SHARES WILL BE TENDERED BY BOOK-ENTRY TRANSFER:
NAME OF TENDERING
INSTITUTIONS:
------------------------------------------------
-------------------------------------------------------------
ACCOUNT NO.
-----------------------------------------------
[ ] The Depository Trust Company
-------------------------------------------------------------
-------------------------------------------------------------
SIGN HERE
-------------------------------------------------------------
-------------------------------------------------------------
SIGNATURE(S)
Dated:
-----------------------------------------------, 1999
Name(s) of Shareholders:
-------------------------------------------------------------
-------------------------------------------------------------
PLEASE TYPE OR PRINT
-------------------------------------------------------------
ADDRESS
-------------------------------------------------------------
ZIP CODE
-------------------------------------------------------------
AREA CODE AND TELEPHONE NO.
-------------------------------------------------------------
TAXPAYER ID NO. OR SOCIAL SECURITY NO.
-------------------------------------------------------------
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Guarantee Program or the Stock Exchange Medallion Program, guarantees to deliver
to the Depositary the shares tendered hereby, together with a properly completed
and duly executed Letter of Transmittal (or copy thereof) or an Agent's Message
(as defined in the Offer to Purchase) and any other required documents, all
within two New York Stock Exchange, Inc. trading days of the date hereof.
-----------------------------------------
Name of Firm
-----------------------------------------
Authorized Signature
-----------------------------------------
Name
-----------------------------------------
Address
-----------------------------------------
Zip Code
Dated: -----------------------------------------
- ------------------------------, 1999
Area Code and Telephone No.
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES
MUST BE SENT WITH THE LETTER OF TRANSMITTAL TO THE DEPOSITARY.
<PAGE> 4
INSTRUCTION FORM
WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
BY
NEW AAP LIMITED
FOR
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AMWAY ASIA PACIFIC LTD.
AT $18.00 PER SHARE OF COMMON STOCK
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated November 18, 1999 (the "Offer to Purchase"), and the
related Letter of Transmittal (the "Letter of Transmittal," which, together with
the Offer to Purchase, constitutes the "Offer"), in connection with the offer to
purchase by New AAP Limited, a Bermuda corporation (the "Company") and an entity
controlled, directly or indirectly, by the DeVos and Van Andel families and
certain corporations, trusts, foundations and other entities established by or
for the benefit of such families, all the outstanding shares of Common Stock,
par value $.01 per share (the "Common Stock"), of Amway Asia Pacific Ltd., a
Bermuda corporation ("AAP"). The purchase price for each share of Common Stock
will be $18.00 in cash (the "Purchase Price"). There will be deducted from the
Purchase Price paid to each holder any U.S. backup or other applicable
withholding taxes which may be required to be withheld.
The undersigned hereby instruct(s) you to tender the number of shares
indicated below or, if no number is indicated, all shares you hold for the
account of the undersigned pursuant to the terms and subject to the conditions
of the Offer.
AGGREGATE NUMBER OF SHARES TO BE TENDERED BY YOU FOR
THE ACCOUNT OF THE UNDERSIGNED:
____________________ SHARES*
- ----------------
* Unless otherwise indicated, all of the shares held for the account of the
undersigned will be tendered.
SIGNATURE BOX
Signature(s)
- --------------------------------------------------------------------------------
Dated
- --------------------------------------------------------------------------------
1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Area Code and Telephone Number
- --------------------------------------------------------------------------------
Taxpayer Identification or
Social Security Number
- --------------------------------------------------------------------------------
<PAGE> 1
Exhibit (a)(4)
OFFER TO PURCHASE FOR CASH
BY
NEW AAP LIMITED
FOR
ALL OUTSTANDING SHARES OF THE COMMON STOCK
OF
AMWAY ASIA PACIFIC LTD.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON DECEMBER 17, 1999 UNLESS THE OFFER IS EXTENDED.
November 18, 1999
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by New AAP Limited, a Bermuda corporation (the
"Company") and an entity controlled, directly or indirectly, by the DeVos and
Van Andel families and certain corporations, trusts, foundations and other
entities established by or for the benefit of such families (the "Principal
Shareholders"), to act as Dealer Managers in connection with its offer (the
"Offer") to purchase all the outstanding shares of the Common Stock, par value
$.01 per share (the "Common Stock"), of Amway Asia Pacific Ltd., a Bermuda
corporation ("AAP"), that are beneficially owned by the shareholders of AAP. The
Company has been informed by the Principal Shareholders that they will not
tender their shares of Common Stock (the "Non-Tendered Shares") in response to
the Offer. The purchase price for each share of Common Stock will be $18.00 in
cash (the "Purchase Price"). There will be deducted from the Purchase Price paid
to each holder any U.S. backup or other applicable withholding taxes which may
be required to be withheld. The Offer is for all Shares of AAP or any lesser
number of Shares tendered and not withdrawn. The Offer will expire, unless
extended, at 12:00 midnight, New York City time, on December 17, 1999. The
Company is making the Offer pursuant to the Tender Offer and Amalgamation
Agreement, dated November 15, 1999, among the Company, AAP and Apple Hold Co.,
L.P., a limited partnership organized under the laws of Bermuda, in accordance
with the terms and conditions described in the Offer to Purchase, dated November
18, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (the
"Letter of Transmittal").
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED OR SUBJECT TO ANY OTHER CONDITIONS.
THE BOARD OF DIRECTORS OF AAP (WITH MESSRS. RICHARD M. DEVOS, JR., DOUGLAS
L. DEVOS AND STEPHEN A. VAN ANDEL NOT PARTICIPATING) RECOMMENDS THAT THE HOLDERS
OF SHARES OF COMMON STOCK OTHER THAN THE NON-TENDERED SHARES ACCEPT THE OFFER
AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER.
EACH HOLDER MUST MAKE ITS OWN DECISION WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER.
For your information and for forwarding to your clients for whom you hold
shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase, dated November 18, 1999;
2. Letter to Clients that may be sent to your clients for whose
accounts you hold shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
3. Letter dated November 18, 1999 from Stephen A. Van Andel to
holders of the Common Stock;
4. Letter of Transmittal for your use and for the information of your
clients;
5. Notice of Guaranteed Delivery; and
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
<PAGE> 2
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER
17, 1999, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any person
for soliciting tenders of shares pursuant to the Offer other than fees paid to
the Information Agent and the Depositary as described in "The Offer -- Fees and
Expenses" in the Offer to Purchase. The Company will, however, upon written
request, reimburse you for customary mailing and handling expenses incurred by
you in forwarding any of the enclosed materials to the beneficial owners of
shares held by you as a nominee or in a fiduciary capacity. However, U.S. backup
withholding tax, may, in certain circumstances described in the Offer to
Purchase, be required to be withheld from the Purchase Price payable to certain
holders or other payees pursuant to the Offer. See "The Offer -- U.S. Federal
Income Tax Consequences -- Backup Withholding" in the Offer to Purchase and
Instruction 9 of the Letter of Transmittal.
In order to accept the Offer, a duly executed and properly completed Letter
of Transmittal and any other required documents should be sent to the Depositary
with either certificates evidencing the tendered shares or confirmation of their
book-entry transfer all in accordance with the instructions set forth in the
Letter of Transmittal and in "The Offer -- Procedure for Tendering Shares" in
the Offer to Purchase. As described in "The Offer -- Procedure for Tendering
Shares -- Guaranteed Delivery" in the Offer to Purchase, tenders of shares may
be made without the concurrent deposit of stock certificates or concurrent
compliance with the procedure for book-entry transfer, if such tenders are made
by or through an Eligible Institution (as defined in the Offer to Purchase).
Certificates for shares so tendered (or confirmation of a book-entry transfer of
such shares into the Depositary's account at the Book-Entry Transfer Facility
described in the Offer to Purchase), together with a properly completed and duly
executed Letter of Transmittal and any other documents required by the Letter of
Transmittal, must be received by the Depositary within two New York Stock
Exchange trading days after receipt by the Depositary of a properly completed
and duly executed Notice of Guaranteed Delivery. See "The Offer -- Procedure for
Tendering Shares -- Guaranteed Delivery" in the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
Georgeson Shareholder Communications Inc., Morgan Stanley & Co. Incorporated or
J.P. Morgan & Co. at their respective addresses and telephone numbers set forth
on the back cover page of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained from Georgeson
Shareholder Communications Inc., the Information Agent, telephone: (212)
440-9800 (call collect).
Very truly yours,
Morgan Stanley & Co. Incorporated
J.P. Morgan & Co.
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, THE
DEALER MANAGERS, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF
THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND
THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
Exhibit (a)(5)
OFFER TO PURCHASE FOR CASH
BY
NEW AAP LIMITED
FOR
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AMWAY ASIA PACIFIC LTD.
AT $18.00 PER SHARE OF COMMON STOCK
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated November
18, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (the
"Letter of Transmittal," which, together with the Offer to Purchase, constitutes
the "Offer") and other materials relating to the offer to purchase by New AAP
Limited, a Bermuda corporation (the "Company") and an entity controlled,
directly or indirectly, by the DeVos and Van Andel families and certain
corporations, trusts, foundations and other entities established by or for the
benefit of such families, of all outstanding shares of Common Stock, par value
$.0l per share (the "Common Stock"), of Amway Asia Pacific Ltd., a Bermuda
corporation ("AAP"), that are beneficially owned by the shareholders of AAP. The
purchase price for each share of Common Stock will be $18.00 in cash (the
"Purchase Price"). There will be deducted from the Purchase Price paid to each
holder any U.S. backup or other applicable withholding taxes which may be
required to be withheld.
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. AS SUCH, WE
ARE THE ONLY ONES WHO CAN TENDER YOUR SHARES, AND THEN ONLY PURSUANT TO YOUR
INSTRUCTIONS. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION
ONLY. IT CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. SEE
"THE OFFER -- PROCEDURE FOR TENDERING SHARES" IN THE OFFER TO PURCHASE.
Please instruct us on the attached instruction form as to whether you wish
us to tender any or all of the shares we hold for your account on the terms and
subject to the conditions of the Offer.
We call your attention to the following:
1. The Offer is not conditioned upon any minimum number of shares
being tendered or subject to any other conditions.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on December 17, 1999, unless the Company extends the Offer.
3. The Offer is for all outstanding shares, unless a lesser number of
shares are tendered and not withdrawn.
4. Tendering holders will not be obligated to pay any brokerage
commissions or solicitation fees on the Company's purchase of shares
pursuant to the Offer. However, U.S. backup withholding tax may, in certain
circumstances described in the Offer to Purchase, be required to be
withheld from the Purchase Price payable to certain holders or other payees
pursuant to the Offer. See "The Offer -- U.S. Federal Income Tax
Consequences -- Backup Withholding" in the Offer to Purchase and
Instruction 9 of the Letter of Transmittal.
If you wish to have us tender any or all of your shares, please so instruct
us by completing, executing and returning to us the attached instruction form.
An envelope to return your instructions to us is enclosed. If you authorize us
to tender your shares, we will tender all such shares unless you specify
otherwise on the attached instruction form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT THE LETTER OF TRANSMITTAL ON YOUR BEHALF ON OR PRIOR TO THE EXPIRATION
DATE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON DECEMBER 17, 1999, UNLESS THE COMPANY EXTENDS THE OFFER.
The Company is not making the Offer to, nor will it accept tenders from or
on behalf of, holders of shares in any jurisdiction in which the Offer or its
acceptance would violate the securities, blue sky or other laws of such
jurisdiction. In any jurisdiction in which the securities or blue sky laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on the Company's behalf by Morgan Stanley & Co. Incorporated
and J.P. Morgan & Co. or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
<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.,
000-00-000. 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 OR EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF-
- -----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
1. Individual The individual
2. Two or more The actual owner of the account or, if
combined funds, any one of the individuals(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings trust The grantor-trustee(1)
(grantor is also trustee)
b. So-called trust account that is not a legal The actual owner(1)
or valid trust under state law
5. Sole proprietorship The owner(3)
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or pension trust The legal entity (Do not furnish the
identifying number of the personal
representative or trustee unless the legal
entity itself is not designated in the account
title.)(4)
8. Corporate The corporation
9. Association, club, religious, charitable, The organization
educational or other tax-exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of Agriculture in The public entity
the name of a public entity (such as a state
or local government, school district, or
prison) that receives agriculture program
payments
</TABLE>
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner.
(4) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
Section references are to the Internal Revenue Code.
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service (the "IRS") and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in (1)
through (13) and a person registered under the Investment Advisers Act of 1940
who regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except that a corporation
that provides medical and health care services or bills and collects payments
for such services is not exempt from backup withholding or information
reporting. Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends, and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under 403(b)(7).
(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 generally not subject to backup
withholding also include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details see sections 6041, 6041(A)(a), 6042, 6044, 6045,
6049, 6050A and 6050N, and the regulations under such sections.
PRIVACY ACT NOTICE
Section 6109 requires you to give your correct taxpayer identification number to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. You must provide
your taxpayer identification number whether or not you are qualified to file a
tax return. Payers must generally withhold 31% of taxable interest, dividend,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE> 1
Exhibit (a)(7)
NEW AAP LIMITED
7575 EAST FULTON ROAD
ADA, MICHIGAN 49355
November 18, 1999
To Holders of Common Stock of Amway Asia Pacific Ltd.:
We are pleased to submit for your consideration an offer by New AAP
Limited, a Bermuda corporation (the "Company") and an entity controlled,
directly or indirectly, by the DeVos and Van Andel families and certain
corporations, trusts, foundations and other entities established by or for the
benefit of such families (the "Principal Shareholders"), to purchase (the
"Offer") all the outstanding shares of Common Stock, par value $.01 per share
(the "Common Stock"), of Amway Asia Pacific Ltd., a Bermuda corporation ("AAP"),
that are beneficially owned by the shareholders of AAP. The Company has been
informed by the Principal Shareholders that they will not tender their shares of
Common Stock ("Non-Tendered Shares") in response to the Offer. The purchase
price for each share of Common Stock will be $18.00 in cash (the "Purchase
Price"). There will be deducted from the Purchase Price paid to each holder any
U.S. backup or other applicable withholding taxes which may be required to be
withheld. The Offer is for all shares of AAP or any lesser number of shares
tendered and not withdrawn.
The Offer is explained in detail in the enclosed Offer to Purchase and
Letter of Transmittal. If you wish to tender your shares, the instructions for
tendering are set forth in the enclosed materials. I encourage you to read these
materials carefully before making any decision with respect to the Offer.
THE BOARD OF DIRECTORS OF AAP (WITH MESSRS. RICHARD M. DEVOS, JR., DOUGLAS
L. DEVOS AND STEPHEN A. VAN ANDEL NOT PARTICIPATING) RECOMMENDS THAT THE HOLDERS
OF SHARES OF COMMON STOCK, OTHER THAN THE NON-TENDERED SHARES, ACCEPT THE OFFER
AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER.
EACH HOLDER MUST MAKE ITS OWN DECISION WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER.
Please note that the Offer will expire at 12:00 midnight, New York City
time, on December 17, 1999, unless it is extended. Should you have questions
regarding this Offer, please call the Information Agent or the Dealer Managers
at their respective telephone numbers set forth on the back cover page of the
Offer to Purchase.
Very truly yours,
New AAP Limited
By: /s/ Stephan A. Van Andel
Name: Stephen A. Van Andel
<PAGE> 1
Exhibit (a)(8)
AMWAY ASIA PACIFIC'S PRINCIPAL SHAREHOLDERS TO COMMENCE
TENDER OFFER FOR OUTSTANDING PUBLIC SHARES
HONG KONG - Monday, November 15, 1999 - Amway Asia Pacific
(NYSE: AAP; ASX: AMW) and its principal shareholders announced that the
principal shareholders intend to commence a cash tender offer to purchase the
approximately 15% of Amway Asia Pacific common stock that they do not currently
own or control for US$18.00 per share, in cash. The transaction has a total
value of approximately US$150 million. The tender offer will commence within the
next five business days.
Amway Asia Pacific and its principal shareholders have entered into a definitive
agreement providing for the tender offer and a second-step merger following the
completion of the tender offer, in which all remaining Amway Asia Pacific
shareholders will receive the same cash consideration paid in the tender offer.
Amway Asia Pacific's board of directors (with three directors who are principal
shareholders recusing themselves) determined that the tender offer is fair to
and in the best interests of the public shareholders and recommended that they
accept the offer and tender their shares.
The company's board of directors acted upon the recommendation of a special
committee of the board, which was comprised of three independent, non-employee
directors of Amway Asia Pacific. Goldman, Sachs & Co. acted as financial advisor
to the special committee.
Eoghan M. McMillan, chairman of the special committee, said, "After careful
review by the special committee and the board of directors, with the assistance
of our financial advisor, our board concluded that this transaction is in the
best interests of our public shareholders, as well as our distributors and
employees. Our public shareholders are receiving a substantial premium of 53% -
in cash."
Steve Van Andel, representing the principal shareholders, said, "The acquisition
of Amway Asia Pacific's shares will give us the flexibility we need to
streamline operations and to integrate certain functions of all Amway companies
under a single global corporate structure. Our objective is to organize in the
most efficient manner to best address our rapidly changing marketplace
worldwide. These realignments will better position us to make necessary
investments to build a stronger foundation for resumed growth in Asia and to
encourage the continued loyalty and motivation of Amway Asia Pacific
distributors. With this action, we are deepening and strengthening our
commitment to our customers, distributors and employees in Asia."
-more-
<PAGE> 2
The tender offer will be made to all holders of common stock. The offer is not
conditioned on obtaining financing or upon any minimum number of shares being
tendered. The full terms and conditions of the offer will be set forth in the
tender offer materials to be filed with the Securities and Exchange Commission
and mailed to Amway Asia Pacific shareholders.
The principal shareholders of Amway Asia Pacific are certain corporations,
trusts, foundations and other entities formed by or for the benefit of the Van
Andel and DeVos families. They formed a new Bermuda corporation, New AAP
Limited, for the purpose of conducting the tender offer.
Morgan Stanley Dean Witter and J.P. Morgan are acting as dealer managers for
this transaction and are global co-financial advisors to the principal
shareholders.
Georgeson Shareholder Communications Inc. is acting as information agent for the
offer and may be contacted (via collect call) at (212)-440-9800 or toll-free at
(800)-223-2064.
Headquartered in Hong Kong, Amway Asia Pacific Ltd. is the exclusive
distribution vehicle for Amway Corporation in Australia, Brunei, People's
Republic of China, Macau, Malaysia, New Zealand, Taiwan and Thailand. Amway Asia
Pacific Ltd. is one of the largest direct selling companies in the region, based
on sales of Amway consumer products offered through a core distributor force of
approximately 601,000 independent distributors at August 31, 1999. Amway Asia
Pacific Ltd. is listed on the New York Stock Exchange (AAP) and the Australian
Stock Exchange (AMW). Current press releases and SEC earnings filings are
available through the Internet at http://www.aap-amway.com.
CONTACTS:
MEDIA AND INVESTORS: MEDIA AND INVESTORS IN AUSTRALIA:
Holly A. Clemente Kate Kerrison
AAP Director of Investor Relations, U.S. Gavin Anderson & Kortlang, Sydney
(616) 787-8688 (612) 9552-4499
<PAGE> 1
Exhibit (a)(9)
AMWAY COMMUNICATIONS TO DISTRIBUTORS
- -------------------------------------------------------------------------------
VEHICLE: E-MAIL: MESSAGE (BELOW)
AND 2 NEWS RELEASES (TO BE ATTACHED)
Audience: Pin Emeralds & above
Date: Monday, Nov. 15, 1999
- --------------------------------------------------------------------------------
[subject box:]
ANNOUNCEMENT FROM S. VAN ANDEL & D. DEVOS
[text:]
We wanted to communicate with you about this important announcement.
The Van Andel and DeVos families are publicly announcing their intention to make
a cash tender offer for the shares of common stock of Amway Japan Limited and
Amway Asia Pacific, Ltd. that are not currently owned by the families. For more
information about this offer, please see the accompanying official news
releases.
We recognize that this decision probably came as a surprise to you, and for some
investors a disappointment. It is important everyone understands that this offer
is the result of a strategic business decision. While this announcement might
seem to be relevant only to the shareholders of Amway Japan Limited and Amway
Asia Pacific, Ltd., this strategic decision and the bigger picture of where
Amway is headed in the 21st century are of vital importance to all Independent
Business Owners.
THE OFFER
Let's focus first on the tender offer itself.
This is a fully financed offer at a full and fair price. The shareholders will
be offered a substantial premium, in cash, to the current share price. In fact,
the offer price is higher than the 52-week high prices of either company.
These offers have been approved by the independent members of the AJL Board and
the AAP Board. The Boards retained Goldman, Sachs & Co. as independent financial
advisor and Cleary Gottlieb as independent legal counsel. Morgan Stanley Dean
Witter and J.P. Morgan are acting as global advisors to the families, and Jones
Day provided legal counsel to the families with respect to the tender offer.
THE FUTURE
Let's now focus on what this means to the Amway business in Asia and worldwide.
With this offer, the DeVos and Van Andel families are increasing their
commitment to Amway's Asian businesses. In fact, this commitment follows several
other major
1
<PAGE> 2
commitments in recent years, which include $300 million for a new headquarters
building in Tokyo, Japan, $200 million for a new distribution center in
Hachioji, Japan, and $20 million to upgrade the manufacturing plant in
Guangzhou, China.
From a broader perspective, this strategic decision was made to give Amway the
flexibility it needs to succeed in the rapidly changing global marketplace.
Amway has a new, clear, powerful Vision statement for its future: helping people
live better lives. Whether one is an IBO building a business, an Amway employee
building a career, or a consumer using our products, it is our Vision to help
people live better lives. This statement reflects a more encompassing Vision
than we had before it truly reflects the diverse nature of what Amway means to
all our various audiences.
This offer will allow Amway to take major steps toward achieving that Vision.
Specifically, it will allow us to accelerate realignments in the financial and
operational areas of our business under a single, global corporate structure -
realignments that would be difficult to do under the current structure of public
and private Amway companies.
The realignment enabled by this transaction will also help Amway customize its
support for individual markets, allowing the company to better meet the needs
and priorities of each unique market, especially North America.
THE COMMUNICATIONS
Amway is informing IBOs about this offer in a number of ways. In addition to
this e-mail, Emeralds and above will receive information via an Amvox and fax. A
mailing is being sent to Platinums and above. ABN will provide information
online, as will the Web site for Amway Japan (www.ajl-amway.com) and the Web
site for Amway Asia Pacific (www.aap-amway.com). Shareholders, of course, will
also receive detailed information.
As Amway celebrates its 40th anniversary, we believe this business is poised for
incredible growth in the 21st century. With the recent launch of Quixtar and
IMC, and the continued launch of outstanding, new products such as MAGNA
BLOC(TM) anD OCeaN ESSENTIals(TM), this business has only scratched the surface
of what can be achieved around the world. We're confident that this offer will
enable us to make the kinds of changes and commitments which will play an
essential part in strengthening the foundation for success already in place.
Steve Van Andel Dick DeVos
- --------------------------------------------------------------------------------
2
<PAGE> 1
Exhibit (a)(10)
- -------------------
To: All Amway Management and Employees
Subject: Tender Offer Announcement
Today, we announced the decision by the Van Andel and DeVos families to make a
cash tender offer for the shares of common stock of Amway Japan Limited and
Amway Asia Pacific, Ltd., that are not currently owned by the families. Details
about this offer are provided in the accompanying official news releases.
We recognize that this decision may come as a surprise to many of you and for
some investors this may be a disappointment. We believe it is important that
everyone understands that this offer represents a strategic business decision
intended to strengthen and grow our business in the long run. While the
announcement might seem to be relevant only to the shareholders of Amway Japan
Limited and Amway Asia Pacific, Ltd., this strategic decision and the bigger
picture of where Amway is headed into the 21st century are of vital importance
to all employees of Amway and its sister corporations.
The Offer
First, let us explain the tender offer itself. This is a fully financed offer at
a full and fair price. The shareholders will be offered a substantial premium,
in cash, to the current share price. And in fact, the offer price is higher than
the 52-week high of either company.
These offers have been approved by the independent members of the AJL Board and
the AAP Board. The Boards retained Goldman, Sachs & Co. and Cleary Gottlieb as
independent legal counsel, respectively, to the boards of Amway Asia Pacific and
Amway Japan. Morgan Stanley Dean Witter and J.P. Morgan are acting as global
advisors to the families, and Jones Day provided legal counsel to the families,
with respect to the tender offer.
<PAGE> 2
The Future
Let's now focus on what this means to the Amway business in Asia and worldwide.
With this offer we, are increasing our commitment to Amway's Asian businesses.
In fact, this commitment follows several other major investments in recent
years, including $300 million for a new headquarters building in Tokyo, Japan,
$200 million for a new distribution center in Hachioji, Japan, and $20 million
to upgrade the manufacturing plant in Guangzhou, China.
From a broader perspective, this is a strategic decision to give Amway the
flexibility it needs to succeed in the rapidly changing global marketplace.
Amway has a new, clear, powerful vision statement for its future: helping people
live better lives. Whether you are an IBO building a business, an employee
building a career, or a consumer using our products, it is our vision to help
people live better lives. This statement reflects a broader, more encompassing
vision than we have had before, it truly reflects the diverse nature of what
Amway means to all our various audiences.
This offer will allow Amway to take major steps toward achieving that vision.
Specifically, it will allow us to accelerate realignments in the financial and
operational areas of our business under a single, global corporate structure -
realignments that would be difficult to do under the current structure of public
and private Amway companies.
The transaction will also help Amway customize its support for individual
markets, allowing the company to better meet the differing needs and priorities
of each unique market.
The Communications
Amway is informing employees, distributors/IBOs, shareholders, the investment
community and the media about this offer in a number of ways.
ABN will provide information online, as will the website for Amway Japan
(www.ajl-amway.com) and the website for Amway Asia Pacific (www.aap-amway.com).
Shareholders, of course, will also receive detailed information. There will be
memos, such as this one, for employees, and we will be providing more
information in employee meetings and through other communications channels. A
variety of messages will also go out to Amway distributors/IBOs worldwide.
Last week we celebrated Amway's 40th anniversary - an outstanding
accomplishment. Today's announcement is an important step towards positioning
this business for growth in the 21st century. With the recent launch of Quixtar
and IMC, and the continued launch of outstanding, new products such as Magna B
loc Therapeutic Magnets and Ocean Essentials, this business has only scratched
the surface of what can be achieved around the world. We're confident that this
offer will enable us to make changes and commitments that will play an essential
part in strengthening the foundation for success already in place.
Steve Van Andel Dick DeVos
<PAGE> 1
Exhibit (a)(11)
AMWAY ASIA PACIFIC'S PRINCIPAL SHAREHOLDERS COMMENCE TENDER OFFER FOR
OUTSTANDING PUBLIC SHARES
ADA, Michigan - Thursday, November 18, 1999 - As announced on November 15,
1999, Amway Asia Pacific's principal sharehrolders today commenced a cash tender
offer to purchase the approximately 15% of Amway Asia Pacific (NYSE: AAP; ASX:
AMW) common stock that they do not currently own or control for US$18.00 per
share, in cash.
This transaction has a total value of approximately US$150 million. The offer
price represents a premium of 53% to the closing price on the last trading day
prior to the announcement of the offer.
Following completion of the tender offer, a second-step merger will occur in
the first half of 2000, in which all remaining Amway Asia Pacific shareholders
will receive the same cash consideration paid in the tender offer.
The tender offer is to all holders of common stock. The offer and withdrawal
rights will expire, unless extended, at 12:00 midnight New York City time on
December 17,1999.
The offer is not conditioned on obtaining financing or upon any minimum number
of shares being tendered. The full terms and conditions of the offer are set
forth in the tender offer materials filed with the Securities and Exchange
Commission and being mailed to Amway Asia Pacific shareholders.
The principal shareholders of Amway Asia Pacific are certain corporations,
trusts, foundations and other entities formed by or for the benefit of the Van
Andel and DeVos families.
Morgan Stanley Dean Witter and J.P. Morgan are acting as dealer managers for
this transaction and are global co-financial advisors to the principal
shareholders.
Georgeson Shareholder Communications Inc. is acting as information agent for the
offer and may be contacted (via collect call) at (212)-440-9800 or toll-free at
(800)-223-2064.
Headquartered in Hong Kong, Amway Asia Pacific Ltd. is the exclusive
distribution vehicle for Amway Corporation in Australia, Brunei, People's
Republic of China, Macau, Malaysia, New Zealand, Taiwan and Thailand. Amway Asia
Pacific Ltd. is one of the largest direct selling companies in the region, based
on sales of Amway consumer products offered through a core distributor force of
approximately 601,000 independent distributors at August 31, 1999. Amway Asia
Pacific Ltd. is listed on the New York Stock Exchange (AAP) and the Australian
Stock Exchange (AMW). Current press releases and SEC earnings filings are
available through the Internet at http://www.aap-amway.com.
CONTACT:
MEDIA AND INVESTORS:
Holly A. Clemente
Director of Investor Relations
(616) 787-8688
<PAGE> 1
Exhibit (a)(12)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is being made solely by the Offer to Purchase, dated
November 18, 1999, and the related Letter of Transmittal. The Offer is being
made to all holders of Shares; provided that 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 making the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. In any jurisdiction the
securities laws of which require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed made on behalf of the Company by Morgan
Stanley & Co. Incorporated or J.P. Morgan Securities Inc. or one or more brokers
or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
BY
NEW AAP LIMITED
FOR
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AMWAY ASIA PACIFIC LTD.
AT
$18.00 PER SHARE
New AAP Limited, a Bermuda corporation ("Purchaser"), offers to purchase all
the outstanding shares of the Common Stock of Amway Asia Pacific Ltd., a Bermuda
corporation ("AAP"), par value $.01 per share (the "Common Stock" or "Shares"),
that are beneficially owned by all shareholders of AAP, in accordance with the
terms and conditions described or referred to in the Offer to Purchase and the
related Letter of Transmittal (the "Offer"). The Offer is being made pursuant to
the Tender Offer and Amalgamation Agreement (the "Amalgamation Agreement"),
dated November 15, 1999, among AAP, Purchaser and Apple Hold Co., L.P., a
limited partnership organized under the laws of Bermuda ("Hold Co."). Hold Co.
is the parent of Purchaser and an entity controlled and beneficially owned,
directly and indirectly, by the principal shareholders of AAP, along with
certain corporations, trusts, foundations and other entities established by or
for the benefit of the principal shareholders and their respective families
(collectively, the "Principal Shareholders"). The Amalgamation Agreement
provides for, among other things, Purchaser to first conduct the Offer and then
for AAP and Purchaser to amalgamate (the "Amalgamation"), with AAP continuing as
the surviving company, in a cash transaction. In certain circumstances, a
compulsory purchase of Shares for cash may occur in lieu of the Amalgamation.
The purchase price for each share of Common Stock purchased in the Offer will be
$18.00 in cash (the "Purchase Price"). There will be deducted from the Purchase
Price paid to each holder any U.S. backup or other applicable withholding taxes
which may be required to be withheld. The Offer is for all Shares of AAP or any
lesser number of Shares tendered and not withdrawn.
Purchaser has been informed by the Principal Shareholders that they will not
tender their Shares in response to the Offer. The Principal Shareholders will
contribute their Shares ("Non-Tendered Shares") to Hold Co. contemporaneously
with the consummation of the Offer.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED OR SUBJECT TO ANY OTHER CONDITIONS.
THE BOARD OF DIRECTORS OF AAP (WITH MESSRS. RICHARD M. DEVOS, JR., DOUGLAS
L. DEVOS AND STEPHEN A. VAN ANDEL NOT PARTICIPATING) (THE "DISINTERESTED
DIRECTORS") HAS UNANIMOUSLY (1) DETERMINED THAT THE OFFER AND THE AMALGAMATION
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES, OTHER THAN
NON-TENDERED SHARES (THE "PUBLIC SHAREHOLDERS"), (2) APPROVED, AUTHORIZED AND
ADOPTED THE AMALGAMATION AGREEMENT AND (3) RESOLVED TO RECOMMEND THAT THE PUBLIC
SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER.
EACH HOLDER MUST MAKE ITS OWN DECISION WHETHER TO TENDER SHARES, AND, IF SO, HOW
MANY SHARES TO TENDER. THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL
CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE MAKING A DECISION TO
TENDER.
All Shares validly tendered and not withdrawn on or prior to the Expiration
Date (as defined below) will be purchased at the Purchase Price, subject to the
terms and conditions of the Offer. The term "Expiration Date" means 12:00
midnight, New York City time, on December 17, 1999, unless and until Purchaser,
in its sole discretion has extended the period of time during which the Offer
will remain open, in which event the term "Expiration Date" will refer to the
latest time and date at which the Offer as so extended by Purchaser will expire.
Only Shares validly tendered and not withdrawn on or prior to the Expiration
Date will be eligible for purchase. Shares not validly tendered will be returned
without delay following the Expiration Date.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless they have been accepted for payment by
Purchaser, may also be withdrawn at any time after 60 days from the Commencement
Date of November 18, 1999.
In order to withdraw Shares, a written or facsimile transmission notice of
withdrawal must be received by the Depositary (as defined in the Offer to
Purchase) on or prior to the Expiration Date at one of its addresses set forth
on the back cover of the Offer to Purchase and must specify the name of the
person who tendered the Shares to be withdrawn and the number of Shares to be
withdrawn. If the Shares to be withdrawn have been delivered to the Depositary,
a signed notice of withdrawal with signatures guaranteed by an Eligible
Institution (as defined in the Offer to Purchase) (except in the case of Shares
tendered by an Eligible Institution) must be submitted prior to the release of
such Shares. In addition, such notice must specify, in the case of Shares
tendered by delivery of Shares, the name of the registered holder (if different
from that of the tendering holder) and the serial numbers shown on the
particular certificates evidencing the Shares to be withdrawn or, in the case of
Shares tendered by book-entry transfer, the name and number of the account at
the Book-Entry Transfer Facility to be credited with the withdrawn Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY TENDERS ARE MADE. The
information required to be disclosed by Rule 14d-6 under the Securities Exchange
Act of 1934 is contained in the Offer to Purchase and is incorporated herein by
reference. The Offer to Purchase and the related Letter of Transmittal are being
mailed to all record holders of Shares as of November 17, 1999, and are being
furnished to brokers, banks and similar persons whose names, or the names of
whose nominees, appear on AAP's stockholder list as of such date or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
Additional copies of the Offer to Purchase and the Letter of Transmittal may
be obtained from the Information Agent or the Dealer Managers and will be
furnished promptly at Purchaser's expense.
The Information Agent for the Offer is:
GEORGESON
SHAREHOLDER
COMMUNICATIONS INC.
17 State Street
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9800
or
All Others Call Toll-Free: (800) 223-2064
The Dealer Managers for the Offer are:
MORGAN STANLEY DEAN WITTER
J.P. MORGAN & CO.
Morgan Stanley & Co. Incorporated 60 Wall Street
One Financial Place New York, New York 10260
440 South LaSalle Street (877) 576-0606 (call toll-free)
Chicago, IL 60605
(312) 706-4411 (call collect)
November 18, 1999
<PAGE> 1
Exhibit (a)(13)
--- Please fold and detach card at perforation before mailing ---
AMWAY ASIA PACIFIC LTD. TENDER OFFER
TRUSTEE DIRECTION FORM
BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY THE ENCLOSED LETTER
AND ALL PREVIOUSLY DISTRIBUTED MATERIALS
In connection with the Offer to Purchase made by New AAP Limited, dated November
18, 1999, as it may be amended (the "Offer"), I hereby instruct Fidelity
Management Trust Company ("Fidelity"), as trustee of the Amway Corporation
Profit-Sharing and 401(k) Plan (the "Plan"), to tender the shares of Amway Asia
Pacific Ltd. (the "Shares") credited to my account under the Plan as of December
XX, 1999, unless a later deadline is announced, as follows (check only ONE box
and complete):
Box 1 [ ] I direct Fidelity to tender ALL of the Shares credited to my
account in the Plan, in accordance with the terms of the Offer.
Box 2 [ ] I direct Fidelity to tender ______ percent (insert a percentage
in whole numbers less than 100%) of the Shares credited to my
account in the Plan, in accordance with the terms of the Offer.
Box 3 [ ] I direct Fidelity NOT to tender any of the Shares credited to my
account in the Plan, in accordance with the terms of the Offer.
--- Please fold and detach card at perforation before mailing ---
As of November 12, 1999, the number of Shares credited to your account in the
Plan is shown to the right of your address.
PLEASE NOTE THAT IF YOU DO NOT SEND IN A PROPERLY COMPLETED, SIGNED FORM, OR IF
IT IS NOT RECEIVED BY 12:00 MIDNIGHT EASTERN TIME AT P.O. BOX 9142, HINGHAM, MA
02043 ON DECEMBER XX, 1999, FIDELITY WILL NOT TENDER ANY OF THE SHARES CREDITED
TO YOUR ACCOUNT IN THE PLAN, IN ACCORDANCE WITH THE OFFER, UNLESS OTHERWISE
REQUIRED BY LAW.
Fidelity makes no recommendation to any Plan participant as to whether to tender
or not. Your instructions to Fidelity will be kept confidential.
This Trustee Direction Form, if properly signed, completed and received by
Fidelity in a timely manner will supersede any previous Trustee Direction Form.
<PAGE> 1
Exhibit (a)(14)
IMMEDIATE ATTENTION REQUIRED
November 10, 1999
RE: AMWAY CORPORATION PROFIT-SHARING AND 401(K) PLAN
Dear Plan Participant:
Our records reflect that, as a participant in the plan above (the
"Plan"), a portion of your individual account is invested in Amway Asia Pacific
Ltd. stock. It has come to our attention that New AAP Limited has initiated an
offer to purchase all outstanding shares of common stock of Amway Asia Pacific
Ltd. As described below, you have the right to instruct Fidelity Management
Trust Company ("Fidelity"), as trustee of the Plan, concerning whether to tender
the shares of Amway Asia Pacific Ltd. credited to your individual account under
the Plan.
Enclosed are tender offer materials and a Direction Form that require
your immediate attention. These materials describe an offer to purchase any and
all shares of common stock of Amway Asia Pacific Ltd. For $18.00 per share.
YOU WILL NEED TO COMPLETE THE ENCLOSED DIRECTION FORM AND RETURN IT TO
FIDELITY INSTITUTIONAL RETIREMENT SERVICES COMPANY IN THE ENCLOSED RETURN
ENVELOPE SO THAT IT IS RECEIVED BY 12:00 MIDNIGHT, EASTERN TIME, ON DECEMBER XX,
1999, UNLESS THE OFFER IS EXTENDED. PLEASE COMPLETE AND RETURN THE ENCLOSED
DIRECTION FORM EVEN IF YOU DECIDE NOT TO PARTICIPATE IN THE TENDER OFFER
DESCRIBED BELOW.
The remainder of this letter summarizes the transaction, your rights
under the Plan and the procedures for completing the Direction Form. You should
also review the more detailed explanation provided in the other materials
enclosed with this letter, including the Offer to Purchase and the related blue
Letter of Transmittal.
BACKGROUND
New AAP Limited (the "Purchaser"), a subsidiary of Apple Hold Co.,
L.P., itself an entity controlled and beneficially owned by the principal
shareholders of the Company, has made a tender offer to purchase all outstanding
shares of common stock, par value $.01 per share, of Amway Asia Pacific Ltd.
(the "Shares"), at a price of $18.00 per Share. The enclosed Offer to Purchase
dated November 18, 1999 (the "Offer to Purchase") and the enclosed Letter of
Transmittal, set forth the objectives, terms and conditions of the tender offer
(the "Offer") and are being provided to all of the Company's shareholders.
The Purchaser's Offer to Purchase extends to the Shares held by the
Plan. As of November 12, 1999, the Plan held approximately 41,642 Shares. Only
Fidelity, as trustee of the Plan, can tender these Shares in the Offer.
Nonetheless, as a participant under the Plan, you have the right to direct
Fidelity whether or not to tender some or all of the Shares credited to your
<PAGE> 2
individual account in the Plan. Unless otherwise required by applicable law,
Fidelity will tender Shares credited to participant accounts in accordance with
participant instructions and Fidelity will not tender Shares credited to
participant accounts for which it does not receive timely instructions. IF YOU
DO NOT COMPLETE THE ENCLOSED DIRECTION FORM AND RETURN IT TO FIDELITY ON A
TIMELY BASIS, YOU WILL BE DEEMED TO HAVE ELECTED NOT TO PARTICIPATE IN THE OFFER
AND NO SHARES CREDITED TO YOUR PLAN ACCOUNT WILL BE TENDERED IN THE OFFER.
Please note that the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and the trust agreement between Amway Corporation and
Fidelity, prohibit the sale of Shares to the Company for less than "adequate
consideration," which Fidelity will determine based on the prevailing or closing
market price of the Shares on or about the date the Shares are tendered by
Fidelity pursuant to the Offer (the "prevailing or closing market price").
Accordingly, depending on the prevailing or closing market price of the Shares
on or about such date, Fidelity may be unable to tender Shares in accordance
with participant directions.
A tender of Shares credited to your individual account under the Plan
can be made only by Fidelity as the holder of record. DO NOT COMPLETE THE BLUE
LETTER OF TRANSMITTAL; IT IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND
CANNOT BE USED BY YOU TO TENDER DIRECTLY SHARES CREDITED TO YOUR INDIVIDUAL
ACCOUNT UNDER THE PLAN. IF YOU WISH TO DIRECT FIDELITY CONCERNING THE TENDER OF
YOUR SHARES IN THE PLAN, YOU MUST COMPLETE AND RETURN THE ENCLOSED DIRECTION
FORM.
FIDELITY MAKES NO RECOMMENDATION AS TO WHETHER TO DIRECT THE TENDER OF
SHARES OR WHETHER TO REFRAIN FROM DIRECTING THE TENDER OF SHARES. EACH
PARTICIPANT MUST MAKE HIS OR HER OWN DECISION ON THESE MATTERS.
CONFIDENTIALITY
TO ASSURE THE CONFIDENTIALITY OF YOUR DECISION, FIDELITY AND ITS
AFFILIATES OR AGENTS WILL TABULATE THE DIRECTION FORMS. NEITHER FIDELITY NOR ITS
AFFILIATES OR AGENTS WILL MAKE THE RESULTS OF YOUR INDIVIDUAL DIRECTION
AVAILABLE TO THE PURCHASER OR THE COMPANY.
PROCEDURE FOR DIRECTING TRUSTEE
A Direction Form for making your direction is enclosed. Please note
that on the reverse side of the Direction Form the number of Shares credited to
your individual account as of November 12, 1999 is indicated to the right of
your address. For purposes of the final tabulation, Fidelity will apply your
instructions to the number of Shares credited to your account as of December XX,
1999 or as of a later date if the Offer is extended.
If you do not properly complete the Direction Form or do not return it
by the deadline specified, unless the Offer is extended such Shares will be
considered NOT TENDERED.
To properly complete your Direction Form, you must do the following:
(1) On the face of the Direction Form, check Box 1, 2 or 3.
CHECK ONLY ONE BOX:
2
<PAGE> 3
- CHECK BOX 1 if you want ALL of the Shares credited to your
individual account tendered for sale in accordance with the
terms of the Offer.
- CHECK BOX 2 if you want to TENDER A PORTION of the Shares
credited to your individual account. SPECIFY THE PERCENTAGE
(in whole numbers) of Shares credited to your individual
account that you want to tender for sale in accordance with
the terms of this Offer. IF THIS AMOUNT IS LESS THAN 100%,
YOU WILL BE DEEMED TO HAVE INSTRUCTED FIDELITY NOT TO TENDER
THE BALANCE OF THE ShareS CREDITED TO YOUR INDIVIDUAL
ACCOUNT UNDER THE PLAN.
- CHECK BOX 3 if you do not want the Shares credited to your
individual account tendered for sale in accordance with the
terms of the Offer and simply want the Plan to continue
holding such Shares.
(2) Date and sign the Direction Form in the space provided.
(3) Return the Direction Form in the enclosed return envelope so that
it is received by Fidelity at the address on the return envelope
(P.O. Box 9142, Hingham, MA 02043) not later than 12:00 Midnight,
Eastern time, on XXXXday, December XX, 1999, unless the Offer is
extended. If you wish to return the form by overnight mail, please
send it to Fidelity's tabulation agent, Management Information
Services, at 61 Accord Park Drive, Norwell, MA 02061.
Your direction will be deemed irrevocable unless withdrawn by 12:00
Midnight, Eastern time, on XXXXday, December XX, 1999, unless the Offer is
extended. In order to make an effective withdrawal, you must submit a new
Direction Form which may be obtained by calling Fidelity at 1-800-xxx-xxxx. Your
new Direction Form must include your name, address and Social Security number.
Upon receipt of a new, completed and signed Direction Form, your previous
direction will be deemed canceled. You may direct the re-tendering of any Shares
credited to your individual account by obtaining an additional Direction Form
from Fidelity and repeating the previous instructions for directing tenders as
set forth in this letter.
After the deadline above for returning the Direction Form to Fidelity,
Fidelity and its affiliates or agents will complete the tabulation of all
directions and Fidelity, as trustee, will tender the appropriate number of
Shares. Unless the Offer is terminated or amended in accordance with its terms,
the Purchaser will then buy all outstanding Shares that were tendered.
EFFECT OF TENDER ON YOUR ACCOUNT
Regardless of whether you elect to tender your Shares, as of 4:00 p.m.,
Eastern Time, on XXXXday, December XX, you will NOT be able to make exchanges
out of the Shares of Amway Asia Pacific Ltd. within your individual account
until all tender offer processing has been completed. Further, all
distributions, loans and withdrawals from balances in Shares will be frozen
after that time. However, balances in Shares will be utilized to calculate
amounts eligible for distributions, loans and withdrawals throughout the freeze.
Contributions to and exchanges from other investment options into Shares may
continue throughout the tender offer and will be unaffected by the freeze.
Fidelity will complete processing as soon as administratively possible. Fidelity
anticipates that the processing will be completed five to seven business days
after receipt of proceeds from the Purchaser.
3
<PAGE> 4
For any Shares in the Plan that are tendered and purchased by the
Purchaser, the Purchaser will pay cash to the Plan. INDIVIDUAL PARTICIPANTS IN
THE PLAN WILL NOT, HOWEVER, RECEIVE ANY CASH TENDER PROCEEDS DIRECTLY. ALL SUCH
PROCEEDS WILL REMAIN IN THE PLAN AND MAY BE WITHDRAWN ONLY IN ACCORDANCE WITH
THE TERMS OF THE PLAN.
Fidelity will invest proceeds with respect to Shares credited to your
account in the Fidelity Asset Manager as soon as administratively possible after
receipt of proceeds. You may call Fidelity at 1-800-xxx-xxxx after the
reinvestment is complete to learn the effect of the tender on your account or to
exchange the proceeds of the sale of Shares from Fidelity Asset Manager into
other investment options offered under the Plan.
PLEASE NOTE THAT IF ALL CONDITIONS OF THE OFFER ARE MET, AND THE SHARES
OF AMWAY ASIA PACIFIC LTD. ARE DE-LISTED (AS DESCRIBED IN THE OFFER), FUTURE
CONTRIBUTIONS INTO SHARES OF AMWAY ASIA PACIFIC LTD. WILL BE INSTEAD INVESTED IN
FIDELITY ASSET MANAGER. IN ORDER TO CHANGE THE INVESTMENT FUND INTO WHICH FUTURE
CONTRIBUTIONS ARE TO BE INVESTED, PLEASE CALL FIDELITY AT 1-800-XXX-XXXX.
As described in Section 2 of the Offer, upon the consummation of the
Amalgamation following the tender offer, all remaining Shares of the Company
will be canceled and converted to the right to receive $18.00 per Share. At that
time, Shares for which Fidelity received directions not to tender or for which
Fidelity did not receive directions by December XX, 1999, will be canceled,
Fidelity will receive $18.00 for each Share, and these proceeds will be invested
in Fidelity Asset Manager, pending participant investment decisions.
SHARES OUTSIDE THE PLAN
If you hold Shares directly, you will receive, under separate cover,
tender offer materials directly from the Purchaser which can be used to tender
such Shares directly to the Purchaser. THOSE TENDER OFFER MATERIALS MAY NOT BE
USED TO DIRECT FIDELITY TO TENDER OR NOT TENDER THE SHARES CREDITED TO YOUR
INDIVIDUAL ACCOUNT UNDER THE PLAN. The direction to tender or not tender Shares
credited to your individual account under the Plan may only be made in
accordance with the procedures in this letter. Similarly, the enclosed Direction
Form may not be used to tender non-Plan Shares.
FURTHER INFORMATION
If you require additional information concerning the procedure to
tender Shares credited to your individual account under the Plan, please contact
Fidelity at 1-800-xxx-xxxx. If you require additional information concerning the
terms and conditions of the Offer, please call Georgeson Shareholder
Communications Inc., the Information Agent, at 1-800-223-2064.
Sincerely,
Fidelity Management Trust Company
4
<PAGE> 1
Exhibit (b)(1)
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
TOKYO BRANCH
AKASAKA PARK BUILDING
2-20, AKASAKA 5-CHOME
MINATO-KU, TOKYO 107, JAPAN
November 15, 1999
ALAP Hold Co., Ltd. N.A.J. Co., Ltd.
7575 Fulton Street, East 7-1 Udagawa-cho, Shibuya-ku
Ada, Michigan 49355 U.S.A. Tokyo 105-0042 Japan
Apple Hold Co., L.P. New AAP Limited
7575 Fulton Street, East Clarendon House
Ada, Michigan 49355 U.S.A. 2 Church Street
Hamilton HM 11 Bermuda
Amway Corporation
7575 Fulton Street, East
Ada, Michigan 49355 U.S.A.
RE: SENIOR BANK FINANCING COMMITMENT LETTER
Ladies and Gentlemen:
Morgan Guaranty Trust Company of New York, Tokyo Branch (" MORGAN "),
understands that (i) N.A.J. Co., Ltd. (" NAJ "), a wholly-owned subsidiary of
ALAP Hold Co., Ltd. ("ALAP"), is proposing to acquire up to all the shares of
Amway Japan Limited ("AJL") and (ii) New AAP Limited ("NAAP"), a wholly-owned
subsidiary of Apple Hold Co., L.P. ("APPLE"), is proposing to acquire up to all
the shares of Amway Asia Pacific, Ltd. ("AAP") (the " ACQUISITIONS"). All of
NAJ, ALAP, NAAP and Apple are affiliates of Amway Corporation ("AMWAY"). You
have asked Morgan to commit to provide up to $700 million of the financing
required for the Acquisitions pursuant to a senior secured credit facility (the
"FACILITY ").
Morgan is pleased to confirm to you that it is willing to provide the
$700 million Facility upon the terms and conditions specified herein. Morgan's
commitment shall become effective when all of you sign counterparts of this
Commitment Letter and the accompanying Fee Letter dated the date hereof among
the parties hereto (the " FEE LETTER ") and return them to Morgan. Morgan
proposes that the Facility be a six-year amortizing term loan.
THE FINANCING
You have advised us that at least 104,500,000 shares of common stock of
AJL will be contributed to ALAP and at least 46,500,000 shares of common stock
of AAP will be contributed to Apple, in each case by the present owners of such
shares. We understand that NAJ and NAAP will require up to approximately $700
million of new funds to consummate the Acquisitions and
<PAGE> 2
to pay related fees and expenses, all of which will be obtained under the
Facility. You have advised us that, other than the Facility, immediately after
giving effect to the Acquisitions, none of NAJ, ALAP, NAAP or Apple will have
any debt outstanding.
RATINGS AND SYNDICATION
To the extent that Morgan seeks at any time during the life of the
Facility to obtain ratings of the loans from Standard & Poor's, Moody's or other
internationally recognized rating agencies or to organize a syndicate of
commercial banks and/or other financial institutions to become lenders ("Other
Lenders") under the Facility, NAJ, ALAP, NAAP and Apple agree (i) to assist
Morgan in obtaining such rating or organizing such syndication and to provide
the rating agencies, Morgan and the Other Lenders, if any, promptly upon
request, with all information reasonably deemed necessary by the rating agencies
to complete the rating process or by Morgan to complete successfully the
syndication, including, but not limited to, (a) an information package for
delivery to potential syndicate members and participants and (b) all information
and projections prepared by NAJ, ALAP, NAAP and Apple or their advisers relating
to the transactions described herein and (ii) to make their officers and
representatives, and to cause officers and representatives of AJL and AAP to be,
available to participate in information meetings with the rating agencies or for
potential syndicate members at such times and places as Morgan may reasonably
request. NAJ, ALAP, NAAP and Apple further agree to refrain, and to cause their
subsidiaries (including AJL and AAP and their respective subsidiaries) and Amway
Affiliates to refrain, from conducting or arranging, or initiating or engaging
in preparations with financial institutions with respect to, any other debt
financings (whether through a capital markets transaction, bank loan or
otherwise) during the period beginning on the date of this Commitment Letter and
ending upon the termination of the Facility unless otherwise agreed by Morgan;
provided that the foregoing shall not prohibit an Amway Affiliate from seeking
financing (i) other than through public offerings and syndicated loan
transactions so long as such affiliate gives Morgan prompt notice of its intent
to seek such financing or (ii) through a public offering with the consent of
Morgan (which consent shall not be unreasonably withheld). As used in the
preceding sentence, "AMWAY AFFILIATE" means Amway Corporation or any of its
subsidiaries or affiliates that is engaged in a business related or similar to
the business of Amway Corporation.
OTHER ENGAGEMENTS
You understand that Morgan and its affiliates provide a wide variety of
financial services and as such may from time to time effect transactions for
their own account or the account of customers, and hold positions in loans and
options on loans of companies that may be the subject of this arrangement. In
addition, Morgan and/or any of its affiliates may provide debt financing, equity
capital or other services (including financial advisory services) to other
companies in respect of which you may have conflicting interests. None of Morgan
and its affiliates will use confidential information obtained from you by virtue
of the Financing or the engagement under this Commitment Letter in connection
with the performance by Morgan and its affiliates of services for other
companies, or furnish any such information to other companies, except as
permitted in its confidentiality undertakings to you. In addition, none of
Morgan and its affiliates will make available to you any confidential
information that it has obtained or may obtain from any other company. You
acknowledge that Morgan and the Other Lenders may share with each other and with
any of their affiliates, for use in connection with the transactions
contemplated by
2
<PAGE> 3
this Commitment Letter, any information supplied by you relating to the
yourselves, the Acquisitions, AJL, AAP or the Financing.
FULL DISCLOSURE
NAJ, ALAP, NAAP and Apple represent, warrant and covenant that (i) no
written information which has been or is hereafter furnished by either of them
or on either of their behalf in connection with the transactions contemplated
hereby and (ii) no other information given at information meetings for potential
syndicate members and supplied or approved by you (such written information and
other information being referred to herein collectively as the "INFORMATION")
contained (or, in the case of Information furnished after the date hereof, will
contain), as of the time it was (or hereafter is) furnished, any material
misstatement of fact or omitted (or will omit) as of such time to state any
material fact necessary to make the statements therein taken as a whole not
misleading, in the light of the circumstances under which they were (or
hereafter are) made; provided that, with respect to Information consisting of
statements, estimates and projections regarding the future performance of NAJ,
ALAP, NAAP, Apple and their subsidiaries (collectively, the "PROJECTIONS"), no
representation, warranty or covenant is made other than that the Projections
have been (and, in the case of Projections furnished after the date hereof, will
be) prepared in good faith based on assumptions believed to be reasonable at the
time of preparation thereof. NAJ, ALAP, NAAP and Apple agree to supplement the
Information and the Projections from time to time until the date of the first
borrowing under the Facility, as appropriate so that the representations and
warranties in the preceding sentence remain correct. In syndicating the
Facility, Morgan will use and rely on the Information and the Projections
without independent verification thereof.
CERTAIN CONDITIONS
Certain of the terms of the Facility are set forth in the Summary of
Terms and Conditions attached hereto and incorporated by reference herein (the
"TERM SHEET"). The Term Sheet is intended as an outline only and does not
purport to summarize all of the terms, conditions, covenants, representations,
warranties and other provisions which will be contained in definitive financing
agreements for the Facility. Morgan's commitment is subject to the satisfaction
of the conditions set forth in the Term Sheet and customary conditions for
transactions of this type, including without limitation: (i) the negotiation,
execution and delivery of a credit agreement (the "CREDIT AGREEMENT") and other
definitive financing agreements, prepared by Davis Polk & Wardwell, special
counsel to Morgan, satisfactory in form and substance to Morgan and containing
terms and conditions consistent with the Term Sheet and otherwise satisfactory
to Morgan, by not later than December 10, 1999 and (ii) the other conditions set
forth in the November 13, 1999 draft of the Credit Agreement for the Facility.
COSTS AND EXPENSES
By your acceptance of this Commitment Letter, you agree that all costs
and expenses (including the reasonable fees and expenses of Davis Polk &
Wardwell, counsel for Morgan) incurred by Morgan in connection with the
negotiation, preparation, execution, delivery, collection and enforcement of
this Commitment Letter and definitive financing agreements and any primary or
secondary syndication of the Facility shall be for your account, and agree to
pay
3
<PAGE> 4
such costs and expenses when the Credit Agreement is signed or upon any earlier
termination of the proposed financing.
INDEMNIFICATION
By your acceptance of this Commitment Letter, each of you (each an
"INDEMNIFYING PERSON") agrees, jointly and severally, to indemnify and hold
harmless Morgan and its affiliates (including, without limitation, any
controlling person) and the directors, officers, employees and agents of each of
the foregoing parties (each, an "INDEMNIFIED PERSON") in accordance with the
provisions of Schedule 1 hereto, which is incorporated herein and made a part of
this Commitment Letter.
CONFIDENTIALITY
Morgan agrees to keep any information supplied by you relating to NAJ,
ALAP, NAAP, Apple, the Acquisitions or the Facility confidential from anyone
other than its affiliates for use in connection with the transactions
contemplated by this Commitment Letter; provided that nothing herein shall
prevent Morgan from disclosing such information (a) upon the order of any court
or administrative agency, (b) upon the request or demand of any regulatory
agency or authority, (c) which had been publicly disclosed other than as a
result of a disclosure by Morgan prohibited by the terms of this paragraph, (d)
already in its possession prior to its disclosure by you, (e) in connection with
any litigation to which Morgan or any of its affiliates may be a party, (f) to
the extent necessary in connection with the exercise of any remedy hereunder,
(g) to Morgan's legal counsel and independent auditors and (h) subject to
provisions substantially similar to those contained in this paragraph, to any
prospective syndicate member or participant. You acknowledge that Morgan and the
Other Lenders may share with each other and with any of their affiliates, for
use in connection with the transactions contemplated by this Commitment Letter,
any information supplied by you relating to NAJ, ALAP, NAAP, Apple, AJL, AAP,
the Acquisitions or the Facility.
You agree that you will not furnish copies of this Commitment Letter or
the Fee Letter or disclose in whole or in part the contents of either thereof to
any Person other than your advisors or as required by applicable law or
compulsory legal process, without the prior written consent of Morgan. Morgan
hereby consents to your disclosure of this Commitment Letter to in the documents
publicly filed or otherwise made public with respect to the Acquisitions so long
as each of you has accepted it as indicated below. Any disclosure by you not
permitted by the foregoing shall constitute your agreement to pay the fee
contemplated by the third paragraph of the Fee Letter, whether or not you have
accepted this Commitment Letter or the Fee Letter.
MISCELLANEOUS
This Commitment Letter is intended to be solely for the benefit of the
parties hereto and is not intended to confer, and shall not be deemed to confer,
any benefits upon, or create any rights in or in favor of, any Person other than
the parties hereto, except as provided above with respect to Indemnified
Persons. By signing this letter, you indicate your awareness that Morgan may be
providing financing or other services to parties whose interests may conflict
with yours.
4
<PAGE> 5
The offer by Morgan set forth in this Commitment Letter will terminate
at 5:00 p.m., New York time, on November 16, 1999, unless on or before that date
and time they have received a copy of this Commitment Letter and the Fee Letter
signed by each of you. The provisions set forth above under "Fees and Expenses"
and "Indemnification" shall survive any such termination of the offers under
this Commitment Letter, and shall be binding regardless of whether a Credit
Agreement or other definitive documentation is signed.
This Commitment Letter shall be governed by and construed in accordance
with the laws of the State of New York. Each of you and Morgan hereby submits to
the jurisdiction of the United States District Court for the Southern District
of New York and of any New York State court sitting in New York City for
purposes of all legal proceedings arising out of or relating to this Commitment
Letter or the transactions contemplated hereby. Each of NAJ, ALAP, NAAP, Apple,
Amway and Morgan hereby irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum and
to the right to have a trial by jury. All payments under this Commitment Letter
and the Fee Letter shall be paid in U.S. Dollars to the relevant payee in Tokyo,
Japan without set-off or counterclaim and free and clear of any withholding or
other taxes.
5
<PAGE> 6
Your respective obligations under this Commitment Letter shall be joint
and several, provided that upon the effectiveness of the contribution to ALAP
and Apple of the shares of AJL and AAP, respectively, referred to in the first
sentence under "The Financing" above (other than up to 3% of the outstanding
shares of AJL), Amway shall be released from any further obligations hereunder
except those set forth in the second paragraph under "Confidentiality" above.
Morgan looks forward to working with you on this transaction.
<TABLE>
<CAPTION>
Very truly yours,
<S> <C>
Morgan Guaranty Trust Company
of New York, Tokyo Branch
By: /s/ Thomas R.F. Dunn
------------------------------
Name: Thomas R.F. Dunn
Title: Managing Director
Agreed and accepted as to the date first above
written:
NEW AAP LIMITED
ALAP HOLD CO., LTD.
By AP New Co., LLC, general partner By: /s/ Lawrence M. Call
-----------------------------
Name: Lawrence M. Call
Title: President
By: /s/ Craig N. Meurlin
-------------------------------------
Name: Craig N. Meurlin
Title: Manager AMWAY CORPORATION
N.A.J. CO., LTD.
By: /s/ Lawrence M. Call
-----------------------------
Name: Lawrence M. Call
By: /s/ Lawrence M. Call Title: Senior Vice President,
------------------------------------- Chief Financial Officer and
Name: Lawrence M. Call Treasurer
Title: Attorney-in-Fact
APPLE HOLD CO., L.P.
By AP New Co., LLC, general partner
By: /s/ Craig N. Meurlin
------------------------------------
Name: Craig N. Meurlin
Title: Manager
</TABLE>
6
<PAGE> 7
SCHEDULE 1
Capitalized terms used but not defined in this Schedule are used as
defined in the Commitment Letter (the "COMMITMENT LETTER") to which this
Schedule is attached and into which it is incorporated.
Each Indemnifying Person agrees to indemnify, defend and hold harmless
each Indemnified Person from and against any and all losses, claims, demands,
damages, liabilities and other expenses of any kind (collectively, "LOSSES") to
which any Indemnified Person may become subject, insofar as such Losses (or
actions or other proceedings commenced or threatened in relation thereto) arise
out of or in any way relate to or result from the Transaction or other
transactions contemplated by the Commitment Letter (including without limitation
the syndication of the Facility) or relate to or in any way arise from any
proposed or actual use of the proceeds of the Facility, and to reimburse each
Indemnified Person for any legal or other expenses incurred in connection with
investigating, preparing to defend or defending against any such Loss or action
or other proceeding (whether or not such Indemnified Person is a party to any
action or proceeding out of which any such Loss arises). No Indemnifying Person
will be responsible, however, for any such Losses of any Indemnified Person that
are determined by final and nonappealable judgment of a court of competent
jurisdiction to have resulted primarily from actions taken or omitted to be
taken by such Indemnified Person in bad faith or from such Indemnified Person's
gross negligence or willful misconduct. No Indemnified Person shall be liable to
any other person, firm, corporation or other legal entity for consequential
damages which may be alleged as a result of the Commitment Letter or the
transactions contemplated thereby.
No Indemnifying Person shall be liable for any settlement of any
proceeding effected without its prior written consent (which shall not be
unreasonably withheld), but if settled with such consent or if there is a final
judgment for the plaintiff, each Indemnifying Person agrees to indemnify each
Indemnified Person from and against any Loss by reason of such settlement or
judgment. No Indemnifying Person shall, without the prior written consent of
each Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which such Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability or claims that are the subject matter of such
proceeding.
1
<PAGE> 1
Exhibit (b)(2)
SUMMARY OF TERMS AND CONDITIONS
Borrowers: N.A.J. Co., Ltd., a Japanese corporation ("NAJ").
New AAP Limited, a Bermuda corporation ("NAAP").
Guarantors: ALAP Hold Co., Ltd., a Nevada limited partnership
("ALAP"). The subsidiaries of ALAP Hold Co., Ltd.
will include Amway Japan and its subsidiaries.
Apple Hold Co., L.P., a Bermuda limited
partnership ("APPLE"). The subsidiaries of Apple
Hold Co., L.P. will include Amway Asia Pacific
and its subsidiaries.
The Borrowers and the Guarantors are sometimes
referred to herein as the "AMWAY PARTIES."
Amount: US$700,000,000
Signing Date: To be determined (assume November 1999)
Availability Period: Until termination of the facility.
Maturity Date: Approximately 6 years and 1 month after signing
date (assume December 2005)
Principal Amortization: The principal amount of the loan facility will
reduce on each anniversary according to the
following schedule (assuming the entire $700mm is
borrowed):
Date Amortization Remaining Loan
---- ------------ --------------
Dec 00 US$116mm US$584mm
Dec 01 US$116mm US$468mm
Dec 02 US$116mm US$352mm
Dec 03 US$116mm US$236mm
Dec 04 US$116mm US$120mm
Dec 05 US$120mm 0
If less than $700mm is borrowed, each
amortization payment will be reduced by one-sixth
of the difference between $700mm and the
aggregate principal amount borrowed. Loans made
after the first amortization date
<PAGE> 2
will be added to the balance to be amortized on
future amortization dates.
Optional Prepayment: A Borrower may, subject to 3 business days' notice,
elect to repay all or part of the non-amortized
portion of the facility. Such prepayments would be
made according to the following schedule of premium
amounts:
Prepayments Percentage
Before of Principal
------ ------------
Dec 00 107.50%
Dec 01 106.00%
Dec 02 104.50%
Dec 03 103.00%
Dec 04 102.00%
Dec 05 101.00%
Up-front Fee: 1.50% of the facility amount. To be paid at the
signing of the facility.
Interest Payments: Interest will be calculated on the outstanding
principal amount of the facility at a rate of 6-month
LIBOR + a margin of 6.35%, except that the margin
applicable to Loans borrowed more than 8 months after
the date of the facility will reflect the relevant
borrower's creditworthiness as determined by the
Agent in its discretion at the time of the borrowing.
NAJ will enter into hedging agreements with the Agent
on such terms as shall result in effectively fixing
the interest cost to NAJ and translating the payments
of principal and interest on NAJ's loans to Japanese
Yen.
Commitment Fee: A commitment fee will be payable until 8 months after
the signing date of the facility on any undrawn
amounts at a rate of 6.35%.
Withholding Tax: All payments of principal and interest will be made
free of any Withholding Tax or other deductions
(Note: Amway and J.P. Morgan will work in the
preparation of this facility to minimize the extent
of
2
<PAGE> 3
any such additional costs to the Borrowers).
Documentation: The facility will be governed by documentation
standard to this type of financing including:
negative pledge, cross default, pari passu, reps &
warranties.
Additional covenants: It will be an event of default if any of the
following events occur:
Maintenance of ownership:
i) The Guarantors cease to own, directly or
indirectly through the Borrowers, 100% of
Amway Japan and Amway Asia Pacific or, if
less, the amount owned after completion of the
offers
ii) "The owners" (see below) cease to own directly
or indirectly 67% of the Guarantors (The
owners are to be defined for this purpose as
the Van Andel and DeVos families and
corporations, trusts, and other entities
formed by or for the benefit of such families)
iii) The Guarantors cease to own, directly or
indirectly, 100% of the Borrowers or, after
the consummation of the merger of Amway Japan
with and into NAJ, all of the stock of NAJ not
owned by any remaining public shareholders.
Maintenance of franchise:
The subsidiaries cease to be the sole operation of
the Amway businesses in each of their respective
territories.
Maintenance of Supply:
There is any change in the terms of the goods supply
contract or other contracts between the individual
subsidiaries and Amway Corp, that (i) is
inconsistent with arms' length negotiations between
unaffiliated parties in the relevant territories and
(ii) would, in a material respect, viewing the
transaction as a whole, commercially disadvantage
the subsidiaries in respect of the supply or cost of
goods.
Maintenance of Dividends:
Any subsidiary enters an agreement that would have
the
3
<PAGE> 4
effect of restricting that, or any other subsidiary's,
ability to pay dividends to the Borrowers or the
Guarantors.
Maintenance of Net Worth:
(a) The Borrowers and the Guarantors fail to maintain
their combined consolidated net worth at the following
levels:
Record date Amount
----------- ------
Aug 31 '00 US$450 mm
Aug 31 '01 US$475 mm
Aug 31 '02 US$500 mm
Aug 31 '03 US$525 mm
Aug 31 '04 US$550 mm
Aug 31 '05 US$550 mm
(b) Apple shall fail to maintain its consolidated net
worth at the following levels:
Record date Amount
----------- ------
Aug 31 '00 US$160 mm
Aug 31 '01 US$165 mm
Aug 31 '02 US$170 mm
Aug 31 '03 US$180 mm
Aug 31 '04 US$190 mm
Aug 31 '05 US$200 mm
Maintenance of Interest cover:
(a) The Borrowers and the Guarantors fail to maintain
their combined consolidated interest (excluding interest
accrued on subordinated intercompany debt borrowed
by an Amway Party that is not paid or required to be
paid in cash during the relevant period) cover
(EBIT/interest) at the following levels:
Year ending Coverage
----------- --------
Aug 31 '00 2.50 times
Aug 31 '01 2.50 times
Aug 31 '02 3.00 times
4
<PAGE> 5
Aug 31 '03 3.50 times
Aug 31 '04 5.00 times
Aug 31 '05 7.00 times
(b) Apple shall fail to maintain its consolidated interest
(excluding interest accrued on subordinated
intercompany debt borrowed by Apple or NAAP that is
not paid or required to be paid in cash during the
relevant period) cover (EBIT/interest) at the following
levels:
Year ending Coverage
----------- --------
Aug 31 '00 1.80 times
Aug 31 '01 1.80 times
Aug 31 '02 2.50 times
Aug 31 '03 3.00 times
Aug 31 '04 4.00 times
Aug 31 '05 5.00 times
Maintenance of Cashflow coverage:
(a) The Borrowers and the Guarantors fail to maintain
their combined consolidated cash flow coverage
(EBITDA/Total Debt (excluding subordinated
intercompany debt borrowed by an Amway Party)) at
the following levels:
Year ending Coverage
----------- --------
Aug 31 '00 25%
Aug 31 '01 30%
Aug 31 '02 35%
Aug 31 '03 40%
Aug 31 '04 50%
Aug 31 '05 50%
(b) Apple shall fail to maintain its consolidated cash
flow coverage (EBITDA/Total Debt (excluding
subordinated intercompany debt borrowed by Apple or
NAAP)) at the following levels:
5
<PAGE> 6
Year ending Coverage
----------- --------
Aug 31 '00 20%
Aug 31 '01 25%
Aug 31 '02 30%
Aug 31 '03 35%
Aug 31 '04 40%
Aug 31 '05 50%
Limitation on Dividends: There will be a limit of the maximum amount that may
be paid by the Guarantors, on a combined basis, as
dividends (or payments of principal of intercompany
subordinated debt) each year until the facility has
been fully repaid. This will be set as follows:
Year ending Max Payment
----------- -----------
Aug 31 '00 US$0 mm
Aug 31 '01 US$40 mm
Aug 31 '02 US$45 mm
Aug 31 '03 US$50 mm
Aug 31 '04 US$50 mm
Aug 31 '05 US$50 mm
Limitation on Subsidiary There will be a strict limitation on the ability of
Indebtedness: the Guarantors' subsidiaries to raise debt except
through NAAP or the Guarantors as the holding
companies. Such limitation is to be determined but will
likely be restricted to working capital facilities
raised by local operations in an aggregate amount not
exceeding the following amounts:
Year ending Max Amount
----------- ----------
Aug 31 '00 US$100 mm
Aug 31 '01 US$150 mm
Aug 31 '02 US$175 mm
Aug 31 '03 US$250 mm
Aug 31 '04 US$300 mm
Aug 31 '05 US$350 mm
Aug 31 '06 US$350 mm
This limitation will not apply to debt borrowed by an
6
<PAGE> 7
Amway Party from an affiliate having terms, including
subordination, maturity and payment suspension,
satisfactory to the Agent in its discretion and, if NAJ
is the borrower, the intercompany debt is effectively
pledged to the Agent for the benefit of the Banks on
terms satisfactory to the Agent in its discretion.
Except as set forth above, NAJ and its subsidiaries
will not be permitted to incur any obligations with
respect to derivatives (except the hedging of the
facility and bona fide hedging transactions entered
into in the ordinary course of business which limit the
effect of currency fluctuations on the value of assets
acquired or liabilities incurred in the ordinary course
of business) or other off-balance sheet financing
arrangements with third parties; any such obligations
will be required to be done with and through ALAP.
In addition, ALAP will use commercially reasonable
efforts, in light of legal, tax and operational
considerations, to arrange for purchasing of goods and
services used by, and leases of facilities to be used
by, NAJ and its subsidiaries to be effected by ALAP and
then provided by ALAP to NAJ on similar terms.
Sale and leaseback Amway Japan will, at any time, be permitted to
of Amway Japan HQ: engage in a sale and leaseback of its headquarters
building, but only to the extent that either (i) such
transactions (A) do not cause a violation of any
covenant and (B) would not have caused a violation of
any such covenant if they had occurred 12 months
earlier or (ii) the Borrowers, at their option, either
(x) prepay an amount of Loans or other debt (excluding
intercompany subordinated debt) such that the tests set
forth in (i) are met and would have been met had such
Loans been so prepaid 12 months earlier or (y) place
such amount on deposit with the Agent in an escrow
account on terms satisfactory to the Agent.
The sale and leaseback will be treated as debt of Amway
Japan and will be considered as debt for purposes of
the financial covenants, whether or not it is a
capitalized lease under GAAP.
7
<PAGE> 8
Guarantees: The Guarantors will unconditionally guaranty the
obligations of the Borrowers under the Facility, and
NAAP will unconditionally guaranty the monetary
obligations of NAJ under the facility. Such guarantees
will be on a joint and several basis. The non-monetary
obligations of the Borrowers and the Guarantors under
the Agreement will be joint and several. However, any
obligation to be performed by the Borrowers and the
Guarantors may be performed by any one of them on
behalf of all of them, and performance by one of them
shall be deemed to constitute performance by all of
them.
8
<PAGE> 1
Exhibit(c)(1)
TENDER OFFER AND AMALGAMATION AGREEMENT
DATED
NOVEMBER 15, 1999
AMONG
AMWAY ASIA PACIFIC, LTD.,
APPLE HOLD CO., L.P.
AND
NEW AAP LIMITED
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
<S> <C>
ARTICLE I INTERPRETATION...................................................................................2
ARTICLE II THE OFFER AND AMALGAMATION.......................................................................3
2.1 The Offer...............................................................................3
2.2 Company Actions.........................................................................4
ARTICLE III THE AMALGAMATION; CONVERSION OF SHARES...........................................................5
3.1 The Amalgamation........................................................................5
3.2 Conversion of Capital Stock.............................................................5
3.3 Exchange of Certificates................................................................6
3.4 Effective Time..........................................................................7
3.5 Closing.................................................................................7
3.6 Directors and Officers of the Amalgamated Company.......................................7
3.7 Further Assurances......................................................................9
ARTICLE IV SECTION 103 TRANSACTION..........................................................................9
4.1 Section 103 Transaction.................................................................9
4.2 Option of Purchaser.....................................................................9
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY ...................................................9
5.1 Organization and Qualification..........................................................9
5.2 Capitalization of the Company..........................................................10
5.3 Power and Authority....................................................................10
5.4 Recommendations........................................................................10
5.5 Consents and Approvals; No Violation...................................................11
5.6 Information Supplied...................................................................11
5.7 Brokers and Finders....................................................................11
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................................................12
6.1 Organization...........................................................................12
6.2 Power and Authority....................................................................12
6.3 Consent and Approvals; No Violation....................................................12
6.4 Information Supplied...................................................................12
6.5 Purchaser's Operations.................................................................12
6.6 Capitalization.........................................................................12
6.7 Financing..............................................................................13
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF HOLD CO.......................................................13
7.1 Organization...........................................................................13
7.2 Authority Relative to this Agreement...................................................13
7.3 Consent and Approvals; No Violation....................................................13
7.4 Hold Co.'s Operations..................................................................13
7.5 Capitalization.........................................................................13
7.6 Financing..............................................................................13
ARTICLE VIII ADDITIONAL COVENANTS............................................................................14
8.1 Consents and Approvals.................................................................14
8.2 Additional Actions.....................................................................14
8.3 Shareholders Approval..................................................................14
8.4 Indemnification, Exculpation And Insurance.............................................14
ARTICLE IX CONDITIONS .....................................................................................15
9.1 Conditions to each Party's Obligations.................................................15
ARTICLE X TERMINATION.....................................................................................16
10.1 Termination............................................................................16
10.2 Effect of Termination..................................................................16
ARTICLE XI GENERAL PROVISIONS..............................................................................17
11.1 Amendment and Modification.............................................................17
11.2 Nonsurvival of Representations and Warranties..........................................17
11.3 Notices................................................................................17
11.4 Definitions; Interpretation............................................................19
11.5 Specific Performance...................................................................19
11.6 Counterparts...........................................................................19
11.7 Entire Agreement; No Third Party Beneficiaries.........................................19
11.8 Severability...........................................................................19
11.9 Governing Law..........................................................................19
11.10 Assignment.............................................................................20
11.11 Extension; Waiver......................................................................20
11.12 Procedure For Termination, Amendment, Extension Or Waiver..............................20
11.13 Announcements..........................................................................20
</TABLE>
<PAGE> 4
TENDER OFFER AND AMALGAMATION AGREEMENT
This Tender Offer and Amalgamation Agreement (this "Agreement") is made
the 15th day of November 1999, by and among Amway Asia Pacific Ltd., a company
incorporated under the laws of Bermuda having its registered office at Clarendon
House, Church Street, Hamilton, Bermuda (the "Company"), Apple Hold Co., L.P., a
Bermuda limited partnership ("Hold Co.") controlled by the Principal
Shareholders (as defined herein), and New AAP Limited, a company incorporated
under the laws of Bermuda having its registered office at Clarendon House,
Church Street, Hamilton, Bermuda ("Purchaser").
RECITALS
WHEREAS, the special committee formed by the Board of Directors of the
Company (the "Special Committee") comprised exclusively of directors of the
Board of Directors not affiliated with the Principal Shareholders (as defined
below) has considered and acted upon a proposal received from Purchaser, which
is a wholly owned subsidiary of Hold Co. and an entity controlled and
beneficially owned, directly and indirectly, by the principal shareholders of
the Company (the "Principal Shareholders"), to acquire from all shareholders of
the Company (the "Shareholders"), all the outstanding shares of Common Stock,
$.01 par value per share (the "Company Common Stock" or the "Shares"), of the
Company (the "Acquisition");
WHEREAS, the Principal Shareholders have advised the Special Committee
that Purchaser intends to commence the Acquisition by first conducting a tender
offer (the "Offer") for all of the outstanding Shares;
WHEREAS, the Principal Shareholders have informed Purchaser that they
will not tender their Shares in response to the Offer, but such Principal
Shareholders will transfer their Shares ("Non-Tendered Shares") to Hold Co.
contemporaneously with the consummation of the Offer;
WHEREAS, in furtherance of the Acquisition, after the consummation of
the Offer and subject to Section 4.1, the Company and Purchaser will amalgamate
(the "Amalgamation"), and the Company will continue as the amalgamated company
(the "Amalgamated Company");
WHEREAS, if at any time after consummation of the Offer, Purchaser and
Hold Co. own, in the aggregate, 95 percent or more of the outstanding shares of
the Company Common Stock, then in such event Purchaser may, if it elects to do
so in lieu of the Amalgamation, compulsorily purchase the remaining Shares from
the remaining Shareholders pursuant to Section 103 of the Bermuda Companies Act
of 1981, as amended (the "Act") at a price equal to the Amalgamation
Consideration (as defined below);
WHEREAS, having received the advice of financial and legal advisors,
and following negotiation of the terms of the Offer and this Agreement, the
Special Committee has unanimously determined that the Offer and the Amalgamation
are fair to, and in the best interests of, the holders of Shares, other than
Non-Tendered Shares (the "Public Shareholders"), and has advised the Board of
Directors of the Company that it has made such determination;
<PAGE> 5
WHEREAS, the Board of Directors of the Company other than those who
have any interest in any proceedings of the Board of Directors with respect to
the transactions contemplated by this Agreement, who currently are Messrs.
Richard M. DeVos, Douglas L. DeVos, Jr., and Stephen A. Van Andel (the
"Disinterested Directors") (based upon the recommendation of the Special
Committee) has unanimously approved the Acquisition, upon the terms and subject
to the conditions set forth in this Agreement, and has unanimously adopted
resolutions approving this Agreement and recommending that the Public
Shareholders accept the Offer and tender their Shares in response to the Offer;
WHEREAS, the Board of Directors of Purchaser has approved the Offer and
the Amalgamation, upon the terms and subject to the conditions set forth in this
Agreement and has adopted resolutions approving this Agreement;
WHEREAS, the general partner of Hold Co., the sole shareholder of
Purchaser, has approved this Agreement and the Acquisition, upon the terms and
subject to the conditions hereinafter described; and
WHEREAS, except as otherwise contemplated by this Agreement, the
Principal Shareholders have agreed, and Hold Co. has agreed that after transfer
to it of the Non-Tendered Shares by the Principal Shareholders, not to dispose
of or otherwise transfer the Non-Tendered Shares, and Purchaser has agreed not
to dispose of or otherwise transfer any Shares purchased by it in the Offer
("Purchased Shares"), in either case prior to consummation of the Amalgamation
or the transaction described in Article IV, as the case may be, and the
Principal Shareholders have agreed, and the Principal Shareholders have agreed
to cause Hold Co. and Purchaser, as the case may be, to vote, and Hold Co. and
Purchaser, as the case may be, have agreed to vote the Non-Tendered Shares and
Purchased Shares in favor of the Amalgamation or the transaction described in
Article IV, as the case may be, on the terms and subject to the conditions set
forth in the Shareholder and Voting Agreement (the "Shareholder Agreement") in
the form of Exhibit A attached hereto, which Shareholder Agreement is being
executed and delivered simultaneously with the execution and delivery of this
Agreement;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
INTERPRETATION
In this Agreement unless the context otherwise acquires:
(a) references to statutory provisions shall be construed as references
to those provisions as amended or re-enacted or as their application is modified
by other provisions from time to time and shall include references to any
provisions of which they are re-enactments (whether with or without
modification);
(b) references to the singular shall include the plural and vice versa
and references to the masculine shall include the feminine and/or neuter and
vice versa; and
<PAGE> 6
(c) references to persons shall include companies, partnerships,
associations and bodies of persons, whether incorporated or unincorporated.
ARTICLE II
THE OFFER AND AMALGAMATION
2.1 THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article X, then (i) on or after the date of execution of this
Agreement, but in any event not later than November 15, 1999, Purchaser and the
Company shall publicly announce the Offer and (ii) Purchaser shall, as promptly
as possible, but in no event later than five Business Days (for purposes of this
Agreement, such term having the meaning given the Rule 14d-1 under the
Securities Exchange Act of 1934 (the "Exchange Act")) after the date of such
public announcement, commence (within the meaning of Rule 14d-2 under the
Exchange Act), the Offer to purchase all of the issued and outstanding Shares at
a price per share of U.S. $18.00, in cash (the "Offer Price"). Purchaser may
withhold and deduct amounts from such payments in accordance with Section
2.1(c). The Offer shall be made pursuant to an Offer to Purchase (the "Offer to
Purchase") and related Letter of Transmittal (the "Letter of Transmittal")
containing terms and conditions consistent with this Agreement. The obligation
of Purchaser to commence the Offer, conduct and consummate the Offer and accept
for payment, and pay for, any Shares properly tendered and not withdrawn
pursuant to the Offer shall not be subject to any conditions other than changes
in applicable laws that have the effect of making the Offer unlawful. Purchaser
expressly reserves the right, subject to compliance with the Exchange Act, to
modify the terms of the Offer except that, without the express written consent
of the Company, as authorized by the Special Committee, Purchaser shall not (i)
reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price,
(iii) change the form of consideration payable in the Offer or (iv) amend,
alter, add or waive any term of the Offer in any manner adverse to the holders
of the Shares. Purchaser shall as soon as practicable after the expiration date
of the Offer, accept for payment, and pay for all Shares validly tendered and
not properly withdrawn pursuant to the Offer.
(b) On the date of commencement of the Offer, Purchaser shall file with
the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
Schedule 14D-1, as supplemented or amended from time to time (the "Schedule
14D-1"), and Schedule 13E-3, as supplemented or amended from time to time (the
"Schedule 13E-3"), with respect to the Offer, which shall contain the Offer to
Purchase and the Letter of Transmittal, summary advertisement and any other
ancillary documents and instruments pursuant to which the Offer will be made
(such Schedule 14D-1, the Schedule 13E-3 and the documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "Offer Documents"). Purchaser agrees to take all
necessary steps to cause the Schedule 14D-1 and Schedule 13E-3 to be filed with
the SEC and the Offer Documents to be disseminated to holders of Shares, in each
case, as and to the extent required by applicable U.S. Federal securities laws.
<PAGE> 7
Purchaser shall make all filings necessary in accordance with the laws of
Australia. The Company and its counsel, as well as the Special Committee and
their counsel, shall be given reasonable opportunity to review and comment upon
the Offer Documents prior to their filing with the SEC and prior to
dissemination to the Shareholders. Purchaser shall consider all comments in good
faith. Purchaser agrees to provide the Company, the Special Committee and their
counsel any comments Purchaser may receive from the SEC or its staff with
respect to the Offer Documents promptly after the receipt of such comments.
(c) Purchaser shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to the Offer such amounts as may be
required to be deducted and withheld with respect to the payment of such
consideration under the Internal Revenue Code of 1986, as amended, or any other
tax under any provision of state, local or foreign tax law; provided, however,
that Purchaser shall promptly pay any amounts deducted and withheld hereunder to
the applicable governmental authority, shall promptly file all tax returns and
reports required to be filed in respect of such deductions and withholding, and
shall promptly provide to the Company proof of such payment and a copy of all
such tax returns and reports.
2.2 COMPANY ACTIONS.
(a) The Company hereby consents to the Offer.
(b) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the Offer, as supplemented or amended from time to time
(the "Schedule 14D-9"), containing the recommendation of the Board of Directors
consisting of the Disinterested Directors described in Section 5.4(b) and shall
mail the Schedule 14D-9 to the Shareholders. The Company agrees to take all
steps necessary to cause the Schedule 14D-9 to be filed with the SEC and
disseminated to the Shareholders simultaneously with the Offer Documents, in
each case, as and to the extent required by applicable U.S. Federal securities
laws. Purchaser shall be given reasonable opportunity to review and comment upon
the Schedule 14D-9 prior to its filing with the SEC or dissemination to the
Shareholders, and the Company shall consider such comments in good faith. The
Company agrees to provide Purchaser any comments the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments.
(c) In connection with the Offer and the Amalgamation, the Company
shall cause its transfer agent and its depositary to furnish Purchaser promptly
with mailing labels containing the names and addresses of the record holders of
Shares as of a recent date and of those persons becoming record holders
subsequent to such date, together with copies of all lists of Shareholders,
security position listings and computer files and all other information in the
Company's possession or control regarding the beneficial owners of Shares, and
shall furnish to Purchaser such information and assistance, including updated
lists of shareholders, security position listings and computer files, as
Purchaser may reasonably request in communicating the Offer to the Shareholders.
Purchaser shall use such labels and other information solely to effect the
Amalgamation and the Acquisition.
<PAGE> 8
ARTICLE III
THE AMALGAMATION; CONVERSION OF SHARES
3.1 THE AMALGAMATION.
(a) At the time the Amalgamation becomes effective pursuant to the Act
(the "Effective Time") Purchaser and the Company shall amalgamate on the terms
and subject to the conditions hereof and in accordance with Part VII of the Act.
The Company and Purchaser shall consummate the Amalgamation pursuant to which
(i) Purchaser and the Company shall amalgamate with the Company continuing as
the Amalgamated Company and (ii) all the rights, privileges, immunities, powers
and franchises of Purchaser and the Company shall be those of the Amalgamated
Company.
(b) Following the consummation of the Amalgamation, (i) the name of the
Amalgamated Company shall be "Amway Asia Pacific Ltd.", (ii) the Memorandum of
Association of the Amalgamated Company shall be that of the Company and (iii)
the Bye-laws of the Amalgamated Company shall be those of the Company.
3.2 CONVERSION OF CAPITAL STOCK. At the Effective Time, by virtue of
the Amalgamation and without any action on the part of Purchaser, the Company or
the holders of any shares of Company Common Stock or Purchaser's common stock,
U.S. $.01 par value per share ("Purchaser Common Stock"):
(a) Purchaser Common Stock. Each issued and outstanding share of
Purchaser Common Stock shall be converted into and become one (1) fully paid and
nonassessable share of common stock of the Amalgamated Company.
(b) Conversion of Shares. Each issued and outstanding share of Company
Common Stock (excluding shares of Company Common Stock owned by Hold Co. or the
Principal Shareholders, which shall remain outstanding) shall be canceled in
consideration for a payment in cash to the holder thereof of an amount equal to
the Offer Price, or if the Offer Price is increased, such increased price,
without interest (the "Amalgamation Consideration"), upon surrender of the
certificate formerly representing such shares of Company Common Stock in the
manner provided in Section 3.3 provided, that shares of Company Common Stock
owned by Purchaser shall not receive the Amalgamation Consideration. There will
be deducted from the Amalgamation Consideration paid to each holder any U.S.
backup or other applicable withholding taxes which may be required to be
withheld. Except for shares of Company Common Stock owned by Hold Co., all
shares of Company Common Stock (excluding shares issued pursuant to subsection
(a) of this Section 3.2), at the Effective Time, shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive the Amalgamation
Consideration therefor upon the surrender of such certificate in the manner
prescribed in Section 3.3, without interest.
<PAGE> 9
(c) Stock Options. At the Effective Time and pursuant to the terms
governing warrants, options and other rights to acquire Company Securities (as
defined in Section 5.2(a)), all issued and outstanding warrants, options and
other rights to acquire Company Securities (as defined in Section 5.2(a)) shall
be converted into rights to receive cash in accordance with the Black-Scholes
Option Pricing Model and will require in connection therewith the surrender of
all awards to acquire Company Securities as of the Effective Time. No holder of
any such warrant, option or other right shall be entitled to receive
consideration in the form of Company Securities from the Company by virtue of
the Acquisition.
(d) Shares of Dissenting Shareholders. Notwithstanding anything in this
Agreement to the contrary, in connection with the Amalgamation (if it becomes
effective), holders of shares of Company Common Stock shall have rights pursuant
to Section 106 of the Act, provided such holders comply with the provisions of
such Section. For purposes of applying the foregoing provisions of the Act, the
date of the corporate action triggering the obligation to provide notice of
dissenters rights to the holders of shares of Company Common Stock shall be the
date on which notice of the shareholder's meeting to approve the Amalgamation is
deemed to be received by such holders.
3.3 EXCHANGE OF CERTIFICATES.
(a) Paying Agent. Purchaser shall designate a bank or trust company to
act as agent for the holders of shares of Company Common Stock in connection
with the Amalgamation (the "Paying Agent") to receive the funds to which holders
of shares of Company Common Stock shall become entitled pursuant to Section
3.2(b). Purchaser shall deposit with the Paying Agent cash in an amount equal to
the product of (i) the number of shares of Company Common Stock required to be
converted pursuant to Section 3.2(b), multiplied by (ii) the Amalgamation
Consideration. The deposit made by Purchaser pursuant to the preceding sentence
is hereinafter referred to as the "Payment Fund." The Paying Agent shall cause
the Payment Fund to be (i) held for the benefit of the holders of shares of
Company Common Stock, and (ii) promptly applied to making the payments provided
for in Section 3.2(b). The Payment Fund shall not be used for any purpose that
is not provided for herein. Such funds shall be invested by the Paying Agent as
directed by Purchaser.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates"),
whose shares of Company Common Stock will have been converted pursuant to
Section 3.2 into the right to receive the Amalgamation Consideration (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Purchaser and the Company may reasonably specify) and related
materials, including, without limitation, a Substitute Form W-9 and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Amalgamation Consideration. Upon surrender of a Certificate
for cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Purchaser, together with such letter of transmittal and related
materials, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor the Amalgamation Consideration for each share of
<PAGE> 10
Company Common Stock formerly represented by such Certificate and the
Certificate so surrendered shall forthwith be canceled. If payment of the
Amalgamation Consideration is to be made to a person other than the person in
whose name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Amalgamation Consideration to a person other than the registered
holder of the Certificate surrendered or shall have established to the
satisfaction of Amalgamated Company that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 3.3, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Amalgamation Consideration in cash, without
interest, as contemplated by this Section 3.3.
(c) Termination of Fund; No Liability. At any time following twelve
months after the Effective Time, the Amalgamated Company shall be entitled to
require the Paying Agent to deliver to it any funds, including any interest
received with respect thereto, which had been made available to the Paying Agent
and which have not been disbursed to holders of Certificates, and thereafter
such holders shall be entitled to look to the Amalgamated Company, subject to
abandoned property, escheat or other similar laws, only as general creditors
thereof with respect to the Amalgamation Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing, neither the Amalgamated Company nor the Paying Agent shall be
liable to any holder of a Certificate for Amalgamation Consideration delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
(d) Lost Certificates. In the event any Certificates shall have been
lost, stolen or destroyed, the Paying Agent shall pay in exchange for such lost,
stolen or destroyed Certificates, upon the making of an affidavit of that fact
by the holder thereof, the Amalgamation Consideration, if any, as may be
required pursuant to Section 3.2(b); provided, however, that Purchaser may, in
its discretion and as a condition precedent to the payment thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as it may reasonably direct against any claim that may be made against
Purchaser, the Amalgamated Company or the Paying Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
(e) Investment of Payment Fund. The Paying Agent will invest the cash
in the Payment Fund, as directed by Purchaser, on a daily basis. Any interest
and other income resulting from investments will be paid to Purchaser.
3.4 EFFECTIVE TIME. On the date of Closing (as defined in Section 3.5),
the parties will cause appropriate documents as required under the Act to be
filed with the Registrar of Companies (the "Registrar of Companies"). The
Amalgamation will become effective when the certificate of amalgamation is
issued by the Registrar of Companies. The time the Amalgamation becomes
effective shall be referred to as the "Effective Time".
3.5 CLOSING. The Closing of the Amalgamation (the "Closing") will take
place at 9:00 a.m., Cleveland time, on a date to be specified by the parties,
which shall be as soon as practicable following the satisfaction or waiver of
the conditions set forth in Article IX (or on such other date as Purchaser and
the Company may agree), but in any event no later than the
<PAGE> 11
second Business Day after satisfaction or waiver of all of the conditions set
forth in Article IX hereof (the "Closing Date"), at the offices of Jones, Day,
Reavis & Pogue, North Point, 901 Lakeside Avenue, Cleveland, Ohio 44114-1190,
unless another date or place is agreed to in writing by the parties hereto.
3.6 DIRECTORS AND OFFICERS OF THE AMALGAMATED COMPANY. The names and
addresses of the persons proposed to be directors and officers of the
Amalgamated Company are as follows:
<TABLE>
<CAPTION>
NAME POSITION ADDRESS CITY, STATE
- ---- -------- ------- -----------
<S> <C> <C> <C>
Stephen A. Van Andel Chairman, Director 7685 Leonard, N.E. Ada, Michigan 49301
Richard M. DeVos, Jr. President, Director 2003 Hillsboro, S.E. Grand Rapids, Michigan 49546
Douglas L. DeVos Director 2020 Devonwood, SE Grand Rapids, Michigan 49546
Eoghan M. McMillan Director C-58 Repulse Bay Repulse Bay, Hong Kong
Apartments, 101
Repulse Bay Road
Jack C.K. So Director 402A Villa Verde, 16 Hong Kong
Guildford Road
John C.C. Chan Director Flat A, 7th Floor, Glory Hong Kong
Heights, 52 Lyttelton
Road
Lai-Huat Choong Director 7, Jalan Turi, Bukit 59100 Kuala Lumpur, Malaysia
Bandaraya
Eva Cheng Executive Vice Block 1-A, 33rd Floor, Hong Kong
President; Director Clovelly Court; 12 May
Road, Mid-levels
Lynn Lyall Chief Financial 1755 Park Trail, NE Grand Rapids, MI 49525
Officer, Vice
President and
Treasurer
Lawrence M. Call Vice President 38 Campau Circle, NW Grand Rapids, Michigan 49503
Craig N. Meurlin Vice President, 6525 Donnegal Lane, SE Grand Rapids, Michigan 49546
General Counsel
and Assistant
Secretary
John C. Brockman Vice President, 7425 Kenrob, SE Grand Rapids, Michigan 49546
Distributor
Relations
Percy Chin Vice President, Suite 1103, Chun Lan Shangai, PRC; 200030
General Manager - Apartment, Magnolia
East China Garden, 50 Pu Hui Tang
Road
Patrick Hau Vice President, Flat 7B, Dynasty Court, Hong Kong
General Manager - Tower 5, 23 Old Peak
National Operations Road
Audie Wong Vice President, Villa 418, Beijing Beijing, PRC 100103
General Manager - Riviera, No. 1, Xiang
North China Jiang Bei Road,
Chaoyang District
Martin Liou General Manager - No. 5, Lane 3, Chun-Pou Taoyuan, Taipei R.O.C.
Taiwan 5th St.
</TABLE>
<PAGE> 12
<TABLE>
<S> <C> <C> <C>
Low Han-Kee Regional Manger - 16, Jalan SS26/3; 47301, Selangor, Malaysia
Malaysia Petaling Jaya
Preecha Prakobkit General Manager - 335 Lad Prao 101 Bangkapi, Bangkok 10240
Thailand Thailand
Peter Williams General Manager - 25 Cadwells Road, Sydney, Australia 2156
Australia Kenthurst
Betty Yeung General Manager - 923 King's Road, 9/Floor, Quarry Bay, Hong Kong
South China Ritz Mansion
John C.R. Collis Secretary "Saltcoats," 10 Keith Hall Warwick WK06, Bermuda
Road
</TABLE>
3.7 FURTHER ASSURANCES. If, at any time after the Effective Time, any
further action is necessary or desirable to consummate the Amalgamation, to
carry out the purposes of this Agreement or to vest the Amalgamated Company with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company and Purchaser, the officers and directors
of the Company and Purchaser are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful and
necessary action.
ARTICLE IV
SECTION 103 TRANSACTION
4.1 SECTION 103 TRANSACTION. Notwithstanding anything stated or
contemplated in this Agreement to the contrary and in particular notwithstanding
Article III, the Company and Purchaser need not amalgamate if at any time after
consummation of the Offer, Purchaser and Hold Co. own, in the aggregate, 95
percent or more of the outstanding shares of the Company Common Stock. In such
event, Purchaser may, if it elects to do so in lieu of the Amalgamation,
compulsorily purchase the remaining outstanding Shares from the remaining Public
Shareholders pursuant to Section 103 of the Act for a per share consideration
equal to the Amalgamation Consideration. In the event the Shares of the
remaining Shareholders are purchased pursuant to Section 103 of the Act, such
remaining Public Shareholders will have the rights granted to them in accordance
with Section 103 of the Act, including dissenters' rights.
4.2 OPTION OF PURCHASER. If, as a result of or following the Offer,
Purchaser is able to effect the transaction set forth in Sections 4.1, Purchaser
shall elect, in its sole discretion, whether to implement such transaction or to
effect the Amalgamation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser and Hold Co. as
follows:
5.1 ORGANIZATION AND QUALIFICATION. The Company has been duly
incorporated and is validly existing as a corporation under the laws of Bermuda.
5.2 CAPITALIZATION OF THE COMPANY.
(a) As of the date hereof, the authorized capital stock of the Company
consists of
<PAGE> 13
110,000,000 shares of Common Stock. All outstanding shares of capital stock of
the Company have been validly issued, and are fully paid and nonassessable. As
of the date hereof, there are 448,500 shares of Common Stock subject to issuance
upon exercise of outstanding options, warrants, or other rights to purchase
capital stock of the Company from the Company. Except as set forth above, there
are outstanding (A) no shares of capital stock or other securities of the
Company, (B) no securities of the Company convertible into or exchangeable for
shares of capital stock or securities of the Company, (C) no options,
subscriptions, warrants, convertible securities, calls or other rights to
acquire from the Company, and no obligation of the Company to issue, deliver or
sell, any capital stock, securities or securities convertible into or
exchangeable for capital stock or securities of the Company, and (D) no equity
equivalents, performance shares, interests in the ownership or earnings of the
Company or other similar rights issued by the Company (the items referred to in
clauses (A)(D) are referred to herein as "Company Securities"). As of the date
hereof, (i) there are no outstanding obligations of the Company to repurchase,
redeem or otherwise acquire any Company Securities, (ii) no agreement, other
document or other obligation that grants or imposes on any Company Securities
any right, preference, privilege or restriction with respect to the transactions
contemplated hereby, including, without limitation, any rights of first refusal,
(iii) there are no bonds, debentures, notes or other indebtedness having general
voting rights (or convertible into securities having such rights) of the Company
issued and outstanding and (iv) the Company is not a party or bound to, and to
the Company's knowledge there are no other, voting agreements, lock-up
agreements or similar agreements or arrangements restricting or affecting
outstanding Company Securities.
(b) All issued and outstanding warrants, options and other rights to
acquire Company Securities will, as of or prior to the Effective Time, be
substituted for such alternative consideration as the Board of Directors of the
Company may in good faith determine to be equitable under the circumstances
surrounding the Acquisition and will require in connection therewith the
surrender of all awards to acquire Company Securities as of the Effective Time.
No holder of any such warrant, option or other right shall be entitled to
receive consideration in the form of Company Securities from the Company by
virtue of the Acquisition.
5.3 POWER AND AUTHORITY. The Company has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company.
5.4 RECOMMENDATIONS.
(a) On November 15, 1999, the Special Committee received an opinion
from its financial advisor, Goldman, Sachs & Co. ("Goldman") to the effect that
the Offer Price to be received by the Public Shareholders in the Offer and the
Amalgamation Consideration or the consideration to be received in the compulsory
acquisition pursuant to Section 103 of the Act pursuant to this Agreement is
fair from a financial point of view to the Public Shareholders. A complete and
correct signed copy of such opinion will be delivered to Purchaser for purposes
of inclusion in the Offer Documents. At a meeting duly called and held on
November 15, 1999, the Special Committee duly, validly and unanimously (i)
determined that the Offer and the Amalgamation are fair to, and in the best
interests of, the Public Shareholders, (ii) recommended
<PAGE> 14
to the Board of Directors that the Board of Directors approve, authorize and
adopt this Agreement, the Amalgamation and the other transactions contemplated
hereby, and (iii) resolved to recommend that the Public Shareholders accept the
Offer and tender their Shares in response to the Offer.
(b) The Board of Directors consisting of the Disinterested Directors,
at a meeting duly called and held on November 15, 1999, based, among other
things, on the recommendation of the Special Committee, unanimously (i)
determined that the Offer and the Amalgamation are fair to, and in the best
interests of, the Public Shareholders, (ii) approved, authorized and adopted
this Agreement, the Amalgamation and the other transactions contemplated hereby,
(iii) resolved to recommend that the Public Shareholders accept the Offer and
tender their Shares in response to the Offer, and (iv) took the action required
to cause all issued and outstanding warrants, options and other rights to
acquire Company Securities to be substituted for rights to acquire consideration
other than Company Securities, as of or prior to the Effective Time.
5.5 CONSENTS AND APPROVALS; NO VIOLATION. The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby and the performance by the Company of its obligations hereunder will not:
(a) conflict with or violate any provision of the Company's Memorandum
of Association or Bye-laws; or
(b) require on the part of the Company any consent, approval, order,
authorization or permit of, or registration, filing or notification to, any
Governmental Authority (as hereinafter defined), except for (i) the filing with
the SEC of such reports under the Exchange Act as may be required in connection
with this Agreement (including, without limitation, the Schedule 14D-9), and the
transactions contemplated hereby, (ii) the filing of the Articles of
Amalgamation with the Registrar of Companies, and (iii) such additional actions
or filings which, if not taken or made, would not, singly or in the aggregate,
have a material adverse effect on the condition, financial or otherwise, the
earnings, business affairs or business prospects of the Company or the
consummation of the transactions contemplated by this Agreement.
5.6 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by the Company specifically for use in the Offer Documents will, at the
time filed with the SEC or as of the date mailed to the Shareholders, 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 the light of the circumstances under which they are made, not
misleading.
5.7 BROKERS AND FINDERS. Except for payments required to be made to
Goldman, the Company will not or has not, directly or indirectly, become
obligated to pay any person or entity any brokerage fee, finder's fee,
investment banking fee or agent's fee as a result of the entering into of this
Agreement or any of the transactions contemplated hereby.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company and Hold Co. as
follows:
<PAGE> 15
6.1 ORGANIZATION. Purchaser is a company duly incorporated and is
validly existing as a corporation under the laws of Bermuda. Purchaser is a
wholly owned subsidiary of Hold Co.
6.2 POWER AND AUTHORITY. Purchaser has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby on the part of
Purchaser have been duly and validly authorized by its board of directors and
its sole shareholder and no other corporate proceedings on the part of Purchaser
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Purchaser.
6.3 CONSENT AND APPROVALS; NO VIOLATION. The execution and delivery by
Purchaser of this Agreement do not, and the consummation of the transactions
contemplated hereby and the performance by Purchaser of its obligations
hereunder will not:
(a) conflict with or violate any provision of Purchaser's Memorandum of
Association or Bye-laws; or
(b) require on the part of Purchaser any consent, approval, order,
authorization or permit of, or registration, filing or notification to, any
Governmental Authority (as hereinafter defined), except for (i) the filing by
Purchaser with the SEC of such reports under the Exchange Act as may be required
in connection with this Agreement (including, without limitation, the Schedule
14D-1 and the Schedule 13E-3), and the transactions contemplated hereby and (ii)
such additional actions or filings which, if not taken or made, would not,
singly or in the aggregate, have a material adverse effect on the condition,
financial or otherwise, the earnings, business affairs or business prospects of
Purchaser or the consummation of the transactions contemplated by this
Agreement.
6.4 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Purchaser or the Principal Shareholders specifically for use in the
Schedule 14D-9 will, at the time filed with the SEC or as of the date mailed to
the Shareholders, contain any untrue statement of a material fact or will omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances in which they
are made, not misleading.
6.5 PURCHASER'S OPERATIONS. Purchaser was incorporated solely for the
purpose of engaging in the transactions contemplated hereby and has not engaged
in any business activities or conducted any operations other than to facilitate
the transactions contemplated hereby.
6.6 CAPITALIZATION. All of the capital stock of Purchaser has been duly
and validly issued and is held of record and owned beneficially solely by Hold
Co.
6.7 FINANCING. Purchaser has, or will have as of the date of
consummation of the Offer, all funds necessary to purchase all Shares accepted
for payment in the Offer. Purchaser has, or will have as of the date of
consummation of the Amalgamation or the transaction contemplated by Section 4.1,
all funds necessary to consummate the applicable transaction.
<PAGE> 16
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF HOLD CO.
Hold Co. represents and warrants to the Company and Purchaser as
follows:
7.1 ORGANIZATION. Hold Co. is a limited partnership duly organized,
validly existing and in good standing under the laws of Bermuda.
7.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Hold Co. has all requisite
limited partnership power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby on the part of Hold Co. have been duly and validly authorized by the
general partner of Hold Co. and no other limited partnership proceedings on the
part of Hold Co. are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Hold Co.
7.3 CONSENT AND APPROVALS; NO VIOLATION. The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
hereby and the performance by Hold Co. of its obligations hereunder will not:
(a) conflict with any provision of the certificate of formation of Hold
Co.; or
(b) require on the part of Hold Co. any consent, approval, order,
authorization or permit of, or registration, filing or notification to, any
Governmental Authority (as hereinafter defined) or any third party.
7.4 HOLD CO.'S OPERATIONS. Hold Co. was formed solely for the purpose
of engaging in the transactions contemplated hereby and has not engaged in any
business activities or conducted any operations other than to facilitate the
transactions contemplated hereby.
7.5 CAPITALIZATION. All of the partnership interests of Hold Co. have
been duly and validly issued and are held of record and owned beneficially
solely by the Principal Shareholders.
7.6 FINANCING. Purchaser has, or will have as of the date of
consummation of the Offer, all funds necessary to purchase all Shares accepted
for payment in the Offer. Purchaser has, or will have as of the date of
consummation of the Amalgamation or the transaction contemplated by Section 4.1,
all funds necessary to consummate the applicable transaction.
ARTICLE VIII
ADDITIONAL COVENANTS
<PAGE> 17
The parties hereto further agree as follows:
8.1 CONSENTS AND APPROVALS. The parties hereto shall cooperate with
each other and use commercially reasonable efforts to promptly prepare and file
all necessary documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable all permits, consents, approvals
and authorizations of all third parties ("Third Party Approvals") and Bermuda,
U.S. Federal, state and local governmental and any foreign governmental agencies
and authorities ("Governmental Authority") which are necessary or advisable to
consummate the transactions contemplated by this Agreement ("Governmental
Approvals" and, together with Third Party Approvals, "Approvals"), and to comply
with the terms and conditions of all such Approvals.
8.2 ADDITIONAL ACTIONS. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, or
to remove any injunctions or other impediments or delays, to consummate and make
effective the Offer, the Amalgamation and the other transactions contemplated by
this Agreement.
8.3 SHAREHOLDERS APPROVAL. The Company shall, as soon as practicable
after the consummation of the Offer, take all steps necessary (a) to duly call,
give notice of, convene and hold a meeting of the Shareholders (the "Shareholder
Meeting") for the purpose of securing the approval by the Shareholders
("Shareholder Approval") of the Amalgamation or (b) to the extent Purchaser
elects under Section 4.2 to pursue the transaction described in Sections 4.1, to
effect such transaction as has been so elected.
8.4 INDEMNIFICATION, EXCULPATION AND INSURANCE.
(a) The Company agrees that all rights to indemnification and
exculpation (including the advancement of expenses) from liabilities for acts or
omissions occurring at or prior to the Effective Time (including with respect to
the transactions contemplated by this Agreement) existing now or at the
Effective Time in favor of the current or former directors or officers of the
Company (the "Indemnified Parties") as provided in the Company Memorandum of
Association, the Company Bye-Laws and any indemnification agreements (each as in
effect on the date hereof) shall be assumed by the Amalgamated Company in the
Amalgamation, without further action, as of the Effective Time and shall survive
the Amalgamation and shall continue in full force and effect without amendment,
modification or repeal for a period not less than the statute of limitations
applicable to such matters; provided, however, that if any claims are asserted
or made during the continuance of such period, all rights to indemnification
(and to advancement of expenses) hereunder in respect of any such claims shall
continue, without diminution, until disposition of any and all such claims.
(b) To the extent paragraph (a) shall not serve to indemnify and hold
harmless an Indemnified Party, for a period of six years from and after the
Effective Time, the Amalgamated Company shall indemnify, defend and hold
harmless the Indemnified Parties against all losses, claims, damages, costs,
expenses (including reasonable attorneys' fees and expenses), liabilities or
judgments of or in connection with any threatened or actual claim, action, suit,
proceeding or investigation (an "ACTION") arising out of or pertaining to such
individuals' services, prior to the
<PAGE> 18
Effective Time, as directors, officers or employees of the Company, including,
without limitation, matters based in whole or in part on, or arising in whole or
in part out of, or pertaining to this Agreement or the transactions contemplated
hereby, in each case to the full extent permitted by applicable law.
(c) The Amalgamated Company shall (i) maintain for a period of not less
than six years from the Effective Time the Company's current directors' and
officers' insurance and indemnification policy to the extent that it provides
coverage for events occurring prior to the Effective Time (the "D&O Insurance"),
for all persons who are directors or officers of the Company on the date of this
Agreement (the "Insured Parties") or (ii) cause to be provided coverage no less
advantageous to the Insured Parties than the D&O Insurance, in each case so long
as the annual premium therefor would not be in excess of 150% of the last annual
premium paid for the D&O Insurance prior to the date of this Agreement (such
150% amount, the "Maximum Premium"). If the existing D&O Insurance expires, is
terminated or canceled during such six-year period, the Amalgamated Company will
use all reasonable efforts to cause to be obtained as much D&O Insurance as can
be obtained for the remainder of such period for an annualized premium not in
excess of the Maximum Premium.
(d) The provisions of this Section 8.4 shall survive the consummation
of the Acquisition and are intended to be for the benefit of, and will be
enforceable by, each indemnified or insured party, his or her heirs and his or
her representatives and (ii) are in addition to, and not in substitution for,
any other rights to indemnification or contribution that any such person may
have by contract or otherwise. The Company or the Amalgamated Company, as
applicable, shall pay the reasonable expenses, including reasonable attorneys'
fees, that may be incurred by any Indemnified Parties in enforcing rights to
which such Indemnified Parties are entitled under the provisions of this Section
8.4.
ARTICLE IX
CONDITIONS
9.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations
of the parties to effect the Amalgamation or the transaction contemplated by
Article IV, as the case may be, shall be subject to the satisfaction or waiver,
on or prior to the Closing Date, of the following conditions:
(a) Shareholder Approval. Unless the transaction contemplated by
Article IV is consummated in lieu of the Amalgamation, prior to consummation of
the Amalgamation, this Agreement and the Amalgamation shall have been approved
by the Shareholders required by and in accordance with applicable law.
(b) Governmental Approvals. Other than the filing of the Articles of
Amalgamation in accordance with the Act, all Governmental Approvals required to
be obtained and all material filings, notices or declarations with or to
Governmental Authorities required to be made by the parties and their
Subsidiaries, officers, directors and affiliates in order to consummate the
Amalgamation or the transaction contemplated by Article IV, as the case may be,
shall have been obtained or made, and no such approval shall contain any
conditions, limitations or restrictions, other than any deviation from the
foregoing that does not have and may not reasonably be
<PAGE> 19
expected to have a material adverse effect on the ability of each of the Company
or Purchaser, as the case may be, to perform its obligations under this
Agreement or to consummate the Amalgamation or the transaction contemplated by
Article IV, as the case may be.
(c) Legal Action; Statutes. No governmental entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other order which is in effect and has the effect of making the
Amalgamation or the transaction contemplated by Article IV, as the case may be,
illegal or prohibits the Company or Purchaser from consummating the Amalgamation
or the transaction contemplated by Article IV.
(d) Closing of Tender Offer. Purchaser shall have (i) commenced the
Offer pursuant to Article II hereof and (ii) purchased, pursuant to the terms
and conditions of such Offer, all Shares duly tendered and not withdrawn;
provided, however, that Purchaser shall not be entitled to rely on the condition
in this Section 9.1(d) if Purchaser shall have failed to commence the Offer or
purchase Shares pursuant to the Offer in breach of its obligations under this
Agreement.
ARTICLE X
TERMINATION
10.1 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement and the Offer may be terminated and the
Amalgamation or transaction contemplated by Article IV may be abandoned at any
time prior to the Effective Time, whether before or after Shareholder Approval
thereof:
(a) By Mutual Consent. By mutual consent of Purchaser or Hold Co. on
the one hand and the Company acting through the Board of Directors consisting of
the Disinterested Directors on the other.
(b) By Purchaser or the Company. By Purchaser or the Company, if any
governmental entity enacts, issues, promulgates, enforces or enters any statute,
rule, regulation, injunction or other order which is in effect and has the
effect of making the Offer, the Amalgamation or the transaction contemplated by
Article IV, as the case may be, illegal or prohibits Purchaser from buying
Shares in the Offer or prohibits the Company or Purchaser from consummating the
Amalgamation or otherwise prohibits, directly or indirectly, consummation of the
transactions contemplated by this Agreement, including the transaction
contemplated by Article IV or if the conditions to consummation of the Offer or
the Amalgamation cannot be satisfied; provided, however, that the right to
terminate this Agreement under this Section 10.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of , or resulted directly or indirectly in, the failure of such
condition to occur on or before the Effective Time.
(c) By the Company: By the Company (acting through the Board of
Directors consisting of the Disinterested Directors), if Purchaser (A) fails to
commence the Offer within five Business Days of the public announcement by
Purchaser and the Company of the Offer, or
<PAGE> 20
(B) fails to pay for Shares pursuant to the Offer in accordance with Section
2.1(a) hereof.
10.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 10.1 above, written notice thereof shall
forthwith be given to the other parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement (except as to those
portions of the Acquisition which, at the date of termination, have been
consummated) shall forthwith become null and void and there shall be no
liability or obligation on the part of the parties hereto or their respective
officers, directors or employees, except to the extent arising under applicable
law and for willful breach hereof.
ARTICLE XI
GENERAL PROVISIONS
11.1 AMENDMENT AND MODIFICATION. Subject to applicable law and subject
to Section 11.12, this Agreement may be amended, modified and supplemented in
any and all respects by written agreement of the parties hereto; provided,
however, that after approval of this Agreement by the Shareholders, no such
amendment, modification or supplement shall reduce or change the form of the
Amalgamation Consideration.
11.2 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement shall survive, in the case of
the Offer, the date upon which the Offer is consummated, in the case of the
Amalgamation, the Effective Time, and, in the case of the transaction described
in Article IV, the date upon which such transaction is consummated. This Section
11.2 shall not limit any covenant or agreement of the parties hereto which by
its terms contemplates performance after (a) the date of consummation of the
Offer, (b) the Effective Time or (c) the date of consummation of the transaction
described in Article IV.
11.3 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given upon personal delivery, facsimile
transmission (which is confirmed), telex or delivery by an overnight express
courier service (delivery, postage or freight charges prepaid), or on the fourth
day following deposit in the mail (if sent by registered or certified mail,
return receipt requested, delivery, postage or freight charges prepaid),
addressed to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) If to the Company:
Special Committee
c/o Amway Asia Pacific, Ltd.
38/F The Lee Gardens
33 Hysan Avenue
Causeway Bay
Hong Kong
Attention: Eoghan McMillan
Telephone: 852/2506-1806
Facsimile: 852/2524-9902
E-mail: [email protected]
<PAGE> 21
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006-1470
Attention: Daniel S. Sternberg, Esq.
Telephone: 212/225-2630
Facsimile: 212/225-3999
E-mail: [email protected]
(b) If to Hold Co.:
Apple Hold Co., L.P.
7575 Fulton Street East
Ada, Michigan 49355
Attention: Craig N. Meurlin, Esq.
Telephone: 616/787-8305
Facsimile: 616/787-5623
E-mail: [email protected]
with a copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Thomas C. Daniels, Esq.
Telephone: 216/586-3939
Facsimile: 216/579-0212
E-mail: [email protected]
(c) If to Purchaser:
New AAP Limited
7575 Fulton Street East
Ada, Michigan 49355
Attention: Craig N. Meurlin, Esq.
Telephone: 616/787-8305
Facsimile: 616/787-5623
E-mail: [email protected]
with a copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Thomas C. Daniels, Esq.
<PAGE> 22
Telephone: 216/586-3939
Facsimile: 216/579-0212
E-mail: [email protected]
11.4 DEFINITIONS; INTERPRETATION. When a reference is made in this
Agreement to an Article or Section, such reference shall be to an Article or
Section in this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
11.5 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of Bermuda having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
11.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
11.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. Except for that
certain Confidentiality Agreement, dated as of September 29, 1999, between the
Company and ALAP Hold Co., Ltd., a Nevada limited partnership, which shall apply
to the Purchaser as if it were a party thereto, this Agreement (including the
documents and the instruments referred to herein and therein) (a) constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, and (b) with the exception of Section 8.4(d) is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
11.8 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
11.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of Bermuda and with respect to the transactions
contemplated hereby the parties hereby irrevocably submit to the non-exclusive
jurisdiction of the courts of Bermuda.
11.10 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding
<PAGE> 23
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by, the parties and their respective successors and assigns.
11.11 EXTENSION; WAIVER. Subject to Section 11.12, at any time prior to
the Effective Time, the parties hereto, by action taken or authorized by, in the
case of the Company, the Board of Directors consisting of its Disinterested
Directors, in the case of Purchaser, its board of directors or, in the case of
Hold Co., a partner, member or authorized officer, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other parties hereto contained herein or
in any document delivered pursuant hereto or (iii) subject to Section 11.1,
waive compliance with any of the agreements or conditions of the other parties
hereto contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
11.12 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement pursuant to Section 10.1, an amendment of this
Agreement pursuant to Section 11.1 or an extension or waiver pursuant to Section
11.11 or other action required or permitted to be taken pursuant to this
Agreement shall, in order to be effective, require in the case of Purchaser,
action by its board of directors or a duly authorized designee thereof, require
in the case of the Company, action by its Board of Directors consisting of its
Disinterested Directors or a duly authorized designee thereof, or require in the
case of Hold Co., action by a partner, member or authorized officer; provided,
however, the affirmative vote of a majority of the Board of Directors consisting
of the Disinterested Directors shall be required in order for the Company or the
Board of Directors to act to (i) amend or terminate this Agreement, (ii)
exercise or waive any of Company's rights or remedies under this Agreement,
(iii) extend the time for performance of Hold Co.'s or Purchaser's respective
obligations under this Agreement or (iv) take any action to amend or otherwise
modify the Company's Articles of Association or Bye-Laws (each as in effect on
the date hereof).
11.13 ANNOUNCEMENTS. None of the Company, Hold Co. or Purchaser shall
make any public announcement of the terms or existence of this Agreement without
the consent of the other parties hereto, unless required by law.
[SIGNATURE PAGE FOLLOWS]
<PAGE> 24
IN WITNESS WHEREOF, Hold Co., Purchaser, and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
AMWAY ASIA PACIFIC, LTD.: APPLE HOLD CO., L.P.:
By: AP New Co., LLC, as
general partner
By: /s/ Eva Cheng By: /s/ Craig N. Meurlin
-------------------------- -----------------------------
Name: Eva Cheng Name: Craig N. Meurlin
Title: Director and Executive Title: Manager
Vice President
NEW AAP LIMITED
By: /s/ Lawrence M. Call
-----------------------------
Name: Lawrence M. Call
Title: President
<PAGE> 25
Exhibit to
(c)(1)
EXHIBIT A
---------
SHAREHOLDER AND VOTING AGREEMENT
by and among
APPLE HOLD CO., L.P.,
NEW AAP LIMITED
and
CERTAIN SHAREHOLDERS OF AMWAY ASIA PACIFIC LTD.
dated as of
November 15, 1999
<PAGE> 26
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
I. VOTING OF COMPANY SHARES...............................................................-2-
1.1 Agreement to Vote Company Shares.................................-2-
II. REPRESENTATIONS AND WARRANTIES.........................................................-2-
2.1 Representations and Warranties of the Principal Shareholders.....-2-
2.2 Representations and Warranties of Parent.........................-2-
2.3 Representations and Warranties of Purchaser......................-3-
III. CERTAIN COVENANTS OF PRINCIPAL SHAREHOLDERS...........................................-4-
3.1 Restriction on Transfer of Principal Shares;
Proxies and Noninterference......................................-4-
IV. CERTAIN COVENANTS OF PARENT............................................................-4-
4.1 Restriction on Transfer of Non-Tendered Shares,
Proxies and Noninterference......................................-4-
4.2 Cooperation......................................................-4-
V. MISCELLANEOUS...........................................................................-5-
5.1 Amendment; Termination...........................................-5-
5.2 Extension; Waiver................................................-5-
5.3 Governing Law....................................................-5-
5.4 Notices..........................................................-5-
5.5 Assignment.......................................................-6-
5.6 Further Assurances...............................................-6-
5.7 Enforcement......................................................-6-
5.8 Severability.....................................................-6-
5.9 Counterparts.....................................................-6-
5.10 Headings.........................................................-6-
5.11 Third Party Beneficiary..........................................-7-
</TABLE>
<PAGE> 27
SHAREHOLDER AND VOTING AGREEMENT
This SHAREHOLDER AND VOTING AGREEMENT, dated as of November 15, 1999
(this "Agreement"), is made and entered into among Apple Hold Co., L.P., a
Bermuda limited partnership ("Parent"), New AAP Limited, a Bermuda corporation
and wholly owned subsidiary of Parent ("Purchaser") and each of the shareholders
whose name is set forth on Schedule A hereto (each, a "Principal Shareholder"
and, collectively, the "Principal Shareholders"). Except as otherwise defined
herein, terms used herein with initial capital letters have the respective
meanings ascribed thereto in the Amalgamation Agreement (as defined below).
RECITALS:
WHEREAS, Parent, Purchaser and Amway Asia Pacific Ltd., a Bermuda
corporation (the "Company") propose to enter into a Tender Offer and
Amalgamation Agreement, dated as of November 15, 1999 (the "Amalgamation
Agreement"), pursuant to which Purchaser will conduct a tender offer (the
"Offer") for all of the Company's Common Stock, and following the Offer,
Purchaser will amalgamate with and into the Company (the "Amalgamation") or, if
so elected by Purchaser, Purchaser will compulsorily purchase all outstanding
Company Common Stock, all on the terms and subject to the conditions set forth
in the Amalgamation Agreement;
WHEREAS, as of the date hereof, each Principal Shareholder beneficially
owns and is entitled to dispose of (or to direct the disposition of) and to vote
(or to direct the voting of) the number of shares, no par value, of the Company,
set forth opposite such Principal Shareholder's name on Schedule A hereto
(collectively, the "Principal Shares");
WHEREAS, the Principal Shareholders have informed Purchaser that they
will not tender their Principal Shares in response to the Offer, but such
Principal Shareholders will transfer their Principal Shares ("Non-Tendered
Shares") to Parent contemporaneously with the consummation of the Offer;
WHEREAS, following the Offer and the transfer of the Non-Tendered
Shares to Parent, Parent will beneficially own and be entitled to dispose of (or
to direct the disposition of) and to vote Shares, representing in excess of
two-thirds of the outstanding Shares of the Company;
WHEREAS, all or a portion of the funds required to pay the Offer Price
will be borrowed by Purchaser pursuant to a Credit Agreement among Purchaser,
Parent, ALAP Hold Co., Ltd. and N.A.J. Co., Ltd., the lenders parties thereto
(the "Lender Parties") and Morgan Guaranty Trust Company of New York, Tokyo
Branch, as agent (the "Agent", and together with the Lender Parties, the
"Banks");
WHEREAS, as a condition and inducement to their willingness to enter
into the Amalgamation Agreement, the Company and Purchaser have requested, and
as a condition to the agreement of the Banks to fund the Offer Price and the
consideration to be paid in the
<PAGE> 28
Amalgamation or the compulsory purchase, the Banks have requested, that Parent
agree, and Parent has agreed, to enter into this Agreement; and
WHEREAS, as a condition and inducement to their willingness to enter
into the Amalgamation Agreement, the Parent and Purchaser have requested, and as
a condition to the agreement of the Banks to fund the Offer Price and the
consideration to be paid in the Amalgamation or the compulsory purchase, the
Banks have requested, that each Principal Shareholder agree, and each Principal
Shareholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
I. VOTING OF COMPANY SHARES
1.1 AGREEMENT TO VOTE COMPANY SHARES. At any meeting of the
shareholders of the Company called to consider and vote upon the adoption or
approval of the Amalgamation Agreement or the Amalgamation (and at any and all
postponements and adjournments thereof), each Principal Shareholder will cause
Parent to vote, and Parent hereby agrees to vote, all of the Non-Tendered
Shares, in favor of the adoption or approval of the Amalgamation Agreement and
the Amalgamation and in favor of any other matter necessary or appropriate for
the consummation of the transactions contemplated by the Amalgamation Agreement
that is considered and voted upon at any such shareholders' meeting.
II. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDERS. Each
Principal Shareholder, severally and not jointly, represents and warrants to
Parent, the Banks and Purchaser, as of the date hereof and as of the Closing
Date, as follows:
(a) EXECUTION AND DELIVERY. Such Principal Shareholder has all
requisite power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. In the case of each Principal Shareholder that
is not a natural person, the execution and delivery of this Agreement by such
Principal Shareholder and the consummation by such Principal Shareholder of the
transactions contemplated hereby have been duly authorized by all necessary
action, if any, on the part of such Principal Shareholder. This Agreement has
been duly and validly executed and delivered by such Principal Shareholder.
(b) OWNERSHIP OF SHARES. Such Principal Shareholder is the
sole holder of record and beneficial owner of such number of Principal Shares
set forth opposite its, his or her name on SCHEDULE A and holds good, valid and
marketable title to such Principal Shares and will hold such title at the date
or dates such Principal Shareholders transfer their Principal Shares to Parent.
2.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent represents and
warrants to
<PAGE> 29
Purchaser and the Principal Shareholders, as of the date hereof and as of the
Closing Date, as follows:
(a) ORGANIZATION. Parent is a limited partnership duly
organized, validly existing and in good standing under the laws of Bermuda.
(b) AUTHORITY RELATIVE TO THIS AGREEMENT. Parent has all
requisite limited partnership power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby on the part of Parent have been duly and validly authorized
by the general partner of Parent and no other limited partnership proceedings on
the part of Parent are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent.
(c) CONSENT AND APPROVALS; NO VIOLATION. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby and the performance by Parent of its obligations hereunder
will not:
(i) conflict with any provision of the certificate of
formation of Parent; or
(ii) require on the part of Parent any consent, approval,
order, authorization or permit of, or registration, filing or notification to,
any Governmental Authority or any third party.
2.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to Parent and the Principal Shareholders, as of the date hereof and
as of the Closing Date, as follows:
(a) ORGANIZATION. Purchaser is a company duly incorporated and
is validly existing as a corporation under the laws of Bermuda.
(b) POWER AND AUTHORITY. Purchaser has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby on the part of
Purchaser have been duly and validly authorized by its board of directors and
its sole shareholder and no other corporate proceedings on the part of Purchaser
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Purchaser.
(c) CONSENT AND APPROVALS; NO VIOLATION. The execution and
delivery by Purchaser of this Agreement does not, and the consummation of the
transactions contemplated hereby and the performance by Purchaser of its
obligations hereunder will not:
(i) conflict with or violate any provision of Purchaser's
Memorandum of Association or Bye-laws; or
(ii) require on the part of Purchaser any consent,
approval, order,
<PAGE> 30
authorization or permit of, or registration, filing or notification to, any
Governmental Authority, except for (i) the filing by Purchaser with the SEC of
such reports under the Exchange Act as may be required in connection with the
Amalgamation Agreement (including, without limitation, the Schedule 14D-1 and
the Schedule 13E-3), and the transactions contemplated thereby and (iii) such
additional actions or filings which, if not taken or made, would not, singly or
in the aggregate, have a material adverse effect on the condition, financial or
otherwise, the earnings, business affairs or business prospects of Purchaser or
the transactions contemplated by this Agreement.
III. CERTAIN COVENANTS OF PRINCIPAL SHAREHOLDERS
3.1 RESTRICTION ON TRANSFER OF PRINCIPAL SHARES; PROXIES AND
NONINTERFERENCE. Each Principal Shareholder hereby agrees that it will not,
directly or indirectly: (A) except as otherwise contemplated by this Agreement
or the Amalgamation Agreement, offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, or enter into any contract, option or
other arrangement or understanding with respect to or consent to the offer for
sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of the Principal Shares or any other Shares it may at
anytime own (collectively, "Company Shares"); (B) except pursuant to the terms
of this Agreement, grant any proxies or powers of attorney, deposit any Company
Shares into a voting trust or enter into a voting agreement with respect to any
Company Shares; or (C) take any action that would reasonably be expected to make
any representation or warranty contained herein untrue or incorrect or have the
effect of impairing the ability of such Principal Shareholder to perform its
obligations under this Agreement or preventing or delaying the consummation of
any of the transactions contemplated hereby.
IV. CERTAIN COVENANTS OF PARENT
4.1 RESTRICTION ON TRANSFER OF NON-TENDERED SHARES, PROXIES AND
NONINTERFERENCE. Parent hereby agrees that it will not, directly or indirectly:
(A) except as otherwise contemplated by this Agreement or the Amalgamation
Agreement, offer for sale, sell, transfer, tender, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
the Non-Tendered Shares or any other Shares it may at anytime own (collectively,
"Parent Shares"); (B) except pursuant to the terms of this Agreement, grant any
proxies or powers of attorney, deposit any Parent Shares into a voting trust or
enter into a voting agreement with respect to any Parent Shares; or (C) take any
action that would reasonably be expected to make any representation or warranty
contained herein untrue or incorrect or have the effect of impairing the ability
of Parent to perform its obligations under this Agreement or preventing or
delaying the consummation of any of the transactions contemplated hereby.
4.2 COOPERATION. Parent will cooperate fully with the Company and
Purchaser in connection with their respective reasonable best efforts to fulfill
the conditions to (a) the Offer set forth in Article II to the Amalgamation
Agreement and (b) the Amalgamation set forth in Article III of the Amalgamation
Agreement or, if so elected by Purchaser, the compulsory purchase set forth in
Article IV of the Amalgamation Agreement.
<PAGE> 31
V. MISCELLANEOUS
5.1 AMENDMENT; TERMINATION. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto. This
Agreement will terminate upon the date the Amalgamation Agreement is terminated
in accordance with its terms, or by the mutual consent of the Board of Directors
of the Company consisting of the Disinterested Directors, and the general
partner of Parent. In the event of termination of this Agreement pursuant to
this Section 5.1, this Agreement, except as to those transactions already
consummated, will become null and void and of no effect with no liability on the
part of any party hereto; provided, however, that no such termination will
relieve any party hereto from any liability for any breach of this Agreement
arising under applicable law.
5.2 EXTENSION; WAIVER. Any agreement on the part of a party to waive
any provision of this Agreement, or to extend the time for any performance
hereunder, will be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise will not constitute a waiver of
such rights.
5.3 GOVERNING LAW. This Agreement will be governed by, and construed in
accordance with, the laws of Bermuda and the parties hereby irrevocably submit
to the non-exclusive jurisdiction of the courts of Bermuda.
5.4 NOTICES. All notices and other communications hereunder shall
comply with the notice provisions of the Amalgamation Agreement. In addition all
notices to the Principal Shareholders shall be sent to the following parties:
Amway Corporation
7575 Fulton Street East
Ada, Michigan 49355
Attention: Craig N. Meurlin, Esq.
Telephone: (616) 787-8305
Facsimile: (616) 787-5623
E-mail: [email protected]
with copies to (for those Principal Shareholders listed on
SCHEDULE A as the "DeVos Family"):
Cravath Swaine & Moore
Worldwide Plaza
825 8th Avenue
New York, New York 10015
Attention: Daniel Mosley, Esq.
Telephone: (212) 474-1696
Facsimile: (212) 765-0977
E-mail: [email protected]
<PAGE> 32
with copies to (for those Principal Shareholders listed on
SCHEDULE A as the "Van Andel Family"):
Hogan & Hartson
Columbia Square
555 Thirteenth Street, NW
Washington, D.C. 20004
Attention: Sara-Ann Determan, Esq.
Telephone: (202) 637-6588
Facsimile: (202) 637-5910
E-mail: [email protected]
5.5 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any party hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by, the parties and their respective
successors and assigns.
5.6 FURTHER ASSURANCES. Each of the Principal Shareholders and Parent
will execute and deliver such other documents and instruments and take such
further actions as may be necessary or appropriate or as may be reasonably
requested by Purchaser in order to ensure that Purchaser receives the full
benefit of this Agreement.
5.7 ENFORCEMENT. Irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, the parties will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity.
5.8 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
5.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same instrument and
will become effective when one or more counterparts have been signed by any
party and delivered to the other parties.
5.10 HEADINGS. 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.
<PAGE> 33
5.11 THIRD PARTY BENEFICIARY. Except for the Banks and, to the extent
provided in the second sentence of Section 5.1 hereof, the Company, this
Agreement is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder. The Banks shall have the same rights
and remedies available to the parties to this Agreement as if the Banks were a
party hereto.
[Remainder of page intentionally left blank]
<PAGE> 34
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the day and year first written above.
APPLE HOLD CO., L.P.
By: AP New Co., LLC, as general partner
By:_____________________________
Name:
Title:
NEW AAP LIMITED
By:_____________________________
Name:
Title:
PRINCIPAL SHAREHOLDERS:
JAY VAN ANDEL TRUST
By:_____________________________
Name:
Title:
SUBTRUST UNDER PARAGRAPH 3 OF JVA
TRUST
By:_____________________________
Name:
Title:
JAY AND BETTY VAN ANDEL FOUNDATION
By:_____________________________
Name:
Title:
RICHARD M. DEVOS 1998 TRUST
By:_____________________________
Name:
<PAGE> 35
Title:
By:_____________________________
Name:
Title:
RICHARD & HELEN DEVOS FOUNDATION
By:_____________________________
Name:
Title:
HELEN J. DEVOS ARTICLE I TRUST
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
RICHARD M. DEVOS, JR. ARTICLE II TRUST
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
<PAGE> 36
DANIEL G. DEVOS ARTICLE II TRUST
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
SUZANNE DEVOS-VANDERWEIDE ARTICLE II
TRUST
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
DOUGLAS L. DEVOS ARTICLE II TRUST
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
RDV CAPITAL MANAGEMENT L.P. III
By: RDV Corporation, as general partner
By:_____________________________
Name:
Title:
<PAGE> 37
RICHARD M. DEVOS, JR. 1995 CHRISTMAS
TRUST
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
DANIEL G. DEVOS 1995 CHRISTMAS TRUST
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
SUZANNE DEVOS-VANDERWEIDE 1995
CHRISTMAS TRUST
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
<PAGE> 38
DOUGLAS L. DEVOS 1995 CHRISTMAS TRUST
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
<PAGE> 39
SCHEDULE A
- ----------------------------------------------------------------------
NUMBER OF PRINCIPAL
SHAREHOLDER SHARES OWNED
- ----------------------------------------------------------------------
I. VAN ANDEL FAMILY
Jay Van Andel Trust 12,315,145
Subtrust Under Paragraph 3 of JVA Trust 11,092,330
Jay and Betty Van Andel Foundation 564,290
II. DEVOS FAMILY
- ----------------------------------------------------------------------
Richard M. DeVos 1998 Trust 9,948,743
Richard & Helen DeVos Foundation 564,290
Helen J. DeVos Article I Trust 3,835,882
Richard M. DeVos, Jr. Article II Trust 200,528
Daniel G. DeVos Article II Trust 200,528
Suzanne DeVos-VanderWeide Article II Trust 200,528
Douglas L. DeVos Article II Trust 200,528
RDV Capital Management L.P. III 1,000,000
Richard M. DeVos, Jr. 1995 Christmas Trust 1,955,184
Daniel G. DeVos 1995 Christmas Trust 1,955,184
Suzanne DeVos-VanderWeide 1995 Christmas Trust 1,955,185
Douglas L. DeVos 1995 Christmas Trust 1,955,185
TOTAL 47,943,530
- ----------------------------------------------------------------------
<PAGE> 1
Exhibit (c)(2)
SHAREHOLDER AND VOTING AGREEMENT
by and among
APPLE HOLD CO., L.P.,
NEW AAP LIMITED
and
CERTAIN SHAREHOLDERS OF AMWAY ASIA PACIFIC LTD.
dated as of
November 15, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
I. VOTING OF COMPANY SHARES....................................................................................-2-
1.1 Agreement to Vote Company Shares......................................................-2-
II. REPRESENTATIONS AND WARRANTIES..............................................................................-2-
2.1 Representations and Warranties of the Principal Shareholders..........................-2-
2.2 Representations and Warranties of Parent..............................................-2-
2.3 Representations and Warranties of Purchaser...........................................-3-
III. CERTAIN COVENANTS OF PRINCIPAL SHAREHOLDERS................................................................-4-
3.1 Restriction on Transfer of Principal Shares;
Proxies and Noninterference...........................................................-4-
IV. CERTAIN COVENANTS OF PARENT.................................................................................-4-
4.1 Restriction on Transfer of Non-Tendered Shares,
Proxies and Noninterference...........................................................-4-
4.2 Cooperation...........................................................................-4-
V. MISCELLANEOUS................................................................................................-5-
5.1 Amendment; Termination................................................................-5-
5.2 Extension; Waiver.....................................................................-5-
5.3 Governing Law.........................................................................-5-
5.4 Notices...............................................................................-5-
5.5 Assignment............................................................................-6-
5.6 Further Assurances....................................................................-6-
5.7 Enforcement...........................................................................-6-
5.8 Severability..........................................................................-6-
5.9 Counterparts..........................................................................-6-
5.10 Headings..............................................................................-6-
5.11 Third Party Beneficiary...............................................................-7-
</TABLE>
-i-
<PAGE> 3
SHAREHOLDER AND VOTING AGREEMENT
This SHAREHOLDER AND VOTING AGREEMENT, dated as of November 15, 1999
(this "Agreement"), is made and entered into among Apple Hold Co., L.P., a
Bermuda limited partnership ("Parent"), New AAP Limited, a Bermuda corporation
and wholly owned subsidiary of Parent ("Purchaser") and each of the shareholders
whose name is set forth on Schedule A hereto (each, a "Principal Shareholder"
and, collectively, the "Principal Shareholders"). Except as otherwise defined
herein, terms used herein with initial capital letters have the respective
meanings ascribed thereto in the Amalgamation Agreement (as defined below).
RECITALS:
WHEREAS, Parent, Purchaser and Amway Asia Pacific Ltd., a Bermuda
corporation (the "Company") propose to enter into a Tender Offer and
Amalgamation Agreement, dated as of November 15, 1999 (the "Amalgamation
Agreement"), pursuant to which Purchaser will conduct a tender offer (the
"Offer") for all of the Company's Common Stock, and following the Offer,
Purchaser will amalgamate with and into the Company (the "Amalgamation") or, if
so elected by Purchaser, Purchaser will compulsorily purchase all outstanding
Company Common Stock, all on the terms and subject to the conditions set forth
in the Amalgamation Agreement;
WHEREAS, as of the date hereof, each Principal Shareholder beneficially
owns and is entitled to dispose of (or to direct the disposition of) and to vote
(or to direct the voting of) the number of shares, no par value, of the Company,
set forth opposite such Principal Shareholder's name on Schedule A hereto
(collectively, the "Principal Shares");
WHEREAS, the Principal Shareholders have informed Purchaser that they
will not tender their Principal Shares in response to the Offer, but such
Principal Shareholders will transfer their Principal Shares ("Non-Tendered
Shares") to Parent contemporaneously with the consummation of the Offer;
WHEREAS, following the Offer and the transfer of the Non-Tendered
Shares to Parent, Parent will beneficially own and be entitled to dispose of (or
to direct the disposition of) and to vote Shares, representing in excess of
two-thirds of the outstanding Shares of the Company;
WHEREAS, all or a portion of the funds required to pay the Offer Price
will be borrowed by Purchaser pursuant to a Credit Agreement among Purchaser,
Parent, ALAP Hold Co., Ltd. and N.A.J. Co., Ltd., the lenders parties thereto
(the "Lender Parties") and Morgan Guaranty Trust Company of New York, Tokyo
Branch, as agent (the "Agent", and together with the Lender Parties, the
"Banks");
WHEREAS, as a condition and inducement to their willingness to enter
into the Amalgamation Agreement, the Company and Purchaser have requested, and
as a condition to the agreement of the Banks to fund the Offer Price and the
consideration to be paid in the
-1-
<PAGE> 4
Amalgamation or the compulsory purchase, the Banks have requested, that Parent
agree, and Parent has agreed, to enter into this Agreement; and
WHEREAS, as a condition and inducement to their willingness to enter
into the Amalgamation Agreement, the Parent and Purchaser have requested, and as
a condition to the agreement of the Banks to fund the Offer Price and the
consideration to be paid in the Amalgamation or the compulsory purchase, the
Banks have requested, that each Principal Shareholder agree, and each Principal
Shareholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
I. VOTING OF COMPANY SHARES
1.1 AGREEMENT TO VOTE COMPANY SHARES. At any meeting of the
shareholders of the Company called to consider and vote upon the adoption or
approval of the Amalgamation Agreement or the Amalgamation (and at any and all
postponements and adjournments thereof), each Principal Shareholder will cause
Parent to vote, and Parent hereby agrees to vote, all of the Non-Tendered
Shares, in favor of the adoption or approval of the Amalgamation Agreement and
the Amalgamation and in favor of any other matter necessary or appropriate for
the consummation of the transactions contemplated by the Amalgamation Agreement
that is considered and voted upon at any such shareholders' meeting.
II. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDERS. Each
Principal Shareholder, severally and not jointly, represents and warrants to
Parent, the Banks and Purchaser, as of the date hereof and as of the Closing
Date, as follows:
(a) EXECUTION AND DELIVERY. Such Principal Shareholder has all
requisite power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. In the case of each Principal Shareholder that
is not a natural person, the execution and delivery of this Agreement by such
Principal Shareholder and the consummation by such Principal Shareholder of the
transactions contemplated hereby have been duly authorized by all necessary
action, if any, on the part of such Principal Shareholder. This Agreement has
been duly and validly executed and delivered by such Principal Shareholder.
(b) OWNERSHIP OF SHARES. Such Principal Shareholder is the
sole holder of record and beneficial owner of such number of Principal Shares
set forth opposite its, his or her name on SCHEDULE A and holds good, valid and
marketable title to such Principal Shares and will hold such title at the date
or dates such Principal Shareholders transfer their Principal Shares to Parent.
2.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent represents and
warrants to
<PAGE> 5
Purchaser and the Principal Shareholders, as of the date hereof and as of the
Closing Date, as follows:
(a) ORGANIZATION. Parent is a limited partnership duly organized,
validly existing and in good standing under the laws of Bermuda.
(b) AUTHORITY RELATIVE TO THIS AGREEMENT. Parent has all requisite
limited partnership power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby on the part of Parent have been duly and validly authorized by the
general partner of Parent and no other limited partnership proceedings on the
part of Parent are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent.
(c) CONSENT AND APPROVALS; NO VIOLATION. The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
hereby and the performance by Parent of its obligations hereunder will not:
(i) conflict with any provision of the certificate of formation
of Parent; or
(ii) require on the part of Parent any consent, approval, order,
authorization or permit of, or registration, filing or notification to, any
Governmental Authority or any third party.
2.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to Parent and the Principal Shareholders, as of the date hereof and as
of the Closing Date, as follows:
(a) ORGANIZATION. Purchaser is a company duly incorporated and is
validly existing as a corporation under the laws of Bermuda.
(b) POWER AND AUTHORITY. Purchaser has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby on the part of
Purchaser have been duly and validly authorized by its board of directors and
its sole shareholder and no other corporate proceedings on the part of Purchaser
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Purchaser.
(c) CONSENT AND APPROVALS; NO VIOLATION. The execution and delivery by
Purchaser of this Agreement does not, and the consummation of the transactions
contemplated hereby and the performance by Purchaser of its obligations
hereunder will not:
(i) conflict with or violate any provision of Purchaser's
Memorandum of Association or Bye-laws; or
(ii) require on the part of Purchaser any consent, approval,
order,
<PAGE> 6
authorization or permit of, or registration, filing or notification to, any
Governmental Authority, except for (i) the filing by Purchaser with the SEC of
such reports under the Exchange Act as may be required in connection with the
Amalgamation Agreement (including, without limitation, the Schedule 14D-1 and
the Schedule 13E-3), and the transactions contemplated thereby and (iii) such
additional actions or filings which, if not taken or made, would not, singly or
in the aggregate, have a material adverse effect on the condition, financial or
otherwise, the earnings, business affairs or business prospects of Purchaser or
the transactions contemplated by this Agreement.
III. CERTAIN COVENANTS OF PRINCIPAL SHAREHOLDERS
3.1 RESTRICTION ON TRANSFER OF PRINCIPAL SHARES; PROXIES AND
NONINTERFERENCE. Each Principal Shareholder hereby agrees that it will not,
directly or indirectly: (A) except as otherwise contemplated by this Agreement
or the Amalgamation Agreement, offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, or enter into any contract, option or
other arrangement or understanding with respect to or consent to the offer for
sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of the Principal Shares or any other Shares it may at
anytime own (collectively, "Company Shares"); (B) except pursuant to the terms
of this Agreement, grant any proxies or powers of attorney, deposit any Company
Shares into a voting trust or enter into a voting agreement with respect to any
Company Shares; or (C) take any action that would reasonably be expected to make
any representation or warranty contained herein untrue or incorrect or have the
effect of impairing the ability of such Principal Shareholder to perform its
obligations under this Agreement or preventing or delaying the consummation of
any of the transactions contemplated hereby.
IV. CERTAIN COVENANTS OF PARENT
4.1 RESTRICTION ON TRANSFER OF NON-TENDERED SHARES, PROXIES AND
NONINTERFERENCE. Parent hereby agrees that it will not, directly or indirectly:
(A) except as otherwise contemplated by this Agreement or the Amalgamation
Agreement, offer for sale, sell, transfer, tender, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
the Non-Tendered Shares or any other Shares it may at anytime own (collectively,
"Parent Shares"); (B) except pursuant to the terms of this Agreement, grant any
proxies or powers of attorney, deposit any Parent Shares into a voting trust or
enter into a voting agreement with respect to any Parent Shares; or (C) take any
action that would reasonably be expected to make any representation or warranty
contained herein untrue or incorrect or have the effect of impairing the ability
of Parent to perform its obligations under this Agreement or preventing or
delaying the consummation of any of the transactions contemplated hereby.
4.2 COOPERATION. Parent will cooperate fully with the Company and
Purchaser in connection with their respective reasonable best efforts to fulfill
the conditions to (a) the Offer set forth in Article II to the Amalgamation
Agreement and (b) the Amalgamation set forth in Article III of the Amalgamation
Agreement or, if so elected by Purchaser, the compulsory purchase set forth in
Article IV of the Amalgamation Agreement.
<PAGE> 7
V. MISCELLANEOUS
5.1 AMENDMENT; TERMINATION. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto. This
Agreement will terminate upon the date the Amalgamation Agreement is terminated
in accordance with its terms, or by the mutual consent of the Board of Directors
of the Company consisting of the Disinterested Directors, and the general
partner of Parent. In the event of termination of this Agreement pursuant to
this Section 5.1, this Agreement, except as to those transactions already
consummated, will become null and void and of no effect with no liability on the
part of any party hereto; provided, however, that no such termination will
relieve any party hereto from any liability for any breach of this Agreement
arising under applicable law.
5.2 EXTENSION; WAIVER. Any agreement on the part of a party to waive
any provision of this Agreement, or to extend the time for any performance
hereunder, will be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise will not constitute a waiver of
such rights.
5.3 GOVERNING LAW. This Agreement will be governed by, and construed in
accordance with, the laws of Bermuda and the parties hereby irrevocably submit
to the non-exclusive jurisdiction of the courts of Bermuda.
5.4 NOTICES. All notices and other communications hereunder shall
comply with the notice provisions of the Amalgamation Agreement. In addition all
notices to the Principal Shareholders shall be sent to the following parties:
Amway Corporation
7575 Fulton Street East
Ada, Michigan 49355
Attention: Craig N. Meurlin, Esq.
Telephone: (616) 787-8305
Facsimile: (616) 787-5623
E-mail: [email protected]
with copies to (for those Principal Shareholders listed
on SCHEDULE A as the "DeVos Family"):
Cravath Swaine & Moore
Worldwide Plaza
825 8th Avenue
New York, New York 10015
Attention: Daniel Mosley, Esq.
Telephone: (212) 474-1696
Facsimile: (212) 765-0977
E-mail: [email protected]
<PAGE> 8
with copies to (for those Principal Shareholders listed
on SCHEDULE A as the "Van Andel Family"):
Hogan & Hartson
Columbia Square
555 Thirteenth Street, NW
Washington, D.C. 20004
Attention: Sara-Ann Determan, Esq.
Telephone: (202) 637-6588
Facsimile: (202) 637-5910
E-mail: [email protected]
5.5 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any party hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by, the parties and their respective
successors and assigns.
5.6 FURTHER ASSURANCES. Each of the Principal Shareholders and Parent
will execute and deliver such other documents and instruments and take such
further actions as may be necessary or appropriate or as may be reasonably
requested by Purchaser in order to ensure that Purchaser receives the full
benefit of this Agreement.
5.7 ENFORCEMENT. Irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, the parties will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity.
5.8 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
5.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same instrument and
will become effective when one or more counterparts have been signed by any
party and delivered to the other parties.
5.10 HEADINGS. 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.
5.11 THIRD PARTY BENEFICIARY. Except for the Banks and, to the extent
provided in the second sentence of Section 5.1 hereof, the Company, this
Agreement is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder. The Banks shall
<PAGE> 9
have the same rights and remedies available to the parties to this Agreement as
if the Banks were a party hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the day and year first written above.
APPLE HOLD CO., L.P.
By: AP New Co., LLC, as general partner
By: /s/ Craig N. Meurlin
-----------------------------------------------
Name: Craig N. Meurlin
Title: Manager for General Partner
NEW AAP LIMITED
By: /s/ Lawrence M. Call
-----------------------------------------------
Name: Lawrence M. Call
Title: Attorney-in-Fact
PRINCIPAL SHAREHOLDERS:
JAY VAN ANDEL TRUST
By: /s/ Jay Van Andel
-----------------------------------------------
Name: Jay Van Andel
Title: Trustee
SUBTRUST UNDER PARAGRAPH 3 OF JVA TRUST
By: /s/ Jay Van Andel
-----------------------------------------------
Name: Jay Van Andel
Title: Trustee
JAY AND BETTY VAN ANDEL FOUNDATION
By: /s/ Jay Van Andel
-----------------------------------------------
Name: Jay Van Andel
Title: President
<PAGE> 10
RICHARD M. DEVOS 1998 TRUST
By: /s/ Jerry Tubergen
-----------------------------------------------
Name: Jerry Tubergen
Title: Trustee
By: /s/ Richard M. DeVos, Jr.
-----------------------------------------------
Name: Richard M. DeVos, Jr.
Title: President
RICHARD & HELEN DEVOS FOUNDATION
By: /s/ Jerry Tubergen
-----------------------------------------------
Name: Jerry Tubergen
Title: Vice President, Secretary
HELEN J. DEVOS ARTICLE I TRUST
By: /s/ Jerry Tubergen
-----------------------------------------------
Name: Jerry Tubergen
Title: Trustee
By: /s/ Richard M. DeVos, Jr.
-----------------------------------------------
Name: Richard M. DeVos, Jr.
Title: President
RICHARD M. DEVOS, JR. ARTICLE II TRUST
By: /s/ Richard M. DeVos, Jr.
-----------------------------------------------
Name: Richard M. DeVos, Jr.
Title: President
By: /s/ Jerry Tubergen
-----------------------------------------------
Name: Jerry Tubergen
Title: Trustee
<PAGE> 11
DANIEL G. DEVOS ARTICLE II TRUST
By: /s/ Jerry Tubergen
-----------------------------------------------
Name: Jerry Tubergen
Title: Trustee
By: /s/ Richard M. DeVos, Jr.
-----------------------------------------------
Name: Richard M. DeVos, Jr.
Title: President
SUZANNE DEVOS-VANDERWEIDE ARTICLE II
TRUST
By: /s/ Jerry Tubergen
-----------------------------------------------
Name: Jerry Tubergen
Title: Trustee
By: /s/ Richard M. DeVos, Jr.
-----------------------------------------------
Name: Richard M. DeVos, Jr.
Title: President
DOUGLAS L. DEVOS ARTICLE II TRUST
By: /s/ Richard M. DeVos, Jr.
-----------------------------------------------
Name: Richard M. DeVos, Jr.
Title: President
By: /s/ Jerry Tubergen
-----------------------------------------------
Name: Jerry Tubergen
Title: Trustee
RDV CAPITAL MANAGEMENT L.P. III
By: RDV Corporation, as general partner
By: /s/ Jerry Tubergen
-----------------------------------------------
Name: Jerry Tubergen
Title: President
<PAGE> 12
RICHARD M. DEVOS, JR. 1995 CHRISTMAS
TRUST
By: /s/ Richard M. DeVos, Jr.
-----------------------------------------------
Name: Richard M. DeVos, Jr.
Title: President
By: /s/ Daniel L. Mosley
-----------------------------------------------
Name: Daniel L. Mosley
Title: Trustee
DANIEL G. DEVOS 1995 CHRISTMAS TRUST
By: /s/ Richard M. DeVos, Jr.
-----------------------------------------------
Name: Richard M. DeVos, Jr.
Title: President
By: /s/ Daniel L. Mosley
-----------------------------------------------
Name: Daniel L. Mosley
Title: Trustee
SUZANNE DEVOS-VANDERWEIDE 1995
CHRISTMAS TRUST
By: /s/ Jerry Tubergen
-----------------------------------------------
Name: Jerry Tubergen
Title: Trustee
By: /s/ Richard M. DeVos, Jr.
-----------------------------------------------
Name: Richard M. DeVos, Jr.
Title: President
<PAGE> 13
DOUGLAS L. DEVOS 1995 CHRISTMAS TRUST
By: /s/ Jerry Tubergen
-----------------------------------------------
Name: Jerry Tubergen
Title: Trustee
By: /s/ Richard M. DeVos, Jr.
-----------------------------------------------
Name: Richard M. DeVos, Jr.
Title: President
<PAGE> 14
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF PRINCIPAL
SHAREHOLDER SHARES OWNED
I. VAN ANDEL FAMILY
<S> <C>
Jay Van Andel Trust 12,315,145
Subtrust Under Paragraph 3 of JVA Trust 11,092,330
Jay and Betty Van Andel Foundation 564,290
II. DEVOS FAMILY
Richard M. DeVos 1998 Trust 9,948,743
Richard & Helen DeVos Foundation 564,290
Helen J. DeVos Article I Trust 3,835,882
Richard M. DeVos, Jr. Article II Trust 200,528
Daniel G. DeVos Article II Trust 200,528
Suzanne DeVos-VanderWeide Article II Trust 200,528
Douglas L. DeVos Article II Trust 200,528
RDV Capital Management L.P. III 1,000,000
Richard M. DeVos, Jr. 1995 Christmas Trust 1,955,184
Daniel G. DeVos 1995 Christmas Trust 1,955,184
Suzanne DeVos-VanderWeide 1995 Christmas Trust 1,955,185
Douglas L. DeVos 1995 Christmas Trust 1,955,185
TOTAL 47,943,530
</TABLE>
<PAGE> 1
Exhibit (g)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders
Amway Asia Pacific Ltd.:
We consent to the use of our reports included herein and incorporated herein by
reference.
/s/KPMG LLP
KPMG LLP
Detroit, Michigan
November 16, 1999
<PAGE> 1
Exhibit (h)
NEW AAP LIMITED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that New AAP Limited, a Bermuda
corporation (the "Company"), hereby appoints Lawrence M. Call, Craig N. Meurlin,
Robert A. Yolles and Thomas C. Daniels and each of them, as attorneys-in-fact
for the Company with full power of substitution and resubstitution, for and in
the name, place and stead of the Company to sign and file with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1934 a
Rule 13E-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") and a
Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") in connection
with the Company's offer to purchase all the outstanding shares of the Common
Stock of Amway Asia Pacific Ltd., a Bermuda corporation ("AAP"), par value $0.01
per share (the "Common Stock"), of AAP and to sign and file any and all
amendments, supplements and exhibits (including the Offer to Purchase) to the
Schedule 13E-3 and Schedule 14D-1, and any and all applications and other
documents to be filed with the Commission, and any and all applicable
applications and other documents to be filed with the New York Stock Exchange or
any other U.S. or non-U.S. national securities exchange in connection with the
Offer, the Offer to Purchase, the Schedule 13E-3, the Schedule 14D-1 or the
Common Stock, any and all documents required to be filed with any U.S. or
non-U.S. governmental or regulatory body in connection with the Offer, the Offer
to Purchase, the Schedule 13E-3, the Schedule 14D-1 or Common Stock, an all
other agreements and documents in connection the Offer, and each of them, full
power and authority to do and perform each and every act and thing necessary or
desirable to be done in order to effectuate the same as fully and to all intents
and purposes as the Company might or could do itself, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or any of
the substitutes, may do or cause to be done by virtue hereof.
EXECUTED as of the 17th day of November 1999.
NEW AAP LIMITED
By: /s/ Craig N. Meurlin
-----------------------------------
Craig N. Meurlin
Vice President, Assistant Secretary
