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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
NIHON AMWAY KABUSHIKI KAISHA
(Exact name of Issuer as Specified in Charter)
AMWAY JAPAN LIMITED
(Translation of Issuer's Name in English)
N.A.J. CO., LTD.
(Bidder)
COMMON STOCK, NO PAR VALUE
AMERICAN DEPOSITARY SHARES, EACH REPRESENTING ONE-HALF OF ONE SHARE
OF COMMON STOCK, EVIDENCED BY AMERICAN DEPOSITARY RECEIPTS
(Title of class of securities)
03 234 J 10 0
(CUSIP Number of ADSs)
---------------------------
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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$486,477,721.00 $97,294.00
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* Estimated for purposes of calculating the amount of the filing fee only. The
amount assumes the purchase of 34,552,978 shares of common stock, no par
value, at Y1490 in cash per share. The exchange rate used to convert the yen
purchase price to dollars for purposes of calculating this filing fee was
Y105.83 = U.S.$1.00, the exchange rate prevailing on November 16, 1999.
[ ] 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 8 Pages
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SCHEDULE 14D-1
CUSIP No. 03 234 J 10 0 Page 1 of 8
<TABLE>
<S> <C> <C>
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1 NAME OF REPORTING PERSONS
N.A.J. CO., LTD.
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
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Japan
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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
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0
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10 TYPE OF REPORTING PERSON
CO
</TABLE>
2
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ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Amway Japan Limited, and the address
of its principal executive office is 7-1 Udagawa-cho, Shibuya-ku, Tokyo
150-0042, Japan.
(b) This Tender Offer Statement on Schedule 14D-1 relates to a tender offer
by N.A.J. Co., Ltd., a joint stock corporation ("kabushiki kaisha") organized
under the laws of Japan ("Purchaser"), to purchase all the outstanding shares of
the Common Stock, no par value (the "Common Stock"), and American Depositary
Shares (the "ADSs" and, together with the Common Stock, the "Shares"), each
representing one-half of one share of Common Stock, that are beneficially owned
by shareholders (the "Shareholders") of Amway Japan Limited, a joint stock
corporation ("kabushiki kaisha") organized under the laws of Japan ("AJL"). The
Offer is being made pursuant to the Tender Offer Agreement (the "Agreement"),
dated November 15, 1999, among Purchaser, AJL and ALAP Hold Co., Ltd ., a
limited partnership organized under the laws of Nevada ("ALAP"). ALAP is the
parent of Purchaser and an entity controlled and beneficially owned by the
principal shareholders of AJL, along with certain corporations, trusts,
foundations and other entities established for the benefit of the principal
shareholders and their respective families. The purchase price for each share of
Common Stock will be Y1,490 in cash (the "Common Stock Purchase Price"). The
purchase price for each ADS purchased in the Offer will be Y745 in cash (the
"ADS Purchase Price" and, together with the Common Stock Purchase Price, the
"Purchase Price"). The ADS Purchase Price will be equal to one-half of the
Common Stock Purchase Price (because each ADS represents one-half of one Share)
and will be payable in and converted into U.S. dollars using the noon buying
rate in New York City for cable transfers of yen announced for customs purposes
by the Federal Reserve Bank of New York on the date of settlement of the Offer
in Japan (the "Common Stock Settlement Date"), which is presently anticipated to
be not later than six trading days after the expiration of the Offer in Japan
(or, if necessary for administrative convenience, on the business day next
preceding the Common Stock Settlement Date). The ADSs are evidenced by American
Depositary Receipts ("ADRs"). There will be deducted from the Purchase Price
paid to each holder any U.S. backup withholding and Japanese income taxes which
may be required to be withheld. The Offer is for all Shares of AJL or any lesser
number of Shares tendered and not withdrawn. With respect to the Common Stock,
the Offer will expire in Japan, unless extended, on December 17, 1999, and, with
respect to the ADSs, it will expire outside of Japan, 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 August 31, 1999, there were approximately
144,025,800 shares of Common Stock held by approximately 18,372 record holders
of Common Stock, including 663 record holders of ADSs issued and outstanding.
The information set forth in "Introduction" in the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in "The Offer -- Market Information; Exchange
Rates; 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 DIRECTORS; AJL EXECUTIVE OFFICERS AND
DIRECTORS" thereto is incorporated herein by reference.
(e) - (f) During the past five years, none of Purchaser's directors (i)
have been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors); or (ii) were a 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, Related Transactions;
3
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Agreement" and "The Offer -- Background of the Offer; Contacts with AJL" 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.
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, Related Transactions; Agreement," "Special
Factors -- Purpose of the Offer; Related Transactions," "Special
Factors -- Certain Effects of the Offer and Agreement," "The Offer -- Market
Information; Exchange Rates; Dividend and Dividend Policy" 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, Related Transactions; 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,
Related Transactions; Agreement," "The Offer -- Background of the Offer;
Contacts with AJL" 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.
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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 Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(4) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(5) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(6) Form of Letter to AJL's Holders of Common Stock and ADSs.
(7) Form of Press Release "Amway Japan's Principal Shareholders
to Commence Tender Offer For Outstanding Public Shares"
issued by AJL and the Principal Shareholders on November 15,
1999.
(8) Form of English translation of Additional Information to the
Press Release on November 15, 1999.
(9) Form of English translation of Notice of Approval of Tender
Offer, dated November 15, 1999.
(10) Form of English translation of Announcement of Approval of
Tender Offer, dated November 15, 1999.
(11) Form of English translation of Announcement of Merger, dated
November 15, 1999.
(12) Form of Statement for AJL Distributors, dated November 15,
1999.
(13) Form of Statement for AJL Employees on Electronic Bulletin
Board, dated November 15, 1999.
(14) Form of Communications to Amway Distributors, dated November
15, 1999.
(15) Form of Tender Offer Announcement to Amway Management and
Employees, dated November 15, 1999.
(16) Form of Memorandum to Diamonds and Direct Distributors,
dated November 16, 1999.
(17) Form of Press Release "Amway Japan's Principal Shareholders
Commence Tender Offer For Outstanding Public Shares" issued
by AJL and the Public Shareholders on November 18, 1999.
(18) Form of English translation of Report of Announcement of
Opinion, dated November 18, 1999.
(19) Form of English translation of the Public Notice, dated
November 18, 1999.
(20) Form of Summary Advertisement published on November 18,
1999.
(21) Form of English translations of Japanese Tender Offer
Explanatory Statement and Tender Offer Application Form,
dated November 18, 1999.
(22) Form of Trustee Direction Form from the 401(k) Trustee.
(23) Form of Letter to Participants of the 401(k) Plan.
(b) (1) Form of Senior Bank Financing Commitment Letter among
Purchaser, ALAP, Apple Hold Co., L.P., New AAP Limited,
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) Form of Tender Offer Agreement, dated November 15, 1999, by
and among AJL, Purchaser and ALAP.
(2) Form of Shareholder and Voting Agreement, by and among ALAP,
Purchaser and Certain Shareholders of AJL, dated as of
November 15, 1999.
(3) Form of English translation of Memorandum Regarding Merger
between Purchaser and AJL, dated November 15, 1999.
(d) Not Applicable.
(e) Not Applicable.
(f) Not Applicable.
(g) Consent of Deloitte Touche Tohmatsu.
(h) Power of Attorney for Purchaser.
</TABLE>
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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 N.A.J. CO., LTD
By: /s/ Lawrence M. Call
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Name: Lawrence M. Call
Title: Attorney-in-Fact
6
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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(a) (1) Form of Offer to Purchase, dated November 18, 1999.
(2) Form of Letter of Transmittal.
(3) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(4) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(5) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(6) Form of Letter to AJL's Holders of Common Stock and ADSs.
(7) Form of Press Release "Amway Japan's Principal Shareholders
to Commence Tender Offer For Outstanding Public Shares"
issued by AJL and the Principal Shareholders on November 15,
1999.
(8) Form of English translation of Additional Information to the
Press Release on November 15, 1999.
(9) Form of English translation of Notice of Approval of Tender
Offer, dated November 15, 1999.
(10) Form of English translation of Announcement of Approval of
Tender Offer, dated November 15, 1999.
(11) Form of English translation of Announcement of Merger, dated
November 15, 1999.
(12) Form of Statement for AJL Distributors, dated November 15,
1999.
(13) Form of Statement for AJL Employees on Electronic Bulletin
Board, dated November 15, 1999.
(14) Form of Communications to Amway Distributors, dated November
15, 1999.
(15) Form of Tender Offer Announcement to Amway Management and
Employees, dated November 15, 1999.
(16) Form of Memorandum to Diamonds and Direct Distributors,
dated November 16, 1999.
(17) Form of Press Release "Amway Japan's Principal Shareholders
Commence Tender Offer For Outstanding Public Shares" issued
by AJL and the Public Shareholders on November 18, 1999.
(18) Form of English translation of Report of Announcement of
Opinion, dated November 18, 1999.
(19) Form of English translation of the Public Notice, dated
November 18, 1999.
(20) Form of Summary Advertisement published on November 18,
1999.
(21) Form of English translations of Japanese Tender Offer
Explanatory Statement and Tender Offer Application Form,
dated November 18, 1999.
(22) Form of Trustee Direction Form from the 401(k) Trustee.
(23) Form of Letter to Participants of the 401(k) Plan.
(b) (1) Form of Senior Bank Financing Commitment Letter among
Purchaser, ALAP, Apple Hold Co., L.P., New AAP Limited,
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.
</TABLE>
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EXHIBIT NO. DESCRIPTION
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(c) (1) Form of Tender Offer Agreement, dated November 15, 1999, by
and among AJL, Purchaser and ALAP.
(2) Form of Shareholder and Voting Agreement, by and among ALAP,
Purchaser and Certain Shareholders of AJL, dated as of
November 15, 1999.
(3) Form of English translation of Memorandum Regarding Merger
between Purchaser and AJL, dated November 15, 1999.
(d) Not Applicable.
(e) Not Applicable.
(f) Not Applicable.
(g) Consent of Deloitte Touche Tohmatsu.
(h) Power of Attorney for Purchaser.
</TABLE>
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Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH
BY
N.A.J. CO., LTD.
FOR
ALL OUTSTANDING SHARES OF COMMON STOCK
AND AMERICAN DEPOSITARY SHARES
OF AMWAY JAPAN LIMITED
AT (Yen)1,490 PER SHARE OF COMMON STOCK
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE OUTSIDE OF JAPAN AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED.
N.A.J. Co., Ltd., a joint stock corporation ("kabushiki kaisha") organized
under the laws of Japan ("Purchaser"), hereby offers to purchase all the
outstanding shares of the Common Stock, no par value (the "Common Stock"), and
American Depositary Shares, each representing one-half of one share of Common
Stock (the "ADSs" and, together with the Common Stock, the "Shares"), that are
beneficially owned by shareholders (the "Shareholders") of Amway Japan Limited,
a joint stock corporation ("kabushiki kaisha") organized under the laws of Japan
("AJL"), 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 Agreement (the
"Agreement"), dated November 15, 1999, among Purchaser, AJL and ALAP Hold Co.,
Ltd., a limited partnership organized under the laws of Nevada ("ALAP"). ALAP is
the parent of Purchaser and an entity controlled and beneficially owned by the
principal shareholders of AJL, 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 Agreement provides for Purchaser first to conduct
the Offer and, after consummation of the Offer, Purchaser and AJL have agreed to
take all steps required by law or as may be necessary or advisable to effect a
merger (the "Merger") of AJL with and into Purchaser, with Purchaser as the
surviving corporation. After the Merger, Purchaser will operate under the name
Amway Japan Limited. The purchase price for each share of Common Stock purchased
in the Offer will be (Yen)1,490 in cash (the "Common Stock Purchase Price"). The
purchase price for each ADS purchased in the Offer will be (Yen)745 in cash (the
"ADS Purchase Price" and, together with the Common Stock Purchase Price, the
"Purchase Price"), which is equal to one-half of the Common Stock Purchase Price
(because each ADS represents one-half of one Share). The ADS Purchase Price will
be payable in and converted into U.S. dollars using the noon buying rate in New
York City for cable transfers of yen announced for customs purposes by the
Federal Reserve Bank of New York (the "Noon Buying Rate") on the date of
settlement of the Offer in Japan (the "Common Stock Settlement Date"), which is
presently anticipated to be not later than six trading days after the expiration
of the Offer in Japan (or, if necessary for administrative convenience, on the
business day next preceding the Common Stock Settlement Date). The ADSs are
evidenced by American Depositary Receipts ("ADRs"). There will be deducted from
the Purchase Price paid to each holder any U.S. backup withholding and Japanese
income taxes which may be required to be withheld. The Offer is for all Shares
of AJL or any lesser number of Shares tendered and not withdrawn. With respect
to the Common Stock, the Offer will expire in Japan, unless extended, on
December 17, 1999, and, with respect to the ADSs, it will expire outside of
Japan, unless extended, at 12:00 midnight, New York City time, on December 17,
1999.
Purchaser has been informed by the Principal Shareholders that they will not
tender their Shares in response to the Offer (other than 550,000 Shares owned by
one of the charitable foundations established by certain of the Principal
Shareholders ("Foundation Tendered Shares")). The Principal Shareholders will
contribute substantially all of their Shares, including the Shares not tendered
by the charitable foundation in response to the Offer ("Offer Non-Tendered
Shares"), to ALAP or Purchaser contemporaneously with the consummation of the
Offer. In addition, no later than immediately prior to the effectiveness of the
Merger, the Principal Shareholders will transfer to ALAP the Shares not
previously transferred ("Merger Non-Tendered Shares" and, together with Offer
Non-Tendered Shares, the "Non-Tendered Shares").
THE BOARD OF DIRECTORS OF AJL (WITH MESSRS. DEVOS, VAN ANDEL AND SUMIHIRO
NOT PARTICIPATING) (THE "DISINTERESTED DIRECTORS") HAS (1) DETERMINED THAT THE
OFFER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES OTHER THAN
FOUNDATION TENDERED SHARES AND NON-TENDERED SHARES (THE "PUBLIC SHAREHOLDERS"),
(2) APPROVED THE 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.
For holders of ADSs, 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. With respect to the Common Stock,
Purchaser has appointed Nikko Salomon Smith Barney Limited (the "Agent") to act
as its sole tender offer agent in Japan. The Agent, in turn, has appointed The
Nikko Securities Co., Ltd. as its sub-agent. In addition, Morgan Stanley Dean
Witter Japan Limited will act as sole intermediary securities firm in Japan. For
a holder of Common Stock, questions and requests for assistance or for copies of
the Japanese Tender Offer Explanatory Statement and tender offer application
form or English translations thereof should be directed to such holder's
standing agent in Japan.
The Dealer Managers for the Offer outside of Japan are:
MORGAN STANLEY DEAN WITTER J.P. MORGAN & CO.
November 18, 1999
<PAGE> 2
The principal trading market for the Common Stock is the Japanese
over-the-counter market (the "Japanese OTC"). On November 15, 1999, the last
full day of trading prior to the date of public announcement of the Offer, the
closing sales price of the Common Stock as reported by the Japan Securities
Dealers Association (the "JSDA") was (Yen)990 and on November 17, 1999, the last
full day of trading prior to the date of this Offer to Purchase (the
"Commencement Date"), the closing sales price was (Yen)1,460. The Common Stock
Purchase Price is (Yen)1,490 per share. The ADSs are listed and traded on the
New York Stock Exchange (the "NYSE") under the symbol "AJL." On November 12,
1999, the last full day of trading prior to the date of the public announcement
of the Offer, the closing sales price of the ADSs on the NYSE was $4.625 and on
November 16, 1999, the last full day of trading prior to the Commencement Date
for which quotations could be obtained, the closing sales price was $6.81. The
ADS Purchase Price is (Yen)745 per ADS which is payable in and converted into
U.S. dollars using the Noon Buying Rate on the Common Stock Settlement Date.
HOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMMON STOCK AND
THE ADSS.
IMPORTANT
NOTE TO HOLDERS OF ADSS
Any holder of ADSs desiring to accept the Offer should either (1) if the
ADRs evidencing such ADSs are held in a name other than the holder's name,
request the holder's broker, dealer, commercial bank, trust company or nominee
to effect the transaction for the holder or (2) if the ADRs evidencing such ADSs
are held in the holder's name, complete and sign the Letter of Transmittal (or a
facsimile thereof) and mail or deliver it and any other required documents to
First Chicago Trust Company of New York (the "Depositary") in accordance with
the instructions set forth in the Letter of Transmittal and as described herein
under "The Offer -- Procedure for Tendering Shares." In addition, any such
holder of ADSs must deliver the ADRs evidencing the ADSs being tendered to the
Depositary along with the Letter of Transmittal or tender such ADSs pursuant to
the procedure for book-entry transfer described herein under "The
Offer -- Procedure for Tendering Shares."
NOTE TO HOLDERS OF COMMON STOCK
A holder of Common Stock resident outside of Japan desiring to accept the
Offer should request from its standing agent in Japan a copy of the Japanese
Tender Offer Explanatory Statement, the Japanese counterpart of this Offer to
Purchase (the "Explanatory Statement"), and a tender offer application form, the
Japanese counterpart of the Letter of Transmittal. As described in the
Explanatory Statement, the standing agent in Japan will submit such tender offer
application forms and tender Common Stock into the Offer on behalf of such
holders. Holders of Common Stock may not tender Common Stock into the Offer by
executing and delivering the Letter of Transmittal. Common Stock may only be
tendered into the Offer in accordance with the terms and conditions of the
Explanatory Statement. See "The Offer -- Procedure for Tendering Shares."
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OR RECOMMENDATION 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.
<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
Disinterested Directors; Reasons for the
Recommendation; Opinion of Financial Advisor to the
Disinterested Directors................................ 4
2. The Offer; Related Transactions; Agreement........... 15
3. Purpose of the Offer; Related Transactions........... 17
4. Position of Purchaser Regarding Fairness of the
Offer.................................................. 18
5. Certain Effects of the Offer and Agreement........... 18
6. Interests of Certain Persons......................... 18
7. Appraisal Rights..................................... 19
THE OFFER................................................... 19
1. Number of Shares; Expiration and Extension of
Offer.................................................. 19
2. Procedure for Tendering Shares....................... 20
3. Withdrawal Rights.................................... 22
4. Acceptance for Payment of Shares and Payment of
Purchase Price......................................... 23
5. Market Information; Exchange Rates; Dividends and
Dividend Policy........................................ 24
6. Certain Effects of the Offer......................... 27
7. Source and Amount of Funds........................... 30
8. Certain Information Regarding AJL.................... 31
9. Certain Information Regarding Purchaser.............. 34
10. Background of the Offer; Contacts with AJL........... 34
11. Interests of Certain Persons......................... 34
12. Transactions and Agreements Concerning the Shares.... 35
13. Certain Legal Matters; Regulatory Approvals.......... 35
14. U.S. Federal Income Tax Consequences................. 35
15. Japanese Tax Consequences............................ 37
16. Extension of Offer; Termination; Amendments.......... 37
17. Fees and Expenses.................................... 38
18. Miscellaneous........................................ 40
SCHEDULE I PURCHASER DIRECTORS; AJL EXECUTIVE OFFICERS
AND DIRECTORS............................... S-1
SCHEDULE II FAIRNESS OPINION OF THE FINANCIAL ADVISOR
SCHEDULE III AUDITED FINANCIAL STATEMENTS OF AMWAY JAPAN
LIMITED 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 AND AMERICAN DEPOSITARY SHARES OF AMWAY JAPAN
LIMITED:
INTRODUCTION
N.A.J. Co., Ltd, a joint stock corporation ("kabushiki kaisha") organized
under the laws of Japan ("Purchaser"), hereby offers to purchase all the
outstanding shares of the Common Stock, no par value (the "Common Stock"), and
American Depositary Shares, each representing one-half of one share of Common
Stock (the "ADSs" and, together with the Common Stock, the "Shares"), that are
beneficially owned by shareholders (the "Shareholders") of Amway Japan Limited,
a joint stock corporation ("kabushiki kaisha") organized under the laws of Japan
("AJL"), 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 (Yen)1,490 in cash
(the "Common Stock Purchase Price"). The purchase price for each ADS purchased
in the Offer will be (Yen)745 in cash (the "ADS Purchase Price" and, together
with the Common Stock Purchase Price, the "Purchase Price"), which is equal to
one-half of the Common Stock Purchase Price (because each ADS represents
one-half of one Share). The ADS Purchase Price will be payable in and converted
into U.S. dollars using the noon buying rate in New York City for cable
transfers of yen announced for customs purposes by the Federal Reserve Bank of
New York (the "Noon Buying Rate") on the date of settlement of the Offer in
Japan (the "Common Stock Settlement Date"), which is presently anticipated to be
not later than six trading days after the expiration of the Offer in Japan (or,
if necessary for administrative convenience, on the business day next preceding
the Common Stock Settlement Date). The ADSs are evidenced by American Depositary
Receipts ("ADRs"). There will be deducted from the Purchase Price paid to each
holder any U.S. backup withholding and Japanese income taxes which may be
required to be withheld. The Offer is for all Shares of AJL or any lesser number
of Shares tendered and not withdrawn. With respect to the Common Stock, the
Offer will expire in Japan, unless extended, on December 17, 1999, and, with
respect to the ADSs, it will expire outside of Japan, 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 as well as to all
holders of ADSs. 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 AJL, 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 110,263,022
shares of Common Stock constituting approximately 76% 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 (other than 550,000 Shares owned by one of the charitable foundations
established by certain of the Principal Shareholders ("Foundation Tendered
Shares")). The Principal Shareholders will contribute substantially all of their
Shares, including any Shares that are not tendered by the charitable foundation
in response to the Offer ("Offer Non-Tendered Shares"), to ALAP (as defined
below) or the Purchaser contemporaneously with the consummation of the Offer. In
addition, no later than immediately prior to the effectiveness of the Merger (as
defined below), the Principal Shareholders will transfer to ALAP the Shares not
previously transferred ("Merger Non-Tendered Shares" and, together with Offer
Non-Tendered Shares, the "Non-Tendered Shares").
The Offer is being made pursuant to the Tender Offer Agreement (the
"Agreement"), dated November 15, 1999, among Purchaser, AJL and ALAP Hold Co.,
Ltd., a limited partnership organized under the laws of Nevada ("ALAP"). ALAP is
the parent of Purchaser and an entity controlled and beneficially owned by the
Principal Shareholders. The purpose of the Offer is to facilitate Purchaser's
acquisition of Shares for cash, and thereby enable the Principal Shareholders to
obtain indirect control of 100% of the capital stock of AJL. Pursuant to the
Agreement, the Purchaser will first make the Offer and, after consummation of
the Offer, Purchaser and AJL have agreed to take all steps required by law or as
may be necessary or advisable to
<PAGE> 5
effect a merger (the "Merger") of AJL with and into Purchaser, which would be
the surviving corporation. After the Merger, Purchaser will operate under the
name Amway Japan Limited. Simultaneously with the execution of the Agreement,
the Principal Shareholders, ALAP and Purchaser entered into a Shareholder and
Voting Agreement (the "Shareholder Agreement"). Pursuant to the Shareholder
Agreement, the Principal Shareholders have agreed, and ALAP 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 Non-Tendered Shares
transferred to it by the Principal Shareholders ("Purchaser Non-Tendered
Shares") or Shares purchased by it in the Offer (the "Acquired Shares" and,
together with the Purchaser Non-Tendered Shares, the "Purchased Shares"), in
either case prior to consummation of the Merger. The Principal Shareholders also
have agreed to cause ALAP and Purchaser, as the case may be, to vote, and the
Principal Shareholders, ALAP and Purchaser have agreed to vote the Merger
Non-Tendered Shares, the Offer Non-Tendered Shares and the Purchased Shares,
respectively, in favor of the Merger. As a result of the Merger, those
Shareholders who do not tender their Shares in response to the Offer will
receive shares of Purchaser common stock.
Upon consummation of the Offer, it is anticipated that the ADSs will be
delisted from the NYSE. Also, it is anticipated that following consummation of
the Offer, the Deposit Agreement, dated as of February 18, 1993, as amended and
restated June 14, 1994, by and among AJL, the depositary and the holders from
time to time of ADRs thereunder (the "Deposit Agreement") related to the ADSs
will be terminated. Upon consummation of the Merger, it is anticipated that the
Common Stock will be delisted from the Japanese OTC. AS A RESULT OF CONSUMMATION
OF THE OFFER AND THE MERGER, IT IS LIKELY THAT THERE WILL BE NO PUBLIC MARKET
FOR THE SHARES. IF THERE IS NO MARKET, HOLDERS WHO DO NOT TENDER THEIR SHARES
PURSUANT TO THE OFFER WILL HAVE LIMITED OPPORTUNITIES TO SELL THEIR SHARES IN
THE FUTURE. See "Special Factors -- The Offer; Related Transactions; Agreement".
Over the last several years, a variety of alternatives have been considered
by the Principal Shareholders and AJL management to increase shareholder value,
while at the same time enhance operations, results and business prospects of
AJL. After consideration of various alternatives and based on the difficult
business environment in Japan, negative publicity regarding AJL, increased
competition among direct selling companies in Japan and the limited public float
of Shares, the Principal Shareholders and AJL concluded that it was unlikely
that any meaningful improvement in share value or liquidity of AJL would occur
in the foreseeable future. AJL and the Principal Shareholders concluded that, as
a private company, AJL 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
AJL to focus on the long-term interests of AJL without concern for the impact
that any action might have on operating results or share price of AJL. The
Principal Shareholders view the Offer as an opportunity to create value for the
Shareholders through a premium purchase price and to provide flexibility for a
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 AJL (WITH MESSRS. DEVOS, VAN ANDEL AND SUMIHIRO
NOT PARTICIPATING) (THE "DISINTERESTED DIRECTORS") HAS (1) DETERMINED THAT THE
OFFER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES OTHER THAN
FOUNDATION TENDERED SHARES AND NON-TENDERED SHARES (THE "PUBLIC SHAREHOLDERS"),
(2) APPROVED THE AGREEMENT AND (3) RESOLVED TO RECOMMEND THAT THE PUBLIC
SHAREHOLDERS ACCEPT THE OFFER AND TENDER
2
<PAGE> 6
THEIR SHARES IN RESPONSE TO THE OFFER. SEE "SPECIAL FACTORS -- BACKGROUND OF THE
OFFER; RECOMMENDATION OF THE DISINTERESTED DIRECTORS; REASONS FOR THE
RECOMMENDATION; OPINION OF FINANCIAL ADVISOR TO THE DISINTERESTED DIRECTORS" FOR
FURTHER INFORMATION REGARDING THE MATTERS CONSIDERED BY THE DISINTERESTED
DIRECTORS IN REVIEWING THE TERMS OF AND FAIRNESS OF THE OFFER.
AJL 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 Disinterested Directors, at the request of the
Disinterested Directors, its written opinion that, as of the date of the
Agreement, the applicable Purchase Price in cash to be received by the Public
Shareholders who tender their Shares in the Offer is fair, from a financial
point of view, to such holders. See "Special Factors -- Background of the Offer;
Recommendation of the Disinterested Directors; Reasons for the Recommendation;
Opinion of Financial Advisor to the Disinterested Directors" for further
information concerning the opinion of the Financial Advisor.
AJL 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.
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. 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 Agent, the Information Agent
and the Depositary incurred in connection with the Offer. See "The Offer -- Fees
and Expenses." However, any U.S. backup withholding and Japanese income 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," "The Offer -- U.S. Federal
Income Tax Consequences" and "The Offer -- Japanese Tax Consequences."
Participants in the Dividend Reinvestment Program and Shareholder Services
Program (the "Dividend Reinvestment Plan") may tender part or all of the ADSs
credited to their accounts in the Dividend Reinvestment Plan by following
Instruction 12 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 ADSs
credited to their accounts in the 401(k) Plan by submitting the letter of
transmittal and the election form included in the materials sent to participants
by the trustee for 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
ADSs credited to a 401(k) Plan account. See "The Offer -- Procedure for
Tendering Shares -- 401(k) Plan."
AJL has advised Purchaser that, as of August 31, 1999, there were
approximately 144,025,800 shares of Common Stock (including 87,429.21 shares of
Common Stock held in the 401(k) Plan) issued and outstanding. According to AJL's
records, there were approximately 18,372 holders of record of the issued and
outstanding shares of Common Stock, including 663 holders of record of ADSs.
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 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." The Japanese income tax
consequences of a sale by a holder of Shares pursuant to the Offer depend upon
the status of the holder as either an individual holder or a corporate holder as
well as the residency of such holder. Japanese income taxes, if required, will
be withheld from the Purchase Price of any such sale of Shares and the
requirement to withhold will depend on whether the holder
3
<PAGE> 7
has a permanent establishment in Japan. 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 Japanese OTC. On
November 15, 1999, the last full day of trading prior to the date of public
announcement, the closing sales price of the Common Stock as reported by the
JSDA was (Yen)990 and on November 17, 1999, the last full day of trading prior
to the Commencement Date, the closing sales price was (Yen)1,460. The Common
Stock Purchase Price is (Yen)1,490 per share. The ADSs are listed and traded on
the NYSE under the symbol "AJL." On November 12, 1999, the last full day of
trading prior to the date of public announcement, the closing sales price of the
ADSs on the NYSE was $4.625 and November 16, 1999, the last full day of trading
prior to the Commencement Date for which quotations could be obtained, the
closing sales price was $6.81. The ADS Purchase Price is (Yen)745, which is
payable in and converted into U.S. dollars using the Noon Buying Rate on the
Common Stock Settlement Date. See "The Offer -- Market Information; Exchange
Rates; Dividends and Dividend Policy" for historical prices of the Common Stock
and ADSs. HOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMMON
STOCK AND THE ADSs.
In this Offer to Purchase, amounts are expressed in Japanese yen ("yen" or
"Y") or in United States dollars ("dollars," "U.S. dollars," "U.S.$" or "$").
Except as otherwise indicated, for the convenience of the reader, translations
of yen into dollars have been made at the rate of 121 yen to the dollar, the
approximate Noon Buying Rate on May 31, 1999, the date of the most recent
balance sheet information contained herein. This rate is not materially
different from the Noon Buying Rate on such date of (Yen)120.88 = U.S.$1.00. On
November 16, 1999, the last full day of trading prior to the Commencement Date
for which a quotations could be obtained, the Noon Buying Rate was (Yen)105.83 =
U.S.$1.00. No representation is made that any yen amounts have been, could have
been or could be converted into dollars at those or any other rate. The ADS
Purchase Price, which is expressed in yen, will be payable in U.S. dollars based
on the Noon Buying Rate on the Common Stock Settlement Date (or, if necessary
for administrative convenience, on the immediately preceding business day). See
"The Offer -- Acceptance for Payment of Shares and Payment of Purchase Price."
For purposes of this Offer to Purchase, a "business day" means any day other
than a Saturday, Sunday or national holiday in either Japan or the United States
and consists of a time period from 12:01 a.m. through 12:00 midnight, Tokyo time
or New York City time, as the case may be.
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.
SPECIAL FACTORS
1. BACKGROUND OF THE OFFER; RECOMMENDATION OF THE DISINTERESTED DIRECTORS;
REASONS FOR THE RECOMMENDATION; OPINION OF FINANCIAL ADVISOR TO THE
DISINTERESTED DIRECTORS.
Background of the Offer. Over the last several years, a variety of
alternatives have been considered by the Principal Shareholders and AJL
management to increase shareholder value, while at the same time enhance the
operations, results and business prospects of AJL. Of particular focus was the
relatively illiquid and, at times, volatile market for AJL's Common Stock. For
example, shortly after the global secondary offering in July 1994, AJL and
representatives of a major Japanese securities firm took steps to effect the
listing of the shares of Common Stock on the Tokyo Stock Exchange (the "TSE").
AJL pursued this possibility because of its desire to provide value to its
shareholders by having the shares traded on a more efficient, active and
broad-based market. However, due primarily to the TSE rules which restrict the
listing of companies with close business relationships with affiliated private
companies, AJL determined it would not be able to obtain the necessary approvals
for a TSE listing. For the next several years, AJL engaged the services of
additional consultants to consider alternatives to resolve the concerns with
respect to the listing of the Common Stock on the TSE. These additional
consultants included the retention of The Nikko Securities Co., Ltd. in June
1998 based on a belief that it might be able to resolve the remaining issues. In
the second
4
<PAGE> 8
calendar quarter of 1998, AJL, however, determined that it would be unable to
list the Common Stock on the TSE.
During the period in which AJL was pursuing the TSE listing, various other
alternatives designed to improve AJL's share value, provide increased market
liquidity and improve operating results were also being considered. These
alternatives included a possible secondary offering in an effort to improve
liquidity and expand ownership of shares of Common Stock by investors. Also
considered was a realignment of AJL with other Amway affiliates either by means
of the combination of AJL and such other affiliates or the acquisition by AJL of
other Amway affiliates in the region. In particular, beginning in April 1997,
AJL, representatives of Amway and financial and legal advisors reviewed the
possibility of forming a holding company which would own both Amway Asia Pacific
Ltd. ("AAP"), a publicly held affiliate of Amway, and AJL. 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.
During the late 1990s, the difficult economic conditions in Japan
exacerbated the concerns regarding share value, market volatility and lack of
liquidity for shareholders. In March of 1998, representatives of AJL and Amway,
as well as legal, tax and financial advisors, met to discuss alternative
proposals to mitigate the issues relating to the previously considered
transactions while at the same time addressing share value, market volatility,
lack of liquidity and AJL's operating results. Following these discussions, an
alternative that was considered was whether shareholder value might be best
served by taking AJL private. As a private company, AJL 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 AJL to
focus on the long-term interests of AJL 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 AJL 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 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 AJL 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.
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 restructuring and 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 assessing 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 LLC ("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.
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, with senior executives of AJL and its counsel to
conduct due diligence, to review a broad range of issues involved in a
5
<PAGE> 9
going private transaction, including legal, tax, accounting, regulatory and
financing, and to discuss process issues. AJL's five-year financial projections
were shared with the financial advisors at this time.
On September 14, 1999, a representative of Amway met with Richard S.
Johnson, the president and representative director of AJL, and Gary Sumihiro,
the general counsel, corporate secretary and a director of AJL, to discuss the
possibility of a going private transaction in which the Principal Shareholders
would conduct a tender offer for the shares of Common Stock. On September 15,
1999, the representative of Amway had a meeting with Messrs. Johnson and
Sumihiro and Yoshikazu Takaishi, a director of AJL, to discuss the proposed
transaction.
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 AJL. 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 28, 1999, Mr. Johnson informed the other members of the Board
of Directors of AJL that he had been asked by the Principal Shareholders to be
prepared to review strategic options for AJL and to report back to the Board of
Directors on such options. At that time, a working group of directors (the
"Working Group") was formed, consisting of Mr. Johnson, Mr. Sumihiro, Yoshizo
Matsushita, vice president and chief financial officer of AJL and Mr. Takaishi,
who is one of two outside directors of AJL, to evaluate and negotiate on behalf
of the Board of Directors potential strategic options for AJL.
On September 29, 1999, a representative of Amway, on behalf of the
Principal Shareholders, and Mr. Johnson had a telephone conversation regarding
the decision of the Principal Shareholders to propose a transaction and
discussed with Mr. Johnson the retention of independent legal and financial
advisors to advise the Working Group and the Disinterested Directors. Following
this discussion, AJL and Purchaser executed a confidentiality agreement related
to the proposed going private transaction.
During the week of October 4, 1999, Mr. Johnson contacted Goldman, Sachs
and Cleary, Gottlieb, Steen & Hamilton ("Cleary") to discuss retention of these
firms by AJL to assist the Working Group in analyzing the proposed transaction.
Goldman Sachs met with Mr. Johnson and senior executives of AJL in Tokyo during
the week of October 11 to conduct financial due diligence. Mr. Johnson and a
senior executive of Amway spoke on October 6, 1999 regarding possible
communication strategies, fees of the financial advisor and the due diligence
process.
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, a representative of the Principal Shareholders
delivered to a representative of Goldman Sachs and sent by telecopy to Mr.
Johnson a written proposal informing AJL that the Principal Shareholders were
interested in discussing a transaction to acquire all of the publicly traded
Shares of AJL. This written proposal indicated that the Principal Shareholders
would propose to purchase the Shares for Y1,350 per share (the "Proposal").
On October 18, 1999, the Working Group met with Cleary, Nishimura &
Partners ("Nishimura"), Japanese counsel to AJL, and Goldman Sachs to discuss
the duties of the Disinterested Directors under applicable law with respect to
the Proposal and appropriate procedures for responding to the Proposal.
On October 20, 1999, the Working Group held a meeting together with
representatives of Goldman Sachs, Cleary and Nishimura. At the meeting,
representatives of Goldman Sachs summarized the results of
6
<PAGE> 10
their due diligence review and presented certain preliminary analyses they had
performed with respect to AJL and the Shares.
On October 20, 1999 a representative of Goldman Sachs communicated to a
representative of Morgan Stanley that at that time and based on preliminary
analysis, the Working Group was continuing to review the Proposal and
accordingly they were not prepared to provide a response to the Proposal.
Goldman Sachs reported to Morgan Stanley that the Working Group wanted more time
to consider the Proposal in order to allow AJL to develop and review with the
Working Group projections of AJL's future financial results. Following these
discussions, Morgan Stanley consulted with the representatives of the Principal
Shareholders and their advisors and representatives of Amway discussed with AJL
management issues relating to the projections.
On October 22, 1999 and again on October 23, 1999, the Working Group met by
teleconference with representatives of Goldman Sachs, Cleary and Nishimura.
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 Working Group and
representatives of Amway.
On October 27, 1999, the Working Group met via telephone conference
together with representatives of Goldman Sachs and Cleary. Goldman Sachs
reviewed its preliminary valuation and financial analysis. After discussing
these analyses, the Working Group directed Goldman Sachs to inform Morgan
Stanley that the Working Group would be prepared to consider a revised offer
price of (Yen)1,550 per Share.
On October 27, 1999, representatives of Goldman Sachs contacted
representatives of Morgan Stanley to discuss financial terms of the Proposal. In
addition, on October 27, 1999, advisers to the Principal Shareholders, senior
executives of Amway, Jones Day and White & Case met in Washington, D.C. to
finalize 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 need for a merger of AJL and the Purchaser
following consummation of the Offer, as well as the desirability of a voting and
shareholder agreement among the Principal Shareholders.
On October 28, 1999, representatives of Goldman Sachs delivered to
representatives of Morgan Stanley a response to the Proposal, indicating the
Working Group was initially willing to consider the Proposal if the Principal
Shareholders would consider a purchase price of (Yen)1,550 per share. Morgan
Stanley consulted with representatives of the Principal Shareholders and their
advisers in order to prepare a response to the Disinterested Directors' reply.
Based on these discussions, on November 5, 1999, a representative of Morgan
Stanley delivered to a representative of Goldman Sachs the Principal
Shareholders' response to the Working Group indication of pricing, stating the
Principal Shareholders were willing to consider a transaction with a purchase
price of (Yen)1,400 per Share. Representatives of Morgan Stanley and Goldman
Sachs had several conversations over the weekend of November 6-7, 1999.
On November 5, 1999, Goldman Sachs reported to the Working Group that
Morgan Stanley indicated to them that Purchaser may be willing to make a
proposal pursuant to which it would offer to pay (Yen)1,400 per Share.
On November 6 and 7, 1999, the Working Group met with representatives of
Goldman Sachs, Cleary and Nishimura via teleconference to discuss further
Purchaser's latest indication of price. Following such meetings, on November 8,
1999, the Working Group concluded, and Goldman Sachs informed Morgan Stanley,
that the Working Group would be prepared to consider a formal proposal by
Purchaser at a price not less than (Yen)1,490 per Share.
While negotiations regarding the offer price continued, the representatives
of the Principal Shareholders and the Working Group and their respective legal
advisors negotiated and finalized the terms of the Agreement.
On November 11, 1999, Purchaser delivered to Mr. Johnson a written offer
meeting the (Yen)1,490 per share price proposed by the Working Group on
November 8, 1999.
7
<PAGE> 11
On November 12, 1999, the Board of Directors of AJL, without the
participation of Messrs. DeVos, Van Andel and, having been named a
representative director of Purchaser, Sumihiro, held a meeting in Tokyo with the
attendance of representatives of Goldman Sachs, Cleary and Nishimura. Mr.
Johnson described the background of the Offer to the other members of the Board
of Directors and reported on behalf of the Working Group with regard to the
Proposal and the negotiations with the Principal Shareholders. Following this
report, representatives of Cleary reviewed the terms of the Agreement submitted
with the revised Proposal, representatives of Nishimura reviewed with the
directors the legal standards applicable to their deliberations under Japanese
law and representatives of Goldman Sachs presented the financial and valuation
analyses which they had performed with respect to the revised Proposal and
expressed an oral opinion that as of the date of the board meeting the
applicable Purchase Price in cash to be received by the Public Shareholders who
tender their Shares in the Offer was fair from a financial point of view to such
holders. See "-- Opinion of the Financial Advisor to the Disinterested
Directors." Goldman Sachs delivered its written opinion dated November 15, 1999
confirming its oral opinion. Following discussion, the meeting of the
Disinterested Directors was adjourned and reconvened on November 15 (Tokyo
time).
At the reconvened meeting and after further discussion, the Disinterested
Directors with Mr. Tomiaki Nagase abstaining, resolved to approve the Agreement
and that the Offer is fair to and in the best interest of the Public
Shareholders and to recommend that the Public Shareholders accept the Offer and
tender their Shares in response to the Offer. See "-- Recommendation of the
Disinterested Directors" and "-- Reasons for the Recommendation." At the
meeting, Mr. Nagase, who abstained with respect to that portion of the action
taken at the meeting with respect to the Offer, the approval of the Agreement
and the determination to recommend that the Public Shareholders accept the Offer
and tender their Shares in response to the Offer, but voted in favor of those
actions relating to the Memorandum Regarding Merger, expressed the view that
although, generally, privatization of AJL may be beneficial, he believed the
Purchase Price too low because he believes AJL's prospects may potentially be
greater than those represented in AJL management's projections. Mr. Nagase also
expressed concern, that given AJL's efforts to defend its reputation in the
Japanese environment in recent years, the contemplated transaction may be viewed
negatively by minority shareholders, including distributor shareholders, as well
as the public. He stated his concern that this might result in negative
publicity about AJL and the Principal Shareholders and might have a negative
impact on AJL's future operating performance.
Recommendation of the Disinterested Directors. As described below, the
Disinterested Directors (with one director, Mr. Nagase abstaining) (a)
determined that the Offer is fair to, and in the best interests of, the Public
Shareholders; (b) approved the Agreement and (c) determined to recommend that
the Public Shareholders accept the Offer and tender their Shares in response to
the Offer.
Reasons for the Recommendation of the Disinterested Directors. The
Disinterested Directors considered the following material factors, among others,
in connection with making their determinations and recommendation:
- The opinion of Goldman Sachs, the independent financial advisor to the
Disinterested Directors, that, as of the date of such opinion, the
applicable Purchase Price in cash to be received by the Public
Shareholders who tender their Shares in the Offer is fair from a
financial point of view to such holders and the financial and valuation
analyses presented by Goldman Sachs to the Disinterested Directors in
connection with its opinion. THE PUBLIC SHAREHOLDERS ARE URGED TO READ
GOLDMAN SACHS' OPINION IN ITS ENTIRETY, WHICH OPINION 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 50.5% over the
per share closing price of the Shares on November 15, 1999, the last
trading day prior to the public announcement of the Offer and
approximately 26.8% over the average price of the Shares over the 52-week
period prior to November 15, 1999. The Disinterested Directors also noted
that the Purchase Price represents a multiple of 9.5x 1999 EBIT and 20.4x
1999 net income.
- The relatively low trading volume of the Shares and the fact that the
public float for the Shares held by the Public Shareholders consists of
only approximately 24% of the outstanding Shares. The Disinter-
8
<PAGE> 12
ested Directors 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 AJL and
Amway, factors effectively precluding a sale of control of AJL or another
transaction that might be more favorable to AJL and the Public
Shareholders. In view of these factors, the Disinterested Directors did
not, and Goldman Sachs were not authorized to and did not, solicit, nor
did AJL receive, third party indications of interest to acquire AJL 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 AJL.
- The commercial relationships between AJL and Amway and the value to the
Principal Shareholders of consummating the Offer and increasing
substantially their ownership in AJL, including greater flexibility to
invest in AJL's future, to realign AJL's business relationship with Amway
and to allow senior management of Amway and AJL 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 AJL and the recent and
historical economic and other developments in the direct distribution
industry and in Japan.
- The Disinterested Directors' recognition that consummation of the Offer
will preclude tendering Public Shareholders from participating in any
future growth of AJL. In the view of the Disinterested Directors,
however, this loss of opportunity was adequately reflected in the
Purchase Price.
- The current intentions expressed by the Principal Shareholders, which are
reflected in the Agreement and the related Memorandum Regarding Merger,
to have the Purchaser and AJL consummate the Merger, to seek a delisting
of the Shares and possibly to take other steps to acquire any Shares
which are not purchased in the Offer and otherwise to complete the
privatization of AJL. In this regard, the Disinterested Directors also
considered the likely effects of such measures on AJL and on the holders
of unpurchased Shares, including substantially increased leverage, the
potential for substantial reduction in liquidity and transferability of
the Shares, a change in AJL's dividend policy and other shareholder
rights and a corresponding effect on the value of such Shares. (See
"-- The Offer; Related Transactions; Agreement" "-- Certain Effects of
the Offer and Agreement," "-- Appraisal Rights," "The Offer -- Market
Information; Dividends and Dividend Policy" and "The Offer -- Source and
Amount of Funds."
- The negotiations between the Disinterested Directors and their
representatives and the Principal Shareholders and their representatives,
including that the negotiations resulted in (a) an increase from the
initial proposed price of Y1,350 per share at which Purchaser was
prepared to acquire the Shares, to the Y1,490 per share Purchase Price
and (b) the Disinterested Directors' 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 Agreement and the Offer generally,
including that (1) tendering Public Shareholders would be able to
relatively quickly liquidate their investment in AJL, (2) the Offer is
not subject to any significant conditions (and in particular that there
is no financing condition attached to the Offer) and (3) 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 Disinterested Directors also believe that the Offer is procedurally
fair because, among other things: (1) the Disinterested Directors consist of all
the directors of AJL who are not Principal Shareholders or a representative
director of Purchaser although certain of the Disinterested Directors are
employees of AJL; (2) the Disinterested Directors retained and received advice
from independent legal counsel; (3) the Disinterested Directors retained an
independent financial advisor, Goldman Sachs, and received financial advice and
9
<PAGE> 13
assistance from Goldman Sachs in evaluating and negotiating a potential
transaction with the Purchaser, as well as an opinion from Goldman Sachs and (4)
the Purchase Price and the terms and conditions of the Agreement were the result
of arm's-length negotiations between representatives of the Disinterested
Directors and the Principal Shareholders and their respective advisors.
The Disinterested Directors recognized that the Offer was not conditioned
upon acceptance by a majority of the Shareholders of AJL, excluding the
Principal Shareholders.
The foregoing discussion of the information and factors considered by the
Disinterested Directors is not meant to be exhaustive, but includes the material
factors considered by them in reaching their conclusions and recommendations. In
view of the variety of factors considered in their reaching a determination, the
Disinterested Directors did not find it practicable to, and did not, quantify or
otherwise assign relative weights to the specific factors considered in reaching
their conclusions and recommendations. In addition, each Disinterested Director
may have given different weights to different factors.
The opinions, views, beliefs and recommendations of the Disinterested
Directors, 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 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 Disinterested Directors is making any recommendation
to the Public Shareholders as to whether they should tender Shares in 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 Disinterested Directors. Goldman Sachs
has acted as financial advisor to the Disinterested Directors. On November 12,
1999, Goldman Sachs delivered to the Disinterested Directors an oral opinion,
subsequently confirmed in writing as of November 15, 1999, that as of such date
the applicable Purchase Price in cash to be received by the Public Shareholders
who tender their Shares in the Offer 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 Disinterested Directors in
connection with their consideration of the Offer. It does not constitute a
recommendation to any holder of Shares as to whether or not such holder should
accept the Offer. The summary of the Goldman Sachs opinion below is qualified by
its full text. Shareholders of AJL should read the Goldman Sachs opinion in its
entirety.
In connection with its opinion, Goldman Sachs reviewed, among other things:
the Agreement; Annual Reports to Stockholders and Annual Reports on Form 20-F of
AJL for the five fiscal years ended August 31, 1998; certain interim reports to
shareholders and Quarterly Reports on Form 6-K of AJL; certain other
communications from AJL to its shareholders; and certain internal financial
analyses and forecasts for AJL prepared by its management. Goldman Sachs also
held discussions with members of the senior management of AJL 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 AJL 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 Disinterested Directors that the
internal financial forecasts prepared by the management of AJL have been
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of AJL. In addition, Goldman Sachs has not made an independent
evaluation or appraisal of the assets and liabilities of AJL and Goldman Sachs
has not been furnished with any such evaluation or appraisal. Goldman Sachs
notes that the Principal Shareholders
10
<PAGE> 14
own a majority of the Shares, and that the Principal Shareholders have informed
Goldman Sachs and the Disinterested Directors 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 AJL.
Goldman Sachs understands that the terms of the Merger have not yet been
determined. As a consequence, Goldman Sachs has not been asked to evaluate, and
is not expressing any opinion as to, the Merger (or any transactions other than
the Offer), or as to the prices at which any outstanding Shares may trade
subsequent to the Offer.
The following is a summary of the material financial analyses used by
Goldman Sachs in connection with providing its written opinion to the
Disinterested Directors. 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 AJL for the years ended August 31, 1994
through 1999, and estimates prepared by the Company's management, in conjunction
with the SEC Reporting and Investor Relations Group of Amway, of the Company'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 Common Stock for the period April
19, 1991 (the date of AJL'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 of Common Stock
have declined gradually from a high of (Yen)9,267 following the IPO in 1991 to
an historic low of (Yen)970 on November 10, 1999. Over the one-year period
ending October 29, 1999 the Common Stock traded between a high of (Yen)1,420 on
November 5, 1998 and a low of (Yen)1,000 on March 23, 1999. Goldman Sachs also
reviewed the indexed stock price of Common Stock against a composite of three
selected comparable public companies in Asia, a composite of six selected
comparable public companies in the U.S., and a composite of four selected
comparable public companies in Japan.
Future Trading Range Analysis. Assuming a range of forward price to
earnings ratios (11-21x) in four years' time and AJL's estimated 2004 earnings
per share, Goldman Sachs calculated a range of potential future stock prices for
AJL in November 2003. Assuming required annual returns to equity investors of 6%
to 10% (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
(Yen)763 to (Yen)1,694 per share today. Goldman Sachs also observed that, if an
investor were to invest in Common Stock today at (Yen)1,490 per share, and
exited the investment in November 2003 at a price that reflected today's forward
price to earnings ratio (16x on AJL's estimated 2000 earnings per share) applied
to AJL's current estimated 2004 earnings per share, the annual return to such
investor would be approximately 2% over the next four-year period. In addition,
Goldman Sachs also observed that if an investor were to invest in Common Stock
today at (Yen)1,490 per share, either AJL's forward price earnings ratio or its
estimated 2004 earnings per share at time of exit in November 2003 must be
greater by approximately 25% than current levels for such investor to obtain an
annual return of 8% (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
AJL, as defined by enterprise value as a multiple of last fiscal year EBIT, to
have a mean of 7.5x 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 20.2x over the same period. AJL's
historical dividend yield (in Japanese yen) reflected a mean of 3.7% over the
same period.
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<PAGE> 15
Transaction Premiums. Goldman Sachs observed that, based on the proposed
price per share of Common Stock of (Yen)1,490, the following premiums were
applicable as of November 10, 1999:
<TABLE>
<CAPTION>
PERIOD TRANSACTION PREMIUM
------ -------------------
<S> <C>
November 10, 1999 closing price............................. 53.6%
52-Week Average............................................. 26.3%
52-Week High................................................ 4.2%
52-Week Low................................................. 53.6%
All-Time High............................................... (83.9)%
</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). 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 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. 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 AJL
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 6% to
10%, based on an estimated cost of capital for AJL, and a range of terminal
multiples of 2004 EBIT of 5.5x to 9.5x, Goldman Sachs calculated a range of net
present values of estimated future cash flows of AJL as of November 30, 1999.
Based on these parameters, Goldman Sachs calculated the enterprise value of AJL
to range from (Yen)133.4 billion to (Yen)230.5 billion and its equity value per
share to range from (Yen)1,077 to (Yen)1,751.
Comparison of Selected Companies. Goldman Sachs reviewed and compared
certain financial information relating to AJL to corresponding financial
information, ratios and public market multiples of fifteen comparable public
companies (eight from the U.S., three from Asia and four from Japan): Amway Asia
Pacific Ltd., 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,
12
<PAGE> 16
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>
AJL......................................................... 0.8x 5.3x 5.8x
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 13.9x 20.7x
High................................................... 2.9 20.7 21.6
Mean................................................... 1.7 16.3 21.1
Median................................................. 1.1 14.3 21.0
Japan Comparables:
Low.................................................... 0.5x 3.0x 3.6x
High................................................... 1.5 11.5 26.4
Mean................................................... 0.8 8.8 14.8
Median................................................. 0.7 10.4 14.6
</TABLE>
P/E MULTIPLES*
<TABLE>
<CAPTION>
2000E 2001E
----- -----
<S> <C> <C>
AJL......................................................... 16.2x 15.3x
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................................................... 46.3 17.8
Mean................................................... 32.7 16.9
Median................................................. 32.7 16.9
Japan Comparables:
Low.................................................... 8.7x NA
High................................................... 32.5 NA
Mean................................................... 25.2 NM
Median................................................. 29.8 NM
</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
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<PAGE> 17
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 14.5% and mean of 13.1%, compared to 2.0% for
AJL.
- Historical annual sales growth for the comparison companies ranged from
(4.8)% to 99.3%, with a mean of 18.2% and median 9.4%, compared to (1.8)%
for AJL.
- EBIT margins for the comparison companies ranged from 1.8% to 17.5%, with
a mean of 10.4% and a median of 11.8%, compared to 14.1% for AJL, down
from a peak of 28.9% in 1996.
- Return on common equity for the comparison companies ranged from (0.3)%
to 55.6%, with a mean of 18.5% and median of 9.7%, compared to 17.8% for
AJL.
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 premiums over market price (one day
prior to announcement) in such transactions were 39%, 28% and 19.1%,
respectively, compared to 53.6% for AJL (premium over November 10, 1999 closing
price). Ratio of offer price to 52-week high ranged from (41)% to (0)% and to
52-week low from 127% to 60%, compared to 4.2% and 53.6% for AJL. Enterprise
value as a multiple of last 12-month sales, EBIT and net income for each
transaction, and comparable figures for AJL, are as follows:
<TABLE>
<CAPTION>
TRANSACTION A TRANSACTION B TRANSACTION C AJL
------------- ------------- ------------- -------
<S> <C> <C> <C> <C>
EV Multiple of Sales...................... 0.2x 1.2x 1.1x 1.3x
EV Multiple of EBIT....................... 5.0 9.6 12.9 9.5
EV Multiple of Net Income................. 10.7 15.8 24.7 20.4
</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 AJL or the Offer. The analyses were
prepared solely for the purpose of Goldman Sachs' providing its opinion to the
Disinterested Directors as to the fairness from a financial point of view of the
Offer Price to the Public Shareholders 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 AJL, 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 Disinterested Directors
was one of many factors taken into consideration by the Disinterested Directors
in making their determination to approve the Agreement. 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.
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.
14
<PAGE> 18
Goldman Sachs is familiar with AJL since it has provided various investment
banking services to AJL in the past. These services include the co-management of
the IPO in 1991.
Goldman Sachs may from time to time effect transactions and hold
securities, including derivative securities, of AJL for its own account and for
the accounts of its customers in the course of its normal trading activity. As
of November 12, 1999, the day on which Goldman Sachs rendered its oral opinion,
Goldman Sachs held the following positions in the Shares for the accounts of its
customers: a long position of 12,500 ADSs and 35,400 shares of Common Stock.
Pursuant to a letter agreement dated October 8, 1999, the Disinterested
Directors engaged Goldman Sachs to act as their financial advisor. Pursuant to
the letter agreement, AJL has agreed to pay Goldman Sachs a fee totaling
$3,000,000 for its opinion and role as financial advisor to the Disinterested
Directors, upon delivery of its opinion. In addition, AJL 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 federal securities laws, arising out of its engagement.
2. THE OFFER; RELATED TRANSACTIONS; AGREEMENT.
The Offer is made in accordance with the Agreement. The purpose of the
Offer is to facilitate Purchaser's acquisition of Shares for cash, and thereby
enable the Principal Shareholders to obtain indirect control of 100% of the
capital stock of AJL. Pursuant to the Agreement, the Purchaser will first make
the Offer and, after consummation of the Offer, Purchaser and AJL have agreed to
take all steps required by law or as may be necessary or advisable to effect the
Merger. In addition, pursuant to the Shareholder Agreement, the Principal
Shareholders have agreed, and ALAP 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 the Purchased Shares, in either case prior to
consummation of the Merger. The Principal Shareholders also have agreed to cause
ALAP and Purchaser, as the case may be, to vote, and the Principal Shareholders,
ALAP and Purchaser have agreed to vote the Merger Non-Tendered Shares, the Offer
Non-Tendered Shares and the Purchased Shares, respectively, in favor of the
Merger. Subject to negotiation and approval of a definitive merger agreement,
these arrangements have the effect of virtually assuring that the Merger will
occur.
Upon consummation of the Offer, it is anticipated that the ADSs will be
delisted from the NYSE. Also, it is anticipated that following consummation of
the Offer, the Deposit Agreement will be terminated. Upon consummation of the
Merger, it is anticipated that the Common Stock will be delisted from the
Japanese OTC. AS A RESULT OF CONSUMMATION OF THE OFFER AND THE MERGER, IT IS
LIKELY THAT THERE WILL BE NO PUBLIC MARKET FOR THE SHARES. IF THERE IS NO
MARKET, HOLDERS WHO DO NOT TENDER THEIR SHARES PURSUANT TO THE OFFER WILL HAVE
LIMITED OPPORTUNITIES TO SELL THEIR SHARES IN THE FUTURE.
It is anticipated that after consummation of the Offer, some Shareholders
will continue to own Shares. Because the purpose of the Offer is to enable the
Principal Shareholders to acquire (through Purchaser) all the shares of Common
Stock that they do not already own, Shareholders who do not tender their Shares
will, as a result of the Merger, own shares of Purchaser common stock. The
specific terms and conditions of the Merger, including the exchange ratio for
Shares into shares of Purchaser common stock, have not been determined. If
effected, it is contemplated that the merger ratio would result in some
Shareholders receiving fractional shares of Purchaser. Such shareholders will
be, unless they chose to receive cash for such fractional shares, registered in
a register of fractional shares of Purchaser. These shareholders of fractional
shares will not be entitled to exercise voting rights or receive dividends with
respect to these fractional shares and will be subject to certain other
restrictions imposed on holding fractional shares under the Commercial Code of
Japan (the "Commercial Code").
Following consummation of the Offer, AJL and Purchaser will negotiate a
definitive agreement which would then be submitted to the board of directors of
each of AJL and Purchaser for approval. After approval by the boards of
directors, the definitive agreement must be submitted to the shareholders of
each of the Purchaser and AJL. The definitive agreement must be approved by a
two-thirds vote of the shareholders
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<PAGE> 19
voting at the shareholder meeting provided that a quorum is present at the
meeting representing a majority of the total outstanding shares. Because the
Principal Shareholders (through ALAP) will hold more than two-thirds of the
outstanding shares of AJL and because ALAP holds 100% of the outstanding shares
of Purchaser, approval of the Merger by the shareholders of each of the
Purchaser and AJL is assured. In addition, under the Commercial Code, any
shareholder who owns three percent or more of the outstanding shares of a
company for at least six months may call, after application with the courts of
Japan, shareholder meetings. Because the Principal Shareholders will continue to
hold Merger Non-Tendered Shares until immediately prior to the effectiveness of
the Merger, which will represent three percent of the outstanding Shares, the
Principal Shareholders will be able to call a special meeting of AJL's
shareholders without requiring such meeting having to be called by the Board of
Directors of AJL.
The Principal Shareholders have indicated their desire that AJL reduce or
eliminate the dividend for fiscal 2000 to preserve capital. After completion of
the Offer, the dividend policy for fiscal 2000 and beyond will be re-examined.
Future dividends will depend on AJL's earnings, capital requirements, financial
condition, the sufficiency of funds legally available for the payment of
dividends and other factors. There can be no assurance that AJL will pay or will
be able to pay dividends in the future.
Simultaneously with the Offer, New AAP Limited, a Bermuda corporation (the
"AAP Purchaser") will be offering to purchase (the "AAP Offer") all the shares
of Common Stock of Amway Asia Pacific Ltd., a Bermuda corporation ("AAP") (the
"AAP Shares"). The consummation of the AAP Offer and the Offer are not
contingent upon each other. As of September 30, 1999, the Principal Shareholders
owned approximately 85% of the AAP Shares. Purchaser has been informed by the
Principal Shareholders that they will not tender their AAP Shares in response to
the AAP Offer. The Principal Shareholders will contribute their shares (the "AAP
Non-Tendered Shares") to Hold Co. (as defined below) contemporaneously with the
consummation of the Offer. The AAP Offer is being made pursuant to the Tender
Offer and Amalgamation Agreement (the "Amalgamation Agreement"), dated November
15, 1999, among AAP, the 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 the AAP Purchaser and an entity controlled and beneficially owned by
the Principal Shareholders. The purpose of the AAP Offer is to facilitate the
AAP Purchaser's acquisition of all AAP Shares for cash, and thereby enable the
Principal Shareholders to obtain 100% of the capital stock of AAP. The
Amalgamation Agreement provides for, among other things, the AAP Purchaser to
first conduct the AAP Offer and then for AAP and the AAP Purchaser to amalgamate
in a cash transaction (the "Amalgamation"), with AAP continuing as the surviving
company. Simultaneously with the execution of the Amalgamation Agreement, the
Principal Shareholders, Hold Co. and AAP Purchaser entered into a Shareholder
and Voting Agreement (the "AAP Shareholder Agreement"). Pursuant to the AAP
Shareholder Agreement, the Principal Shareholders have agreed, and Hold Co. has
agreed, after transfer to it of the AAP Non-Tendered Shares by the Principal
Shareholders, not to dispose of or otherwise transfer the AAP Non-Tendered
Shares, and the AAP Purchaser has agreed not to dispose of or otherwise transfer
any AAP Shares purchased by it in the AAP Offer ("AAP Purchased Shares"), in
either case prior to consummation of the Amalgamation. In addition, the
Principal Shareholders have agreed to cause Hold Co. and the AAP Purchaser, as
the case may be, to vote, and Hold Co. and the AAP Purchaser, as the case may
be, have agreed to vote the AAP Non-Tendered Shares and AAP 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 AAP 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 AAP Shares. As a result of the Amalgamation,
those holders who do not tender their AAP Shares in the AAP Offer will receive
cash after consummation of the Amalgamation. Alternatively, if at any time after
consummation of the AAP Offer, the AAP Purchaser and Hold Co. own, in the
aggregate, 95 percent or more of the outstanding AAP Shares, then the AAP
Purchaser may, if it elects to do so in lieu of the Amalgamation, compulsorily
purchase the
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<PAGE> 20
remaining AAP Shares from the remaining shareholders of AAP 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 AAP Offer and the
Amalgamation or alternatively, the purchase of the AAP 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 AAP Shares. The AAP Offer, the Amalgamation or the transaction in
accordance with Section 103 of the Bermuda Act are collectively referred to as
the "AAP Transaction."
As a result of the AAP Transaction, the Principal Shareholders will own,
indirectly as limited partners of Hold Co., all the AAP Shares. In addition, as
a result of the Offer and the Merger, the Principal Shareholders will own,
indirectly as limited partners of ALAP, substantially all of 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 ALAP, Hold Co. or an affiliate of each of ALAP or Hold Co. After
consummation of the Merger and the AAP Transaction, the Principal Shareholders
may consider, from time to time, restructuring transactions involving one or
more Amway Companies in order to improve liquidity and the 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.
Purchaser will pay for the Shares purchased pursuant to the Offer with
funds borrowed (approximately $505.0 million, assuming that all of the Shares
other than the Non-Tendered Shares are tendered in the Offer) under a new senior
credit facility (the "Credit Facility") with Morgan Guaranty and possibly other
commercial banks and lending institutions. The Offer is not, however, contingent
upon receiving financing. As a result of the Merger, AJL will be merged with and
into Purchaser. Therefore, by operation of law, AJL will cease to exist and
Purchaser's indebtedness will be assumed by the combined company (i.e., AJL and
Purchaser). The Credit Facility will contain covenants that will restrict
Purchaser from, among other things, selling substantially all of its assets,
incurring liens on its assets, and incurring debt. In addition, the Credit
Facility will require Purchaser, among other things, to maintain or limit, as
the case may be, dividend payments, consolidated net worth and payments to
shareholder. The increase in debt could have important consequences to the
remaining shareholders, including the remaining Shareholders of AJL. For
example, it could:
- require AJL or Purchaser, after the Merger, to dedicate a substantial
portion of its cash flow from operations to pay principal and interest on
this financing facility, which will reduce the availability of cash flow
to fund working capital, capital expenditures, business development
activities, dividends and other general corporate purposes; and
- limit, among other things, AJL's or Purchaser's after the Merger, ability
to borrow money in the future for working capital, capital expenditures
and other purposes.
3. PURPOSE OF THE OFFER; RELATED TRANSACTIONS.
Over the last several years, a variety of alternatives have been considered
by the Principal Shareholders and AJL management to increase shareholder value,
while at the same time enhance operations, results and business prospects of
AJL. After considerations of various alternatives and based on the difficult
business environment in Japan, negative publicity regarding AJL, increased
competition among direct selling companies in Japan and the limited public float
of Shares, the Principal Shareholders and AJL concluded that it was unlikely
that any meaningful improvement in share value or liquidity of AJL would occur
in the foreseeable future. AJL and the Principal Shareholders concluded that, as
a private company, AJL would have greater flexibility to invest in its future,
realign the business relationships with Amway and other Amway affiliates and
allow senior management of Amway and AJL to focus on the long-term interests of
AJL without concern for the impact that any action might have on operating
results or share price of AJL. The Principal Shareholders see the Offer as an
opportunity to create value for the Shareholders through a premium purchase
price and to create value for the Principal Shareholders through a restructuring
and realignment of all Amway Companies.
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<PAGE> 21
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 Disinterested Directors 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 Disinterested Directors and that
Purchaser is not entitled to rely on such opinion, the fact that the
Disinterested Directors received an opinion from Goldman Sachs that the Y1,490
per share in cash to be received by the Public Shareholders pursuant to the
Offer is fair from a financial point of view to the Public Shareholders, (iii)
the historical and projected financial performance of AJL, (iv) Purchaser's
assessment of future economic conditions in Japan, (v) the consideration to be
paid in the Offer represents a premium of 50.5% over the closing price for
November 15, 1999, the last full trading day in Japan prior to the public
announcement of the Offer and (vi) the Offer will provide consideration to be
paid to the Public Shareholders 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 OFFER AND AGREEMENT.
Upon consummation of the Offer and the Merger, it is contemplated that AJL
will cease to have equity traded in any public market.
6. INTERESTS OF CERTAIN PERSONS.
In considering the recommendations of the Disinterested Directors with
respect to the Offer, the Shareholders should be aware that certain officers and
directors of AJL have interests which may present them with actual or potential
conflicts of interest as summarized below. The Disinterested Directors were
aware of these interests and considered them among the other matters described
under "Background of the Offer; Recommendation of the Disinterested Directors;
Reasons for the Recommendation; Opinion of Financial Advisor to the
Disinterested Directors." These interests are described below.
The Board of Directors and Officers of AJL
Each of Messrs. DeVos and Van Andel are Principal Shareholders and Mr.
Sumihiro is the representative director of Purchaser. Accordingly, they 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 Shares as follows:
<TABLE>
<S> <C> <C>
Mr. Richard M. DeVos, Jr. Chairman and Director 26,752,800 Shares
Mr. Richard J. Johnson President and Representative Director 63,000 Shares
Mr. Tomiaki Nagase Representative Director, Senior Vice President,
Chief Operating Officer 5,000 Shares
Mr. Takashi Kure Director, Vice President and Chief Planning
Officer 10,000 Shares
Mr. Yoshizo Matsushita(1) Vice President and Chief Financial Officer 8,000 Shares*
Mr. Gary Sumihiro(1) Director, Secretary and General Counsel 1,718 Shares*
Mr. Hiroyuki Kimizuka Controller of the Finance and Administration
Division 1,378 Shares
Mr. Christopher Wilson Director of Logistics 392 Shares
Mr. Shigeo Kobayashi Director of Distributor Relations 2,167 Shares
Mr. Akira Kinoshita Director of Information Services 1,323 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. Matsushita, 5,500 Shares
and Mr. Sumihiro, 1,667 Shares
In addition, under the terms of the Agreement, Purchaser has agreed subject
to certain exceptions to retain after consummation of the Offer and Merger
insurance substantially similar to the existing D&O insurance.
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<PAGE> 22
7. APPRAISAL RIGHTS.
No statutory or other appraisal rights are applicable or will be accorded
to holders of Shares in connection with the Offer.
Under the Commercial Code, however, in connection with the Merger a holder
of Shares who (i) provides written notice to AJL of its opposition to the Merger
prior to the general meeting of shareholders of AJL held to approve the merger
agreement and (ii) exercises its voting rights at such meeting in opposition to
such approval of the merger agreement is entitled, within 20 days from the date
of the resolution, to require in writing that AJL purchase its Shares. In the
event that such statutory appraisal right is duly exercised, AJL must purchase
the relevant Shares from the Shareholder at a price which would constitute a
fair price assuming that the resolution in favor of the Merger had not passed.
Such purchase price is determined based on discussion between AJL and the
Shareholder and, if agreed, AJL is required to make payment within 90 days from
the date of the resolution. In the event that AJL and the Shareholder are unable
to reach agreement on the purchase price within 60 days from the date of the
resolutions, the holder is entitled, within 30 days thereafter, to request a
Japanese court to determine the purchase price. The Shareholder will lose its
appraisal right if it fails to make such request to the court. The payment of
the purchase price will be made upon the exchange of the share certificates, and
at that time the ownership of the Shares represented by such certificates will
be transferred from the Shareholders to AJL.
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
applicable Expiration Date (as defined below) or any lesser number of Shares
validly tendered and not so withdrawn. With respect to the ADSs, the Offer will
expire at the later of 12:00 midnight, New York City time, on December 17, 1999,
or the latest time and date to which the Offer is extended (the "ADS Expiration
Date"). With respect to shares of Common Stock, the Offer will expire on the
later of December 17, 1999, in Japan, or the latest date in Japan to which the
Offer is extended (the "Common Stock Expiration Date" and, together with the ADS
Expiration Date, the "Expiration Date"). 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.
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 and Japanese income 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 (or, in the case of ADSs tendered by book-entry transfer,
such ADSs will be credited to an account maintained with the Book-Entry Transfer
Facility) 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.
As described in "-- Japanese Tax Consequences," the status of a holder as
either an individual holder or a corporate holder, the residency of such holder,
the presence of the individual holder in Japan, and the existence of a permanent
establishment in Japan of such holder, will impact whether Japanese income taxes
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<PAGE> 23
will be imposed on any gain from the sale of Shares pursuant to the Offer.
Holders should consult and rely on their own tax advisors with respect to the
federal, state, local and foreign income tax consequences of the sale of the
Shares pursuant to the Offer.
2. PROCEDURE FOR TENDERING SHARES.
Proper Tender of ADSs. To tender ADSs into the Offer, a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) and any other
documents required by the Letter of Transmittal must be received by the
Depositary on or prior to the ADS Expiration Date at one of its addresses set
forth on the back cover of this Offer to Purchase. In addition, either (i) ADRs
evidencing the ADSs to be tendered must be received by the Depositary at one of
such addresses or (ii) such ADSs 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 ADS Expiration Date.
Notwithstanding any other provisions hereof to the contrary, payment for
ADSs tendered and accepted for payment pursuant to the Offer will be made only
after receipt on or prior to the ADSs Expiration Date by the Depositary of ADRs
evidencing such ADSs (or a timely confirmation of a book-entry transfer of such
ADSs into the Depositary's account at the Book-Entry Transfer Facility, as
defined below), a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees or an Agent's Message
(as defined below) in connection with a book-entry transfer and any other
documents required by the Letter of Transmittal.
Proper Tender of Common Stock. In Japan, any holder of Common Stock may
tender Common Stock into the Offer by submitting to the Agent a completed tender
offer application form, the Japanese counterpart of the Letter of Transmittal,
by which such holder may tender Common Stock into the Offer, accompanied by
certificates representing the number of Shares to be tendered into the Offer. A
holder of Common Stock resident outside of Japan desiring to accept the Offer
should request from its standing agent in Japan a copy of the Explanatory
Statement, the Japanese counterpart of this Offer to Purchase, and a tender
offer application form, the Japanese counterpart of the Letter of Transmittal.
As described in the Explanatory Statement, the standing agent in Japan will
submit such tender offer application forms and tender Shares to the Agent on
behalf of such holders. HOLDERS OF COMMON STOCK MAY NOT TENDER COMMON STOCK INTO
THE OFFER BY EXECUTING AND DELIVERING THE LETTER OF TRANSMITTAL. COMMON STOCK
MAY ONLY BE TENDERED INTO THE OFFER IN ACCORDANCE WITH THE TERMS AND CONDITIONS
OF THE EXPLANATORY STATEMENT.
ADS Book Entry Delivery. The Depositary will establish accounts with
respect to the ADSs 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, and any financial institution that is a participant in
the system of the Book-Entry Transfer Facility may make delivery of ADSs by
causing the Book-Entry Transfer Facility to transfer such ADSs into the
Depositary's account in accordance with the procedures of the Book-Entry
Transfer Facility. Although delivery of ADSs may be effected through book-entry
transfer, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) or an Agent's Message in connection with a book-entry
transfer and any other required documents 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 ADS Expiration Date. 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 term "Agent's Message" means
a message transmitted by the Book-Entry Transfer Facility to, and received by,
the Depositary and forming a part of a Book-Entry Confirmation, which states
that the Book-Entry Transfer Facility has received an express acknowledgment
from the participant in the Book-Entry Transfer Facility tendering the ADSs
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.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING ADRS, 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 DELIVERY IS BY MAIL, REGISTERED MAIL
WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
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<PAGE> 24
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 Agent 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 ADRs evidencing the ADSs 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 ADSs are tendered for the account of an Eligible
Institution. See Instructions 1 and 6 of the Letter of Transmittal.
Dividend Reinvestment Plan. If you participate in the Dividend
Reinvestment Program and Shareholder Services Program, 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 12 of the Letter of Transmittal.
401(k) Plan. Participants in the 401(k) Plan who wish to have the trustee
of such Plan tender ADSs 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 ADSs. Participants may only use the letter
of transmittal and the 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 for the 401(k) Plan. See Instruction 11 of the
Letter of Transmittal.
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 ADSs who
elects to tender ADSs 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 ADSs who elect to tender ADSs 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. 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.
Japanese Tax Consequences. Any gain derived from the sale of Shares by a
non-resident holder (either individual or corporate) which does not have a
permanent establishment in Japan in general is not subject to Japanese income
tax. However, a non-resident individual holder who (i) both is a resident of the
United States under the Convention Between the United States and Japan for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect
to Tax on Income dated March 8, 1971 (the "Convention") and is present in Japan
for a period or periods aggregating more than 183 days during the taxable year
of the sale or (ii) is not a resident of the United States under the Convention
(or a resident of any other country with which Japan has a tax treaty which
restricts the tax action in Japan of capital gains) and sells the Shares while
visiting Japan, may be subject to Japanese income tax with respect to any such
gain.
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<PAGE> 25
Gains derived from the sale of Shares pursuant to the Offer by a
non-resident holder (either individual or corporate) which (i) has a permanent
establishment in Japan, (ii) does not hold the Shares through said permanent
establishment, (iii) is a resident of the United States under the Convention (or
is a resident of any other country with which Japan has a tax treaty under which
capital gain not attributable to said permanent establishment in general is
exempt from Japanese income tax), and (iv) is not otherwise subject to Japanese
income tax on such gain under the Convention (or such other treaty) as described
above, will not be subject to Japanese income tax. However, any other
non-resident holder (either individual or corporate) which has a permanent
establishment in Japan may be subject to Japanese income tax with respect to any
such gain.
In the event that Japanese income tax applies to any gain from the sale of
Shares, a non-resident individual holder (i) may elect to have the Japanese
income tax liability satisfied by withholding at the rate of 1.05% of the
Purchase Price provided that the holder has a permanent establishment in Japan
and the sale of Shares is conducted through a securities company or bank in
Japan, (ii) must report, on an annual tax return to be filed in Japan, the gain
together with gain and loss derived from other securities (if any) during the
year and pay Japanese income tax at a rate of 20% on the net gains from such
securities. A non-resident corporate holder will be required to report the gain
from the sale of Shares pursuant to the Offer as ordinary income on its annual
corporate tax return and pay Japanese income taxes at an effective rate of
approximately 42%.
Tender Constitutes An Agreement. The tender of ADSs 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 ADSs
complies with Regulation 14D under the Securities Exchange Act of 1934 (the
"Exchange Act"). Purchaser's acceptance for payment of the ADSs validly tendered
and not withdrawn pursuant to the Offer will constitute a binding agreement with
the tendering holder of ADSs 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 ADSs 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
ADSs, 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 ADSs 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 AGENT, 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 4, tenders of Common Stock and
ADSs made pursuant to the Offer are irrevocable. Common Stock and ADSs 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 any reason, then, without prejudice
to Purchaser's rights under the Offer, the Depositary may, on behalf of
Purchaser, retain all ADSs tendered, and such ADSs 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.
22
<PAGE> 26
In order to withdraw tendered Shares, a holder in Japan, or the appropriate
standing agent in Japan on behalf of a holder resident outside of Japan, must
submit to the Agent, on or prior to the Common Stock Expiration Date, the tender
offer application acceptance card they received from the Agent when they
submitted their completed tender offer application form along with a written
notice withdrawing such Shares.
With respect to withdrawal of tendered ADSs, to be effective, a written or
facsimile transmission notice of withdrawal must be received by the Depositary
on or prior to the ADS 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 ADSs to be withdrawn and the number of ADSs to be withdrawn. If the
ADSs 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 ADSs tendered by an Eligible Institution) must be submitted prior to the
release of such ADSs. In addition, such notice must specify, in the case of ADSs
tendered by delivery of ADRs, the name of the registered holder (if different
from that of the tendering holder) and the serial numbers shown on the
particular ADRs evidencing the ADSs to be withdrawn or, in the case of ADSs
tendered by book-entry transfer, the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn ADSs.
Withdrawals may not be rescinded and Common Stock and ADSs withdrawn will
thereafter be deemed not validly tendered for purposes of the Offer. However,
withdrawn Common Stock and ADSs 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 AGENT, 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 Common Stock 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. Purchaser and the Agent
presently anticipate that the date of settlement with respect to the ADSs (the
"ADS Settlement Date") will be no later than seven NYSE trading days after the
ADS Expiration Date. In all cases, payment for ADSs accepted for payment will be
made only after receipt by the Depositary on or prior to the ADS Expiration Date
of ADR certificates evidencing tendered ADSs (or a confirmation of a book-entry
transfer of such ADSs into the Depositary's account at the Book-Entry Transfer
Facility), a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of
Transmittal.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares that are validly tendered and not
withdrawn as, if and when it gives written notice to the Agent and the
Depositary of its acceptance for payment of the aggregate number of Shares, to
be purchased pursuant to the Offer (the "Accepted Shares"). It is presently
anticipated that this notification will be made on the business day following
the Common Stock Expiration Date. One business day prior to the Common Stock
Settlement Date, Purchaser will deposit with the Agent funds sufficient for the
payment for the Accepted Shares. Upon receipt of such funds, the Agent will
deposit with the Depositary funds sufficient to make payment for that portion of
the Accepted Shares that have been validly tendered to the Depositary and not
withdrawn. The Depositary will act as agent for tendering holders of ADSs for
the purpose of receiving payment from the Agent and transmitting payment to
tendering holders of ADSs. 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 and Japanese income
23
<PAGE> 27
taxes which may be required to be withheld. See "-- U.S. Federal Income Tax
Consequences" and "-- Japanese 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.
The ADS Purchase Price will be payable in cash for each ADS accepted
pursuant to the Offer. As provided by the SEL, the Common Stock Purchase Price
will be payable in cash for each Share accepted pursuant to the Offer. The
Common Stock Purchase Price will be converted into U.S. dollars with respect to
the purchase of ADSs at the Noon Buying Rate on the Common Stock Settlement Date
(or, if necessary for administrative convenience, the immediately preceding
business day) in order to ensure that ADS holders are treated as comparably as
possible to holders of Common Stock.
On November 15, 1999, the last full day of trading prior to the public
announcement of the Offer, the closing sale price of the Common Stock in the
Japanese OTC as reported by the JSDA was Y990 and on November 17, 1999, the last
full day of trading prior to the Commencement Date, the closing sales price was
Y1,460. The Common Stock Purchase Price is Y1,490 per share. On November 12,
1999, the last full trading day prior to the public announcement of the Offer,
the closing sales price of the ADSs on the NYSE was $4.625 and on November 16,
1999, the last full day of trading prior to the Commencement Date for which
quotations could be obtained, the closing sales price was $6.81. The ADS
Purchase Price is Y745 per ADS, which is payable in and converted into U.S.
dollars using the Noon Buying Rate on the Common Stock Settlement Date. See
"-- Market Information; Exchange Rates; Dividends and Dividend Policy."
5. MARKET INFORMATION; EXCHANGE RATES; DIVIDENDS AND DIVIDEND POLICY.
Japanese OTC. The principal securities market for the Common Stock is the
Japanese OTC. Trading in the Common Stock in the Japanese OTC began in April
1991. The following table sets forth certain price information for the fiscal
quarters shown for the Common Stock in the Japanese OTC. High and low sales
prices per Share are shown in yen as reported by the JSDA and, solely for the
convenience of the reader, in U.S. dollars per Share at the Noon Buying Rate on
the last trading date of each fiscal quarter.
<TABLE>
<CAPTION>
YEN PRICE DOLLAR PRICE
PER SHARE PER SHARE(1)
-------------- --------------
HIGH LOW HIGH LOW
----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
FY 1997 First Quarter............................. 5,000 4,150 41.42 35.25
Second Quarter............................ 4,210 3,180 34.08 26.67
Third Quarter............................. 4,530 3,220 38.57 27.66
Fourth Quarter............................ 4,750 3,040 39.26 25.12
FY 1998 First Quarter............................. 3,750 2,030 29.08 15.74
Second Quarter............................ 2,820 2,170 22.33 17.18
Third Quarter............................. 2,520 1,700 18.08 11.33
Fourth Quarter............................ 1,710 1,300 12.07 9.18
FY 1999 First Quarter............................. 1,430 900 11.63 7.31
Second Quarter............................ 1,390 1,090 11.68 9.61
Third Quarter............................. 1,300 980 10.74 8.10
Fourth Quarter............................ 1,320 1,070 12.11 9.81
FY 2000 First Quarter (through November 15, 1,230 940 11.73 8.96
1999).....................................
</TABLE>
- ---------------
(1) Each ADS represents one-half of one Share.
On November 15, 1999, the last full day of trading prior to the public
announcement of the Offer, the closing sales price of the Common Stock in the
Japanese OTC as reported by the JSDA was Y990 and on
24
<PAGE> 28
November 17, 1999, the last full day of trading prior to the Commencement Date,
the closing sales price was Y1,460. The Common Stock Purchase Price is Y1,490
per share. HOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMMON
STOCK.
U.S. Market. In February 1993, AJL sponsored a deposit facility for its
American Depositary Shares, which, at that time, traded in the unlisted OTC
market in the United States (the "Level I ADSs"). Beginning on June 29, 1994,
the ADSs began to trade on the NYSE. Prior to June 29, 1994, quotations for the
Level I ADSs from certain market makers in the U.S. OTC market were provided in
the so-called "pink sheets" published daily by the National Quotations Bureau,
Inc.
The following table sets forth the high and low composite sales prices in
U.S. dollars for the ADSs listed on the NYSE for the fiscal quarters shown.
<TABLE>
<CAPTION>
ADS
------------
NYSE HIGH LOW
- ---- ---- ----
<S> <C> <C> <C>
FY 1997 First Quarter.............................................. 22 5/8 18 1/2
Second Quarter............................................. 18 1/4 12 3/4
Third quarter.............................................. 19 7/8 12 1/4
Fourth Quarter............................................. 20 1/4 13 1/4
FY 1998 First Quarter.............................................. 16 8 1/2
Second Quarter............................................. 11 5/8 8 9/16
Third quarter.............................................. 10 5/8 6 1/16
Fourth Quarter............................................. 6 7/16 4 9/16
FY 1999 First Quarter.............................................. 6 1/2 3 1/2
Second Quarter............................................. 6 1/2 4
Third quarter.............................................. 5 3/4 3 3/4
Fourth Quarter............................................. 5 7/8 3 7/8
FY 2000 First Quarter (through November 12, 1999).................. 5 3/8 4 5/16
</TABLE>
On November 12, 1999, the last full day of trading prior to the public
announcement of the Offer, the closing sales price of the ADSs on the NYSE was
$4.625 and on November 16, 1999, the last full day of trading prior to the
Commencement Date for which quotations could be obtained the closing sales price
was $6.81. The ADS Purchase Price is Y745 per ADS, which is payable in and
converted into U.S. dollars using the Noon Buying Rate on the Common Stock
Settlement Date. HOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
ADSS.
Pursuant to the terms of the Deposit Agreement, AJL may, at any time upon
30 days' written notice, terminate such agreement. It is anticipated that
following the consummation of the Offer, the Deposit Agreement related to the
ADSs will be terminated. Upon termination of the Deposit Agreement, the
depositary will cease to perform any further acts thereunder, including
transferring ADSs, distributing dividends, and providing further notices to
holders of ADSs. The depositary will, however, remain liable to perform certain
functions, such as delivering underlying securities and related dividends or
distributions upon surrender of ADSs. Moreover, the depositary will, as soon as
practicable after the expiration of six months following termination of the
Deposit Agreement, sell all whole units of Common Stock remaining on deposit
with it and hold the net proceeds thereof for the ratable benefit of the holders
of unsurrendered ADSs.
Exchange Rates. The rate of exchange between the yen and the dollar is
determined by the forces of supply and demand in the foreign exchange markets,
which in turn are affected by changes in the balance of payments and other
economic and financial conditions, government intervention, speculation and
other
25
<PAGE> 29
factors. The following table sets forth for the periods indicated certain
information concerning the exchange rate for yen and dollars, based on the Noon
Buying Rates during each such fiscal period.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED AUGUST 31, HIGH LOW AVERAGE(1) PERIOD-END
- ---------------------------- ------ ------ ---------- ----------
(AMOUNTS IN YEN PER DOLLAR)
<S> <C> <C> <C> <C>
1995................................................ 99.60 84.04 93.08 97.75
1996................................................ 110.95 97.49 105.24 108.70
1997................................................ 127.03 108.85 118.16 120.65
1998................................................ 147.14 119.05 131.71 140.90
1999................................................ 136.59 108.83 118.98 109.30
</TABLE>
- ---------------
(1) The average of month-end rates during the period.
On November 16, 1999, the Noon Buying Rate was (Yen)105.83 = U.S.$1.00. As
stated previously, for the convenience of the reader translations of financial
information from yen into dollars have been made, except as otherwise indicated,
at the rate of 121 yen to the dollar, the approximate Noon Buying Rate on May
31, 1999, the date of the latest balance sheet information contained herein
(which does not differ materially from the Noon Buying Rate of (Yen)120.88 =
U.S.$1.00 on such date).
Fluctuations in exchange rates will affect the foreign currency amounts
received when dividends are remitted outside Japan to holders of ADSs as well as
the ADS Purchase Price received by holders of ADSs, which will be computed on
the Common Stock Settlement Date using the Noon Buying Rate on the Common Stock
Settlement Date (or, if necessary for administrative convenience, on the
immediately preceding business day). See "-- Acceptance for Payment of Shares
and Payment of Purchase Price." Such fluctuations also affect the foreign
currency equivalents of the yen price of the Common Stock in the Japanese OTC,
and therefore are likely to affect the market price of the ADSs in the United
States.
Dividends and Dividend Policy. The Articles of Association of AJL provide
that AJL's financial accounts shall be closed on August 31 each year (the end of
AJL's fiscal year), and that such date shall be the record date for the payment
of year-end dividends, if any. The payment of year-end dividends is subject to
shareholder approval. In addition, AJL may, by resolution of the Board of
Directors, pay interim cash dividends once each fiscal year to shareholders of
record as of the close of business on the last day of February of such fiscal
year, without shareholder approval. Historically, year-end dividends have been
paid promptly following approval thereof at the shareholders meeting to holders
of record as of the preceding August 31. Although the interim dividend is
ordinarily declared and the year-end dividend is approved subsequent to the last
day of February or the August 31 record date, as the case may be, the Common
Stock generally trades in the Japanese OTC "ex-dividend" three business days in
advance of each record date (unless the record date is not a business day, in
which case the ex-dividend date is four business days prior to the record date).
The following table sets forth the dividends paid by AJL with respect to
each fiscal year indicated to holders of the Common Stock.
<TABLE>
<CAPTION>
DIVIDEND PAID PER
COMMON SHARE
------------------
FISCAL YEAR ENDED AUGUST 31, (Yen) U.S.$(1)
- ---------------------------- ------ --------
<S> <C> <C>
1997(2)..................................................... 100.00 0.80
1998(3)..................................................... 100.00 0.79
1999(4)..................................................... 100.00 0.89
</TABLE>
- ---------------
(1) Except as otherwise indicated, yen dividend amounts per Share appearing in
this table and the footnotes to this table are translated solely for the
convenience of the reader into U.S. dollars at the Noon Buying Rate on the
dividend payment date. Each ADS represents one-half of one Share.
(2) Includes (i) a regular interim dividend of (Yen)50 (U.S. $0.41) per share of
Common Stock paid on May 9, 1997 to holders of record on February 28, 1997
and (ii) a regular year-end dividend of (Yen)50 (U.S. $0.39) per share of
Common Stock paid on November 27, 1997 to holders of record as of August 31,
1997.
26
<PAGE> 30
(3) Includes (i) a regular interim dividend of (Yen)50 (U.S. $0.38) per share of
Common Stock paid on May 8, 1998 to holders of record on February 28, 1998
and (ii) a regular year-end dividend of (Yen)50 (U.S. $0.41) per share of
Common Stock paid on November 27, 1998 to holders of record as of
August 31, 1998.
(4) Includes (i) a regular interim dividend of (Yen)50 (U.S. $0.41) per share of
Common Stock paid on May 10, 1999 to holders of record on February 28, 1999
and (ii) subject to shareholder approval, a regular year-end dividend of
(Yen)50 (US $0.48 based on the approximate rate of exchange prevailing on
November 1, 1999 of (Yen)104 to U.S. $1.00) per share of Common Stock to
holders of record as of August 31, 1999 on or about December 1, 1999.
Future dividend policy depends upon a variety of factors, many of which are
beyond the control of Purchaser. The Principal Shareholders have indicated their
desire that AJL reduce or eliminate the dividend for fiscal 2000 to preserve
capital. After completion of the Offer, the dividend policy for fiscal 2000 and
beyond will be re-examined. Future dividends will depend on AJL's earnings,
capital requirements, financial condition, the sufficiency of funds legally
available for the payment of dividends and other factors considered relevant by
the directors and upon receiving shareholder approval for year-end dividends or
when otherwise required. In addition, after the Merger, the surviving company,
Purchaser, will be subject to the Credit Facility. Under the Credit Facility,
the Purchaser will be required, among other things, to limit dividend payments.
There can be no assurance that AJL will pay or will be able to pay dividends in
the future.
6. CERTAIN EFFECTS OF THE OFFER.
As of September 30, 1999, AJL had issued and outstanding (i) 144,025,800
shares of Common Stock (held by approximately 18,372 holders of record) and (ii)
16,914,879 ADSs (held by approximately 663 holders of record). The Principal
Shareholders held approximately 76% of the issued and outstanding shares of
Common Stock.
Reduction 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 on the number of Shares
purchased pursuant to the Offer and the number of remaining holders thereafter,
the purchase of Shares pursuant to the Offer is expected to adversely affect
both the liquidity and market value of the remaining publicly held Shares.
NYSE Delisting and Termination of ADS Facility. Depending on the number of
ADSs purchased pursuant to the Offer, it is anticipated that the ADSs may no
longer meet the standards for continued inclusion in the NYSE. Pursuant to the
terms of the Deposit Agreement, AJL may, at any time upon 30 days' written
notice, terminate such agreement. It is anticipated that following the
consummation of the Offer, the Deposit Agreement will be terminated. Upon
termination of the Deposit Agreement, the depositary will cease to perform any
further acts thereunder, including transferring ADRs, distributing dividends,
and providing further notices to holders of ADRs. The depositary will, however,
remain liable to perform certain functions, such as delivering underlying
securities and related dividends or distributions upon surrender of ADRs.
Moreover, the depositary will, as soon as practicable after the expiration of
six months following termination of the Deposit Agreement, sell all whole units
of Common Stock remaining on deposit with it and hold the net proceeds thereof
for the ratable benefit of the holders of unsurrendered ADRs. In light of the
nature of the Japanese unit share system and other factors, termination of the
ADS facility could adversely affect the ability of holders of ADSs to, among
other things, (i) transfer any Common Stock held by them that constitutes less
than a unit, (ii) obtain dividends relating to the underlying Common Stock, or
(iii) obtain information concerning AJL or notices therefrom. In addition, upon
termination of the Deposit Agreement, the ADSs will no longer meet the standards
for continued inclusion in the NYSE. As a result, the ADSs will be delisted by
the NYSE.
Potential Japanese OTC Delisting. Depending on the number of Shares
purchased pursuant to the Offer, it is anticipated that the shares of Common
Stock may no longer remain eligible for continued listing with the Japanese OTC.
Pursuant to the Agreement, AJL and Purchaser have agreed to take all steps
required by law or as may be necessary or advisable to effect the Merger. Upon
consummation of the Merger, it is anticipated that the Common Stock will be
delisted from the Japanese OTC .
27
<PAGE> 31
If as anticipated, the ADSs and/or shares of Common Stock are no longer
eligible for listing, quotations might still be available from other sources.
The extent of the public market for the shares of Common Stock and the
availability of such quotations would, however, depend on the number of holders
of such Shares remaining at such time, the interest of securities firms in
maintaining a market in the shares of Common Stock at such time, and, among
other things, the possible termination of the registration of the shares of
Common Stock under the Exchange Act and/or with the JSDA. If an active public
market does not develop for the shares of Common Stock following the Offer and
the Merger and any possible NYSE and/or Japanese OTC delisting, the market for
the shares of Common Stock can be expected to be significantly less liquid than
exists as of the date of this Offer to Purchase.
Potential Exchange Act Deregistration. The ADSs are currently registered
under the Exchange Act. Such registration may be terminated following
application by AJL to the Commission if, at any time following consummation of
the Offer or the effectiveness of the Merger, the ADSs are not listed on a
national securities exchange and there are fewer than 300 holders of record of
the ADSs. See " -- NYSE Delisting and Termination of ADS Facility." In the
event the Merger is subject to the Securities Act of 1933, Purchaser may be
subject to the reporting periodic requirements of the Exchange Act for a period
of time after the Merger. It is anticipated Purchaser would terminate
registration under the Exchange Act as soon as possible after it no longer
satisfied the reporting requirements. The termination of registration under the
Exchange Act would substantially reduce the information required to be furnished
to holders of capital stock and to the Commission, and would result in the
future inapplicability of certain provisions of the Exchange Act, including,
among other things, the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private transactions." If the registration under the Exchange
Act is terminated, certain affiliates of AJL or Purchaser, as the case may be,
could be deprived of the ability to dispose of any capital stock held by them
pursuant to Rule 144 promulgated under the Exchange Act.
Potential Termination of Japanese Disclosure Obligation. AJL is currently
subject to the continuous reporting obligations under the Japanese Securities
and Exchange Law. Such obligations may be terminated following application by
AJL to the Minister of Finance of Japan if, following the Offer, the Common
Stock is not listed on a Japanese stock exchange or registered on the Japanese
OTC and there are fewer than 25 holders of the shares of Common Stock. After
consummation of the Merger, the Purchaser will succeed to AJL's public reporting
requirements, but Purchaser will no longer be subject to these requirements when
it has fewer than 25 shareholders. See "Potential Japanese OTC Delisting". The
termination of the reporting obligations under the Japanese Securities and
Exchange Law would substantially reduce the information required to be furnished
by AJL or Purchaser, as the case may be, to the holders of the shares of Common
Stock or Purchaser common stock.
Status of ADSs as "Margin Securities." The ADSs 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 ADSs. Depending on factors similar to those described above regarding
listing and market quotations, following the Offer, it is possible that the ADSs
might no longer constitute "margin securities" for purposes of the margin
regulations of the Federal Reserve Board, in which event such ADSs could no
longer be used as collateral for loans made by brokers.
Concentration of Shares and ADSs with Affiliates of AJL. Except for an
aggregate of 550,000 shares held by one of the charitable foundations
established by certain of the Principal Shareholders and the Merger Non-Tendered
Shares, the Principal Shareholders will contribute all of their shares of Common
Stock to ALAP or Purchaser contemporaneously with the consummation of the Offer.
Except for the 550,000 Shares, 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, indirectly as limited partners of
ALAP, approximately 100% of the outstanding Shares.
As discussed above in "Special Factors -- The Offer; Related Transactions;
Agreement" the Agreement provides that Purchaser and AJL have agreed to take all
steps required by law or as may be necessary or advisable to effect the Merger.
The specific terms and conditions of the Merger have not been determined.
28
<PAGE> 32
Accordingly, there can be no assurance that the Merger will be on financial and
other terms as favorable to the Shareholders as the Offer. The exchange ratio
for Shares into shares of Purchaser common stock has not been determined. If
effected, it is contemplated that the exchange ratio would result in some
Shareholders receiving fractional shares of Purchaser. Such Shareholders will
be, unless they chose to receive cash for such fractional shares, registered in
a register of fractional shares of Purchaser. These shareholders of fractional
shares will not be entitled to exercise voting rights or receive dividends with
respect to these fractional shares and will be subject to certain other
restrictions imposed on holding fractional shares under the Commercial Code.
Japanese Unit Share System. The Japanese laws and regulations governing
tender offers are set forth in the Securities and Exchange Law of Japan, as
amended (the "SEL"), the Securities and Exchange Law Enforcement Order, as
amended (the "Enforcement Order"), a Ministerial Ordinance (the "Ministerial
Ordinance") issued by the Japanese Ministry of Finance ("the MOF"), and the
Commercial Code relating to joint stock corporations and certain related
legislation provide for regulations concerning joint stock corporations and
shares.
Under the Commercial Code, Japanese corporations established prior to
October 1, 1982, in general, are required to specify in their articles of
association the number of shares constituting a share unit. AJL's Articles of
Association, as amended (the "Articles"), provide that 100 shares of Common
Stock constitute one "unit." The Commercial Code imposes significant
restrictions and limitations on holdings of Common Stock that do not represent
one unit or integral multiples of a unit. For example, under the Commercial
Code, certificates for shares of Common Stock representing less than one unit
may be issued only in certain limited circumstances. Because the transfer of
shares of Common Stock requires delivery of certificates, fractions of a unit
for which no certificates have been issued are not transferable. Shares of
Common Stock representing less than one unit for which certificates have been
issued continue to be transferable, but the transfer may be registered on AJL's
shareholder registry only if the transferee is already a registered holder
(whether in respect of units or of shares of Common Stock representing less than
one unit). In addition, a holder of shares of Common Stock representing less
than one unit cannot exercise any voting rights with respect to such shares of
Common Stock. Certain other rights, such as the right to institute derivative
actions, cannot be exercised with respect to shares of Common Stock representing
less than one unit.
Because the transfer of ADSs does not require changes in the ownership of
the Common Stock underlying the ADSs, holders of ADSs representing less than one
unit of Common Stock are not affected by such restrictions in their ability to
transfer ADSs. However, the right of ADS holders under the Deposit Agreement to
surrender their ADSs and withdraw the underlying Common Stock may be exercised
only as to whole units of Common Stock because of the restrictions under the
Commercial Code with respect to shares of Common Stock representing less than
one unit. It is, however, anticipated that following consummation of the Offer,
the Deposit Agreement related to the ADSs will be terminated.
Rule 10b-13 under the Exchange Act, however, prohibits Purchaser and its
affiliates, including AJL, from purchasing any Shares during the Offer, other
than pursuant to the Offer, until the expiration thereof (the "Blackout
Period"). Due to the limitations and restrictions imposed by the Commercial Code
upon holdings of Common Stock constituting less than one unit (100 Shares in the
case of AJL), as described in "The Offer -- Certain Effects of the Offer," the
Commercial Code provides a mechanism for the purchase by a Japanese corporation
of its own shares representing less than a unit. Pursuant to the provisions of
the Share Handling Regulations of AJL which implement such mechanism, AJL is
required to purchase, at any time, at the request of a holder, such holder's
Common Stock representing less than a unit (the "Statutory Put"). AJL must make
such purchases at the sales price announced by the JSDA on the day when such
request is served on AJL's transfer agent. Because holders of ADSs representing
less than one unit of Common Stock are not able to withdraw the respective
Common Stock underlying the ADSs from deposit, such holders are unable to
exercise this Statutory Put and to require AJL to purchase the respective
underlying shares.
According to the records of The Dai-Ichi Kangyo Fuji Trust & Banking Co.,
Ltd., as of November 1, 1999 (the latest date for which such information is
available), only 3 holders of Common Stock representing less than one unit
existed. Based on these records, such holders held in the aggregate
substantially less than 0.01% of the outstanding Common Stock. The Securities
and Exchange Commission (the "Commission")
29
<PAGE> 33
has previously granted exemptive relief from Rule 10b-13 under the Exchange Act
in the event AJL is required to purchase Shares during the Blackout Period
pursuant to the Statutory Put.
In addition, the Agent may be permitted under Japanese law to purchase
Common Stock outside of the Transaction during the Blackout Period. Such
purchases by the Agent, however, may be made only under the following limited
circumstances: (i) unsolicited brokerage transactions in Common Stock for the
purpose of executing purchase orders of its customers other than Purchaser or
AJL, which does not include transactions in which the Agent acts as principal;
and (ii) purchases of Common Stock from its customers other than Purchaser or
AJL in the event that the Agent mistakenly failed to execute such customer's
sell order with respect to the Common Stock, subject to the prior approval of
the JSDA. The Commission has granted the Agent exemptive relief from Rule 10b-13
under the Exchange Act with respect to such limited purchases by the Agent
during the Blackout Period.
See "-- 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 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, Purchaser estimates that the total amount of funds required to purchase
such Shares and pay related fees and expenses will be (Yen)50.0 billion
(approximately U.S.$505 million), all of which will be financed through 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 the
Purchaser's creditworthiness thereafter. Purchaser has entered into hedging
arrangements with Morgan Guaranty effectively fixing a portion of the interest
cost under the facility and translating the payments of principal and interest
to yen. The Credit Facility will contain covenants that will restrict each of
Purchaser 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 ALAP and Hold Co. has,
jointly and severally, guaranteed the obligations of Purchaser and AAP 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.
As a result of the Merger, AJL will be merged with and into Purchaser.
Therefore, by operation of law, AJL will cease to exist and Purchaser's
indebtedness will be assumed by the combined company (i.e., AJL and Purchaser).
The increase in debt could have important consequences to the remaining
shareholders, including the remaining Shareholders, of AJL. For example, it
could:
- require AJL or Purchaser, after the Merger, to dedicate a substantial
portion of its cash flow from operations to pay principal and interest on
this financing facility, which will reduce the availability of cash flow
to fund working capital, capital expenditures, business development
activities, dividends and other general corporate purposes; and
- limit, among other things, AJL's or Purchaser's after the Merger, ability
to borrow money in the future for working capital, capital expenditures
and other purposes.
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<PAGE> 34
8. CERTAIN INFORMATION REGARDING AJL.
Except as otherwise set forth herein, the information concerning AJL
contained in this Offer to Purchase, including financial information, has been
furnished to Purchaser by AJL or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources.
General. AJL is a Japanese joint stock corporation, whose principal
executive office is 7-1, Udagawa-cho, Shibuya-ku, Tokyo 150-0042, Japan. AJL is
the exclusive distribution vehicle for Amway Corporation in Japan.
Financial Information. Provided below is certain selected financial
information relating to AJL which has been excerpted or derived from the audited
financial statements contained in AJL's Annual Report on Form 20-F for the
fiscal year ended August 31, 1998 (the "Form 20-F") and the unaudited financial
statements contained in AJL's Form 6-K for the quarterly period 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 AJL 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 AJL'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 unaudited financial
statements for the quarterly period ended May 31, 1999, including comparative
statements as contained in the Form 6-K for the quarterly period 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.
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<PAGE> 35
SELECTED FINANCIAL INFORMATION
(In millions of yen and thousands of U.S. dollars, except ratios, per share and
per ADS amounts and shares outstanding)
<TABLE>
<CAPTION>
Y = (Yen)
YEARS ENDED AUGUST 31, NINE MONTHS ENDED MAY 31,
----------------------- ---------------------------------------
1997 1998 1998 1999 1999(1)
---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
In accordance with Japanese GAAP:
Net sales................................ Y203,362 Y192,458 Y146,599 Y108,516 $896,827
Cost of sales............................ 57,279 62,178 46,788 35,823 296,058
-------- -------- -------- -------- ----------
146,083 130,280 99,811 72,693 600,769
-------- -------- -------- -------- ----------
Distributor incentives................... 56,904 57,781 41,829 32,234 266,397
Distribution expenses.................... 11,173 10,783 8,103 6,260 51,736
Selling and administrative expenses...... 30,158 31,289 23,757 19,815 163,760
-------- -------- -------- -------- ----------
Total operating expenses................. 98,235 99,853 73,689 58,309 481,893
-------- -------- -------- -------- ----------
Operating income......................... 47,848 30,427 26,122 14,384 118,876
Other income -- net...................... 3,299 (698) 198 795 6,570
-------- -------- -------- -------- ----------
Income before income taxes............... 51,147 29,729 26,320 15,179 125,446
Income taxes............................. 28,030 16,950 14,687 7,519 62,140
-------- -------- -------- -------- ----------
Net income............................... Y 23,117 12,779 11,633 7,660 $63,306
======== ======== ======== ======== ==========
Net income per share(2).................. Y 157.70 88.71 80.75 53.18 $0.44
======== ======== ======== ======== ==========
Net income per ADS(3).................... Y 78.85 44.36 40.38 26.59 $0.22
======== ======== ======== ======== ==========
Dividends per share...................... Y 100.00 100.00 50.00 50.00 $0.41
======== ======== ======== ======== ==========
Dividends per ADS........................ Y 50.00 50.00 25.00 25.00 $0.21
======== ======== ======== ======== ==========
Weighted average number of shares
outstanding (000's).................... 146,593 144,048 144,056 144,026
======== ======== ======== ========
Ratio of earnings to fixed charges(4).... 53.4 31.3 36.9 23.6
======== ======== ======== ========
In accordance with U.S. GAAP:(5)
Net income............................... Y 22,198 Y 12,481 Y 11,703 Y 6,852 $56,628
======== ======== ======== ======== ==========
Net income per share(2).................. Y 151.43 Y 86.64 Y 81.24 Y 47.57 $0.39
======== ======== ======== ======== ==========
Net income per ADS(3).................... Y 75.71 Y 43.32 Y 40.62 Y 23.79 $0.20
======== ======== ======== ======== ==========
Ratio of earnings to fixed charges(4).... 53.8 31.8 37.4 22.9
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Y = (Yen)
AS OF AUGUST 31, AS OF MAY 31,
----------------- -------------------------
1997 1998 1999 1999(1)
------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
In accordance with Japanese GAAP:
Working capital............................ Y21,909 Y20,612 Y10,713 $ 88,537
Total assets............................... 110,230 100,046 79,803 659,529
Total shareholders' equity................. 63,360 60,878 54,117 447,248
Book value per share(6).................... 439.19 422.69 375.75 3.11
Book value per ADS......................... 219.59 211.34 187.87 1.55
In accordance with U.S. GAAP:(5)
Working capital............................ Y29,379 Y27,143 Y16,835 $139,132
Total assets............................... 118,265 107,438 87,716 724,926
Total shareholders' equity................. 69,906 66,873 59,593 492,504
Book value per share(6).................... 484.56 464.32 413.77 3.42
Book value per ADS......................... 242.28 232.16 206.88 1.71
</TABLE>
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<PAGE> 36
NOTES TO SUMMARY FINANCIAL INFORMATION
In preparing this summary financial information, the financial statements for
fiscal 1997 include the accounts of AJL and a wholly-owned subsidiary, Amway
Japan Enterprises, Inc. ("AJEI"). AJEI was liquidated in the first quarter of
fiscal 1997 and final repatriation of AJEI funds was completed in February 1997.
Accordingly, the financial statements as of and for the year ended August 31,
1998 and as of and for the nine months ended May 31, 1999 only include the
accounts of AJL.
(1) U.S. dollar amounts provided in the summary financial information are,
solely for convenience, calculated at the approximate rate of exchange
prevailing on May 31, 1999 of (yen)121 to U.S.$1.00.
(2) The computation of net income per share is based on the weighted average
number of shares of Common Stock outstanding during the period.
(3) Each ADS represents one-half of one share of Common Stock.
(4) The ratio of earnings to fixed charges was computed by dividing income
before income taxes plus fixed charges by the fixed charges. Fixed charges
consist of that portion of operating lease rental expense that is
representative of the interest factor.
(5) AJL prepares its consolidated financial statements in accordance with
accounting principles generally accepted in Japan ("Japanese GAAP") which
differ in certain material respects from those in the U.S. ("U.S. GAAP").
(6) Book value per share was computed by dividing book value by shares of Common
Stock. Book value consists of shareholders' equity. Common shares consist of
the number of fully paid shares outstanding at the end of the period.
1999 Fiscal Year Results and Outlook. In October 1999, AJL reported its
results for the fiscal year ended August 31, 1999. Net sales for the fiscal year
declined 25.3% compared to the prior year, operating income was down 33.4%, and
net income declined 17.8%. In the fourth quarter of 1999, net sales also
declined 23.1%. In the fourth quarter of 1999, operating income increased 36.5%
because of a decline in sales related costs. This increase in sales related
costs also was primarily the reason for an increase in net income. The major
reasons for AJL's decline in performance for both the fiscal year and the fourth
quarter are the weak Japanese economy, negative publicity about AJL's business
and increased competition.
In October 1999, AJL issued projections for fiscal 2000 net sales,
operating income, ordinary income and net income. AJL's projected net sales for
fiscal 2000 are essentially flat compared to fiscal 1999, while operating income
and net income are projected to decline compared to fiscal 1999. AJL assumed
that any recovery in Japanese consumer spending would be gradual and relatively
limited, therefore, only minimally impacting its net sales results. AJL's
continued investments to build a foundation for future growth, such as expanding
e-commerce and telecommunications initiatives, are expected to negatively impact
operating income and net income in fiscal 2000.
The statements contained herein that are not historical facts, including
the statements in the immediately preceding paragraph, are forward-looking
statements. These forward-looking statements involve risks and uncertainties,
such as, without limitations: the continuation of adverse publicity in general
and with respect to consumer complaints as experienced in the past; continued
worsening of the overall economic situation in Japan, resulting in lower demand
for AJL's products; continued competitive pressure form other direct selling
companies; weaker than expected sales form new product introductions scheduled
for fiscal 2000; and adverse action against AJL's distributors or AJL under
statutes or regulations which pertain to the direct selling industry and which
may impact the AJL's ability to sell any of its products or operate pursuant to
the Amway Sales and Marketing Plan generally. These and other risks and
uncertainties are further detailed in AJL'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
Regulations" and "Description of business--Risks and Uncertainties."
Additional Information About AJL. The Schedule 14D-9, Form 20-F and the
Form 6-K, together with certain other documents and reports concerning AJL
(collectively, the "AJL Filings") have been filed by AJL
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<PAGE> 37
with the Commission. Copies of the AJL Filings may be obtained from Ms. Holly
Clemente, Director of Investor Relations, AJL, at (914) 961-1564 or as described
immediately below.
AJL 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 AJL's directors
and officers, their remuneration, stock options granted to them, the principal
holders of AJL's securities and any material interest of such persons in
transactions with AJL 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 AJL 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 Japan in November
1999 for the principal purpose of acquiring all of the outstanding shares of AJL
and has no prior operating history. The principal executive offices of Purchaser
are currently located at 7-1, Udagawa-cho, Shibuya-ku, Tokyo 150-0042. 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 Agreement and preparation for the Offer. Because Purchaser is
acquiring Shares for cash, financial information regarding it is not meaningful.
During the last five years none of Purchaser's officers, directors or
general partners was (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 was or is 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.
The Principal Shareholders control Purchaser through their ownership of
ALAP. 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, approximately 76% of
the outstanding Common Stock of AJL. 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 AJL.
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
their respective families. As of the Commencement Date, the Principal
Shareholders, beneficially own, in the aggregate, 110,263,022 shares
(approximately 76%) of the outstanding shares of Common Stock. It is anticipated
550,000 shares of Common Stock held by one of the charitable
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<PAGE> 38
foundations established by certain of the Principal Shareholders will be
tendered in the Offer. As of the Commencement Date, directors and executive
officers of AJL, other than those who are Principal Shareholders, own
beneficially and of record, in the aggregate, 94,395 Shares, substantially less
than 0.01% of the outstanding Common Stock. See "Special Factors -- Interest of
Certain Persons."
Assuming the purchase of all Shares of Common Stock, other than those held
by the Principal Shareholders, but including those expected to be tendered by
the charitable foundation, pursuant to the Offer and assuming that, as expected,
the directors and executive officers of AJL, other than those who are Principal
Shareholders, tender all of their Shares pursuant to the Offer, directors and
executive officers of AJL, other than those who are Principal Shareholders or a
trustee or fiduciary with respect to a Principal Shareholder, will own no shares
of Common Stock following the Offer. Based on a review of information provided
by directors and executive officers of AJL, it is not anticipated, however, that
any material amount of Shares will be tendered by the directors or executive
officers except for the Foundation Tendered Shares.
12. TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES.
Based upon Purchaser's records and upon information provided to Purchaser
by its and AJL's directors, executive officers and affiliates, neither Purchaser
nor, to Purchaser's knowledge, any director or executive officer of Purchaser or
AJL, any person controlling Purchaser or AJL, any director or executive officer
of any corporation ultimately in control of Purchaser or AJL 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 or the
ADSs during the 60 business day period prior to the Commencement Date. Except as
described in this Offer to Purchase, neither Purchaser or AJL nor, to
Purchaser's or AJL's knowledge, any director or executive officer of Purchaser
or AJL, any person controlling Purchaser or AJL or any director or executive
officer of any corporation ultimately in control of Purchaser or AJL 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 or the ADSs (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.
Purchaser is not aware of any approval or other action (other than those
that have previously been duly obtained) 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. Should any 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 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.
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<PAGE> 39
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 AJL is completely sold; (ii) its percentage
interest in AJL 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 AJL'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 AJL 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 ADSs who elects to
tender ADSs 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 Depository 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 ADSs who elect to tender ADSs 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,
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<PAGE> 40
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. JAPANESE TAX CONSEQUENCES.
The following discussion is a summary of the anticipated tax consequences
of the sale of Shares by non-residents of Japan to Purchaser pursuant to the
Offer. This discussion does not deal with all possible Japanese tax consequences
relating to any such transaction. This discussion is based upon laws and
relevant interpretations thereof in effect as of the date of this Offer to
Purchase, all of which are subject to change.
Any gain derived from the sale of Shares by a non-resident holder (either
individual or corporate) which does not have a permanent establishment in Japan
in general is not subject to Japanese income tax. However, a non-resident
individual holder who (i) both is a resident of the United States under the
Convention Between the United States and Japan for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with Respect to Tax on Income
dated March 8, 1971 (the "Convention") and is present in Japan for a period or
periods aggregating more than 183 days during the taxable year of the sale or
(ii) is not a resident of the United States under the Convention (or a resident
of any other country with which Japan has a tax treaty which restricts the
taxation in Japan of capital gains) and sells the Shares while visiting Japan,
may be subject to Japanese income tax with respect to any such gain.
Any gain derived from the sale of Shares pursuant to the Offer by a
non-resident holder (either individual or corporate) which (i) has a permanent
establishment in Japan, (ii) does not hold the Shares through said permanent
establishment, (iii) is a resident of the United States under the Convention (or
is a resident of any other country with which Japan has a tax treaty under which
capital gain not attributable to said permanent establishment in general is
exempt from Japanese income tax), and (iv) is not otherwise subject to Japanese
income tax on such gain under the Convention (or such other treaty) as described
above, will not be subject to Japanese income tax. However, any other
non-resident holder (either individual or corporate) which has a permanent
establishment in Japan may be subject to Japanese income tax with respect to any
such gain.
In the event that Japanese income tax applies to any gain from the sale of
Shares, a non-resident individual holder (i) may elect to have the Japanese
income tax liability satisfied by withholding at the rate of 1.05% of the
Purchase Price provided that the holder has a permanent establishment in Japan
and the sale of Shares is conducted through a securities company or bank in
Japan, or (ii) must report, on an annual tax return to be filed in Japan, the
gain together with gain and loss derived from other securities (if any) during
the year and pay Japanese income tax at a rate of 20% on the net gain from such
securities. A non-resident corporate holder will be required to report the gain
from the sale of Shares pursuant to the Offer as ordinary income on its annual
corporate tax return and pay Japanese income taxes at an effective rate of
approximately 42%.
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 JAPANESE, U.S. FEDERAL, STATE, LOCAL AND OTHER FOREIGN TAX LAWS.
16. 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. However, under Japanese law, the Offer cannot remain open for longer
than 60 calendar days following the Commencement Date. During any such
extension, all Shares previously tendered and not
37
<PAGE> 41
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." Once
commenced, under the SEL, Purchaser may terminate the Offer only if the
consummation of the Offer would violate Japanese laws or regulations.
Accordingly, Purchaser does not expect to terminate the Offer.
Subject to compliance with applicable law, 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 ADSs 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
the SEL and 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 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 or amend, alter, add or waive any term of
the Offer in any manner adverse to the holders of the Shares.
17. 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 to holders of ADSs outside
of Japan. 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 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 AJL 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, exposure fees and transaction fees. Morgan Stanley's advisory fees are
$62,500 per month for the months of September, October 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 $1,250,000. If at the expiration of
the Offer, the Principal Shareholders control at least 85% of the Shares or the
earlier of two years or such times as the Principal Shareholders increase their
ownership, then Purchaser will pay a transaction fee to Morgan Stanley ranging
between $2,000,000 (if 85% of the Shares are controlled) to $4,000,000 (if 95%
or more of the Shares are controlled). The monthly advisory fees and exposure
fees are creditable against any transaction fee payable to Morgan Stanley.
Purchaser will also pay to J.P. Morgan $625,000. If at the expiration of
the Offer, the Principal Shareholders control at least 85% of the Shares or the
earlier of two years or such times as the Principal Shareholders increase their
ownership, then Purchaser will pay a transaction fee to J.P. Morgan ranging
38
<PAGE> 42
between $1,000,000 (if 85% of the Shares are controlled) to $2,000,000 (if 95%
or more of the Shares are controlled). The exposure fees are creditable against
any transaction fee payable to J.P. Morgan.
Agent. Nikko Salomon Smith Barney Limited, (the "Agent") has been retained
by Purchaser to act as sole tender offer agent in Japan in connection with the
Offer. The Agent, in turn, has appointed The Nikko Securities Co., Ltd. as its
sub-agent. The Agent will receive reasonable and customary compensation for its
services. The Agent will also be reimbursed by Purchaser for certain
out-of-pocket expenses, including attorneys' fees, and will be indemnified
against certain liabilities in connection with the Offer. The Agent and its
affiliates have from time to time provided investment banking services to AJL
and its affiliates for which they have received, or will receive, reasonable and
customary compensation. It is expected that the Agent and Intermediary will
continue to provide such services to Purchaser in the future.
Purchaser will pay to the Agent an advisory fee of (yen)100,000,000 ($826,000).
In addition, Purchaser will reimburse the Agent, for expenses relating to its
financial advisory services. Finally, Purchaser will pay a fee of (yen)
$50,000,000 ($413,000) and the following fees which are determined by the value
(based on the Purchase Price) of shares of Common Stock (not including ADSs)
tendered pursuant to the Offer.
<TABLE>
<CAPTION>
Y = (yen)
BROKERAGE AGENT'S
TRADE VALUE COMMISSION COMMISSION
- ----------- ---------- ----------
<S> <C> <C>
Y1,000,000 or less Higher of 1.15% or Y2,500 200% of brokerage
Over Y1,000,000 but Y5,000,000 or Higher of 0.90% or Y2,500 200% of brokerage
less
Over Y5,000,000 but Y10,000,000 or Higher of 0.70% or Y12,500 150% of brokerage
less
Over Y10,000,000 but Y30,000,000 Higher of 0.575% or Y25,000 100% of brokerage
or less
Over Y30,000,000 but Y50,000,000 Higher of 0.375% or Y85,000 100% of brokerage
or less
Over Y50,000,000 Y272,500 100% of brokerage
</TABLE>
Depositary. Purchaser has retained First Chicago Trust Company of New York
to act as depositary in connection with the Offer outside of Japan (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
outside of Japan. 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 and
Japanese income taxes, if any. See "-- U.S. Federal Income Tax Consequences" and
"-- Japanese Tax Consequences."
39
<PAGE> 43
It is estimated that expenses incurred by Purchaser and AJL in connection
with the Offer will be approximately as set forth below.
<TABLE>
<S> <C> <C>
Filing Fees........................................ $ 97,294
Financial Advisory Fees and Expenses of Purchaser
Morgan Stanley*.................................. $ 4,000,000
J.P. Morgan*..................................... $ 2,000,000
Agent and Advisory Fees**.......................... $ 1,450,000
Financial Advisory Fees and Expenses of AJL........ $ 3,050,000
Financial and Commitment Fees...................... $ 875,000
Accounting and Legal Fees and Expenses............. $ 2,000,000
Printing and Mailing............................... $ 1,680,218
Miscellaneous...................................... $ 1,847,488
-----------
Total.............................................. $17,000,000
===========
</TABLE>
* Assumes payment of maximum amount payable pursuant to applicable engagement
letters.
**Excludes fees determined based on the value of Common Stock tendered as
described above.
18. 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
Agent, 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.
N.A.J. Co., Ltd.
40
<PAGE> 44
SCHEDULE I
PURCHASER DIRECTORS;
AJL EXECUTIVE OFFICERS AND DIRECTORS
PURCHASER DIRECTORS
Gary K. Sumihiro, Representative Director
Yoshizo Matsushita, Director
James B. Payne, Director
The business address for each of the directors of Purchaser is 7-1,
Udagawa-cho, Shibuya-ku, Tokyo 150-0042. Messrs. Sumihiro and Payne are U.S.
citizens. Mr. Matsushita is a Japanese citizen.
AJL EXECUTIVE OFFICERS AND DIRECTORS.
<TABLE>
<CAPTION>
DIRECTOR/EXECUTIVE
NAME AGE POSITION OFFICER SINCE
- ---- --- -------- ------------------
<S> <C> <C> <C>
Richard M. DeVos, Jr....... 44 Chairman; Director 1994
Stephen A. Van Andel....... 44 Vice Chairman; Director 1994
Richard S. Johnson......... 57 President; Representative Director 1991
Tomiaki Nagase............. 64 Senior Vice President, Chief Operating 1995
Officer, Representative Director
Takashi Kure............... 48 Vice President and Chief Planning Officer; 1987
Director
Yoshizo Matsushita......... 64 Vice President and Chief Financial Officer; 1990
Director
Masaru Iwata............... 57 Executive Director of External Affairs and 1997
Public Relations; Director
Noboru Makino.............. 78 Director 1994
Yoshikazu Takaishi......... 69 Director 1994
Gary K. Sumihiro........... 42 General Counsel; Corporate Secretary; 1997
Director
James B. Payne............. 46 Senior Vice President of Distributor Support 1999
Division
Naoto Kira................. 54 Director of Human Resources Division and 1998
Customer Services Division
Hiroyuki Kimizuka.......... 48 Controller 1998
Christopher Wilson......... 52 Director of Logistics Division 1998
Shigeo Kobayashi........... 52 Director of Distributor Relations 1996
Akira Kinoshita............ 49 Director of Information Services Division 1998
</TABLE>
Richard M. DeVos, Jr. has been Chairman of AJL since January 1995 and a
director since November 1994. From January 1995 until October 15, 1999, Mr.
DeVos was President of Amway Asia Pacific Ltd. On October 15, 1999, he became
Vice Chairman of Amway Asia Pacific Ltd. Mr. DeVos 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 Corporation
since September 1, 1999. He was President and Chief Executive Officer of the
Orlando Magic Ltd. from 1991 to 1993. Mr. DeVos is Chairman of the Windquest
Group, a multi-company management group which he founded in 1989. Prior to that,
he was Vice President International of Amway since 1984. Previously, Mr. DeVos
held various research and development, manufacturing, distribution, marketing,
finance, public relations and government affairs positions with Amway. He 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. Mr. DeVos is also a director of Amway Asia Pacific Ltd. and Old
Kent Financial Corporation.
Stephen A. Van Andel has been Vice Chairman of AJL since January 1995 and a
director since November 1994. Since January 1995, Mr. Van Andel has been
Chairman of Amway Asia Pacific Ltd. He has been Chairman of Amway since
September 1, 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
Corporation since
S-1
<PAGE> 45
September 1, 1999. From 1993 to 1995, Mr. Van Andel was Chairman of the
Executive Committee of Amway and Vice President -- Corporate Affairs. 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 Amway Asia Pacific Ltd. and Michigan National Bank
Corp.
Richard S. Johnson has been President and Representative Director of AJL
since 1991. Mr. Johnson joined Amway in 1990 as General Manager of Amway
Germany. Prior to joining Amway, he was President of Tupperware Pacific. Prior
thereto, Mr. Johnson held management positions for Asian operations for R.J.
Reynolds Tobacco International and Pepsico International. He is also a member of
the board of the Japan Direct Selling Association, and is a member of the Board
of Directors for Japan and Vice Chairman of Northeast Asia, in the World
Federation of Direct Selling Associations. Mr. Johnson holds a Bachelor's degree
from the University of Pennsylvania and a Masters of Business Administration
degree from Harvard Business School.
Tomiaki Nagase has been Chief Operating Officer of AJL since October 1996,
a Representative Director since September 1996, and Senior Vice President since
July 1996. Mr. Nagase was previously Senior Managing Director of Kao
Corporation, a multi-national corporation involved in the manufacture and sale
of consumer products ("Kao"), from March 1992 until June 1995. Previously, he
held various operational and marketing managerial positions with Kao as well as
serving as a member of its board of directors. In addition, Mr. Nagase has
previously held managerial positions with Fuji Bank, Limited and Asian
Development Bank. He holds a Bachelor's degree in Economics from Gakushuin
University.
Takashi Kure has been Vice President and Chief Planning Officer of AJL
since January 1995, and a director of AJL since October 1987. Prior to becoming
Chief Planning Officer, Mr. Kure served as Vice President and Chief Operating
Officer from 1990 to 1995. In 1989, he became Director of Sales and Marketing.
Between 1987 and 1989, Mr. Kure served as Director of Operations and Manager of
Information Systems Department of AJL. He joined AJL in 1985 as Manager of the
EDP Department. Mr. Kure holds a Bachelor's degree from Cornell University.
Yoshizo Matsushita has been Vice President and Chief Financial Officer of
AJL since 1994, and a director of AJL since 1990. Mr. Matsushita joined AJL in
1989 as Division Manager of Finance and served as Director of Finance from 1990
to 1994. Prior to joining AJL, he held various manufacturing and finance
positions with Nihon Tetra Pak K.K. Mr. Matsushita holds a Bachelor's of
Business Administration degree from Meiji University.
Masaru Iwata joined AJL in April 1997 as Manager of External Affairs and
Public Relations. Prior to joining AJL, Mr. Iwata was Representative Director of
IMN Company Limited from 1994 to April 1997, and he was President and
Representative Director of Pisa Company Limited from 1990 to 1994. From 1965 to
1990, he held various positions with Seibu Department Store Company Limited. Mr.
Iwata holds a degree in Politics and Economics from Gakushuin University.
Noboru Makino has been a director of AJL since 1994. From 1990 to 1994, Mr.
Makino served as an Advisory Director to Mitsubishi Research Institute, Ltd. and
as a Senior Advisory Director since 1994. Prior to that, he was Director and
Chairman of Mitsubishi Research Institute, Ltd. since June 1984. Mr. Makino
holds a Doctorate degree from Tokyo University.
Yoshikazu Takaishi has been a director of AJL since November 1994. Between
November 1993 and November 1994, Mr. Takaishi was statutory auditor of AJL. In
April 1993, he established Takaishi Law Office. Prior to that, Mr. Takaishi was
Managing Director (Legal Affairs and Intellectual Property) for IBM Japan
Limited. He holds a Bachelor's of Law degree from Nihon University, an M.C.L.
from Columbia University Law School, an LLM in International Law from New York
University Law School and has been an attorney-at-law since 1957.
Gary K. Sumihiro has been a director and Secretary of AJL since November
1997 and its General Counsel since January 1995. Mr. Sumihiro joined Amway
Corporation in 1988 and was Assistant General
S-2
<PAGE> 46
Counsel prior to his present position with AJL. From 1985 to 1988, he was
International Counsel for North American Van Lines, Inc., and was a Contract
Specialist with the U.S. Department of Labor from 1983 to 1985. Mr. Sumihiro
holds a Bachelor's degree from Thiel College, a Master's in Public
Administration from the American University and a Juris Doctorate from the
University of Cincinnati.
James B. Payne was appointed Senior Vice President, Distributor Support
Division of AJL on September 3, 1999. He served as a director and Executive Vice
President of Amway Asia Pacific Ltd. from January 1997 until September 3, 1999.
In that role he was responsible for that company's operations in Malaysia,
Thailand, Brunei, Australia and New Zealand. Prior to his role with Amway Asia
Pacific Ltd., he led Amway's New Market Development efforts. Prior to that, Mr.
Payne managed Amway's operations in Germany, Austria and Switzerland. He holds a
Bachelor's degree from Aquinas College.
Naoto Kira has been AJL's Director of Human Resources since September 1997.
Prior to joining AJL, Mr. Kira was a partner and Director of Administration for
the Japan office of McKinsey & Company, Inc., a leading management consulting
company. Prior to becoming a management consultant at McKinsey, he held
corporate planning and marketing positions in Teijin, Ltd. and Teijin Volvo
Corporation. Mr. Kira holds a Bachelor's degree from International Christian
University and a Master of Business Administration from Harvard Business School.
Hiroyuki Kimizuka has been AJL's Controller of Finance and Administration
since November 1994. Prior to his present position with AJL, Mr. Kimizuka was a
director and controller for General Motors Japan Ltd. from September 1974 to
October 1994.
Christopher Wilson has been AJL's Director of Logistics Division since
October 1997. Prior to joining AJL, Mr. Wilson was Senior Manager International
Distribution at Amway Corporation from September 1991 until October 1997. He was
in Logistics and Purchasing at Amway New Zealand from 1989 to September 1991.
Prior to that, Mr. Wilson worked for New Zealand's largest automotive parts
distribution company, Repco Auto Parts, where he held various purchasing,
distribution and IS positions with the role of General Manager Distribution at
the time of his departure.
Shigeo Kobayashi has been AJL's Director of Distributor Relations since
December 1996. Mr. Kobayashi was Director of Logistics Division from March 1996
to November 1996. He was National Distribution Manager of AJL from the time he
joined AJL in November 1988 to February 1996. Mr. Kobayashi holds a Bachelor's
degree of Mathematics from Science University of Tokyo.
Akira Kinoshita has been AJL's Director of Information Services Division
since July 1998. Mr. Kinoshita joined AJL in August 1995 as Manager Technical
Infrastructure. Prior to joining AJL, he was Vice President of Technology at
American Express International, Inc. Mr. Kinoshita holds a Bachelor of Science
degree from Kyoto University.
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.
S-3
<PAGE> 47
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 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-4
<PAGE> 48
Goldman, Sachs & Co. | 85 Broad Street | New York, New York 10004
Tel: 212-902-1000
GOLDMAN SACHS LOGO
SCHEDULE II
FAIRNESS OPINION OF THE AJL FINANCIAL ADVISOR
PERSONAL AND CONFIDENTIAL
November 15, 1999
Disinterested Directors of the Board of Directors
Amway Japan Limited
7-1, Udagawacho, Shibuya-ku
Tokyo 150-0042, Japan
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, no par value (the "Company Common
Stock"), of Amway Japan Limited (the "Company"), and the outstanding American
Depositary Shares, each representing one-half of one share of Company Common
Stock (the "ADSs" and, together with the Company Common Stock, the "Shares"), of
the applicable Offer Price (as defined below) to be received by such holders in
cash in the Tender Offer (as defined below) pursuant to the Tender Offer
Agreement, dated as of November 15, 1999, between ALAP Hold Co., Ltd. ("ALAP"),
N.A.J. Co., Ltd. ("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 (a) for each share
of Company Common Stock tendered, Y 1,490 (the "Company Common Stock Offer
Price") and (b) for each ADS tendered, a yen price equal to one-half of the
Company Common Stock Offer Price (the "ADS Offer Price" and, together with the
Company Common Stock Offer Price, the "Offer Price"). The Agreement further
provides that payment of the ADS Offer Price will be made in U.S. dollars, using
the noon buying rate in New York City for cable transfers of yen announced for
customs purposes by the Federal Reserve Bank of New York on the date of
settlement of the Tender Offer in Japan. Buyer is an entity controlled and
beneficially owned directly and indirectly by the Controlling Shareholders of
the Company, who currently beneficially own 76.6% of the Shares in the
aggregate.
The Agreement provides that, following the Tender Offer, it is the
intention of the Controlling Shareholders, ALAP and Buyer to take all steps
necessary to effect a merger (the "Merger") of the Company with and into Buyer,
with Buyer as the surviving entity, subject to the negotiation of a definitive
agreement providing for the Merger and approval of the Merger by the
shareholders of the Company and shareholders of Buyer. We understand that the
terms of the Merger have not yet been determined. As a consequence, you have not
asked us to evaluate, and we are not expressing any opinion as to, the Merger
(or any transactions other than the Tender Offer), or as to the prices at which
any outstanding Shares may trade subsequent to the Tender Offer.
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 Disinterested
Directors 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
<PAGE> 49
Disinterested Directors of the Board of Directors
Amway Japan Limited
November 15, 1999
Page Two
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 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 Disinterested Directors 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
Disinterested Directors of the Board of Directors of the Company in connection
with their consideration of the transaction 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.
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
applicable Offer Price in cash to be received by the holders of Shares (other
than the Controlling Shareholders) who tender their Shares in the Tender Offer
is fair from a financial point of view to such holders.
Very truly yours,
/s/ Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
<PAGE> 50
SCHEDULE III
AUDITED FINANCIAL STATEMENTS OF AMWAY JAPAN LIMITED
FOR THE FISCAL YEARS ENDED AUGUST 31, 1996, 1997 AND 1998
AND UNAUDITED FINANCIAL STATEMENTS FOR THE NINE
MONTHS ENDED MAY 31, 1999
AMWAY JAPAN LIMITED
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ANNUAL FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS'
REPORT:
Independent Auditors' Report.............................. F-2
Balance sheets at August 31, 1997 and 1998................ F-3
Statements of income for the years ended August 31, 1996,
1997 and 1998.......................................... F-4
Statements of shareholders' equity for the years ended
August 31, 1996, 1997 and 1998......................... F-5
Statements of cash flows for the years ended August 31,
1996, 1997 and 1998.................................... F-6
Notes to financial statements............................. F-7
UNAUDITED INTERIM FINANCIAL STATEMENTS:
Statements of income for the quarter and nine months ended
May 31, 1998 and 1999.................................. F-18
Balance sheets as of August 31, 1998 and May 31, 1999..... F-19
Statements of cash flows for the nine months ended May 31,
1998 and 1999.......................................... F-20
Notes to financial statements............................. F-21
</TABLE>
F-1
<PAGE> 51
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Amway Japan Limited:
We have audited the accompanying balance sheets of Amway Japan Limited as
of August 31, 1997 and 1998, and the related statements of income, shareholders'
equity and cash flows for each of the three years in the period ended August 31,
1998, all expressed in Japanese yen. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in Japan (and the United States of America). 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, such financial statements present fairly, in all material
respects, the financial position of Amway Japan Limited as of August 31, 1997
and 1998, and the results of its operations and its cash flows for each of the
three years in the period ended August 31, 1998, in conformity with accounting
principles generally accepted in Japan. As described in Notes 10 and 11,
accounting principles generally accepted in Japan differ, in certain material
respects, from those generally accepted in the United States of America.
Our audits also comprehended the translation of Japanese yen amounts into
U.S. dollar amounts, in our opinion, such translation has been made in
conformity with the basis stated in Note 1. Such U.S. dollar amounts are
presented solely for the convenience of readers outside Japan.
/s/ DELOITTE TOUCHE TOHMATSU
--------------------------------------
DELOITTE TOUCHE TOHMATSU
Tokyo, Japan
October 16, 1998 (February 19, 1999 as to Note 1)
F-2
<PAGE> 52
AMWAY JAPAN LIMITED
BALANCE SHEETS
AUGUST 31, 1997 AND 1998
(IN MILLIONS OF YEN AND THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
Y = (yen)
1997 1998 1998
-------- -------- --------
(NOTE 1)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Note 2)....................... Y 30,442 Y 19,557 $161,628
Investment funds (Note 3)................................ 16,053 15,729 129,992
Short-term investments................................... -- 1,800 14,876
Accounts receivable...................................... 3,953 4,199 34,702
Inventories.............................................. 16,707 16,640 137,521
Prepaid expenses......................................... 1,368 1,231 10,174
Other current assets (Note 9)............................ 256 624 5,157
-------- -------- --------
Total current assets............................. 68,779 59,780 494,050
Property and equipment, net (Note 5)....................... 37,594 36,639 302,802
Investments in affiliates (Note 4)......................... 244 144 1,190
Leasehold deposits......................................... 2,572 2,419 19,992
Capitalized software costs................................. 534 570 4,711
Other...................................................... 507 494 4,081
-------- -------- --------
Total assets..................................... Y110,230 Y100,046 $826,826
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................... Y 16,408 Y 17,949 $148,339
Income taxes payable..................................... 14,211 7,486 61,868
Accounts payable to Amway Corporation (Note 9)........... 4,877 3,391 28,025
Allowance for sales returns.............................. 4,964 4,608 38,083
Accrued distributor seminar expenses..................... 2,894 2,659 21,975
Distributor deposits..................................... 1,367 324 2,678
Consumption taxes payable................................ 291 676 5,587
Withholding tax for stock repurchase..................... 836 -- --
Accrued expenses and other current liabilities........... 1,022 2,075 17,147
-------- -------- --------
Total current liabilities........................ 46,870 39,168 323,702
-------- -------- --------
Commitments and contingencies (Notes 2 ,5 and 6)
Shareholders' equity (Notes 7 and 14):
Common stock, no par value -- authorized 250,641,000 and
250,400,800 shares, respectively; issued and
outstanding 144,266,000 and 144,025,800, respectively
(equivalent to 288,532,000 and 288,051,600 ADSs,
respectively, see Note 1)............................. 12,462 12,462 102,992
Additional paid-in capital............................... 14,850 14,850 122,727
Legal reserve............................................ 3,116 3,116 25,752
Retained earnings........................................ 32,932 30,450 251,653
-------- -------- --------
Total shareholders' equity....................... 63,360 60,878 503,124
-------- -------- --------
Total liabilities and shareholders' equity....... Y110,230 Y100,046 $826,826
======== ======== ========
</TABLE>
See accompanying notes to the financial statements.
F-3
<PAGE> 53
AMWAY JAPAN LIMITED
STATEMENTS OF INCOME
YEARS ENDED AUGUST 31, 1996, 1997 AND 1998
(IN MILLIONS OF YEN AND THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Y = (yen)
1996 1997 1998 1998
-------- -------- -------- ----------
(NOTE 1)
<S> <C> <C> <C> <C>
Net sales..................................... Y212,196 Y203,362 Y192,458 $1,590,562
Cost of sales (Note 9)........................ 55,588 57,279 62,178 513,868
-------- -------- -------- ----------
156,608 146,083 130,280 1,076,694
-------- -------- -------- ----------
Operating expenses:
Distributor incentives...................... 57,044 56,904 57,781 477,529
Distribution expenses....................... 9,839 11,173 10,783 89,116
Selling and administrative expenses......... 28,355 30,158 31,289 258,586
-------- -------- -------- ----------
Total operating expenses............ 95,238 98,235 99,853 825,231
-------- -------- -------- ----------
Operating income.................... 61,370 47,848 30,427 251,463
Other income -- net (Note 12)................. 1,309 3,299 (698) (5,769)
-------- -------- -------- ----------
Income before income taxes.................. 62,679 51,147 29,729 245,694
Income taxes (Note 8)......................... 34,598 28,030 16,950 140,082
-------- -------- -------- ----------
Net income.................................. Y 28,081 Y 23,117 Y 12,779 $ 105,612
======== ======== ======== ==========
Basic and diluted net income per share........ Y 187.83 Y 157.70 Y 88.71 $ 0.73
-------- -------- -------- ----------
Basic and diluted net income per ADS.......... 93.92 78.85 44.36 0.37
-------- -------- -------- ----------
Dividends per share........................... Y 125.00 Y 100.00 Y 100.00 $ 0.83
-------- -------- -------- ----------
Dividends per ADS............................. 62.50 50.00 50.00 0.41
-------- -------- -------- ----------
Weighted average number of shares outstanding
(000s)...................................... 149,502 146,593 144,048
-------- -------- --------
</TABLE>
See accompanying notes to the financial statements.
F-4
<PAGE> 54
AMWAY JAPAN LIMITED
STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED AUGUST 31, 1996, 1997 AND 1998
(IN MILLIONS OF YEN AND THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
Y = (yen)
NET
UNREALIZED
SHARES ADDITIONAL GAIN (LOSS) ON TOTAL
ISSUED AND COMMON PAID-IN LEGAL SHORT-TERM RETAINED SHAREHOLDER'S
OUTSTANDING STOCK CAPITAL RESERVE INVESTMENTS EARNINGS EQUITY
----------- -------- ---------- ------- -------------- -------- -------------
(THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, August 31, 1995............. 149,625 Y 12,462 Y 14,850 Y 3,116 Y 1,632 Y 45,822 Y 77,882
Net income............................ -- -- -- -- -- 28,081 28,081
Dividends paid:
1995 year-end, Y95 per share Y47.50
per ADS).......................... -- -- -- -- -- (14,214) (14,214)
1996 interim, Y75 per share (Y37.50
per ADS)............................ -- -- -- -- -- (11,222) (11,222)
Bonuses to directors and statutory
auditors............................ -- -- -- -- -- (32) (32)
Change in fair value of short-term
investments......................... -- -- -- -- (1,632) -- (1,632)
Retirement of common stock............ (2,804) -- -- -- -- (15,000) (15,000)
------- -------- -------- ------- ------- -------- --------
Balances, August 31, 1996............. 146,821 12,462 14,850 3,116 -- 33,435 63,863
Net income............................ -- -- -- -- -- 23,117 23,117
Dividends paid:
1996 year-end, Y50 per share (Y25
per ADS).......................... -- -- -- -- -- (7,341) (7,341)
1997 interim, Y50 per share (Y25 per
ADS).............................. -- -- -- -- -- (7,341) (7,341)
Bonuses to directors and statutory
auditors............................ -- -- -- -- -- (50) (50)
Retirement of common stock............ (2,555) -- -- -- -- (8,888) (8,888)
------- -------- -------- ------- ------- -------- --------
Balances, August 31, 1997............. 144,266 12,462 14,850 3,116 -- 32,932 63,360
Net income............................ -- -- -- -- -- 12,779 12,779
Dividends paid:
1997 year-end, Y50 per share (Y25
per ADS).......................... -- -- -- -- -- (7,214) (7,214)
1998 interim, Y50 per share (Y25 per
ADS).............................. -- -- -- -- -- (7,201) (7,201)
Bonuses to directors and statutory
auditors............................ -- -- -- -- -- (20) (20)
Retirement of Common.................. (240) (826) (826)
------- -------- -------- ------- ------- -------- --------
Balances, August 31, 1998............. 144,026 Y 12,462 Y 14,850 Y 3,116 Y Y 30,450 Y 60,878
======= ======== ======== ======= ======= ======== ========
In U.S. Dollars (Note 1):
Balances, August 31, 1997............. $102,992 $122,727 $25,752 $ $272,165 $523,636
Net income............................ -- -- -- -- 105,612 105,612
Dividends paid:
1997 year-end, $0.41 per share
($0.21 per ADS)................... -- -- -- -- (59,620) (59,620)
1998 interim, $0.41 per share ($0.21
per ADS).......................... -- -- -- -- (59,512) (59,512)
Bonuses to directors and statutory
auditors............................ -- -- -- -- (165) (165)
Retirement of common stock............ (6,827) (6,827)
------- -------- -------- ------- ------- -------- --------
Balances, August 31, 1998............. $102,992 $122,727 $25,752 $ -- $251,653 $503,124
======== ======== ======= ======= ======== ========
</TABLE>
See accompanying notes to the financial statements.
F-5
<PAGE> 55
AMWAY JAPAN LIMITED
STATEMENTS OF CASH FLOWS
AUGUST 31, 1996, 1997 AND 1998
(IN MILLIONS OF YEN AND THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
Y = (yen)
1996 1997 1998 1998
-------- -------- -------- ---------
(NOTE 1)
<S> <C> <C> <C> <C>
Operating activities:
Net income........................................... Y 28,081 Y 23,117 Y 12,779 $ 105,612
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 1,128 1,650 2,046 16,909
Loss on disposals of property and
equipment -- net.............................. 51 307 224 1,851
Loss on investment funds........................ -- -- 244 2,017
Gain on marketable securities and
investments -- net............................ (2,322) (2,679) (10) (83)
Write-off of capitalized software............... 446 62 -- --
Loss on foreign currency transactions........... 776 -- -- --
Changes in assets and liabilities:
Accounts receivable........................... 430 (3,507) (246) (2,033)
Inventories................................... (1,079) (4,231) 67 554
Prepaid expenses.............................. (166) (170) 137 1,132
Other current assets.......................... (883) 403 (368) (3,041)
Accounts payable.............................. 718 2,659 55 455
Income taxes payable.......................... 4,003 (5,380) (6,725) (55,579)
Withholding tax for stock repurchase.......... 1,636 (800) (836) (6,909)
Accrued expenses and other current
liabilities................................ 2,212 (1,922) (196) (1,620)
Other........................................... 114 (451) (7) (58)
-------- -------- -------- ---------
Net cash provided by operating
activities............................... 35,145 9,058 7,164 59,207
-------- -------- -------- ---------
Investing activities:
Purchase of property and equipment................. (5,359) (8,254) (1,143) (9,446)
Investments in affiliates.......................... (145) -- -- --
(Increase) decrease in investment funds............ -- (16,053) 80 661
Purchases of short-term investments................ (26,044) -- (4,997) (41,298)
Proceeds from sale of short-term investments....... 55,900 4,758 3,207 26,504
Proceeds from liquidation of investment in
affiliates...................................... -- 4,617 100 826
Capitalized software costs......................... (194) (281) (211) (1,744)
Net change in leasehold deposits................... (79) (40) 153 1,264
Other.............................................. (204) (17) 3 26
-------- -------- -------- ---------
Net cash provided by (used in) investing
activities...................................... 23,875 (15,270) (2,808) (23,207)
-------- -------- -------- ---------
Financing activities:
Cash dividends paid................................ (25,436) (14,682) (14,415) (119,132)
Repurchase of common stock......................... (15,000) (8,888) (826) (6,827)
-------- -------- -------- ---------
Net cash used in financing activities...... (40,436) (23,570) (15,241) (125,959)
-------- -------- -------- ---------
Net increase (decrease) in cash and cash
equivalents........................................ 18,584 (29,782) (10,885) (89,959)
Cash and cash equivalents, beginning of year......... 41,640 60,224 30,442 251,587
-------- -------- -------- ---------
Cash and cash equivalents, end of year............... Y 60,224 Y 30,442 Y 19,557 $ 161,628
======== ======== ======== =========
Additional cash flow information:
Income taxes paid.................................. Y 31,837 Y 33,410 Y 23,598 $ 195,025
======== ======== ======== =========
</TABLE>
See accompanying notes to the financial statements.
F-6
<PAGE> 56
AMWAY JAPAN LIMITED
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996, 1997 AND 1998
(IN MILLIONS OF YEN AND THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Amway Japan Limited (the "Company"), is a direct selling company that
distributes approximately 180 consumer products through approximately 1,144,000
independent core distributors in Japan. Established in 1977, AJL serves as the
exclusive distribution vehicle in Japan for Amway Corporation ("Amway"), a U.S.
direct selling company incorporated in Michigan. AJL operates in a single
business segment, consumer products, and in a single geographic area, Japan.
AJL's common stock is traded on the Japanese over-the-counter market, and on the
New York Stock Exchange in the form of American Depository Shares (ADSs), each
of which represents one half of one share of common stock.
Basis of Presentation -- The accompanying financial statements for fiscal
1997 and 1996 of AJL include the accounts of AJL and a wholly-owned U.S.
subsidiary, Amway Japan Enterprises, Inc. ("AJEI"). AJEI was liquidated in the
first quarter of fiscal 1997 and final repatriation of AJEI funds was completed
in February 1997. Accordingly, the accompanying financial statements as of and
for the year ended August 31, 1998 include only the accounts of AJL. The
financial statements referred to herein, unless otherwise stated, refer to the
financial statements of AJL as of and for the year ended August 31, 1998 and the
consolidated financial statements of AJL and AJEI as of and for the years ended
August 31, 1997 and 1996. The financial statements are presented in accordance
with accounting principles generally accepted in Japan ("Japanese GAAP"), which
differ in certain material respects from those in the United States ("U.S.
GAAP"). See Notes 10 and 11. In preparing these financial statements, certain
amounts have been reclassified to present these financial statements in a format
which is more familiar to readers outside of Japan.
The statements of cash flows have been prepared for the convenience of
readers outside of Japan, although such statements are not required as part of
the basic financial statements in Japan. For purposes of the statement of cash
flows, AJL considers all time deposits and negotiable certificates of deposit
with a maturity of one year or less to be cash equivalents.
The U.S. dollar amounts included herein are, solely for convenience,
calculated at the approximate rate of exchange prevailing on February 19, 1999
of Y121 to U.S. $1.00. The U.S. dollar amounts should not be construed as
representations that the Japanese yen have been, or could in the future be,
converted into United States dollars at this or any other rate of exchange.
Consolidation -- The accompanying consolidated financial statements as of
and for the years ended August 31, 1997 and 1996 include the accounts of AJL and
AJEI. All significant intercompany accounts and transactions are eliminated in
consolidation. It is common practice in Japan for the accounts of foreign
subsidiaries to be included in the consolidated financial statements without
converting the accounting principles of the foreign entities to Japanese GAAP.
Accordingly, the accounts of AJEI included in the consolidated financial
statements are based upon U.S. GAAP.
Foreign Currency Translation -- In the 1996 financial statements of AJEI,
translation adjustments resulting from the translation of balance sheet items
were recorded as part of Other income -- net due to the planned liquidation of
AJEI investments.
Average exchange rates during the respective periods were used for all AJEI
items of income and expense, except for net income which was translated at the
rates prevailing at the respective balance sheet dates. The resulting exchange
difference has been included in Other income -- net.
Marketable Equity Securities -- In the 1996 financial statements of AJEI,
unrealized gains and losses on marketable equity securities were included in
income, due to the planned liquidation of AJEI.
F-7
<PAGE> 57
Investment Funds -- Investment funds are carried at the lower of aggregate
cost or market of each fund managed by an independent investment advisor with
the net realized and unrealized gains or losses included in Other income -- net
(see Note 3).
Derivative financial instruments -- AJL had only limited involvement with
derivative financial instruments and did not use them for trading purposes. They
were used to manage well-defined investment risks.
In the fiscal 1996 financial statements, options which did not qualify for
hedge accounting were valued at market, and changes in market value were
recognized as gains or losses in the period of the change. Options which
qualified as hedges were split between time values and intrinsic values. The
changes in intrinsic value were included in the same separate component of
shareholders' equity as the changes in the fair value of the item being hedged.
The time value was amortized into expense over the life of the option. Swaps
were valued at market value, and changes in market value were recognized as
gains or losses in the period of the change. No option or swap transactions were
entered during the years ended August 31, 1997 and 1998.
AJL uses foreign exchange forward contracts as a hedge to reduce potential
losses due to foreign currency exchange rate risk associated with transactions
and anticipated transactions that create assets or liabilities which are settled
primarily in U.S. dollars. In accordance with Japanese GAAP, foreign currency
receivables or payables hedged by foreign exchange forward contracts are carried
at the forward rate while any exchange gain or loss, resulting from the
difference between the rate at which the transaction was originally recorded and
the forward rate, is charged to income. In accordance with Japanese GAAP, these
forward contracts are not reflected in AJL's balance sheets. In addition,
forward contracts were used in fiscal 1997 and 1998 to hedge the foreign
currency exchange rate risk associated with foreign investments included in
Investment funds. The effect of these forward contracts is reflected in the
carrying amount of the Investment funds.
Investments in Affiliates -- AJL's 45% interest in Ceara Limited is
accounted for pursuant to the equity method of accounting. Provatene Partners
Limited, 50% owned by AJL, was liquidated in fiscal 1998 with cash proceeds of
Y100 ($826). (See Note 4).
Revenue Recognition -- AJL recognizes sales revenue upon shipment of
products to distributors. An allowance for sales returns is accrued based on
historical experience. Revenue from distributor renewal fees is recognized
ratably over the fiscal year.
Inventories -- Inventories consist primarily of finished goods merchandise
purchased for sale and are stated at the lower of cost, determined in accordance
with the first-in, first-out method, or market.
Property and Equipment -- Property and equipment are stated at cost.
Depreciation is computed in accordance with the declining-balance method over
the estimated useful lives of the assets.
Software Costs -- AJL capitalizes the cost of purchased computer software
and modification costs paid to outsiders. Such capitalized costs are amortized
on a straight-line basis over a five-year period or the estimated useful life,
whichever is shorter.
Income Taxes -- Income taxes are provided only for amounts currently
payable for each year. Deferred income taxes related to temporary differences
between the tax basis of assets and liabilities and the reported amounts in the
financial statements are not recorded except for those related to the accounts
of AJEI.
The Japanese enterprise tax, which is based on earnings and included in
selling and administrative expenses under Japanese GAAP, has been reclassified
to Income taxes in these financial statements in order to provide a presentation
more familiar to readers outside of Japan.
Defined Benefit Pension Plan -- AJL's contributions to its defined benefit
non-contributory pension plan (see Note 11) are charged to expense when paid.
Prior service costs of the pension plan are amortized to expense at the rate of
30% per annum.
Stock Issue Costs -- Stock issue costs are charged to expense when paid.
Amounts per Share; Amounts per American Depository Share (ADS) -- The
computation of net income per share is based on the weighted average number of
shares of common stock outstanding during the period. Each ADS is equivalent to
one half of one share of common stock, consequently amounts per ADS are
calculated as one half of the per share amount of common stock.
F-8
<PAGE> 58
Cash dividends per share and per ADS shown in the statements of income are
based on interim dividends paid during the year, plus year-end dividends
declared and paid in the following fiscal year.
Appropriation of Retained Earnings -- Payments of bonuses to directors and
statutory auditors are made as an appropriation of retained earnings. Retained
earnings at each year-end are appropriated, and such appropriation is reflected
in the books of account, in the year during which approval at the shareholders
meeting has been obtained. This accounting is required by the Commercial Code of
Japan (the "Code").
Foreign Currency Transactions -- Current receivables and payables
denominated in foreign currencies are translated into yen at the rates
prevailing on the respective balance sheet dates. Transaction gains and losses
are included in Other income -- net.
2. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consists of the following at August 31:
<TABLE>
<CAPTION>
Y = (yen)
1997 1998 1998
------- ------- --------
<S> <C> <C> <C>
Cash on hand and in banks............................ Y 4,800 Y 4,046 $ 33,438
Time deposits........................................ 25,642 15,511 128,190
------- ------- --------
Y30,442 Y19,557 $161,628
======= ======= ========
</TABLE>
AJL has arrangements with three finance companies for the extension of credit to
AJL's distributors. AJL is responsible for the losses incurred by these finance
companies as the result of improper acts of distributors, and in certain other
cases. At August 31, 1997 and 1998, the outstanding receivables of the finance
companies relating to these arrangements aggregated approximately (yen)13,391
and (yen)11,980 ($99,008), respectively. Time deposits of (yen)300 ($2,479)
collateralized these arrangements at August 31, 1997 and 1998, respectively.
Management believes that the risk of loss is not significant.
3. INVESTMENT FUNDS
In 1997, AJL invested (yen)16,000 in investment funds, which are managed by
three independent investment advisors and kept by trust banks in Japan. Adjusted
cost base amounts of investment funds (see Note 1) in accordance with Japanese
GAAP consist of the following at August 31:
<TABLE>
<CAPTION>
Y = (yen)
1997 1998 1998
------- ------- --------
<S> <C> <C> <C>
Japanese and foreign government bond securities...... Y10,317 Y 9,434 $ 77,967
Corporate debt securities............................ 781 576 4,760
Equity securities.................................... 3,792 3,334 27,554
Cash and cash equivalents............................ 979 2,240 18,512
Others............................................... 184 145 1,199
------- ------- --------
Y16,053 Y15,729 $129,992
======= ======= ========
</TABLE>
4. INVESTMENTS IN AFFILIATES
In December 1993, AJL exchanged its ownership of, and advances to, Amway
Pacific Ltd., for 972,222 shares (approximately 2%) of the common stock of Amway
Asia Pacific Ltd. ("AAP"). AAP is majority-owned by the principal shareholders
of AJL. All 972,222 shares of the common stock of AAP were tendered to and
repurchased by AAP on May 30, 1997.
In December 1994, AJL, at a cost of (yen)100, formed a partnership joint
venture, Provatene Partners Limited ("Provatene"), with Nutrilite Products
("Nutrilite"), a division of Amway. The joint venture engages in the processing
of raw materials used by Nutrilite in the manufacture of certain vitamins.
Partners of Provatene agreed to dissolve it on August 31, 1997, and Provatene
was liquidated in fiscal 1998 without significant impact on AJL's financial
statements.
In May 1996, AJL invested (yen)144 ($1,190) for a 45% interest in Ceara
Limited, a captive insurance company established for the purpose of reinsuring
AJL's insurance claims first placed with an outside insurance company to save
AJL insurance premiums. Amway and AAP own the other 55% of Ceara Limited.
F-9
<PAGE> 59
5. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at August 31:
<TABLE>
<CAPTION>
Y = (yen)
1997 1998 1998
------- ------- --------
<S> <C> <C> <C>
Land................................................. Y24,222 Y24,222 $200,182
Building and structures.............................. 6,533 6,589 54,455
Machinery and equipment.............................. 3,540 3,578 29,570
Vehicles............................................. 525 530 4,380
Furniture and fixtures............................... 4,474 4,555 37,645
Construction in process.............................. 3,040 3,166 26,165
------- ------- --------
Total...................................... 42,334 42,640 352,397
Less -- accumulated depreciation..................... (4,740) (6,001) (49,595)
------- ------- --------
Net property and equipment......................... Y37,594 Y36,639 $302,802
======= ======= ========
</TABLE>
In February 1997, AJL commenced construction of a new headquarters facility in
Tokyo. Management estimates that the total cost of the headquarters construction
project will be approximately (yen)16,000 ($132,231). Additionally, in March
1997, AJL completed construction of a Regional Distribution Center (RDC) at a
total cost of approximately (yen)7,300 ($60,331). In accordance with Japanese
accounting practices, certain additional direct costs of the land acquisitions
for these projects totaling (yen)399 ($3,298) were expensed as incurred during
fiscal 1997. As of August 31, 1998, AJL has commitments under contracts for the
construction of the new headquarters building of (yen)9,811 ($81,083), to which
AJL plans to relocate in September 1999. Total capital expenditures projected
for fiscal 1999 are approximately (yen)15,400 ($127,273).
6. LEASES
AJL has no leases which are accounted for as capital leases. Total rent expense
charged to operations under operating leases, primarily for real estate and
equipment, aggregated (yen)3,049, (yen)3,273 and (yen)3,399 ($28,091) for the
years ended August 31, 1996, 1997, and 1998, respectively. Certain of the
equipment leases are non-cancelable. Future minimum annual rentals under
operating leases as of August 31, 1998 are as follows:
<TABLE>
<CAPTION>
Y = (yen)
REAL ESTATE EQUIPMENT TOTAL TOTAL
----------- --------- ------ ------
<S> <C> <C> <C> <C>
Year ended August 31, 1999................. Y185 Y353 Y 538 $4,446
2000....................................... 185 120 305 2,521
2001..................................... 185 86 271 2,240
2002..................................... 16 29 45 372
---- ---- ------ ------
Total minimum lease payments............... Y571 Y588 Y1,159 $9,579
==== ==== ====== ======
</TABLE>
7. SHAREHOLDERS' EQUITY
At August 31, 1997 and 1998, 83.0% and 83.1% respectively, of AJL's
outstanding common stock was held by certain trusts, foundations and entities
created by or for the benefit of the founders of Amway, Jay Van Andel and
Richard M. DeVos, and their families. The remaining balance of AJL's common
stock was publicly held. AJL's common stock is traded on the Japanese
over-the-counter market. AJL's common stock is also traded on the New York Stock
Exchange in the form of American Depository Shares (ADSs), each of which
represents one-half of one common share.
Under the Code, at least 50% of the issue price of new shares is to be
designated as stated capital as determined by resolution of the Board of
Directors. Proceeds in excess of the amounts designated as stated capital are to
be credited to additional paid-in capital. AJL may transfer portions of
additional paid-in capital to stated capital by resolution of the Board of
Directors.
Under the Code, AJL is required to appropriate as a legal reserve portions of
retained earnings in an amount equal to at least 10% of specified cash payments,
such as cash dividends and bonuses to directors and statutory auditors,
appropriated in each financial period until the reserve equals 25% of the stated
capital. As of August 31, 1998 such reserve, at (yen)3,116, was equal to 25% of
the stated capital. This reserve is not available
F-10
<PAGE> 60
for dividends but may be used to reduce a deficit by resolution of the
shareholders or transferred to the stated capital by resolution of the Board of
Directors. AJL may also transfer portions of retained earnings which are
available for dividends to stated capital by resolution of the shareholders.
Year-end dividends are approved at the shareholders' meeting held
subsequent to the fiscal year to which the dividends are applicable. In
addition, interim dividends may be paid upon resolution of the Board of
Directors, subject to limitations imposed by the Code, without shareholder
approval.
The Code permits AJL to repurchase its outstanding common shares for the
purpose of (1) assignment of the shares to its employees or (2) cancellation of
the shares subject to an approval at the ordinary general shareholders' meeting
and certain requirements of the Code. In a repurchase for the purpose of (1)
above, (a) the aggregate purchase price may not exceed AJL's distributable
retained earnings and (b) the aggregate number of shares repurchased must not
exceed three percent of the total issued shares. In a repurchase for the purpose
of (2) above, the requirements include requirement (a) above, but not
requirement (b) above.
Pursuant to the resolution at the Ordinary General Meeting of Shareholders held
on November 29, 1995, AJL repurchased 2,803,700 shares of common stock at a
total cost of (yen)15,000 by means of a tender offer to the shareholders of AJL
in accordance with the Securities and Exchange Law of Japan and the U.S.
Securities Exchange Act of 1934. The shares repurchased were retired in August
1996. As a result of this transaction, both cash and cash equivalents and
retained earnings of AJL were reduced by (yen)15,000 during 1996.
On November 27, 1996, AJL's shareholders approved the repurchase of up to
(yen)12.0 billion of its outstanding shares, but in no event in excess of 3
million shares of common stock, by open market purchases, through a tender
offer, or both, subject to favorable market conditions. On March 10, 1997, AJL
announced that its Board of Directors had authorized an open market purchase of
up to (yen)3.0 billion of its outstanding shares, but in no event in excess of
750,000 shares of common stock. During fiscal 1997, AJL repurchased 305,300
shares of common stock through open market purchases at a total cost of
(yen)1,035 and 2,250,000 shares by means of a tender offer to the shareholders
of AJL at a total cost of (yen)7,853. During fiscal 1998, AJL repurchased
240,200 shares through open market purchases at a total cost of (yen)826
($6,826). All shares repurchased in fiscal 1997 and 1998 were retired before
August 31, 1997 and 1998, respectively. As a result of these transactions, both
cash and cash equivalents and retained earnings of AJL were reduced by
(yen)8,888 and (yen)826 ($6,826) during 1997 and 1998, respectively.
8. INCOME TAXES
AJL is subject to a number of taxes based on earnings: the corporate tax,
inhabitants tax and enterprise tax. The enterprise tax is deductible when paid
for purposes of calculating earnings-based taxes, which results in an effective
combined statutory tax rate that is somewhat lower than the sum of the statutory
tax rates. In the aggregate, these taxes produced effective statutory tax rates
of approximately 51.4% for 1996, 1997 and 1998. AJL's effective tax rates
reflected in the accompanying statements of income differ from the effective
statutory tax rates primarily due to the effect of permanently non-deductible
expenses and temporary differences in the recognition of asset and liability
items for tax and for financial reporting purposes.
9. RELATED PARTY TRANSACTIONS
AJL is the exclusive distribution vehicle for Amway in Japan. AJL has
entered into agreements with Amway (1) for receiving a long-term secure and
stable supply of merchandise (the Product Purchase Agreement), (2) for the
exclusive use of Amway's trademarks in Japan (the Trademark License Agreement)
and (3) for receiving management and administrative support services (the Second
Amended and Restated Support Services Agreement).
Balances with Amway consist of the following at August 31:
<TABLE>
<CAPTION>
Y = (yen)
1997 1998 1998
------ ------ -------
<S> <C> <C> <C>
Receivables included in other current assets............ Y 117 Y 83 $ 686
Accounts payable........................................ 4,877 3,391 28,025
</TABLE>
F-11
<PAGE> 61
Purchases from and other transactions with Amway for the years ended August
31 are as follows:
<TABLE>
<CAPTION>
Y = (Yen)
1996 1997 1998 1998
------- ------- ------- --------
<S> <C> <C> <C> <C>
Purchases.................................. Y34,135 Y40,244 Y42,394 $350,364
Royalties.................................. 1,173 1,068 968 8,000
Support services........................... 591 393 835 6,901
</TABLE>
Beginning in fiscal year 1996, AJL pays to Amway, for the use of Amway
trademarks and formulas in connection with products manufactured by others under
contract with AJL, a royalty of 4% for products bearing an Amway trademark, and
8% for products bearing an Amway trademark and also using an Amway formula or
design. The applicable percentage is applied to the net sales of such products
after such net sales are reduced by 25% to cover distributor bonuses paid by
AJL.
Based upon estimated sales of products for fiscal years 1996 through 1998,
AJL also delivered promissory notes in payment of royalties for these years. In
consideration for the execution of these notes, the actual payments for these
years approximated 3.6% for products bearing an Amway trademark and 7.3% for
products bearing an Amway trademark and using an Amway formula or design. The
final payment was made on August 31, 1998. Because these promissory notes were
not treated as notes under Japanese commercial practices and regulations, they
were not recorded on AJL's August 31, 1997 balance sheet.
10. RECONCILIATION OF JAPANESE AND U.S. ACCOUNTING PRINCIPLES
AJL prepares its accounts in accordance with Japanese GAAP, which differ in
certain material respects from U.S. GAAP. The significant differences relate to
the following items:
Income Taxes -- In accordance with Japanese GAAP, income taxes are provided
only for amounts currently payable for each year. U.S. GAAP requires that
deferred income taxes be recognized for temporary differences between the tax
basis of assets and liabilities and the reported amounts in the financial
statements. On March 31, 1998, a reduction of the income tax rate was enacted in
Japan, and accordingly, the effective statutory tax rate was lowered to
approximately 47.7% effective for the year ending August 31, 1999 and
thereafter. Under U.S. GAAP, the adjustment to deferred tax assets and
liabilities resulting from this future change in the income tax rate is charged
to income for the year ended August 31, 1998 in accordance with SFAS No. 109.
Pension Costs -- Under Japanese GAAP, the amounts contributed to AJL's
funded defined benefit pension plan, including amortization of prior service
costs, are charged to expense when paid. Under U.S. GAAP, net periodic pension
costs, as defined by SFAS No. 87, "Employers' Accounting for Pensions," are
charged to expense.
Investment Funds -- Under Japanese GAAP, investment funds are carried at
the lower of aggregate cost or market of each fund with net unrealized losses
included in income, whereas, under U.S. GAAP, available-for-sale securities are
carried at fair value with unrealized gains and losses, net of tax, recorded as
a separate component of shareholders' equity.
Software Costs -- AJL capitalizes the costs of both purchased software and
modification costs paid to unrelated parties under Japanese GAAP, whereas only
purchased software costs are capitalized under U.S. GAAP. Under Japanese GAAP,
amortization of capitalized software costs aggregated (Yen)187, (Yen)126 and
(Yen)162 ($1,339), during the fiscal years ended August 31, 1996, 1997 and 1998,
respectively. Accumulated amortization, under Japanese GAAP, aggregated (Yen)260
and (Yen)410 ($3,388) as of August 31, 1997 and 1998, respectively.
Stock Issue Costs -- Stock issue costs are charged to expense when paid
under Japanese GAAP, whereas such costs are charged to additional paid-in
capital under U.S. GAAP.
Investments in Affiliates and Non-Monetary Transaction -- In December 1993,
AJL exchanged its ownership of, and advances to, Amway Pacific Ltd., for 972,222
shares (approximately 2%) of the common stock of Amway Asia Pacific Ltd.
("AAP"). AAP is majority-owned by the principal shareholders of AJL. A gain was
recorded on the exchange of stock under Japanese GAAP, whereas U.S. GAAP does
not allow recognition of such a gain. Additionally, under U.S. GAAP the
investment in AAP would be valued at market
F-12
<PAGE> 62
value with the unrealized gain or loss, net of tax, being reflected in
shareholders' equity. Under Japanese GAAP, this investment was carried at cost.
All 972,222 shares of the common stock of AAP were tendered to and repurchased
by AAP on May 30, 1997. As a result, the gain on the exchange of stock
previously recognized under Japanese GAAP, would have been recognized under U.S.
GAAP in the year ended August 31, 1997.
Cash dividends per share -- Under Japanese GAAP, cash dividends per share
are based on interim dividends paid during the year, plus year-end dividends
declared and paid in the following fiscal year. Under U.S. GAAP, cash dividends
per share are based on dividends paid during the year.
Notes Payable -- AJL had outstanding negotiable promissory notes payable to
Amway aggregating (Yen)622 as of August 31, 1997 (see Note 9). Because these
notes are not treated as notes under the commercial practices and regulations in
Japan, they were not recorded on AJL's August 31, 1997 consolidated balance
sheet. Under U.S. GAAP, these notes would have been recorded as a liability with
the offset being recorded as a prepaid expense.
Land Acquisition Costs -- Taxes and certain other direct costs incurred in
connection with land acquisitions (see Note 5) are being expensed as incurred in
accordance with Japanese GAAP, whereas under U.S. GAAP these costs would be
capitalized.
The following table summarizes the effects on net income of the differences
between Japanese GAAP and U.S. GAAP for the years ended August 31:
<TABLE>
<CAPTION>
Y = (Yen)
1996 1997 1998 1998
------- ------- ------- --------
<S> <C> <C> <C> <C>
Amounts as shown in the Japanese GAAP
financial statements..................... Y28,081 Y23,117 Y12,779 $105,612
Adjustments for:
Income taxes............................. 1,438 (1,280) (810) (6,694)
Software costs........................... 429 (148) (52) (430)
Investment funds......................... -- -- 563 4,653
Gain on exchange of stock of
subsidiary............................ -- 507 -- --
Other.................................... 39 2 1 8
------- ------- ------- --------
Amounts according to U.S. GAAP............. Y29,987 Y22,198 Y12,481 $103,149
======= ======= ======= ========
Basic and diluted net income per share
under U.S. GAAP.......................... Y200.58 Y151.43 Y 86.64 $ 0.72
======= ======= ======= ========
Basic and diluted net income per ADS under
U.S. GAAP................................ Y100.29 Y 75.71 Y 43.32 $ 0.36
======= ======= ======= ========
Dividends per share under U.S. GAAP........ Y170.00 Y100.00 Y100.00 $ 0.83
======= ======= ======= ========
Dividends per ADS under U.S. GAAP.......... Y 85.00 Y 50.00 Y 50.00 $ 0.41
======= ======= ======= ========
</TABLE>
The following table summarizes the effect on shareholders' equity of the
differences between Japanese GAAP and U.S. GAAP at August 31:
<TABLE>
<CAPTION>
Y = (Yen)
1997 1998 1998
------- ------- --------
<S> <C> <C> <C>
Amounts as shown in the Japanese GAAP financial
statements......................................... Y63,360 Y60,878 $503,124
Adjustments for:
Deferred income tax................................ 6,035 5,485 45,331
Prepaid pension cost............................... 561 604 4,992
Reversal of capitalization of Software costs....... (334) (385) (3,182)
Land acquisition costs............................. 399 399 3,298
Adjustment to investment funds..................... -- 32 264
Other.............................................. (115) (140) (1,158)
------- ------- --------
Amounts according to U.S. GAAP....................... Y69,906 Y66,873 $552,669
======= ======= ========
</TABLE>
F-13
<PAGE> 63
Investments -- Securities held by AJL at August 31, 1998 and 1997 which are
subject to the provisions of Statement of Financial Accounting Standards
("SFAS") No. 115 are summarized as follows:
<TABLE>
<CAPTION>
Y = (Yen)
GROSS GROSS
UNREALIZED UNREALIZED
HOLDING HOLDING MARKET MARKET
COST GAINS LOSSES VALUE VALUE
------- ---------- ---------- ------- --------
<S> <C> <C> <C> <C> <C>
AUGUST 31, 1998:
Available for sale:
Japanese and foreign
government bonds......... Y 9,182 Y 60 Y 70 Y 9,172 $ 75,802
Corporate debt securities... 576 -- -- 576 4,760
Equity securities........... 3,907 114 687 3,334 27,554
------- ---- ---- ------- --------
Y13,665 Y174 Y757 Y13,082 108,116
======= ==== ==== ======= ========
Held to maturity:
Notes issued by foreign
financial institutions... Y 1,800 -- -- Y 1,800 $ 14,876
======= ==== ==== ======= ========
AUGUST 31, 1997:
Available for sale:
Japanese and foreign
government bonds......... Y10,414 Y 55 Y191 Y10,278
Corporate debt securities... 781 -- -- 781
Equity securities........... 3,864 121 193 3,792
------- ---- ---- -------
Y15,059 Y176 Y384 Y14,851
======= ==== ==== =======
</TABLE>
The available-for-sale securities displayed in the above table are included
in investment funds on the balance sheets; investment funds also includes items
that are not subject to SFAS No. 115 and are therefore excluded from the table.
The held-to-maturity securities are included in Short-term investments on the
August 31, 1998 balance sheet. There were no held-to-maturity investments at
August 31, 1997.
Contractual maturities of debt securities held at August 31, 1998 are as
follows:
<TABLE>
Y = (Yen)
<S> <C> <C>
Available for sale:
Due within one year......................................... Y1,808 $14,942
Due after one year through five years..................... 6,180 51,074
Due after five years through ten years.................... 1,760 14,546
------ -------
Y9,748 $80,562
====== =======
Held to maturity:
Due within one year....................................... Y1,800 $14,876
====== =======
</TABLE>
Income Tax -- The effective income tax rates of AJL on a U.S. GAAP basis
differ from the effective Japanese statutory tax rates as follows:
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Effective Japanese statutory tax rates...................... 51.4% 51.4% 51.4%
Permanently non-deductible expenses......................... 2.6 3.9 5.8
Effect of the enacted change in the tax rate................ -- -- 1.4
Other....................................................... (1.5) 1.6 0.1
---- ---- ----
Effective tax rates......................................... 52.5% 56.9% 58.7%
==== ==== ====
</TABLE>
F-14
<PAGE> 64
The approximate tax effects of temporary differences that would give rise
to deferred tax balances at August 31, 1997 and 1998, under U.S. GAAP, are
presented below.
<TABLE>
<CAPTION>
Y = (Yen)
1997 1998 1998
------- ------ -------
<S> <C> <C> <C>
Deferred tax assets:
Sales returns.......................................... Y 2,551 Y2,198 $18,165
Enterprise tax....................................... 1,554 752 6,215
Accrued distributor seminars......................... 1,660 1,456 12,033
Deferred software costs.............................. 171 178 1,471
Other................................................ 1,135 1,451 11,992
------- ------ -------
Total gross deferred tax assets.............. 7,071 6,035 49,876
------- ------ -------
Deferred tax liabilities:
Reserve for domestic market development.............. (484) (295) (2,438)
Other................................................ (552) (255) (2,107)
------- ------ -------
Total gross deferred tax liabilities......... (1,036) (550) (4,545)
------- ------ -------
Net deferred tax assets...................... Y 6,035 Y5,485 $45,331
======= ====== =======
</TABLE>
Stock Options -- During fiscal 1998, AJL entered into agreements with six
directors of AJL whereby AJL granted pre-emptive rights ("options") to subscribe
for a total of 97,000 new shares of AJL's common stock at an exercise price of
(Yen)2,470 ($20.41) per share. The fair value of these options at the date of
grant was (Yen)239 ($1.98) per share. Based on the terms of each agreement,
50,000 options became exercisable during fiscal 1998 while the remaining options
become exercisable, in whole or in part, in three equal installments on each of
the first three anniversaries of the date the options were granted for so long
as the recipient remains in the continuous employment of AJL. All 97,000 options
were outstanding as of August 31, 1998. The options will expire in November 2007
or prior to such date in the event the recipient dies, becomes disabled or is no
longer employed by AJL. As such, the remaining contractual life of the options
outstanding as of August 31, 1998 was approximately 10 years.
In accordance with SFAS No. 123, "Accounting for Stock-Based Compensation",
AJL has adopted the fair value based method to measure compensation cost related
to stock-based awards in determining U.S. GAAP net income. For the year ended
August 31, 1998, total compensation cost recognized in U.S. GAAP income for
these stock-based employee compensation awards, before taxes, was (Yen)15
($124).
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 5 years; 1.5% risk-free interest rate; 5.0% annual
rate of dividends; and expected volatility of 33%.
Cash Flows -- U.S. GAAP requires that for cash flow reporting, cash and
cash equivalents include only those time deposits with original maturities of
less than three months. Under U.S. GAAP, cash and cash equivalents were
(Yen)29,742 and (Yen)17,645 ($145,826) at August 31, 1997 and 1998,
respectively.
11. PENSION PLAN
AJL maintains a defined-benefit non-contributory pension plan (the "Plan")
for the benefit of its permanent full-time employees. Substantially all such
employees are covered by the Plan. Under the Plan, employees terminating their
employment or retiring are, in most circumstances, entitled to benefits based on
years of service, compensation at the time of termination and certain other
factors. The amounts contributed to the fund for the years ended August 31,
1996, 1997, and 1998 were (Yen)335, (Yen)352, and (Yen)408 ($3,372),
respectively.
F-15
<PAGE> 65
The net periodic pension costs, the status of projected benefit obligations
of the Plan and major assumptions used to determine these amounts under the
requirements of U.S. GAAP are as follows:
<TABLE>
<CAPTION>
Y = (Yen)
1996 1997 1998 1998
---- ------- ------- ------
<S> <C> <C> <C> <C>
Components of net periodic pension costs:
Service cost................................. Y249 Y 312 Y 326 $2,694
Interest cost................................ 79 77 85 702
Actual return on plan assets................. (90) (105) (57) (471)
Net amortization and deferral................ 33 62 (12) (99)
---- ------- ------- ------
Net periodic pension cost...................... Y271 Y 346 Y 342 $2,826
==== ======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
Y = (Yen)
1997 1998 1998
------- ------- --------
<S> <C> <C> <C>
Status of obligations:
Actuarial present value of benefit obligation:
Vested benefit obligation....................... Y(1,461) Y(1,792) $(14,810)
Non-vested benefit obligation................... (24) (30) (248)
------- ------- --------
Accumulated benefit obligation..................... Y(1,485) Y(1,822) (15,058)
======= ======= ========
Projected benefit obligation for service rendered to
date............................................... Y(2,216) Y(2,416) (19,967)
Plan assets at fair value............................ 2,223 2,491 20,587
------- ------- --------
Plan assets in excess of projected benefit
obligations........................................ 7 75 620
Unrecognized net loss................................ 526 503 4,157
Unrecognized prior service costs..................... 34 31 256
Unrecognized net assets at date of initial
application........................................ (6) (5) (41)
------- ------- --------
Prepaid pension costs to be recognized on the balance
sheets............................................. Y 561 Y 604 $ 4,992
======= ======= ========
Assumptions used:
Discount rate...................................... 4.0% 3.5%
Rate of increase in compensation level............. 3.5% 2.5%
Expected long-term rate of return on assets........ 4.0% 4.0%
</TABLE>
At August 31, 1998, plan assets consisted primarily of marketable debt and
equity securities.
12. OTHER INCOME -- NET
Other Income -- net consists of the following for the years ended August
31:
<TABLE>
<CAPTION>
Y = (Yen)
1996 1997 1998 1998
------- ------ ----- -------
<S> <C> <C> <C> <C>
Interest income............................... Y 1,314 Y 346 Y 201 $ 1,661
Gains on sales of investments................. 2,322 2,679 -- --
Dividend income............................... 639 71 -- --
Write-off of capitalized software............. (446) (61) (12) (99)
Restructuring charges......................... -- -- (959) (7,926)
Exchange gain (loss), net..................... (2,502) -- 200 1,653
Other, net.................................... (18) 264 (128) (1,058)
------- ------ ----- -------
Y 1,309 Y3,299 Y(698) $(5,769)
======= ====== ===== =======
</TABLE>
During the fourth quarter of fiscal 1998, AJL recorded restructuring
charges of (Yen)959 ($7,926). Included in the charges are the expected costs for
planned work force reduction of (Yen)545 ($4,504) and distribution facility
consolidation of (Yen)414 ($3,421).
F-16
<PAGE> 66
13. UNAUDITED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
Y = (yen)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
1997
Net Sales.......................... Y 49,810 Y 46,491 Y 53,820 Y 53,241 Y 203,362
Gross Profit..................... 36,520 33,587 38,076 37,900 146,083
Net Income....................... Y 6,374 Y 4,680 Y 5,962 Y 6,101 Y 23,117
======== ======== ======== ======== ==========
Net Income per Share............. Y 43.41 Y 31.88 Y 40.66 Y 41.75 Y 157.70
======== ======== ======== ======== ==========
Net Income per ADS............... Y 21.71 Y 15.94 Y 20.33 Y 20.87 Y 78.85
======== ======== ======== ======== ==========
1998
Net Sales........................ Y 51,321 Y 47,969 Y 47,309 Y 45,859 Y 192,458
Gross Profit..................... 35,488 32,038 32,285 30,469 130,280
Net Income....................... Y 4,821 Y 3,139 Y 3,673 Y 1,146 Y 12,779
======== ======== ======== ======== ==========
Net Income per Share............. Y 33.45 Y 21.79 Y 25.50 Y 7.97 Y 88.71
======== ======== ======== ======== ==========
Net Income per ADS............... Y 16.73 Y 10.90 Y 12.75 Y 3.98 Y 44.36
======== ======== ======== ======== ==========
1998
Net Sales........................ $424,140 $396,438 $390,983 $379,000 $1,590,562
Gross Profit..................... 293,289 264,777 266,818 251,810 1,076,694
Net Income....................... $ 39,843 $ 25,942 $ 30,355 $ 9,471 $105,612
======== ======== ======== ======== ==========
Net Income per Share............. $ 0.28 $ 0.18 $ 0.21 $ 0.07 $0.73
======== ======== ======== ======== ==========
Net Income per ADS............... $ 0.14 $ 0.09 $ 0.11 $ 0.03 $0.37
======== ======== ======== ======== ==========
</TABLE>
14. SUBSEQUENT EVENTS
On October 16, 1998, a resolution was made by AJL's Board of Directors for
payment of year-end cash dividends to shareholders of record on August 31, 1998
of (yen)50 ($0.41) per share of common stock (yen)25 ($0.21) per ADS for a
total of (yen)7,201 ($59,512) which is contingent on shareholders' approval at
the Ordinary General Meeting of Shareholders to be held on November 25, 1998.
On October 16, 1998, AJL's Board of Directors resolved to present to AJL's
shareholders at AJL's Ordinary General Meeting of Shareholders to be held on
November 25, 1998, a proposal to amend the Articles of Association. This
amendment, if approved, would permit the Board of Directors to approve the
repurchase of up to 14,402,580 of AJL's shares of common stock for the purpose
of cancellation.
F-17
<PAGE> 67
AMWAY JAPAN LIMITED
STATEMENTS OF INCOME
(IN MILLIONS OF YEN AND THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Y = (yen)
THIRD QUARTER ENDED MAY 31, NINE MONTHS ENDED MAY 31,
---------------------------- ------------------------------
1998 1999 1999 1998 1999 1999
------- ------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net sales............................ Y47,309 Y33,188 $274,281 Y146,599 Y108,516 $896,827
Cost of sales........................ 15,024 10,195 84,256 46,788 35,823 296,058
------- ------- -------- -------- -------- --------
32,285 22,993 190,025 99,811 72,693 600,769
------- ------- -------- -------- -------- --------
Operating expenses:
Distributor incentives............. 13,679 9,876 81,620 41,829 32,234 266,397
Distribution expenses.............. 2,712 1,869 15,446 8,103 6,260 51,736
Selling and administrative
expenses........................ 7,805 6,065 50,124 23,757 19,815 163,760
------- ------- -------- -------- -------- --------
Total operating expenses............. 24,196 17,810 147,190 73,689 58,309 481,893
------- ------- -------- -------- -------- --------
Operating income................... 8,089 5,183 42,835 26,122 14,384 118,876
Other income -- net.................. 221 722 5,967 198 795 6,570
------- ------- -------- -------- -------- --------
Income before income taxes........... 8,310 5,905 48,802 26,320 15,179 125,446
Income taxes......................... 4,637 2,949 24,372 14,687 7,519 62,140
------- ------- -------- -------- -------- --------
Net income................. Y 3,673 Y 2,956 $ 24,430 Y 11,633 Y 7,660 $ 63,306
======= ======= ======== ======== ======== ========
Basic and diluted net income per
share.............................. Y 25.50 Y 20.52 $ 0.17 Y 80.75 Y 53.18 $ 0.44
======= ======= ======== ======== ======== ========
Basic and diluted net income per
ADS................................ Y 12.75 Y 10.26 $ 0.08 Y 40.38 Y 26.59 $ 0.22
======= ======= ======== ======== ======== ========
Dividends per share.................. Y 50.00 Y 50.00 $ 0.41
======== ======== ========
Dividends per ADS.................... Y 25.00 Y 25.00 $ 0.21
======== ======== ========
Weighted average number of shares
outstanding (000s)................. 144,026 144,026 144,056 144,026
======= ======= ======== ========
</TABLE>
See accompanying notes to financial statements.
F-18
<PAGE> 68
AMWAY JAPAN LIMITED
BALANCE SHEETS
(IN MILLIONS OF YEN AND THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
Y = (yen)
AUGUST 31, MAY 31, MAY 31,
1998 1999 1999
---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ Y 19,557 Y 4,711 $ 38,934
Investment funds....................................... 15,729 16,328 134,942
Short-term investments................................. 1,800 -- --
Accounts receivable.................................... 4,199 3,357 27,744
Inventories............................................ 16,640 10,359 85,612
Prepaid expenses....................................... 1,231 1,217 10,058
Other current assets................................... 624 427 3,529
-------- ------- --------
Total current assets........................... 59,780 36,399 300,819
Property and equipment, net.............................. 36,639 39,820 329,091
Investments in affiliates................................ 144 144 1,190
Leasehold deposits....................................... 2,419 2,318 19,157
Capitalized software costs............................... 570 611 5,049
Other.................................................... 494 511 4,223
-------- ------- --------
Total assets................................... Y100,046 Y79,803 $659,529
======== ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................... Y 17,949 Y 9,870 $ 81,570
Accounts payable to Amway Corporation.................. 3,391 2,833 23,413
Income taxes payable................................... 7,486 2,227 18,405
Allowance for sales returns............................ 4,608 4,375 36,157
Accrued distributor seminar expenses................... 2,659 2,324 19,207
Distributor deposits................................... 324 1,291 10,669
Consumption taxes payable.............................. 676 401 3,314
Dividend withholding taxes payable..................... -- 1,114 9,207
Accrued expenses and other current liabilities......... 2,075 1,251 10,339
-------- ------- --------
Total current liabilities...................... 39,168 25,686 212,281
-------- ------- --------
Shareholders' equity:
Common stock, no par value -- authorized: 250,400,800
shares; issued and outstanding: 144,025,800 shares
(equivalent to 288,051,600 ADSs, see Note 1)........ 12,462 12,462 102,992
Additional paid-in capital............................. 14,850 14,850 122,727
Legal reserve.......................................... 3,116 3,116 25,752
Retained earnings...................................... 30,450 23,689 195,777
-------- ------- --------
Total shareholders' equity..................... 60,878 54,117 447,248
-------- ------- --------
Total liabilities and shareholders' equity..... Y100,046 Y79,803 $659,529
======== ======= ========
</TABLE>
See accompanying notes to financial statements.
F-19
<PAGE> 69
AMWAY JAPAN LIMITED
STATEMENTS OF CASH FLOWS
(IN MILLIONS OF YEN AND THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
Y = (yen)
(UNAUDITED)
---------------------------------
NINE MONTHS ENDED MAY 31,
---------------------------------
1998 1999 1999
-------- -------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................ Y 11,633 Y 7,660 $ 63,306
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................ 1,498 1,430 11,818
(Gain)/Loss on investment funds...................... 135 (645) (5,331)
Gain on short-term investments....................... (10) (8) (66)
Loss on disposals of property and equipment.......... 196 49 405
Changes in assets and liabilities.................... (16,168) (5,915) (48,884)
-------- -------- ---------
Net cash (used in)/provided by operating
activities.................................... (2,716) 2,571 21,248
-------- -------- ---------
Cash flows from investing activities:
Purchases of property and equipment..................... (793) (4,760) (39,339)
Purchase of short-term investments...................... (3,197) -- --
Proceeds from sale of short-term investments............ 3,207 1,808 14,942
Proceeds from sale of investments in affiliates......... 100 -- --
Decrease in investment funds............................ 60 46 380
Capitalized software costs.............................. (67) (185) (1,529)
Net change in leasehold deposits and other.............. 166 77 637
-------- -------- ---------
Net cash used in investing activities........... (524) (3,014) (24,909)
-------- -------- ---------
Cash flows from financing activities:
Dividends paid.......................................... (14,415) (14,403) (119,033)
Repurchase of common stock.............................. (826) -- --
-------- -------- ---------
Net cash used in financing activities........... (15,241) (14,403) (119,033)
-------- -------- ---------
Net decrease in cash and cash equivalents....... (18,481) (14,846) (122,694)
Cash and cash equivalents at beginning of year............ 30,442 19,557 161,628
-------- -------- ---------
Cash and cash equivalents at end of period................ Y 11,961 Y 4,711 $ 38,934
======== ======== =========
Supplemental disclosure of cash flow information:
Income taxes paid....................................... Y 23,591 Y 12,735 $ 105,248
======== ======== =========
</TABLE>
See accompanying notes to financial statements.
F-20
<PAGE> 70
AMWAY JAPAN LIMITED
NOTES TO FINANCIAL STATEMENTS
(IN MILLIONS OF YEN AND THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION
The accompanying financial statements have not been audited by independent
accountants, except for the balance sheet at August 31, 1998. In the opinion of
AJL's management, the financial statements reflect all adjustments, including
the use of management's estimates, necessary to present fairly, in accordance
with accounting principles generally accepted in Japan ("Japanese GAAP"), which
differ in certain material respects from those in the United States ("U.S.
GAAP") as described in Note 5, AJL's results of operations for the third quarter
and nine months ended May 31, 1998 and 1999, the financial position at August
31, 1998 and May 31, 1999, and the cash flows for the nine months ended May 31,
1998 and 1999. All such adjustments are of a normal recurring nature. Where
necessary to achieve a fair presentation of results of operations for each
interim period, certain operating expenses are allocated to interim periods
based on an estimate of time expired, benefit received or activity associated
with the periods. However, 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.
In preparing these financial statements, certain amounts have been
reclassified to present these financial statements in a format which is more
familiar to readers outside of Japan. These financial statements should be read
in conjunction with the financial statements (including Notes thereto) contained
in AJL's Annual Report on Form 20-F for the fiscal year ended August 31, 1998.
The statements of cash flows have been prepared for the convenience of
readers outside of Japan, although such statements are not required as part of
the basic financial statements in Japan. For purposes of the statement of cash
flows, AJL considers all time deposits and negotiable certificates of deposit
with a maturity of one year or less to be cash equivalents.
The U.S. dollar amounts included herein are, solely for convenience,
calculated at the approximate rate of exchange prevailing on May 28, 1999 of
U.S.$1.00 = (yen)121. The U.S. dollar amounts should not be construed as
representations that the Japanese yen have been, or could in the future be,
converted into U.S. dollars at this or any other rate of exchange.
AJL's common stock is traded on the Japanese over-the-counter market, and
on the New York Stock Exchange in the form of American Depository Shares
("ADSs"), each of which represents one-half of one share of common stock.
2. INVESTMENT FUNDS
Investment funds are carried at the lower of aggregate cost or market of
each fund managed by an independent investment advisor. The aggregate fair
values of investment funds as of August 31, 1998 and May 31, 1999 are
(yen)15,760 and (yen)16,372 ($135,306 ), respectively.
3. INVENTORIES
Inventories consist of merchandise purchased for resale and are stated at
the lower of cost or market. Cost is determined using the first-in, first-out
(FIFO) method.
4. PROPERTY AND EQUIPMENT
Property and equipment are stated at original cost net of accumulated
depreciation. Depreciation is computed using the declining-balance method,
except for buildings for which the straight-line method is used, over the
estimated useful lives of the assets.
F-21
<PAGE> 71
5. RECONCILIATION OF JAPANESE AND U.S. ACCOUNTING PRINCIPLES
AJL prepares its accounts in accordance with Japanese GAAP, which differ in
certain material respects from U.S. GAAP. The significant differences relate to
the following items:
Income Taxes -- In accordance with Japanese GAAP, income taxes are provided
only for amounts currently payable for each year. U.S. GAAP requires that
deferred income taxes be recognized for temporary differences between the tax
basis of assets and liabilities and the reported amounts in the financial
statements. On March 31, 1998, a reduction of the income tax rate was enacted in
Japan, and accordingly, the effective statutory tax rate was lowered to
approximately 47.7% effective for the year ending August 31, 1999 and
thereafter. Under U.S. GAAP, the adjustment to deferred tax assets and
liabilities resulting from this future change in the income tax rate was charged
to income for the year ended August 31, 1998 in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109.
Pension Costs -- Under Japanese GAAP, the amounts contributed to AJL's
funded defined benefit pension plan, including amortization of prior service
costs, are charged to expense when paid. Under U.S. GAAP, net periodic pension
costs, as defined by SFAS No. 87, "Employers' Accounting for Pensions," are
charged to expense.
Investment Funds -- Under Japanese GAAP, investment funds are carried at
the lower of aggregate cost or market of each fund with net unrealized losses
included in income. Under U.S. GAAP, available-for-sale securities included in
investment funds are carried at fair value with unrealized gains and losses, net
of tax, recorded as a separate component of shareholders' equity.
Software Costs -- AJL capitalizes the costs of both purchased software and
modification costs paid to unrelated parties under Japanese GAAP, whereas only
purchased software costs are capitalized under U.S. GAAP.
Stock Issue Costs -- Stock issue costs are charged to expense when paid
under Japanese GAAP, whereas such costs are charged to additional paid-in
capital under U.S. GAAP.
Cash Dividends per share -- Under Japanese GAAP, cash dividends per share
are based on interim dividends declared for the first half of the year. Under
U.S. GAAP, cash dividends per share are based on dividends declared during the
periods reported.
Land Acquisition Costs -- Taxes and certain other direct costs incurred in
connection with land acquisitions are being expensed as incurred in accordance
with Japanese GAAP, whereas under U.S. GAAP these costs would be capitalized.
F-22
<PAGE> 72
The following table summarizes the effects on net income of the differences
between Japanese GAAP and U.S. GAAP:
<TABLE>
<CAPTION>
Y = (yen)
THIRD QUARTER ENDED NINE MONTHS ENDED
MAY 31, MAY 31,
------------------------- ---------------------------
1998 1999 1999 1998 1999 1999
------ ------ ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Amounts as shown in the Japanese GAAP
consolidated financial statements........ Y3,673 Y2,956 $24,430 Y11,633 Y 7,660 $63,306
Adjustments of:
Income taxes............................. (7) 325 2,686 (316) (419) (3,463)
Defined benefit pension plan............. 4 2 17 29 36 298
Software costs........................... 3 (2) (17) 31 (44) (364)
Investment funds......................... (66) (565) (4,670) 346 (502) (4,149)
Others................................... -- (1) (8) (20) 121 1,000
------ ------ ------- ------- ------- -------
Amounts according to U.S. GAAP............. Y3,607 Y2,715 $22,438 Y11,703 Y 6,852 $56,628
====== ====== ======= ======= ======= =======
Basic and diluted net income per share
under U.S. GAAP.......................... Y25.05 Y18.85 $0.16 Y 81.24 Y 47.57 $ 0.39
====== ====== ======= ======= ======= =======
Basic and diluted net income per ADS under
U.S. GAAP................................ Y12.52 Y 9.43 $0.08 Y 40.62 Y 23.79 $ 0.20
====== ====== ======= ======= ======= =======
Dividends per share under U.S. GAAP........ Y100.00 Y100.00 $ 0.83
======= ======= =======
Dividends per ADS under U.S. GAAP.......... Y 50.00 Y 50.00 $ 0.41
======= ======= =======
</TABLE>
The following table summarizes the effects on shareholders' equity of the
differences between Japanese GAAP and U.S. GAAP :
<TABLE>
<CAPTION>
Y = (Yen)
AUGUST 31, MAY 31, MAY 31,
1998 1999 1999
---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Amounts as shown in the Japanese GAAP financial
statements............................................. Y60,878 Y54,117 $447,248
Adjustments for:
Deferred income tax.................................... 5,208 4,787 39,562
Prepaid pension cost................................... 604 641 5,298
Reversal of capitalization of software costs........... (385) (429) (3,545)
Land acquisition costs................................. 399 399 3,297
Investment funds:
Valuation........................................... 615 113 934
Net unrealized loss, net of tax, recorded in
shareholders' equity.............................. (305) (36) (298)
Other.................................................... (141) 1 8
------- ------- --------
Amounts according to U.S. GAAP........................... Y66,873 Y59,593 $492,504
======= ======= ========
</TABLE>
Comprehensive Income -- In June 1997, the U.S. 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. Comprehensive income includes all changes in equity during
a period except those resulting from investments by and distributions to AJL's
shareholders. AJL adopted this statement for its U.S. GAAP reporting purposes
effective September 1, 1998. Total comprehensive income under U.S. GAAP, net of
related tax effects, was (yen)11,535 and (yen)7,121 ($58,851) for the nine
months ended May 31, 1998 and 1999, respectively.
Cash Flow Disclosure -- U.S. GAAP requires that for cash flow reporting,
cash and cash equivalents include only those time deposits with original
maturities of three months or less. Under U.S. GAAP, cash and cash equivalents
were (yen)10,544 and (yen)4,711 ($38,934) at May 31, 1998 and 1999,
respectively.
F-23
<PAGE> 73
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal, ADR certificates evidencing ADSs and any other required
documents should be sent or delivered by each holder of ADSs 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 outside of Japan 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 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 0731
</TABLE>
For holders of ADSs, questions and requests for assistance may be directed
to the Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth 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. To
confirm the delivery of your ADSs, you are directed to contact the Depositary.
With respect to the Common Stock, Purchaser has appointed Salomon Smith Barney
Limited as its sole tender offer agent in Japan which has appointed The Nikko
Securities Co., Ltd. as its sub-agent. In addition, Morgan Stanley Dean Witter
Japan Limited will act as sole intermediary securities firm in Japan. For a
holder of Common Stock, questions and requests for assistance or for copies of
the Explanatory Statement and tender offer application form or English
translations thereof should be directed to such holder's standing agent in
Japan. Holders of Common Stock may NOT tender Common Stock into the Offer by
executing and delivering the Letter of Transmittal. Common Stock may only be
tendered into the Offer in accordance with the terms and conditions of the
Explanatory Statement.
THE INFORMATION AGENT FOR THE OFFER OUTSIDE OF JAPAN 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 OUTSIDE OF JAPAN 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 10022
440 South LaSalle Street (877) 576-0606 (toll free)
Chicago, IL 60605
(312) 706-4411 (call collect)
</TABLE>
<PAGE> 1
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO TENDER AMERICAN DEPOSITARY SHARES,
EACH REPRESENTING ONE-HALF OF
ONE SHARE OF COMMON STOCK
OF
AMWAY JAPAN LIMITED
PURSUANT TO THE OFFER TO PURCHASE,
DATED NOVEMBER 18, 1999
OF
N.A.J. CO., LTD.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE OUTSIDE OF JAPAN AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer outside of Japan 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 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 LETTER OF TRANSMITTAL 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.
This Letter of Transmittal is to be used only if American Depositary
Receipts ("ADRs") evidencing American Depositary Shares ("ADSs") representing
shares of Common Stock, no par value, of Amway Japan Limited (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 ADSs 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
ADSs attributable to their accounts may not use this Letter of Transmittal to
direct the tender of such ADSs. Participants may only use the separate election
form sent to them by the trustee of such Plan. See Instruction 11.
No alternative, conditional or contingent tenders will be accepted, and no
fractional ADSs will be purchased.
ONLY ADSS MAY BE TENDERED INTO THE OFFER PURSUANT TO THIS LETTER OF
TRANSMITTAL. A HOLDER OF COMMON STOCK DESIRING TO ACCEPT THE OFFER SHOULD
OBTAIN, OR, IF RESIDENT OUTSIDE OF JAPAN, REQUEST FROM ITS STANDING AGENT IN
JAPAN, COPIES OF THE JAPANESE TENDER OFFER EXPLANATORY STATEMENT, THE JAPANESE
COUNTERPART OF THE OFFER TO PURCHASE, AND THE TENDER OFFER APPLICATION FORM, THE
JAPANESE COUNTERPART OF THE LETTER OF TRANSMITTAL, BY WHICH SUCH HOLDER MAY
TENDER COMMON STOCK INTO THE OFFER. HOLDERS OF COMMON STOCK MAY NOT TENDER
COMMON STOCK INTO THE OFFER PURSUANT TO THIS LETTER OF TRANSMITTAL. SEE "THE
OFFER -- PROCEDURE FOR TENDERING SHARES" IN THE OFFER TO PURCHASE.
<PAGE> 2
<TABLE>
- -------------------------------------------------------------------------- --------------------------------------------------------
DESCRIPTION OF ADSS TENDERED
- -------------------------------------------------------------------------- --------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) ADSS TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON ADR(S), IF ANY) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -------------------------------------------------------------------------- --------------------------------------------------------
<CAPTION>
TOTAL NUMBER
OF ADSS NUMBER OF
ADR REPRESENTED ADSS
NUMBER(S)* BY ADR(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 ADSs
represented by any ADR delivered to the Depositary are being tendered.
See Instruction 4.
- --------------------------------------------------------------------------
</TABLE>
DIVIDEND REINVESTMENT PLAN SHARES
(SEE INSTRUCTION 12)
To be completed ONLY if shares held in the Shareholder Services Program for
Amway Japan Limited (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 ADSS ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
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 N.A.J. Co.,
Ltd., a joint stock corporation (kabushiki kaisha) organized under the laws of
Japan (the "Company") and an entity controlled, directly or indirectly, by the
DeVos and Van Andel families and certain corporations, trusts and other entities
established by or for the benefit of such families, the number of ADSs indicated
below, 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"). Each ADS represents one-half of one
share of Common Stock.
Subject to and effective upon acceptance for payment of and payment for the
ADSs 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 ADSs 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 ADSs, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to (a) deliver ADRs evidencing such ADSs, or
transfer ownership of such ADSs 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 ADSs, 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 ADSs tendered hereby and has read, understands
and agrees to be bound by, all the 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, ADSs tendered or may accept for
payment fewer than all of the ADSs tendered hereby. The undersigned understands
that tenders of ADSs 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 ADS Purchase Price (as defined in
the Offer to Purchase) of any ADSs purchased (less the amount of any U.S. backup
withholding and Japanese income tax which may be required to be withheld) and
return any ADSs not validly tendered and not purchased, in the name(s) of the
undersigned, and in the case of ADSs tendered by book-entry transfer, by credit
to the account at the Book-Entry Transfer Facility through which the ADSs were
originally tendered. Similarly, unless otherwise indicated herein in the box
entitled "Special Delivery Instructions," please mail the check for the ADS
Purchase Price of any ADSs purchased (less the amount of any U.S. backup
withholding and Japanese income tax which may be required to be withheld) and
return any ADSs 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 ADS Purchase Price of any ADSs purchased (less the amount of
any U.S. backup withholding and Japanese income tax which may be required to be
withheld) and return any ADSs not validly tendered and not purchased in the
name(s) of, and deliver such check and any ADRs to, the person(s) so indicated.
The undersigned recognizes that the Company has no obligation, pursuant to the
"Special Payment Instructions," to transfer any ADSs from the name(s) of the
registered holder(s) thereof, or to order the registration or transfer of such
ADSs tendered by book-entry transfer, if the Company does not accept for payment
any of the ADSs 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 ADS Purchase Price of ADSs
purchased (less the amount of any U.S. backup withholding and Japanese
income tax which may be required to be withheld) or ADRs evidencing ADSs
not validly tendered and not purchased are to be issued in the name of
someone other than the undersigned, or if ADSs delivered by book-entry
transfer that are not validly tendered and not purchased are to be
returned by credit to an account maintained by a Book-Entry Transfer
Facility.
Issue [ ] Check [ ] ADR(s) to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION NO.
OR SOCIAL SECURITY NO.)
[ ] Credit unpurchased ADSs tendered by book-entry transfer and not
purchased to the DTC 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 ADS Purchase Price of ADSs
purchased (less the amount of any U.S. backup withholding and Japanese
income tax which may be required to be withheld) or ADRs evidencing ADSs
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 ADSs Tendered.'
Mail [ ] Check [ ] ADR(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
the ADR(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>
<C> <S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE Enter your identification number in the appropriate Social Security Number OR
FORM W-9 box. For most individuals, this is your Social Employer Identification Number
Security Number. If you do not have a number, see ------------------------------------
How to Obtain a TIN in the enclosed Guidelines.
----------------------------------------------------------------------------------------------
NOTE: If the account is in more than one name, see the chart on page 2 of enclosed
Guidelines for guidelines on which number to give the payer.
----------------------------------------------------------------------------------------------
DEPARTMENT OF THE Certificate: Under penalties of perjury, I certify
TREASURY, INTERNAL that:
REVENUE SERVICE (1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me), and
PAYER'S REQUEST (2) I am not subject to backup withholding either For Payees Exempt From Backup
FOR because I have not been notified by the Withholding (see enclosed
TAXPAYER Internal Revenue Service ("IRS") that I am Guidelines)
IDENTIFICATION subject to backup withholding as a result of a
NO. 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>
<TABLE>
<C> <S> <C> <C>
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 ADSs) of the ADRs 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 ADSs 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 ADSs. This Letter of Transmittal
is to be used only if ADRs are to be tendered herewith unless an Agent's Message
is utilized or if delivery of ADSs 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 ADSs, ADRs evidencing all
physically delivered ADSs, or a timely confirmation of a book-entry transfer of
all ADSs 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 its addresses set forth on the front page of this Letter of
Transmittal on or prior to the ADS Expiration Date (as defined in the Offer to
Purchase). See Instruction 10 and "The Offer -- Procedure for Tendering
Shares -- ADS Book Entry Delivery" and " -- Japanese Tax Consequences" in the
Offer to Purchase.
ONLY ADSS MAY BE TENDERED INTO THE OFFER PURSUANT TO THE LETTER OF
TRANSMITTAL. A HOLDER OF COMMON STOCK DESIRING TO ACCEPT THE OFFER SHOULD
OBTAIN, OR, IF RESIDENT OUTSIDE OF JAPAN, REQUEST FROM ITS STANDING AGENT IN
JAPAN, COPIES OF THE JAPANESE TENDER OFFER EXPLANATORY STATEMENT, THE JAPANESE
COUNTERPART OF THE OFFER TO PURCHASE (THE "EXPLANATORY STATEMENT"), AND THE
TENDER OFFER APPLICATION FORM, THE JAPANESE COUNTERPART OF THE LETTER OF
TRANSMITTAL, BY WHICH SUCH HOLDER MAY TENDER COMMON STOCK INTO THE OFFER.
HOLDERS OF COMMON STOCK MAY NOT TENDER COMMON STOCK INTO THE OFFER PURSUANT TO
THE LETTER OF TRANSMITTAL. SEE "THE OFFER -- PROCEDURE FOR TENDERING SHARES" IN
THE OFFER TO PURCHASE.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING ADRS, 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 ADSs 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 ADSs.
3. Inadequate Space. If the space provided in the box captioned
"Description of ADSs Tendered" is inadequate, the ADRs and/or the number of ADSs
evidenced by such ADRs and the number of ADSs 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 ADSs evidenced by any ADR delivered to the
Depositary are to be tendered, fill in the number of ADSs that are to be
tendered in the box entitled "Number of ADSs Tendered." In such case, a new ADR
for the remainder of the ADSs evidenced by the old ADR 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 ADS
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 ADSs evidenced by ADRs delivered to the Depositary will
be deemed to have been tendered unless otherwise indicated.
5. Lost, Destroyed or Stolen ADRs. If any ADR(s) evidencing ADSs has been
lost, destroyed or stolen, the ADS holder should promptly notify the Depositary.
The ADS holder will then be instructed as to the steps that must be taken in
order to replace the ADR(s). This Letter of Transmittal and related documents
cannot be processed until the procedures for replacing lost, destroyed or stolen
ADRs have been followed.
6. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the ADRs
evidencing the ADSs tendered hereby, the signature(s) must correspond with the
name(s) as written on the face of the ADRs without any change whatsoever.
If any of the ADSs tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the ADSs 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 ADRs.
If this Letter of Transmittal is signed by the registered holder(s) of the
ADRs evidencing the ADSs tendered hereby, no endorsement of ADRs or separate
stock powers are required unless payment of the ADS Purchase Price (less the
amount of any U.S. backup withholding which may be required to be withheld) is
to be made, or ADSs 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 ADRs 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 ADSs tendered hereby, ADRs 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 ADRs evidencing such ADSs. 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 ADRs 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.
<PAGE> 8
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 ADSs to it or its order, pursuant to the Offer. If, however, payment of
the ADS Purchase Price (less the amount of any U.S. backup withholding which may
be required to be withheld) is to be made to, or ADSs not validly tendered and
not purchased are to be returned, in the name of any person other than the
registered holder(s), or tendered ADSs 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 ADS Purchase Price unless satisfactory
evidence of the payment of such taxes, or exemption therefrom is submitted. See
"The Offer -- Acceptance for Payment of Shares and Payment of Purchase Price" in
the Offer to Purchase and Instruction 8.
8. Special Payment and Delivery Instructions. If the check for the ADS
Purchase Price (less the amount of any U.S. backup withholding which may be
required to be withheld) of any ADSs purchased is to be issued, or any ADSs 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 or
any ADSs 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
of ADSs tendering ADSs by book-entry transfer may request that ADSs 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 ADSs 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 ADSs 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 ADSs 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 of ADSs 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 ADSs
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.
10. Japanese Income Tax Withholding. Any gain derived from the sale of
Shares by a non-resident holder (either individual or corporate) which does not
have a permanent establishment in Japan in general is not subject to Japanese
income tax. However, a non-resident individual holder who (i) both is a resident
of the United States under the Convention Between the United States and Japan
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
Respect to Tax on Income dated March 8, 1971 (the "Convention") and is present
in Japan for a period of periods aggregating more than 183 days during the
taxable year of the sale or (ii) is not a resident of the United States under
the Convention (or a resident of any other country with which Japan has a tax
treaty which restricts the taxation in Japan of capital gain) and sells the
Shares while visiting Japan, may be subject to Japanese income tax with respect
to any such gain.
Any gain derived from the sale of Shares pursuant to the Offer by a
non-resident holder (either individual or corporate) which (i) has a permanent
establishment in Japan, (ii) does not hold the Shares through said permanent
establishment, (iii) is a resident of the United States under the Convention (or
is a resident of any other country with which Japan has a tax treaty under which
capital gain not attributable to said permanent establishment in general is
exempt from Japanese income tax), and (iv) is not otherwise subject to Japanese
income tax on such gain under the Convention (or such other treaty) as described
above, will not be subject to Japanese income tax. However, any other
non-resident holder (either individual or corporate) which has a permanent
establishment in Japan may be subject to Japanese income tax with respect to any
such gain.
In the event that Japanese income tax applies to any gain from the sale of
Shares, a non-resident individual holder (i) may elect by marking the
appropriate box on this Letter of Transmittal to have the Japanese income tax
liability satisfied by withholding at the rate of 1.05% of the Purchase Price
provided that the holder has a permanent establishment in Japan and the sale of
Shares is conducted through a securities company or bank in Japan or otherwise
(ii) must report, on an annual tax return to be filed in Japan, the gain
together with gain and losses derived from other securities (if any) during the
year and pay Japanese income tax at a rate of 20% on the net gains from such
securities. A non-resident corporate holder will be required to report the gain
from the sale of Shares pursuant to the Offer as ordinary income on its annual
corporate tax return and pay Japanese income taxes at an effective rate of
approximately 42%. See "The Offer -- Japanese Tax Consequences" in the Offer to
Purchase.
In the event that a holder does not provide the legal status and residency
information requested on the signature page above, or, if requested,
satisfactory evidence of such holder's status as an individual, such holder will
be treated as a corporation for purposes of Japanese withholding tax.
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
ADSs 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 ADSs allocated to the participant's 401(k) Plan
account. If a participant's 401(k) Plan ADSs are purchased pursuant to the
Offer, the number of ADSs allocated to the participant's 401(k) Plan account
will be reduced by the number of such participant's ADSs so purchased. Any
401(k) Plan ADSs tendered but not purchased will be returned to the
participant's 401(k) Plan account. Participants in the 401(k) Plan may not use
this Letter of Transmittal to direct the tender of ADSs attributable to the
participant's 401(k) Plan account, but must only 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" in the Offer to
Purchase.
<PAGE> 9
12. 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" in the Offer to Purchase.
13. Irregularities. All questions as to the ADS Purchase Price, the
deductions to be made from the ADS Purchase Price, the number of ADSs tendered
and accepted, the form of documents, and the validity, eligibility (including
time of receipt) and acceptance for payment of any tender of ADSs 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 ADSs 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 ADSs, 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 ADSs 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
Agents, 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.
14. Requests for Assistance or Additional Copies. For holders of ADSs,
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. With respect to
the Common Stock, the Company has appointed Nikko Salomon Smith Barney Limited
(the "Agent") to act as its sole tender offer agent in Japan. The Agent, in
turn, has appointed The Nikko Securities Co., Ltd. as its sub-agent. In
addition, Morgan Stanley Dean Witter Japan Limited will act as the sole
intermediary securities firm in Japan. For a holder of Common Stock, questions
and requests for assistance or for copies of the Explanatory Statement and
tender offer application form or English translations thereof may be directed to
such holder's standing agent in Japan. Holders of Common Stock may not tender
Common Stock into the Offer by executing and delivering the Letter of
Transmittal. Common Stock may only be tendered into the Offer in accordance with
the terms and conditions of the Explanatory Statement.
The Information Agent for the Offer outside of Japan is:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 State Street
New York, New York 10004
Banks & Brokers Call Collect: (212) 440-9800
or
All Others Call Toll-Free: (800) 223-2064
The Dealer Managers for the Offer outside of Japan are:
<TABLE>
<S> <C>
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, Illinois 60605
(212) 706-4411 (call collect)
</TABLE>
<PAGE> 1
Exhibit (a)(3)
OFFER TO PURCHASE FOR CASH
BY
N.A.J. CO., LTD.
FOR
ALL OUTSTANDING SHARES OF THE COMMON STOCK
AND AMERICAN DEPOSITARY SHARES
OF
AMWAY JAPAN LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE OUTSIDE OF JAPAN 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 N.A.J. Co., Ltd., a joint stock corporation
(kabushiki kaisha) organized under the laws of Japan (the "Company") and an
entity controlled, directly or indirectly, by the DeVos and Van Andel families
and certain corporations, trusts, and other entities established by or for the
benefit of such families (the "Principal Shareholders"), to act as Dealer
Managers outside of Japan in connection with its offer (the "Offer") to purchase
all the outstanding shares of the Common Stock, no par value (the "Common
Stock"), and American Depositary Shares, each representing one-half of one share
of Common Stock (the "ADSs" and, together with the Common Stock, the "Shares"),
that are beneficially owned by the shareholders of Amway Japan Limited, a joint
stock corporation (kabushiki kaisha) organized under the laws of Japan ("AJL").
The Company has been informed by the Principal Shareholders that they will not
tender their Shares ("Non-Tendered Shares") in response to the Offer (other than
550,000 Shares owned by one of the charitable foundations established by certain
of the Principal Shareholders ("Foundation Tendered Shares")). The purchase
price for each share of Common Stock will be (Yen)1,490 in cash (the "Common
Stock Purchase Price"). The purchase price for each ADS purchased in the Offer
will be (Yen)745 in cash (the "ADS Purchase Price" and, together with the Common
Stock Purchase Price, the "Purchase Price"), which is equal to one-half of the
Common Stock Purchase Price (because each ADS represents one-half of one share
of Common Stock). The ADS Purchase Price will be payable in and converted into
U.S. dollars using the noon buying rate in New York City for cable transfers of
yen announced for customs purposes by the Federal Reserve Bank of New York on
the date of settlement of the Offer in Japan (the "Common Stock Settlement
Date"), which is presently anticipated to be not later than six trading days
after the expiration of the Offer in Japan (or, if necessary for administrative
convenience, on the business day next preceding the Common Stock Settlement
Date). The ADSs are evidenced by American Depositary Receipts ("ADRs"). There
will be deducted from the Purchase Price paid to each holder any U.S. backup
withholding and Japanese income taxes which may be required to be withheld. The
Offer is for all Shares of AJL or any lesser number of Shares tendered and not
withdrawn. With respect to the Common Stock, the Offer will expire in Japan,
unless extended, on December 17, 1999, and, with respect to the ADSs, it will
expire outside of Japan, unless extended, at 12:00 midnight, New York City time,
on December 17, 1999. The Company is making the Offer outside Japan in
accordance with the terms and conditions described in the Company's Offer to
Purchase, dated November 18, 1999 (the "Offer to Purchase"), and the related
Letter of Transmittal (the "Letter of Transmittal"). The Company has appointed
Nikko Salomon Smith Barney Limited (the "Agent") to act as its sole offer agent
in Japan. The Agent, in turn, has appointed The Nikko Securities Co., Ltd. as
its sub-agent. In addition, Morgan Stanley Dean Witter Japan Limited will act as
sole intermediary securities firm in Japan.
ONLY ADSS MAY BE TENDERED INTO THE OFFER PURSUANT TO THE LETTER OF
TRANSMITTAL. IN ORDER TO TENDER COMMON STOCK INTO THE OFFER, EACH HOLDER OF
COMMON STOCK MUST OBTAIN, OR, IF RESIDENT OUTSIDE OF JAPAN, REQUEST FROM ITS
STANDING AGENT IN JAPAN, COPIES OF THE JAPANESE TENDER OFFER EXPLANATORY
STATEMENT, THE JAPANESE COUNTERPART OF THE OFFER TO PURCHASE, INCLUDING THE
TENDER OFFER APPLICATION FORM, THE JAPANESE COUNTERPART OF THE LETTER OF
TRANSMITTAL, BY WHICH SUCH HOLDER MAY TENDER COMMON STOCK INTO THE OFFER.
HOLDERS OF COMMON STOCK MAY NOT TENDER COMMON STOCK INTO THE OFFER PURSUANT TO
THE LETTER OF TRANSMITTAL. SEE "THE OFFER -- PROCEDURE FOR TENDERING SHARES" IN
THE OFFER TO PURCHASE.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED OR SUBJECT TO ANY OTHER CONDITIONS.
<PAGE> 2
THE BOARD OF DIRECTORS OF AJL (WITH MESSRS. DEVOS, VAN ANDEL AND SUMIHIRO
NOT PARTICIPATING) RECOMMENDS THAT THE HOLDERS OF SHARES, OTHER THAN FOUNDATION
TENDERED SHARES AND 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
ADSs 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 ADSs 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 and ADSs;
4. Letter of Transmittal for your use and for the information of
your clients; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER AND
WITHDRAWAL RIGHTS WILL EXPIRE OUTSIDE JAPAN 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 ADSs pursuant to the Offer other than fees paid to the
Agent, 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 ADSs held by you as a nominee or in a fiduciary capacity. However,
applicable U.S. backup withholding and Japanese income taxes will be withheld
from the gross proceeds of all purchases of Shares pursuant to the Offer. See
"The Offer -- Acceptance for Payment of Shares and Payment of Purchase Price"
in the Offer to Purchase and Instructions 7, 9 and 10 of the Letter of
Transmittal.
In order to accept the Offer with respect to ADSs, a duly executed and
properly completed Letter of Transmittal and any other required documents should
be sent to the Depositary with either ADRs evidencing the tendered ADSs 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.
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 AGENT, 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)(4)
OFFER TO PURCHASE FOR CASH
BY
N.A.J. CO., LTD.
FOR
ALL OUTSTANDING SHARES OF COMMON STOCK
AND AMERICAN DEPOSITARY SHARES
OF
AMWAY JAPAN LIMITED
AT (Yen)1,490 PER SHARE OF COMMON STOCK
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE OUTSIDE OF JAPAN 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 N.A.J.
Co., Ltd., a joint stock corporation (kabushiki kaisha) organized under the laws
of Japan (the "Company") and an entity controlled, directly or indirectly, by
the DeVos and Van Andel families and certain corporations, trusts and other
entities established by or for the benefit of such families, of all the
outstanding shares of the Common Stock, no par value (the "Common Stock"), and
American Depositary Shares, each representing one-half of one share of Common
Stock (the "ADSs" and, together with the Common Stock, the "Shares"), that are
beneficially owned by the shareholders of Amway Japan Limited, a joint stock
corporation (kabushiki kaisha) organized under the laws of Japan ("AJL"). The
purchase price for each share of Common Stock will be (Yen)1,490 in cash (the
"Common Stock Purchase Price"). The purchase price for each ADS purchased in the
Offer will be (Yen)745 in cash (the "ADS Purchase Price" and, together with the
Common Stock Purchase Price, the "Purchase Price"), which is equal to one-half
of the Common Stock Purchase Price (because each ADS represents one-half of one
share of Common Stock). The ADS Purchase Price will be payable in and converted
into U.S. dollars using the noon buying rate in New York City for cable
transfers of yen announced for customs purposes by the Federal Reserve Bank of
New York on the date of settlement of the Offer in Japan (the "Common Stock
Settlement Date"), which is presently anticipated to be not later than six
trading days after the expiration of the Offer in Japan (or, if necessary for
administrative convenience, on the business day next preceding the Common Stock
Settlement Date). The ADSs are evidenced by American Depositary Receipts
("ADRs"). There will be deducted from the Purchase Price paid to each holder any
U.S. backup withholding and Japanese income taxes which may be required to be
withheld. The Offer is for all Shares of AJL or any lesser number of Shares
tendered and not withdrawn. With respect to the Common Stock, the Offer will
expire in Japan, unless extended, on December 17, 1999, and, with respect to the
ADSs, it will expire outside of Japan, unless extended, at 12:00 midnight, New
York City time, on December 17, 1999.
WE ARE THE HOLDER OF RECORD OF ADSS HELD FOR YOUR ACCOUNT. AS SUCH, WE ARE
THE ONLY ONES WHO CAN TENDER YOUR ADSS, 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 ADSS HELD BY US FOR YOUR ACCOUNT. ONLY
ADSS MAY BE TENDERED INTO THE OFFER PURSUANT TO THE LETTER OF TRANSMITTAL. A
HOLDER OF COMMON STOCK DESIRING TO ACCEPT THE OFFER SHOULD OBTAIN, OR, IF
RESIDENT OUTSIDE OF JAPAN, REQUEST FROM ITS STANDING AGENT IN JAPAN, COPIES OF
THE JAPANESE TENDER OFFER EXPLANATORY STATEMENT, THE JAPANESE COUNTERPART OF THE
OFFER TO PURCHASE, AND THE TENDER OFFER APPLICATION FORM, THE JAPANESE
COUNTERPART OF THE LETTER OF TRANSMITTAL, BY WHICH SUCH HOLDER MAY TENDER COMMON
STOCK INTO THE OFFER. HOLDERS OF COMMON STOCK MAY NOT TENDER COMMON STOCK INTO
THE OFFER PURSUANT TO THIS LETTER OF TRANSMITTAL. 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 ADSs 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 outside of Japan 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.
<PAGE> 2
4. Only ADSs may be tendered into the Offer pursuant to this Letter
of Transmittal. A holder of Common Stock desiring to accept the Offer
should obtain, or, if resident outside of Japan, request from its standing
agent in Japan, copies of the Japanese Tender Offer Explanatory Statement,
the Japanese counterpart of the Offer to Purchase, and the tender offer
application form, the Japanese counterpart of the Letter of Transmittal, by
which such holder may tender Common Stock into the Offer. Holders of Common
Stock may not tender Common Stock into the Offer pursuant to this Letter of
Transmittal. See "The Offer -- Procedure for Tendering Shares" in the Offer
to Purchase.
5. Tendering holders of ADSs will not be obligated to pay any
brokerage commissions or solicitation fees on the Company's purchase of the
ADSs pursuant to the Offer, except that any U.S. backup withholding and
Japanese income taxes, if any, 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" in the Offer to
Purchase and Instructions 7, 9 and 10 of the Letter of Transmittal.
If you wish to have us tender any or all of your ADSs, 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 ADSs, we will tender all such ADSs 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 ADS
EXPIRATION DATE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE OUTSIDE OF JAPAN 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 ADSs 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,
J.P. Morgan & Co., or Morgan Stanley Dean Witter Japan Limited or Nikko Salomon
Smith Barney Limited or one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
<PAGE> 3
INSTRUCTION FORM
WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
BY
N.A.J. CO., LTD.
FOR
ALL OUTSTANDING SHARES OF COMMON STOCK
AND AMERICAN DEPOSITARY SHARES
OF
AMWAY JAPAN LIMITED
AT (Yen)1,490 PER SHARE OF COMMON STOCK
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE OUTSIDE OF JAPAN 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 N.A.J. Co., Ltd., a joint stock corporation (kabushiki kaisha)
organized under the laws of Japan (the "Company") and an entity controlled,
directly or indirectly, by the DeVos and Van Andel families and certain
corporations, trusts and other entities established by or for the benefit of
such families, of all the outstanding shares of the Common Stock, no par value
(the "Common Stock"), and American Depositary Shares, each representing one-half
of one share of Common Stock (the "ADSs" and, together with the Common Stock,
the "Shares"), that are beneficially owned by the shareholders of Amway Japan
Limited, a joint stock corporation (kabushiki kaisha) organized under the laws
of Japan ("AJL"). The purchase price for each share of Common Stock will be
(Yen)1,490 in cash (the "Common Stock Purchase Price"). The purchase price for
each ADS purchased in the Offer will be (Yen)745 in cash (the "ADS Purchase
Price" and, together with the Common Stock Purchase Price, the "Purchase
Price"), which is equal to one-half of the Common Stock Purchase Price (because
each ADS represents one-half of one share of Common Stock). The ADS Purchase
Price will be payable in and converted into U.S. dollars using the noon buying
rate in New York City for cable transfers of yen announced for customs purposes
by the Federal Reserve Bank of New York on the date of settlement of the Offer
in Japan (the "Common Stock Settlement Date"), which is presently anticipated to
be not later than six trading days after the expiration of the Offer in Japan
(or, if necessary for administrative convenience, on the business day next
preceding the Common Stock Settlement Date). The ADSs are evidenced by American
Depositary Receipts ("ADRs"). There will be deducted from the Purchase Price
paid to each holder any U.S. backup withholding and Japanese income taxes which
may be required to be withheld. The Offer is for all Shares of AJL or any lesser
number of Shares tendered and not withdrawn. With respect to the Common Stock,
the Offer will expire in Japan, unless extended, on December 17, 1999, and, with
respect to the ADSs, it will expire outside of Japan, unless extended, at 12:00
midnight, New York City time, on December 17, 1999.
The undersigned hereby instruct(s) you to tender the number of ADSs
indicated below or, if no number is indicated, all ADSs you hold for the account
of the undersigned pursuant to the terms and subject to the conditions of the
Offer.
AGGREGATE NUMBER OF ADSS TO BE TENDERED BY YOU FOR
THE ACCOUNT OF THE UNDERSIGNED:
____________________________ ADSS*
- ---------------
* Unless otherwise indicated, all of the ADSs held for the account of the
undersigned will be tendered.
<PAGE> 4
SIGNATURE BOX
Signature(s)
Dated , 1999
Name(s) and Address(es)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(Please Print)
Area Code and Telephone Number
Taxpayer Identification or
Social Security Number
<PAGE> 1
Exhibit (a)(5)
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)(6)
N. A. J. CO., LTD.
7-1, UDAGAWA-CHO
SHIBUYA-KU
TOKYO 150-0042
JAPAN
November 18, 1999
To Holders of Common Stock and American Depositary Shares of Amway Japan
Limited:
We are pleased to submit for your consideration an offer by N.A.J. Co.,
Ltd., a joint stock corporation (kabushika kaisha) organized under the laws of
Japan (the "Company") and an entity controlled, directly or indirectly, by the
DeVos and Van Andel families and certain corporations, trusts and other entities
established by or for the benefit of such families (the "Principal
Shareholders"), to purchase (the "Offer") all the outstanding shares of the
Common Stock, no par value (the "Common Stock"), and American Depositary Shares,
each representing one-half of one share of Common Stock (the "ADSs" and,
together with the Common Stock, the "Shares"), that are beneficially owned by
the shareholders of Amway Japan Limited ("AJL"), a joint stock corporation
(kabushika kaisha) organized under the laws of Japan. The Company has been
informed by the Principal Shareholders that they will not tender their Shares
("Non-Tendered Shares") in response to the Offer (other than 550,000 Shares
owned by one of the charitable foundations established by certain of the
Principal Shareholders ("Foundation Tendered Shares")). The purchase price for
each share of Common Stock will be (Yen)1,490 in cash (the "Common Stock
Purchase Price"). The purchase price for each ADS purchased in the Offer will be
(Yen)745 in cash (the "ADS Purchase Price" and, together with the Common Stock
Purchase Price, the "Purchase Price"), which is equal to one-half of the Common
Stock Purchase Price (because each ADS represents one-half of one share of
Common Stock). The ADS Purchase Price will be payable in and converted into U.S.
dollars using the noon buying rate in New York City for cable transfers of yen
announced for customs purposes by the Federal Reserve Bank of New York on the
date of settlement of the Offer in Japan (the "Common Stock Settlement Date"),
which is presently anticipated to be not later than six trading days after the
expiration of the Offer in Japan (or, if necessary for administrative
convenience, on the business day next preceding the Common Stock Settlement
Date). The ADSs are evidenced by American Depositary Receipts. There will be
deducted from the Purchase Price paid to each holder any U.S. backup withholding
and Japanese income taxes which may be required to be withheld. The Offer is for
all Shares of AJL 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 want to tender your Shares, the instructions for
tendering are set forth in detail in the enclosed materials. I encourage you to
read these materials carefully before making any decision with respect to the
Offer. Please note that only ADSs may be tendered into the Offer pursuant to the
Letter of Transmittal. A holder of Common Stock desiring to accept the Offer
should obtain, or, if resident outside of Japan, request from its standing agent
in Japan, copies of the Japanese Tender Offer Explanatory Statement, the
Japanese counterpart of the Offer to Purchase, and the tender offer application
form, the Japanese counterpart of the Letter of Transmittal, by which such
holder may tender Common Stock into the Offer. Holders of Common Stock may not
tender Common Stock into the Offer pursuant to the Letter of Transmittal. See
"The Offer -- Procedure for Tendering Shares" in the Offer to Purchase.
THE BOARD OF DIRECTORS OF AJL (WITH MESSRS. DEVOS, VAN ANDEL AND SUMIHIRO
NOT PARTICIPATING) RECOMMENDS THAT THE HOLDERS OF SHARES, OTHER THAN FOUNDATION
TENDERED SHARES AND 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 outside of Japan 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,
N.A.J. Co., Ltd.
By: /s/ Stephen A. Van Andel
Name: Stephen A. Van Andel
<PAGE> 1
Exhibit (a)(7)
AMWAY JAPAN'S PRINCIPAL SHAREHOLDERS TO COMMENCE TENDER
OFFER FOR OUTSTANDING PUBLIC SHARES
TOKYO -- Monday, November 15, 1999 -- Amway Japan Limited
(NYSE: AJL; Tokyo OTC: 9821) and its principal shareholders announced that the
principal shareholders intend to commence a cash tender offer to purchase the
approximately 24% of Amway Japan common stock and common stock underlying
American Depositary Shares that they do not currently own or control for Yen
1,490 per share and Yen 745 per ADS, in cash. Each ADS represents one-half of
one share of common stock. This transaction has a total value of approximately
Yen 50 billion. The tender offer will commence within the next five business
days.
Based upon the November 12 noon buying rate for dollars, this offer is the
equivalent of approximately $14.14 per share, or $7.07 per ADS. The final U.S.
dollar equivalent for the ADSs in the tender offer will be determined by the
noon buying rate for dollars on the settlement date for the tender offer.
Amway Japan's board of directors (with two directors who are principal
shareholders and a third director who is a representative director of the
purchaser 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.
Goldman, Sachs & Co. acted as financial advisor to the disinterested directors.
Dick Johnson, president and representative director of Amway Japan, said, "After
careful review, with the assistance of our independent 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
will receive a substantial premium of over 50% -- in cash."
Dick DeVos, representing the principal shareholders, said, "The acquisition of
Amway Japan'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 Japan and to encourage the
continued loyalty and motivation of Amway Japan distributors. Over the last
three years we have invested more than $500 million in our Japanese operations.
With this action, we are deepening and strengthening our commitment to our
customers, distributors and employees in Japan."
<PAGE> 2
The tender offer in Japan will be made to all holders of common stock and the
tender offer in the United States will be made to all holders of ADSs
representing underlying shares. 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 appropriate regulatory agencies and mailed to Amway Japan
shareholders.
The principal shareholders of Amway Japan are certain corporations, trusts,
foundations and other entities formed by or for the benefit of the Van Andel and
DeVos families. They recently formed a Japanese corporation, N.A.J. Co., Ltd.,
for the purpose of conducting the offer. Following completion of the tender
offer, Amway Japan and N.A.J. propose to merge, with N.A.J as the surviving
company operating under the Amway Japan Limited name. The principal shareholders
intend to vote in favor of the merger.
Morgan Stanley Dean Witter and Nikko Salomon Smith Barney are serving as
cofinancial advisors to the principal shareholders for this transaction in
Japan. Nikko Salomon Smith Barney is serving as tender offer agent in Japan,
with Nikko Securities acting as sub-agent. Morgan Stanley Dean Witter and J.P.
Morgan & Co. are serving as co-dealer managers with respect to the ADSs and are
global co-financial advisors to the principal shareholders.
For information with respect to the tender offer, U.S. residents holding ADSs
should contact Georgeson Shareholder Communications Inc. via collect call at
(212)-440-9800 or toll-free at (800)-223-2064. Shareholders in Japan should
contact Nikko Securities at various offices throughout Japan. Common stock
shareholders outside of Japan should contact Nikko Salomon Smith Barney at
813-5574-4111.
Amway Japan Limited is the exclusive distribution vehicle in Japan for Amway
Corporation. A direct selling company, Amway Japan distributes approximately 190
consumer products through a core distributor force (distributors who renewed
within fiscal 1999) of approximately 1,100,000 independent distributors. With
total shareholders' equity at August 31, 1999 of Yen 57.0 billion, its fiscal
1999 net sales were Yen 143.8 billion and net income was Yen 10.5 billion. Amway
Japan is registered on the Tokyo OTC market (securities code: 9821) and its ADSs
(American Depositary Shares), each representing one-half of one share of common
stock, are listed on the New York Stock Exchange (ticker symbol: AJL) and quoted
on SEAQ International. Current press releases and SEC earnings filings are
available through the Internet at http://www.ajl-amway.com.
CONTACTS:
MEDIA AND INVESTORS: INVESTORS IN JAPAN:
Holly A. Clemente Yoshio Mikoshiba
AJL Director of Investor Relations, U.S. 03-5428-7000
616-787-8688
MEDIA IN JAPAN:
Atsuko Iwaki
03-5428-7000
<PAGE> 1
Exhibit (a)(8)
(Additional Information to Press Release)
1. Tender Offer Timetable (expected)
Date of Tender Offer Public Notice within five business days
Filing of Tender Offer Registration Statement "
Commencement of Tender Offer "
Expiration of Tender Offer to be disclosed in Public Notice
Announcement of results of Tender Offer "
First day of settlement "
2. Percentage of Ownership of Bidder Following the Tender Offer, Percentage of
Ownership of Related Parties on This Date and Aggregate Ownership
(a) Bidder 23.82% Special Related Parties 76.18% Total 100%
(b) Special Related Parties 76.56% Total 110,272,490 shares
3. Transaction Value and Funds Required for Tender Offer
Transaction value 51,126 million yen
The funds required for tender offer will be financed with funds borrowed
through Morgan Guaranty Trust Company of New York.
4. Subsequent Plans
Under the Tender Offer Agreement between N.A.J. and Amway Japan, among
others, and a Memorandum regarding Merger, it is proposed that N.A.J. and
Amway Japan will merge following completion of the tender offer, with N.A.J.
as the surviving company operating under the Amway Japan Limited name. It is
expected that the merger will occur within the next several months. The
principal shareholders of Amway Japan intend to vote their Amway Japan shares
in favor of the merger. This assures that the necessary approval of Amway
Japan shareholders will be received. As a result of the merger, shares of
Amway Japan will be deregistered from the Japanese OTC.
5. Miscellaneous
The principal shareholders have indicated their desire that Amway Japan
reduce or eliminate the dividend for fiscal 2000 to preserve cash. As a
result, after completion of the offer, the dividend policy for fiscal year
2000 and beyond will be re-examined. The future dividend policy will depend
on a variety of factors, including Amway Japan's operating results and cash
requirements.
<PAGE> 1
Exhibit (a)(9)
[Translation]
November 15, 1999
To President of Japan Securities Dealers Association
7-1, Udagawa-cho, Shibuya-ku, Tokyo
AMWAY JAPAN LIMITED
Representative Director-President
Richard S. Johnson
(OTC Registered Code Number 9821)
Contact Person: Director-Vice President
Yoshizo Matsushita
Telephone: 03-5428-7000
NOTICE OF APPROVAL OF TENDER OFFER
----------------------------------
The Board of Directors of AMWAY JAPAN LIMITED (the "Company) announces
its approval, as described below, of the tender offer (the "Tender Offer") for
the shares of the Company by N.A.J. Co., Ltd. ("NAJ") based on the resolution of
the Board of Directors of the Company from which Richard M. DeVos Jr., Stephen
A. Van Andel and Gary K. Sumihiro are excluded due to their status as a special
interested directors.
According to NAJ, the Tender Offer is made to the holders of all of the
outstanding shares of the Company and the Tender Offer aims to enable
restructuring and realignment of the Company's business in order to be able to
pursue long term business strategies. The Board had concluded that, in addition
to providing a fair price to the Company's shareholders, the Tender Offer will
establish a more cooperative relationship between the Company and Amway
Corporation (located in the United States), as well as between the Company and
the whole AMWAY group, and will advance the Company's business hereafter.
The purchase price of the Tender Offer (the "Purchase Price") has been
established through negotiation between NAJ and the Board. The Purchase Price
equals a 50.5% premium to the November 12 price of the Company's stock and is
above the highest price for the past one year. An opinion letter from Goldman,
Sachs & Co., as a third party financial advisor, concerning the fairness from a
financial point of view of the Purchase Price, has been obtained by the
disinterested directors.
Taking all the above matters into consideration, the Company recommends
that shareholders tender their shares in the Tender Offer.
In addition to this, since the Company executed the Memorandum
Regarding Merger with NAJ on November 15, 1999, the Company will be deregistered
from the OTC after the approval of the merger at an extraordinary general
meeting of shareholders and completion of other procedures of the merger
required under the law have been completed. By way of precaution, the Board of
Directors advises that under the merger procedures, shareholders who object to
the merger are entitled to an appraisal right; however, consideration paid to
dissenting shareholders could well be different from the Purchase Price under
this Tender Offer. Further, please note that the principal shareholders have
indicated their desire that the current policy
<PAGE> 2
-2-
regarding dividends of the Company may substantially be changed after the
Tender Offer.
The Board of Directors is of the opinion that shareholders should decide for
themselves whether to tender their shares in this Tender Offer by carefully
reviewing, among other things, the Tender Offer Explanatory Statement and the
Public Notice of Commencement of Tender Offer.
<PAGE> 1
Exhibit (a)(10)
[Translation]
November 15, 1999
To whom it may concern
7-1, Udagawa-cho, Shibuya-ku, Tokyo
AMWAY JAPAN LIMITED
Representative Director- President
Richard S. Johnson
(OTC Registered Code Number 9821)
Contact Person: Director - Vice President
Yoshizo Matsushita
Telephone: 03-5428-7000
ANNOUNCEMENT OF APPROVAL OF TENDER OFFER
----------------------------------------
The Board of Directors of AMWAY JAPAN LIMITED (the "Company") announces
its approval, as described below, of the tender offer (the "Tender Offer") for
the shares of the Company by N.A.J. Co., Ltd. ("NAJ") based on the resolution of
the Board of Directors of the Company from which Richard M.DeVos Jr., Stephen A.
Van Andel and Gary K. Sumihiro are excluded due to their status as special
interested directors.
According to NAJ, the Tender Offer is made to the holders of all of the
outstanding shares of the Company and the Tender Offer aims to enable
restructuring and realignment of the Company's business in order to be able to
pursue long term business strategies. The Board has concluded that, in addition
to providing a fair price to the Company's shareholders, the Tender Offer will
establish a more cooperative relationship between the Company and Amway
Corporation (located in the United States), as well as between the Company and
the whole AMWAY group, and will advance the Company's business hereafter.
The purchase price of the Tender Offer (the "Purchase Price") has been
established through negotiation between NAJ and the Board. The Purchase Price
equals a 50.5 % premium to the November 12 price of the Company's stock and is
above the highest price for the past one year. An opinion letter from Goldman,
Sachs & Co., as a third party financial advisor, concerning the fairness from a
financial point of view of the Purchase Price, has been obtained by the
disinterested directors.
Taking all the above matters into consideration, the Company recommends
that shareholders tender their shares in the Tender Offer.
In addition to this, since the Company executed the Memorandum
Regarding Merger with NAJ on November 15, 1999, the Company will be deregistered
from the OTC after the approval of the merger at an extraordinary general
meeting of shareholders and completion of other procedures of the merger
required under the law have been completed. By way of precaution, the Board of
Directors advises that under the merger procedures, shareholders who object to
the merger are entitled to an appraisal right; however, consideration paid to
dissenting shareholders could well be different from the Purchase Price under
this Tender Offer. Further, please note that the principal shareholders have
indicated their
<PAGE> 2
-2-
desire that the current policy regarding dividends of the Company may
substantially be changed after the Tender Offer.
The Board of Directors is of the opinion that shareholders should
decide for themselves whether to tender their shares in this Tender Offer by
carefully reviewing, among other things, the Tender Offer Explanatory Statement
and the Public Notice of Commencement of Tender Offer.
<PAGE> 1
Exhibit (a)(11)
[Translation]
ANNOUNCEMENT OF MERGER
November 15, 1999
To whom it may be concern:
7-1, Udagawa-cho, Shibuya-ku, Tokyo
Amway Japan Limited
Representative Director-President:
Richard S. Johnson
(OTC Registered Code Number: 9821)
Contact Person: Director-Vice President
Yoshizo Matsushita
Tel: 03-5428-7000
ANNOUNCEMENT OF MERGER
We hereby announce that the Board of Directors of Amway Japan Limited
(the "Company") has resolved, on November 15,1999, to approve the execution of
the Memorandum Regarding Merger with N.A.J. Co., Ltd. ("NAJ"), which was entered
into by and between the Company and NAJ on the same day.
1. Purpose of Merger
Shares of the Company (the "Shares") are registered at the OTC market
and NAJ intends to carry out a tender offer (the "Offer") to acquire
the Shares. According to NAJ, the Offer will establish a more
cooperative relationship between the Company and Amway Corporation
(located in the United States), as well as between the Company and the
whole AMWAY group, and will advance the Company's business hereafter.
In addition, if the Company, through the merger which follows the
Offer, will be merged into NAJ and thus the Shares will be removed from
OTC registration, it will be in a better position to prepare the
structure to pursue the business strategy in a long-term view. The
definitive deregistration schedule for the Shares will be determined
hereafter.
<PAGE> 2
-2-
The Company will be merged into NAJ, which has been established solely
for the foregoing purposes. Accordingly, the Company will not
substantially change its business and organization after the
deregistration and will continue to provide its services at the same
standards as before the merger. Further, the Company believes that it
will provide services of higher quality than before the merger based on
the improvement of management base accomplished by the merger.
2. Outline of Merger
(1) Time Schedule
<TABLE>
<S> <C>
Board of Directors meeting for approval of the November 15, 1999
Memorandum Regarding Merger
Execution of the Memorandum Regarding Merger November 15, 1999
Board of Directors meeting for approval of January 2000 (current plan)
merger agreement
Execution of merger agreement January 2000 (current plan)
General meeting of shareholders for approval of February 2000 (current plan)
merger agreement
Date of merger April 1, 2000 (current plan)
Registration of merger Early in April, 2000 (current plan)
</TABLE>
(2) Manner of Merger
The Company will be merged into NAJ, the surviving company, and the
Company will be dissolved.
<PAGE> 3
-3-
(3) Merger Ratio
The Company and NAJ will discuss and determine the merger ratio based
on the fair value of a share of each company after obtaining a
valuation analysis from an independent advisor.
(4) Merger Distribution
The Company and NAJ will discuss and determine such matters by the time
when the Board of Directors meeting of each company approves the merger
agreement.
(5) Base Date for Dividends on New Shares issued upon Merger
March 1, 2000 (current plan)
(6) Matters referred to in the foregoing paragraphs will be settled in the
Merger Agreement. The effectiveness of the Merger and the execution of
the Merger Agreement are subject to the approval, respectively, by the
Board of Directors' meeting of the Company to be held in January 2000
and the extraordinary general meeting of shareholders of the Company to
be held in February 2000.
<PAGE> 4
-4-
3. Outline of the Companies to be Merged
<TABLE>
<CAPTION>
(Amway Japan Limited: as of August 31, 1999)
(NAJ CO., LTD.: as of November 1, 1999)
- -------------------------------------------------------------------------------------------------------------------
Corporate Name Amway Japan Limited NAJ CO., LTD.
(Merged Company) (Surviving Company)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Business the import, export, sale and sale for the import, export, sale and sale for
consignment of goods including but not consignment of goods including but not
limited to soaps, detergents, limited to soaps, detergents,
quasi-pharmaceuticals, cosmetics, quasi-pharmaceuticals, cosmetics,
nutritionally-enriched food supplements nutritionally-enriched food supplements
and cooking utensils, the publishing and and cooking utensils, the publishing and
sale of magazines, etc., the sale of sale of magazines, etc., the sale of
compact discs, cassette tapes, etc., the compact discs, cassette tapes, etc., the
import, export and sale of cameras, etc., import, export and sale of cameras,
and the import, export and sale of etc., and the import, export and sale of
telecommunications equipment, etc. telecommunications equipment, etc.
- -------------------------------------------------------------------------------------------------------------------
Date of April 26, 1977 November 1, 1999
Incorporation
- -------------------------------------------------------------------------------------------------------------------
Location of Head 7-1, Udagawa-cho, Shibuya-ku, Tokyo 7-1, Udagawa-cho, Shibuya-ku, Tokyo
Office
- -------------------------------------------------------------------------------------------------------------------
Representative Richard S. Johnson Gary K. Sumihiro
- -------------------------------------------------------------------------------------------------------------------
Capital (Y)12,462 MM (Y)10 MM
- -------------------------------------------------------------------------------------------------------------------
Total Number of 144,025,800 (No Par Value) 50 (No Par Value)
Issued Shares
- -------------------------------------------------------------------------------------------------------------------
Shareholder's (Y)56, 964 MM (Y)10 MM
Equity
- -------------------------------------------------------------------------------------------------------------------
Total Assets (Y)83,961 MM (Y)10 MM
- -------------------------------------------------------------------------------------------------------------------
Settlement Date August 31 August 31
- -------------------------------------------------------------------------------------------------------------------
Employees 678 0
- -------------------------------------------------------------------------------------------------------------------
Main Customers Supplier: Amway Corp. -
- -------------------------------------------------------------------------------------------------------------------
Major Shareholders 1. Jay Van Andel Trust 19.17% 1. ALAP Hold Co., Ltd. 100%
and Respective 2. Japan HC1 Inc. 17.90%
Shareholdings 3. RDV (AJL) Holdings, Inc. 17.26%
4. HDV (AJL) Holdings, Inc. 14.24%
5. Moxley & Company 5.88%
- -------------------------------------------------------------------------------------------------------------------
Main Banks The Sanwa Bank, Ltd. Morgan Guarantee Trust Company
The Sakura Bank, Ltd.
The Bank of Tokyo-Mitsubishi, Ltd.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 5
-5-
4. Results for the Last Three Years
<TABLE>
<CAPTION>
(millions of yen)
- -------------------------------------------------------------------------------------------------------------------
Amway Japan Limited NAJ CO., LTD.
(Merged Company) (Surviving Company)
- -------------------------------------------------------------------------------------------------------------------
Settlement Term To August 31, To August 31, To August 31, - - -
1996 1997 1998
(20th FY) (21st FY) (22nd FY)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 212,195 203,361 192,457 - - -
- -------------------------------------------------------------------------------------------------------------------
Ordinary Income 51,433 42,364 27,207 - - -
- -------------------------------------------------------------------------------------------------------------------
Profit for the Term 25,130 26,638 12,778 - - -
- -------------------------------------------------------------------------------------------------------------------
Profit per Share 168.09 181.71 88.71 - - -
(in yen)
- -------------------------------------------------------------------------------------------------------------------
Dividend per Share 125 100 100 - - -
(in yen)
- -------------------------------------------------------------------------------------------------------------------
Shareholders' 410.99 439.19 422.69 - - -
Equity per Share
(in yen)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
*1 No results can be mentioned regarding NAJ because NAJ was incorporated
on November 1, 1999.
*2 Interim Results of 23rd FY (From September 1, 1998 to February 28,
1999) of the Company are as follows:
------------------------------------------------------
Sales (Y)75,327 MM
------------------------------------------------------
Ordinary Income (Y)8,099 MM
------------------------------------------------------
Interim Profit for the Term (Y)4,703 MM
------------------------------------------------------
Profit per Share (Y)32.65
------------------------------------------------------
Interim Dividend per Share (Y)50
------------------------------------------------------
Shareholders' Equity per Share (Y)405.22
------------------------------------------------------
5. State after Merger
(1) Corporate Name
Amway Japan Limited
(Change of name of NAJ Co., Ltd. to Amway Japan Limited)
(2) Business
The import, export, sale and sale for consignment of goods including
but not limited to soaps, detergents, quasi-pharmaceuticals, cosmetics,
nutritionally-enriched food supplements and cooking utensils, the
publishing and sale of magazines, etc., the sale of compact discs,
cassette tapes, etc., the import,
<PAGE> 6
-6-
export and sale of cameras, etc., and the import, export and sale of
telecommunications equipment, etc.
(3) Location of Head Office
7-1, Udagawa-cho, Shibuya-ku, Tokyo
(4) Representative
Not determined.
(5) Capital
To be discussed between both companies and determined by the time of
execution of the merger agreement.
(6) Total Assets
Not determined.
(7) Settlement Day
August 31 (current plan)
(8) Total Outstanding Shares
Not determined.
(9) Forecasted Results after Merger (for two business years)
Not determined.
<PAGE> 1
Exhibit (a)(12)
STATEMENT FOR DISTRIBUTORS
FOR DISTRIBUTION THROUGH AMITY AND F-NET
NOVEMBER 15, 1999
We wanted to communicate with you about an important announcement being made
today.
The announcement is that the Van Andel and DeVos families intend to make a cash
tender offer for the common stock of Amway Japan Limited that they do not
already own. For more information about the offer, please see the accompanying
official news release.
We recognize that this news may come as a surprise, and also as a disappointment
from an investment point of view. However, this offer has very positive
implications for the future of your businesses, and in fact for all distributors
and employees of Amway Japan.
The offer is part of a broad strategic initiative by the families that includes
a simultaneous tender offer to shareholders of Amway Asia Pacific, and will lead
to the creation of a single global Amway corporate structure.
1
<PAGE> 2
After careful review, with the assistance of our independent financial advisor,
our Board of Directors has decided that the offer is in the best interests of
our public shareholders, as well as our distributors and employees. Consequently
the Board is recommending that shareholders accept the offer and tender their
shares.
This message is intended to ensure that you are promptly informed not only about
the offer but also about what it will mean for the future of Amway Japan and for
your businesses.
THE OFFER
This is a fully financed offer at A FAIR price. Shareholders are being offered a
substantial premium, in cash, to the prevailing market price. And they are being
given the opportunity to liquidate their holdings at a higher price than has
been available in the market for more than a year.
Goldman Sachs, a pre-eminent financial firm, acted as financial advisor to the
disinterested directors.
Our share price has for a long time suffered from lack of liquidity and lack of
investor interest, and we have no reason to believe this will change in the
foreseeable future.
2
<PAGE> 3
In these circumstances, and taking into account Amway Japan's near-term business
prospects, we believe this tender offer represents the best option for
shareholders.
THE FUTURE
Now let's focus on what this means for the future prospects of Amway Japan.
With this offer, the Van Andel and DeVos families are increasing their
commitment to Amway Japan and the Japanese market. This tender offer represents
one of the largest transactions the families have ever conducted in support of
their business.
From a strategic perspective, the new global corporate structure the families
envisage will allow Amway to streamline its operations in ways that would be
difficult to accomplish under the current structure of public and private
companies.
It will allow Amway to take a longer-term view. And it will give Amway the
flexibility it needs to succeed in the rapidly changing global marketplace.
All of this means major benefits for Amway Japan, as an integral part of this
streamlined global organization.
3
<PAGE> 4
It means Amway will be in a stronger position to customize its support for Amway
Japan -- and therefore better able to meet the specific needs and priorities of
the Japanese market.
And it means the families will be in a better position to make investments
necessary to build a stronger foundation for resumed growth at Amway Japan.
We are confident this announcement brightens the future prospects of all Amway
Japan distributors as we head towards the 21st century.
Richard S. Johnson Jim Payne
President and Representative Director President and
Representative Director -
Designate
Information Service:
For more detailed information, call 0120-038899. This toll-free information
service has been set up exclusively for Amway Japan distributors with questions
concerning this announcement.
4
<PAGE> 1
Exhibit (a)(13)
STATEMENT FOR EMPLOYEES
ON ELECTRONIC BULLETIN BOARD
NOVEMBER 15, 1999
We wanted to communicate with you about an important announcement being made
today.
The announcement is that the Van Andel and DeVos families intend to make a cash
tender offer for the common stock of Amway Japan Limited that they do not
already own. For more information about the offer, please see the accompanying
official news release.
We recognize that this news may come as a surprise, and also as a disappointment
from an investment point of view. However, this offer has very positive
implications for the future of Amway Japan and all its employees.
The offer is part of a broad strategic initiative by the families that includes
a simultaneous tender offer to shareholders of Amway Asia Pacific, and will lead
to the creation of a single global Amway corporate structure.
1
<PAGE> 2
After careful review, with the assistance of our independent financial advisor,
our Board of Directors has decided that the offer is in the best interests of
our public shareholders, as well our distributors and employees. Consequently
the Board is recommending that shareholders accept the offer and tender their
shares.
This message is intended to ensure that you are promptly informed not only about
the offer but also about what it will mean for the future of Amway Japan.
THE OFFER
This is a fully financed offer at A FAIR price. Shareholders are being offered a
substantial premium, in cash, to the prevailing market price. And they are being
given the opportunity to liquidate their holdings at a higher price than has
been available in the market for more than a year.
Goldman Sachs, a pre-eminent financial firm, acted as financial advisor to the
disinterested directors.
Our share price has for a long time suffered from lack of liquidity and lack of
investor interest, and we have no reason to believe this will change in the
foreseeable future.
2
<PAGE> 3
In these circumstances, and taking into account Amway Japan's near-term business
prospects, we believe this tender offer represents the best option for
shareholders.
THE FUTURE
Now let's focus on what this means for the future prospects of Amway Japan.
With this offer, the Van Andel and DeVos families are increasing their
commitment to Amway Japan and the Japanese market. This tender offer represents
one of the largest transactions the families have ever conducted in support of
their business.
From a strategic perspective, the new global corporate structure the families
envisage will allow Amway to streamline its operations in ways that would be
difficult to accomplish under the current structure of public and private
companies.
It will allow Amway to take a longer-term view. And it will give Amway the
flexibility it needs to succeed in the rapidly changing global marketplace.
All of this means major benefits for Amway Japan, as an integral part of this
streamlined global organization.
3
<PAGE> 4
It means Amway will be in a stronger position to customize its support for Amway
Japan -- and therefore better able to meet the specific needs and priorities of
the Japanese market.
And it means the families will be in a better position to make investments
necessary to build a stronger foundation for resumed growth at Amway Japan.
We are confident this announcement brightens the future prospects of all Amway
Japan employees as we head towards the 21st century.
Richard S. Johnson Jim Payne
President and Representative Director President and
Representative Director -
Designate
4
<PAGE> 1
Exhibit (a)(14)
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)(15)
- -------------------
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)(16)
MEMORANDUM
TO: DIAMONDS AND ABOVE DIRECT DISTRIBUTORS
CC: DOUG DEVOS
FROM: DICK JOHNSON & JIM PAYNE
DATE: 11/17/99
RE: "TOB" ANNOUNCEMENT AND ANTICIPATED QUESTIONS AND SUGGESTED
ANSWERS
- --------------------------------------------------------------------------------
THE PURPOSE OF THIS MEMO IS TO PROVIDE YOU WITH OUR THOUGHTS ON SOME
QUESTIONS AND CONCERNS YOUR DOWNLINES MAY HAVE REGARDING THE RECENTLY
ANNOUNCED TENDER OFFER ("TOB").
We believe that the recently announced Tender Offer is "good news"
for you and your downline Distributors.
The Founding Families want you to recognize that this Tender Offer
allows them to strengthen their commitment to Japan. This increased
commitment is part of an overall strategy that will enhance the Amway
business opportunity in Japan and around the world. The result of
this strategy is the reunification of all of Amway's businesses into
a single global corporate structure under the direct guidance of the
Founding Families.
Some of your downlines may not easily recognize the value of this
strategy. We wanted to share with you our thoughts on some of the
questions you may face and our suggestions as to ways in which you
might respond.
In addition, there are "Amway-bashers" who may attempt to distort the
purposes of the Tender Offer resulting in negative comments. Again,
we wanted to share with you our thoughts and suggestions.
1. You may be asked -- "What benefits does the Tender Offer
and the reunification provide to Distributors?"
Our belief is that Distributors will receive the following
benefits:
- Substantially increased family engagement - Doug
as Senior Vice President responsible for Asia and,
also, Chairman of AJL; increased direct investment
in Japan;
1
<PAGE> 2
- Enhanced product supply - increased customization,
expanded sourcing alternatives, more competitive
pricing, more rapid product development, more
integrated Research and Development.
- Quicker, more aligned decision-making.
- Greater connectivity to the world of Amway through
integrated communications such as Amway's Internet
programs, best practices, better access to global
alliances.
2. You may be asked - "How will this transaction affect our
Image? Won't it make us less transparent to Japanese
society?"
Our belief is that being a publicly traded company has
contributed very little to our Image. It is clear that the
factors that contribute most importantly to our Image are
action directly related to how we manage our business:
Distributor behavior, the 3-D project and the new
Headquarters. Together, these three elements provide the
overwhelming majority of impressions that enable
individuals to shape their perceptions of Amway in Japan.
3. You may be asked - "Why is this transaction taking place at
this time?"
We would suggest that you respond as follows - "The Company
has a clearly defined objective of globalizing the Amway
business in order to truly achieve a single, global,
vertically and horizontally integrated company. In order to
achieve this before the 21st century begins, it is
necessary to remove the barriers with some companies being
private and some being public. Thus, consolidating under
one global Amway is integral in preparing for the new
Millennium.
4. You may be asked - "Is this an unusual transaction? Unusual
in Japan? Unusual in the United States?"
The facts are that such transactions are becoming
increasingly normal in Japan following a relaxation in
regulations and, have been quite common in the United
States and other developed markets for many years. Examples
of recent Japanese transactions are:
- Japan Marine Technologies Ltd.
- NCR Japan Ltd.
- SDS Biotech
In the US, tender offers have been conducted by companies
such as:
- Dow Chemical
- Rhone-Poulenc S.A.
- Enron Corporation
2
<PAGE> 3
Tender Offers are also frequently used in U.S. business combinations.
Examples of companies that have used tender offers this year are
Microsoft and Delta Airlines.
We hope this will help you share the good news with your downlines
and take pride in the Founding Families initiative.
If you have any questions or comments, please contact your Amway
Distributor Support personnel or us.
Thanks and regards,
Dick Johnson Jim Payne
3
<PAGE> 1
Exhibit (a)(17)
AMWAY JAPAN'S PRINCIPAL SHAREHOLDERS COMMENCE TENDER OFFER FOR OUTSTANDING
PUBLIC SHARES
ADA, Michigan - Thursday, November 18, 1999 - As announced on November 15,
1999, Amway Japan Limited's principal sharerholders today commenced a cash
tender offer to purchase the approximately 24% of Amway Japan Limited (NYSE:
AJL; Tokyo OTC: 9821) common stock and common stock underlying American
Depositary Shares that they do not currently own or control for 1,490 yen per
share and 745 yen per ADS, in cash. Each ADS represents one-half of one share
of common stock.
This transaction has a total value of approximately 50 billion yen. The offer
price represents a premium of over 50% to the closing price on the last trading
day prior to the announcement of the offer.
Based upon the November 12 noon buying rate for dollars, this offer is the
equivalent of approximately $14.14 per share, or $7.07 per ADS. The final U.S.
dollar equivalent for the ADSs in the tender offer will be determined by the
noon buying rate for dollars on the settlement date for the tender offer.
The tender offer in Japan is to all holders of common stock and the tender offer
in the United States is to all holders of ADSs representing underlying shares.
The offer and withdrawal right for the common stock will expire in Japan, unless
extended, on December 17, 1999, and, the offer and withdrawal right for the ADSs
will expire outside of Japan, 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 appropriate regulatory
agencies and being mailed to Amway Japan shareholders.
The principal shareholders of Amway Japan 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 Nikko Salomon Smith Barney are serving as
co-financial advisors to the principal shareholders for this transaction in
Japan. Nikko Salomon Smith Barney is serving as tender offer agent in Japan,
with Nikko Securities acting as sub-agent. Morgan Stanley Dean Witter and J.P.
Morgan & Co. are serving as co-dealer managers with respect to the ADSs and are
global co-financial advisors to the principal shareholders. For information with
respect to the tender offer, U.S. residents holding ADSs should contact
Georgeson Shareholder Communications Inc. via collect call at (212)-440-9800 or
toll-free at (800)-223-2064. Shareholders in Japan should contact Nikko
Securities at various offices throughout Japan. Common stock shareholders
outside of Japan should contact Nikko Salomon Smith Barney at 813-5574-4111.
Amway Japan Limited is the exclusive distribution vehicle in Japan for Amway
Corporation. A direct selling company, Amway Japan distributes approximately 190
consumer products through a core distributor force (distributors who renewed
within fiscal 1999) of approximately 1,100,000 independent distributors. With
total shareholders' equity at August 31, 1999 of 57.0 yen billion, its fiscal
1999 net sales were 143.8 billion yen and net income was 10.5 billion yen. Amway
Japan is registered on the Tokyo OTC market (securities code: 9821) and its ADSs
(American Depositary Shares), each representing one-half of one share of common
stock, are listed on the New York Stock Exchange (ticker symbol: AJL) and quoted
on SEAQ International. Current press releases and SEC earnings filings are
available through the Internet at http://www.ajl-amway.com.
CONTACT:
MEDIA AND INVESTORS:
Holly A. Clemente
Director of Investor Relations
616-787-8688
<PAGE> 1
Exhibit (a)(18)
(TRANSLATION)
REPORT OF ANNOUNCEMENT OF OPINION
---------------------------------
TO: THE DIRECTOR OF THE KANTO LOCAL FINANCE BUREAU
----------------------------------------------
Date of Filing: November 18, 1999
Reporter
Corporate Name: AMWAY JAPAN LIMITED
Title and Name of Representative: Representative Director -
President
Richard S. Johnson
Location of Head Office: 7-1, Udagawa-cho, Shibuya-
ku, Tokyo
Telephone: 03-5428-7000
Place to Contact: Same as above
Telephone: Same as above
Person in Charge: Director - Vice President
Yoshizo Matsushita
PLACE WHERE COPIES OF THIS REPORT OF ANNOUNCEMENT OF OPINION
------------------------------------------------------------
ARE MADE AVAILABLE FOR PUBLIC INSPECTION
----------------------------------------
NAME OF OFFICE LOCATION
- -------------- --------
AMWAY JAPAN LIMITED 7-1, Udagawa-cho, Shibuya-ku, Tokyo
Japan Securities Dealers Association 2-1, Nihonbashi-Kabuto-cho, Chuo-ku,
Tokyo
(This registration statement in Japanese consists of 3 pages including the cover
page.)
<PAGE> 2
1. THE NAME AND LOCATION OF BIDDER:
-------------------------------
(Name) N.A.J. CO., LTD.
(Location) 7-1, Udagawa-cho, Shibuya-ku, Tokyo
2. THE CONTENTS OF AND REASONS FOR THE OPINION RELATED TO THIS TENDER OFFER:
------------------------------------------------------------------------
The Board of Directors of AMWAY JAPAN LIMITED (the "Company") announces
its approval, as described below, of the tender offer (the "Tender Offer") for
the shares of the Company by N.A.J. Co., Ltd. ("NAJ") based on the resolution of
the Board of Directors of the Company from which Richard M. DeVos Jr., Stephen
A. VanAndel and Gary K. Sumihiro are excluded due to their status as special
interested directors.
According to NAJ, the Tender Offer is made to the holders of all of the
outstanding shares of the Company and the Tender Offer aims to enable
restructuring and realignment of the Company's business in order to be able to
pursue long term business strategies. The Board has concluded that, in addition
to providing a fair price to the Company's shareholders, the Tender Offer will
establish a more cooperative relationship between the Company and Amway
Corporation (located in the United States), as well as between the Company and
the whole AMWAY group, and will advance the Company's business hereafter.
The purchase price of the Tender Offer (the "Purchase Price") has been
established through negotiation between NAJ and the Board. The Purchase Price
equals a 50.5% premium to the November 12 price of the Company's stock and is
above the highest price for the past one year. An opinion letter, attached
hereto as Exhibit I, from Goldman, Sachs & Co., as a third party financial
advisor, concerning the fairness from a financial point of view of the Purchase
Price, has been obtained by the disinterested directors.
Taking all the above matters into consideration, the Company recommends
that shareholders tender their shares in the Tender Offer.
In addition to this, since the Company executed the Memorandum
Regarding Merger with NAJ on November 15, 1999, the Company will be deregistered
from the OTC after the approval of the merger at an extraordinary general
meeting of shareholders and completion of other procedures of the merger
required under the law have been completed. By way of precaution, the Board of
Directors advises that under the merger procedures, shareholders who object to
the merger are entitled to an appraisal right; however, consideration paid to
dissenting shareholders could well be different from the Purchase Price under
this Tender Offer. Further, please note that the principal shareholders have
indicated their desire that the current policy regarding dividends of the
Company may substantially be changed after the Tender Offer.
The Board of Directors is of the opinion that shareholders should
decide for themselves whether to tender their shares in this Tender Offer by
carefully reviewing, among other things, the Tender Offer Explanatory Statement
and the Public Notice of Commencement of Tender Offer.
<PAGE> 3
- 2 -
3. NUMBER OF SHARE CERTIFICATE ETC. OWNED BY THE DIRECTORS AND STATUTORY
---------------------------------------------------------------------
AUDITORS:
--------
<TABLE>
<CAPTION>
<S> <C>
Richard M. DeVos Jr. -
Stephen A. VanAndel -
Richard S. Johnson 8000 shares
Tomiaki Nagase 2000 shares
Takashi Kure 4500 shares
Yoshizo Matsushita 2250 shares
Masaru Iwata -
Gary K. Sumihiro -
Naoto Kira -
Noboru Makino -
Yoshikazu Takaishi -
Koichi Kura 5000 shares
Craig N. Meurlin -
James J. Rosloniec -
</TABLE>
4. THE CONTENTS OF OFFERED BENEFIT BY THE BIDDER OR ITS SPECIAL RELATED
--------------------------------------------------------------------
PARTIES
-------
(except for the parties who have made the Offer to the Minister of Finance
in accordance with Article 27-5, Sub-paragraph 2 of the Securities and
Exchange Law)
N/A
<PAGE> 1
Exhibit (a)(19)
(Translation)
PUBLIC NOTICE OF COMMENCEMENT OF TENDER OFFER
November 18, 1999
7-1, Udagawacho, Shibuya-ku, Tokyo
N.A.J. Co., Ltd.
Gary K. Sumihiro, Representative Director
This is to notify that N.A.J. Co., Ltd. will commence a Tender Offer
pursuant to the Securities and Exchange Law of Japan in the manner prescribed
below.
1. PURPOSE OF TENDER OFFER
The Target Company is primarily engaged in the import and distribution
in Japan of products developed and manufactured by Amway Corporation
(hereinafter "Amway U.S.A.") as well as in purchases and sales of products
manufactured in Japan through use of the technology of Amway U.S.A. Faced with
the continuing weakness of Japanese economic conditions, the business results of
the Target Company have declined in recent years. In order to overcome such
situation and improve performance, it is necessary to create a corporate
structure that will facilitate implementation of sound decisions and allow the
Target Company to pursue long-term business strategies without taking into
account the influence on the short-term outlook of the equities markets.
Further, it is necessary for the Target Company to be able to respond with
greater flexibility to the business reorganization being considered with other
Amway entities.
The founders of Amway U.S.A., Jay Van Andel and Richard M. DeVos and
their respective families, along with certain corporations, trusts, foundations
and other entities established by and for the benefit thereof (hereinafter
collectively, the "Principal Shareholders") already own approximately 76% of the
total issued shares of the common stock of the Target Company. The Principal
Shareholders believe the acquisition of all remaining shares of the common stock
of the Target Company is the most effective method of satisfying the goals
described above and will facilitate the provision of better services and
products to distributors and customers of the Target Company and improve
operating results.
In addition, the price of the Target Company's shares on the
over-the-counter market has languished for some time, and the volume of trading
has not provided sufficient
<PAGE> 2
-2-
liquidity for investors. Looking at the economic situation in Japan, the
Principal Shareholders believe there is little possibility that either the share
price or the volume of trading on the over-the-counter market will significantly
improve in the foreseeable future. This Tender Offer will, by purchasing all
remaining shares of the Target Company at a 50.5% premium to the closing selling
price of the Target Company's shares on the over-the-counter market on November
12, 1999 (the date prior to the announcement of this Tender Offer), provide all
the shareholders other than the Principal Shareholders the most efficient
opportunity possible to sell their shares at a price that is higher than any
price that is reasonably foreseeable over the next several years.
Pursuant to the Tender Offer Agreement among the Bidder, the Target
Company and the other party thereto and the Memorandum regarding Merger between
the Bidder and the Target Company, the Bidder and the Target Company have
agreed, after consummation of this Tender Offer, to take all steps required by
law or otherwise to effect the merger of the Target Company into the Bidder,
thus the Bidder being the surviving company (the "Merger"). Furthermore, the
Principal Shareholders intend to vote shares of the Target Company held directly
or indirectly by them in favor of the Merger at the relevant shareholder
meeting. This assures that the necessary approval of the Merger will be given by
the Target Company's shareholders. As a result of the Merger, the shares of the
Target Company will be deregistered from the over-the-counter market and those
shareholders who do not tender their shares in response to this Tender Offer
will own shares of the Bidder's common stock. Consequently, trading markets of
the shares held by the shareholders who do not tender to this Tender Offer will
cease to exist and such shareholders will in the future experience difficulty in
selling their shares.
2. CONTENTS OF TENDER OFFER
(1) Name of Target Company
Amway Japan Limited
(2) Type of Shares or Other Securities Subject to Tender Offer
Shares of common stock with no par value
(3) Tender Offer Period
From Thursday, November 18, 1999 to Friday, December 17, 1999
<PAGE> 3
-3-
(4) Tender Offer Price (Exchange Ratio)
\1,490 per share
(5) Number of Shares Proposed to be Purchased
Number of Shares Proposed to be Purchased: 34,312,778 Shares
Excess number proposed to be purchased is not provided.
(6) Shareholding Ratio of Bidder after Tender Offer, Shareholding
Ratio of Special Related Parties as of Date of Public Notice
and Total Shareholding Ratio
Bidder: 23,82%
Special Related Parties: 76.56%
Total: 100%
(Certain shares held by some Principal Shareholders and
officers of the Bidder are subject to acquisition under this
Tender Offer. However, the number of such shares has not been
taken into account in calculating the total.)
(7) Manner and Location of Tender
Tender Offer Agent: Nikko Salomon Smith Barney Limited
Tokyo Branch
2-20, Akasaka 5-chome, Minato-ku, Tokyo
The Tender Offer Agent appoints the following as its Sub-Agent
to entrust it with certain business of the Tender Offer Agent:
The Nikko Securities Co., Ltd.
3-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo
Shareholders may tender their shares by submitting the Tender
Offer Application Form and other required documents to the Tokyo
Branch of the Tender
<PAGE> 4
-4-
Offer Agent as well as the head office and any Japanese branch of The
Nikko Securities Co., Ltd. If the relevant share certificates are held
in custody by the Tender Offer Agent or the Sub-Agent (or by the Japan
Securities Depositary Center (the "JASDEC") through the Tender Offer
Agent or the Sub-Agent), please submit the receipts for such custody
instead of such share certificates. Shareholders who have been
receiving monthly reports from the Tender Offer Agent or the Sub-Agent
regarding such shares held in custody by it do not have to submit such
receipt, either. A tender may be made by submitting required documents
at Morgan Stanley Japan Ltd., Tokyo Branch (to become Morgan Stanley
Dean Witter Japan Limited from December 1, 1999) which will act as an
intermediary to the Tender Offer Agent (hereinafter the "Securities
Dealer Intermediary"); provided, however, that in the event of tender
through the Securities Dealer Intermediary, please take care with
respect to the number of days required for the relevant procedures.
(8) Name of Securities Company and/or Bank that Handles Settlement
of Tender Offer
Nikko Salomon Smith Barney Limited, Tokyo Branch
2-20, Akasaka 5-chome, Minato-ku, Tokyo
The Nikko Securities Co., Ltd.
3-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo
(9) Commencement Date of Settlement
Wednesday, December 22, 1999
(10) Manner and Location of Settlement
Notice of purchase of shares will be mailed to tendering
shareholders at their addresses without delay after the expiration of
the tender offer period.
The purchase price of tendered shares will be paid in cash.
For individual shareholders who elect withholding taxation of capital
gains, the Tender Offer Agent or the Sub-Agent shall promptly after the
commencement date of settlement remit the purchase price to the
tendering shareholder (or if the Securities Dealer Intermediary is
used, to the Securities Dealer Intermediary) at its designated account
after deduction of withholding tax equal to 1.05% of the purchase
price.
<PAGE> 5
-5-
(11) Manner of Return of Shares or Other Securities
If tendered shares are not purchased pursuant to the
conditions set out in (12) (b) below, then the share certificates which
must be returned as a result thereof will be returned to the relevant
tendering shareholders by mail or delivery or (if held in custody by
the Tender Offer Agent, the Sub-Agent, the Securities Dealer
Intermediary or the JASDEC) to the same status as at the time of tender
promptly after the date of revocation.
(12) Other Conditions and Procedures of Tender Offer
(a) Any Conditions Listed in Each Sub-Paragraph of
Paragraph 4 of Article 27-13 of the Securities and
Exchange Law
The Bidder will purchase all shares tendered.
(b) Any Conditions for Revocation of Tender Offer and
Manner of Disclosure of Such Revocation
This Tender Offer may be revoked, if any of the
events specified in Article 14, Paragraph 1, Sub-paragraph 1,
items (a) through (e) and (g), Sub-paragraph 2, items (a)
through (g) and (i) and Sub-paragraph 3 of the Securities and
Exchange Law Enforcement Order occurs, or if there has been
any material change in the circumstances specified in Article
14, Paragraph 2, Sub-paragraphs 3 through 6 of the Securities
and Exchange Law Enforcement Order.
If this Tender Offer is to be revoked, public notice
will be given in Nihon Keizai Shimbun and Asahi Shimbun;
provided, however, that, if it is difficult to make public
notice by the last day of the tender offer period, such
revocation shall be announced in the manner prescribed in
Article 20 of the Ministerial Ordinance Concerning Disclosure
Relating to Tender Offer of Shares or Other Securities by any
Person Other than the Issuing Company (the "Ministerial
Ordinance"), which announcement shall forthwith be followed by
public notice.
<PAGE> 6
-6-
(c) Matters Relating to Cancellation Rights of Tendered
Shareholders
A tendering shareholder may cancel its agreement for
tender of shares at any time during the tender offer period by
submitting a Cancellation Notice (a Tender Offer Acceptance
Card and a document stating that such shareholder cancel its
agreement for tender of shares) to the Tender Offer Agent and
the Sub-Agent. If the Cancellation Notice is sent by mail, it
must reach thereto not later than the last day of the tender
offer period. Even if any tendering shareholder cancels its
agreement for tender of shares, the Bidder will not demand
payment of damages or penalties by such shareholder.
Furthermore, expenses necessary for returning the share
certificates held in custody will be borne by the Bidder.
(d) Manner of Disclosure of Any Change in Terms of Tender
Offer
If any term of this Tender Offer is to be changed,
public notice thereof will be given in Nihon Keizai Shimbun
and Asahi Shimbun; provided, however, that, if it is difficult
to make public notice by the last day of the tender offer
period, such change shall be announced in the manner
prescribed by Article 20 of the Ministerial Ordinance, which
announcement shall forthwith be followed by public notice.
Shares tendered prior to the date of such public notice will
also be purchased upon the terms so changed.
(e) Manner of Disclosure of Filing of Amendment to Tender
Offer Registration Statement
If any amendment to the Tender Offer Registration
Statement is filed with the Director of the Kanto Local
Finance Bureau, the contents of such amendment will forthwith
be announced in the manner prescribed by Article 20 of the
Ministerial Ordinance, to the extent that they are relevant to
the public notice of commencement of this Tender Offer. In
such case, the Tender Offer Explanatory Statement will be
immediately amended, and copies of the Tender Offer
Explanatory Statement, as amended, will be delivered to the
tendering shareholders to which copies of the Tender Offer
Explanatory Statement, as initially prepared, were delivered;
provided, however, that, if such amendment is immaterial, the
amendment may be effected by preparing, and delivering to the
tendering shareholders, a
<PAGE> 7
-7-
document setting out the reason for the amendment, the amended
matters and the description after the amendment.
(f) Manner of Disclosure of Results of Tender Offer
The results of this Tender Offer will be announced on
the day immediately following the last day of the tender offer
period in the manner prescribed by Article 20 of the
Ministerial Ordinances.
(g) Tender Offer For Non-Par Value Common Stock of the
Company represented by ADSs in the United States
American Depositary Shares ("ADSs") representing
shares of non-par value common stock of the Target Company are
listed on the New York Stock Exchange. The Target Company,
simultaneously with this Tender Offer, will conduct a tender
offer for ADSs in the United States in accordance with the
Securities Exchange Act of 1934 and Rules 14D and 13E and Rule
10b-13 under such Act in order to enable ADS holders to
participate in the tender offer.
3. ANY AGREEMENT BETWEEN BIDDER AND TARGET COMPANY OR ANY OF ITS OFFICERS
The Bidder has already obtained the consent from the Target Company
with respect to this Tender Offer.
The Bidder, the Target Company and the other party have entered into
the Tender Offer Agreement with respect to the consummation and the procedures
of this Tender Offer and the Merger on November 15, 1999. On the same day, the
Bidder and the Target Company have also entered into the Memorandum regarding
Merger.
4. PLACE WHERE COPIES OF TENDER OFFER REGISTRATION STATEMENT ARE MADE
AVAILABLE FOR PUBLIC INSPECTION
N.A.J. Co., Ltd.
7-1, Udagawacho, Shibuya-ku, Tokyo
Japan Securities Dealers Association
Nihonbashi Kabutocho 7-2, Chuo-ku, Tokyo
<PAGE> 8
-8-
5. CORPORATE PURPOSE, SUBSTANCE OF BUSINESS AND AMOUNT OF CAPITAL OF
COMPANY
(1) Corporate Purpose
1. the import, export, sale and sale for consignment of
the following goods:
(1) soaps, cleansers, detergents,
quasi-pharmaceuticals, cosmetics and
cosmetic accessories;
(2) nutritionally-enriched food supplements
(containing nutritive elements such as
vitamins, calcium, proteins and fats, and
natural fibers), macaroni, spaghetti and
other noodles, food additives, seasonings,
jam, confectioneries and soft drinks;
(3) coffee, tea, cocoa and the like;
(4) pet food;
(5) clothing, textile and accessories;
(6) writing materials, stationery, office
supplies;
(7) cooking utensils, tableware and household
goods;
(8) household electrical appliances;
(9) chemical products such as nylon, rayon and
vinal;
(10) leather, leather products and cloth products
such as bags;
(11) toys and playing materials;
(12) flowers and other plants; and
(13) medical instruments and health equipment;
<PAGE> 9
-9-
2. the publishing and sale of magazines and other
periodicals and books;
3. the import, export, production, and sale of compact
discs, cassette tapes, video tapes, phonographic
records and other types of visual and audio software;
4. the import, export and sale of cameras, photographic
film, and photographic equipment;
5. the import, export and sale of telecommunications
equipment, receiving set of satellite broadcasting
and any other types of communication appliances or
equipment and all related software;
6. providing business with telecommunications services
by using satellites, cable lines and Internet:
7. the consulting business and the intermediary business
related to the preceding two paragraphs;
8. the liability insurance agency business;
9. the business of introduction of prospective life
insurance policy holders and the business relating to
life insurance solicitation;
10. money loans;
11. design, manufacturing, sales and maintenance of
computer hardware and related equipment;
12. design, manufacturing, sales and maintenance of
computer software;
13. the establishment of shopping malls on the Internet;
14. the electronic commerce business such as the sale and
intermediary business of goods by using Internet;
<PAGE> 10
-10-
15. providing business with contents such as advertising
and providing various information by using
satellites, cable lines and Internet;
16. travel agency business in accordance with the Travel
Agency Business Law;
17. sales of securities; and
18. any and all other business incidental to the
foregoing.
(2) Substance of Business
The Bidder was established by the Principal Shareholders to
implement the Tender Offer. After the implementation of the Tender
Offer, the Bidder plans to merge with the Target Company and it will,
as the surviving company, assume and engage in the business of the
Target Company.
(3) Amount of Capital
\10,000,000
<PAGE> 1
Exhibit (a)(20)
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
N.A.J. CO., LTD.
FOR
ALL OUTSTANDING SHARES OF COMMON STOCK
AND AMERICAN DEPOSITARY SHARES
OF
AMWAY JAPAN LIMITED
AT
(Y)1,490 PER SHARE OF COMMON STOCK
N.A.J. Co., Ltd., a joint stock corporation (kabushiki kaisha)organized
under the laws of Japan ("Purchaser"), offers to purchase all the outstanding
shares of the Common Stock, no par value (the "Common Stock"), and American
Depositary Shares, each representing one-half of one share of Common Stock (the
"ADSs" and, together with the Common Stock, the "Shares"), that are beneficially
owned by shareholders of Amway Japan Limited, a joint stock corporation
(kabushiki kaisha) organized under the laws of Japan ("AJL"), 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 Agreement (the "Agreement"), dated November 15,
1999, among Purchaser, AJL and ALAP Hold Co., Ltd., a limited partnership
organized under the laws of Nevada ("ALAP"). ALAP is the parent of Purchaser and
an entity controlled and beneficially owned by the principal shareholders of
AJL, 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 Agreement
provides for Purchaser first to conduct the Offer and, after consummation of the
Offer, Purchaser and AJL have agreed to take all steps required by law or as may
be necessary or advisable to effect a merger (the "Merger") of AJL with and into
Purchaser, with Purchaser as the surviving corporation. In the Merger,
shareholders of AJL would receive shares of common stock of Purchaser. After the
Merger, Purchaser will operate under the name Amway Japan Limited. The purchase
price for each share of Common Stock purchased in the Offer will be (Y)1,490 in
cash (the "Common Stock Purchase Price"). The purchase price for each ADS
purchased in the Offer will be (Y)745 in cash (the "ADS Purchase Price" and,
together with the Common Stock Purchase Price, the "Purchase Price"), which is
equal to one-half of the Common Stock Purchase Price (because each ADS
represents one-half of one Share). The ADS Purchase Price will be payable in and
converted into U.S. dollars using the noon buying rate in New York City for
cable transfers of yen announced for customs purposes by the Federal Reserve
Bank of New York on the date of settlement of the Offer in Japan (the "Common
Stock Settlement Date"), which is presently anticipated to be not later than six
trading days after the expiration of the Offer in Japan (or, if necessary for
administrative convenience, on the business day next preceding the Common Stock
Settlement Date). The ADSs are evidenced by American Depositary Receipts
("ADRs"). There will be deducted from the Purchase Price paid to each holder any
U.S. backup withholding and Japanese income taxes which may be required to be
withheld. The Offer is for all Shares of AJL 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 (other than 550,000 Shares
owned by one of the charitable foundations established by certain of the
Principal Shareholders ("Foundation Tendered Shares")). The Principal
Shareholders will contribute substantially all of their Shares, including any
Shares that are not tendered by the charitable foundation in response to the
Offer ("Offer Non-Tendered Shares"), to ALAP or Purchaser contemporaneously
with the consummation of the Offer. In addition, no later than immediately prior
to the effectiveness of the Merger, the Principal Shareholders will transfer to
ALAP the Shares not previously transferred ("Merger Non-Tendered Shares" and,
together with Offer Non-Tendered Shares, the "Non-Tendered Shares").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE OUTSIDE OF JAPAN 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 AJL (WITH MESSRS. DEVOS, VAN ANDEL AND SUMIHIRO
NOT PARTICIPATING) (THE "DISINTERESTED DIRECTORS") HAS (1) DETERMINED THAT THE
OFFER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES OTHER THAN
FOUNDATION TENDERED SHARES AND NON-TENDERED SHARES (THE "PUBLIC SHAREHOLDERS"),
(2) APPROVED THE 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 applicable
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 with respect to the ADSs, 12:00 midnight, New York City time, on December
17, 1999, and with respect to the shares of Common Stock, means December 17,
1999, in Japan, 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 applicable Expiration Date will be eligible for
purchase. Shares not validly tendered will be returned without delay following
the Expiration Date.
Common Stock and ADSs 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. 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 any reason, then, without prejudice to Purchaser's rights under the
Offer, the Depositary (as defined in the Offer to Purchase) may, on behalf of
Purchaser, retain all ADSs tendered, and such ADSs may not be withdrawn except
as otherwise described in the Offer to Purchase. However, in any event,
Purchaser will comply with Rule 14e-1 under the Securities Exchange Act of 1934,
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 tendered Shares, a holder in Japan, or the appropriate
standing agent in Japan on behalf of a holder resident outside of Japan, must
submit to the Agent (as defined in the Offer to Purchase), on or prior to the
Expiration Date for the Common Stock, the tender offer application acceptance
card they received from the Agent when they submitted their completed tender
offer application form along with a written notice withdrawing such Shares.
With respect to withdrawal of tendered ADSs, to be effective, a written or
facsimile transmission notice of withdrawal must be received by the Depositary
on or prior to the ADS 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 ADSs to be withdrawn and the number of ADSs to be withdrawn. If the
ADSs 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 ADSs tendered by an Eligible
Institution) must be submitted prior to the release of such ADSs. In addition,
such notice must specify, in the case of ADSs tendered by delivery of ADRs, the
name of the registered holder (if different from that of the tendering holder)
and the serial numbers shown on the particular ADRs evidencing the ADSs to be
withdrawn or, in the case of ADSs tendered by book-entry transfer, the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn ADSs.
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 in the United States as of August 31,
1999, and are being furnished to brokers, banks and similar persons whose names,
or the names of whose nominees, appear on AJL'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 outside of Japan 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)(21)
[Translation]
November 1999
N.A.J. CO., LTD.
TENDER OFFER EXPLANATORY STATEMENT
<PAGE> 2
TENDER OFFER EXPLANATORY STATEMENT
----------------------------------
This Explanatory Statement is subject to the provisions of Chapter 2-2,
Section 1 of the Securities and Exchange Law (Law No. 25, 1948) and has
been prepared pursuant to the provisions of Article 27-9 of the
Securities and Exchange Law.
Bidder:
Name : N.A.J. Co., Ltd.
Gary K. Sumihiro
Representative Director
Address : 7-1, Udagawacho, Shibuya-ku, Tokyo
Nearby Place of Contact : Same as above
Telephone : 03-5428-7000 (main number)
Contact Person : Yoshizo Matsushita
Director
Attorney-in-Fact:
Name : None
Address : None
Nearby Place of Contact : None
Telephone : None
Contact Person : None
Place Where Copies of Tender Offer Registration Statement
Are made Available for Public Inspection
---------------------------------------------------------
N.A.J. Co., Ltd.
7-1, Udagawacho, Shibuya-ku, Tokyo
Japan Securities Dealers Association
Nihonbashi Kabuto-cho 7-2, Chuo-ku, Tokyo
<PAGE> 3
- i -
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
ITEM 1 OUTLINE OF TENDER OFFER .....................................................................1
1. Name of Target Company .................................................................1
2. Type of Shares or Other Securities Subject to Tender Offer .............................1
3. Purposes of Tender Offer ...............................................................1
4. Tender Offer Period, Tender Offer Price and Number of Shares
or Other Securities Proposed to Be Purchased .........................................4
5. Shareholding Ratio After Tender Offer ..................................................6
6. Permission Concerning Acquisition of Shares or Other Securities ........................7
7. Manner of Tender and Manner of Cancellation of Agreements ..............................7
8. Funds Required for Tender Offer .......................................................10
9. Matters Relating to Issuer of Securities Used as Consideration for
Tender Offer ........................................................................13
10. Manner of Settlement ..................................................................13
11. Other Conditions and Manners of Tender Offer ..........................................14
ITEM 2 MATTERS RELATING TO BIDDER .................................................................16
1. Outline of Company ....................................................................16
2. Financial Condition ...................................................................20
ITEM 3 SHARES OR OTHER SECURITIES OWNED AND TRADED BY BIDDER AND
SPECIAL RELATED PARTIES .............................................................21
1. Shares or Other Securities Owned as of Filing Date ....................................21
2. Trading of Shares or Other Securities .................................................36
3. Material Contracts Relating to Such Shares or Other Securities ........................36
4. Any Contract under Which Shares or Other Securities will Be
Purchased After Filing Date of Tender Offer Statement ...............................37
ITEM 4 TRANSACTIONS BETWEEN BIDDER AND TARGET COMPANY .............................................38
1. Any Material Transactions Between Bidder and Target Company or
Any of Its Officers .................................................................38
2. Any Agreement Between Bidder and Target Company or
Any of Its Officers .................................................................38
ITEM 5 MATTERS RELATING TO TARGET COMPANY .........................................................39
1. Profits and Loss, Etc. for Most Recent Three Years ....................................39
2. Share Prices ..........................................................................40
</TABLE>
<PAGE> 4
-ii-
<TABLE>
<CAPTION>
<S> <C>
3. Shareholders ..........................................................................40
4. Others ................................................................................44
</TABLE>
<PAGE> 5
ITEM 1 OUTLINE OF TENDER OFFER
1. NAME OF TARGET COMPANY
Amway Japan Limited
2. TYPE OF SHARES OR OTHER SECURITIES SUBJECT TO TENDER OFFER
Shares of common stock with no par value
3. PURPOSES OF TENDER OFFER
The Target Company is primarily engaged in the import and distribution
in Japan of products developed and manufactured by Amway Corporation
(hereinafter "Amway U.S.A.") as well as in purchases and sales of products
manufactured in Japan through use of the technology of Amway U.S.A. Faced with
the continuing weakness of Japanese economic conditions, the business results of
the Target Company have declined in recent years. In order to overcome such
situation and improve performance, it is necessary to create a corporate
structure that will facilitate implementation of sound decisions and allow the
Target Company to pursue long-term business strategies without taking into
account the influence on the short-term outlook of the equities markets.
Further, it is necessary for the Target Company to be able to respond with
greater flexibility to the business reorganization being considered with other
Amway entities.
The founders of Amway U.S.A., Jay Van Andel and Richard M. DeVos and
their respective families, along with certain corporations, trusts, foundations
and other entities established by and for the benefit thereof (hereinafter
collectively, the "Principal Shareholders") already own 110,263,022 shares,
approximately 76% of the total issued shares of the common stock of the Target
Company. The Principal Shareholders believe the acquisition of all remaining
shares of the common stock of the Target Company is the most effective method of
satisfying the goals described above and will facilitate the provision of better
services and products to distributors and customers of the Target Company and
improve operating results.
In addition, the price of the Target Company's shares on the
over-the-counter market has languished for some time, and the volume of trading
has not provided sufficient liquidity for investors. Looking at the economic
situation in Japan, the Principal Shareholders believe there is little
possibility that either the share price or the volume of trading on the
over-the-counter market will significantly improve in the foreseeable future.
This Tender Offer will, by purchasing all remaining shares of the Target Company
at a 50.5% premium to the closing selling price of the Target Company's shares
on the over-the-counter market on November 12, 1999 (the date prior to the
announcement of this Tender Offer), provide all the shareholders other than the
Principal Shareholders the most efficient opportunity possible to sell their
shares at a price that is higher than any price that is reasonably foreseeable
over the next several years.
The Bidder has been informed by the Principal Shareholders that the
Principal Shareholders will not tender their shares in response to this Tender
Offer (other than an
<PAGE> 6
- 2 -
aggregate of 550,000 shares owned by one of the charitable foundations
established by certain of the Principal Shareholders (the "Foundation Tendered
Shares")). The Principal Shareholders will contribute substantially all of their
shares that are not tendered in response to this Tender Offer (including shares
other than the Foundation Tendered Shares which are owned by the charitable
foundation) (the "First Contribution Shares"), to ALAP Hold Co., Ltd., a limited
partnership organized under the laws of Nevada and the parent of the Bidder and
an entity controlled and beneficially owned by the Principal Shareholders
("ALAP") or the Bidder contemporaneously with the consummation of this Tender
Offer. In addition, no later than immediately prior to the effectiveness of the
Merger referred to below, the Principal Shareholders will contribute the
remaining shares other than the First Contribution Shares (the "Second
Contribution Shares", and together with the First Contribution Shares, the
"Contribution Shares") to ALAP.
The purpose of this Tender Offer is to facilitate Bidder's acquisition
of shares for cash, and thereby enable the Principal Shareholders to obtain
indirect control of 100% of the capital stock of the Target Company. Pursuant to
the Tender Offer Agreement (the "Agreement"), dated November 15, 1999, among the
Bidder, the Target Company and ALAP and the Memorandum regarding Merger dated
the same date, between the Bidder and the Target Company, the Bidder will first
make this Tender Offer and, after consummation of this Tender Offer, the Bidder
and the Target Company have agreed to take all steps required by law or
otherwise to effect the merger of the Target Company into the Bidder, thus the
Bidder being the surviving company (the "Merger"). After the Merger, the Bidder
will operate under the name Amway Japan Limited. In addition, simultaneously
with the execution of the Agreement, the Principal Shareholders, the Bidder and
ALAP have entered into the Shareholder and Voting Agreement (the "Shareholder
Agreement"). Pursuant to the Shareholder Agreement, the Principal Shareholders
have agreed, and ALAP has agreed, after contribution to it of the Contribution
Shares by the Principal Shareholders, not to transfer or otherwise dispose of
the Contribution Shares, and the Bidder has agreed not to transfer or otherwise
dispose of any First Contribution Shares contributed to it by the Principal
Shareholders (if any) or any shares purchased by it in this Tender Offer
(collectively, the "Purchased Shares"), in either case prior to consummation of
the Merger. Furthermore, the Principal Shareholders, ALAP and the Bidder have
agreed to vote the Second Contribution Shares, the First Contribution Shares and
the Purchased Shares, respectively, in favor of the Merger at the relevant
shareholder meeting. This assures that the necessary approval of the Merger will
be given by the Target Company's shareholders. As a result of the Merger, those
shareholders who do not tender their shares in response to this Tender Offer
will own shares of the Bidder's common stock. In addition, the shares of the
Target Company will be deregistered from the over-the-counter market and the
American Depositary Receipts thereof will be delisted from the New York Stock
Exchange. As a result, trading markets of the shares held by the shareholders
who do not tender to this Tender Offer will cease to exist and such shareholders
will in the future experience difficulty in selling their shares.
In the event that the Merger is consummated after this Tender Offer,
the terms and conditions of the Merger, including the merger ratio, will be set
forth in a definitive merger agreement to be entered into between the Bidder and
the Target Company. Depending on the merger ratio, shareholders of the Target
Company who do not tender their shares in response to this Tender Offer may,
with respect to all or a part of their shares, end up owing
<PAGE> 7
- 3 -
fractional shares in the Target Company, which do not carry the rights to
receive dividends and certain other rights. Furthermore, the Principal
Shareholders have indicated their desire that the Target Company reduce or
eliminate the dividends to preserve cash after this Tender Offer. After
completion of this Tender Offer, the dividend policy for fiscal 2000 and beyond
will be re-examined. It should be noted that under the Merger procedures,
shareholders to object to the Merger are entitled to an appraisal right;
however, consideration paid to descending shareholders could well be different
from the Purchase Price under this Tender Offer.
As of September 30, 1999, the Principal Shareholders owned
approximately 85% of the outstanding shares of common stock of Amway Asia
Pacific, Ltd. ("AAP"), an Amway group entity. The Principal Shareholders,
through Apple Hold Co., Ltd. (hereinafter "Apple Hold"), a limited partnership
established under the Bermuda law and its subsidiary, will conduct a separate
tender offer and the subsequent transactions (collectively, "AAP Transactions"),
thereby acquire all shares of the stock of AAP.
As a result of the Tender Offer and the subsequent Merger, the
Principal Shareholders will own, indirectly as limited partner of ALAP, all or
substantially all of the shares of the Target Company. In addition, as a result
of the AAP Transactions, the Principal Shareholders will own, indirectly as
limited partners of Apple Hold, all of the outstanding shares of AAP. Currently,
the Principal Shareholders are the sole owners of Amway U.S.A. and various
subsidiaries and affiliates thereof. The Principal Shareholders may desire at
some point in the future to transfer all of their ownership in such Amway group
entities to ALAP. Apple Hold or affiliate of each of ALAP or Apple Hold. After
completion of the Merger and the AAP Transactions, the Principal Shareholders
may consider from time to time, restructuring transactions of Amway entities, in
order to improve liquidity and value of their investment, including possible
public offering by the Bidder or one or more of its affiliates.
The Bidder will pay for the shares purchased pursuant to this Tender
Offer with the Funds borrowed (assuming that all of the shares held by
shareholders other than the Principal Shareholders and the Foundation Tendered
Shares are tendered, approximately U.S.$505 million) under a new senior credit
facility with the Morgan Guaranty Trust Company of New York, Tokyo Branch
("Morgan Guaranty"), an affiliate of J.P. Morgan & Co. and other syndicate loan
banks. This Tender Offer is not, however, contingent upon receiving such loans.
As a result of the Merger, the Target Company will be merged into the Bidder and
will cease to exist, and therefore such loans will be assumed by the surviving
company combining the Target Company and the Bidder. The credit facility will
contain covenants that will restrict the Bidder from, among other things,
selling substantially all of its assets, incurring liens on its assets, and
incurring debt. In addition, the credit facility will require the Bidder, among
other things, to maintain or limit, as the case may be, dividend payments,
consolidated net worth and payments to shareholder. The increase in debt could
have important consequences to the remaining shareholders of the Target Company.
For example, it could require the Target Company to dedicate a substantial
portion of its cash flow from operations to pay principal and interest on the
said loans, which will reduce the availability of cash flow to fund working
capital, capital expenditures, business development activities, dividends and
other general corporate
<PAGE> 8
- 4 -
purposes and limit, among other things, the Target Company's ability to borrow
money in the future for working capital, capital expenditures and other
purposes.
4. TENDER OFFER PERIOD, TENDER OFFER PRICE AND NUMBER OF SHARES OR OTHER
SECURITIES PROPOSED TO BE PURCHASED
Tender Offer Period:
From November 18, 1999 to December 17, 1999 (30 days)
Date of Public Notice:
November 18, 1999
Name of Newspapers Carrying Public Notice:
Nihon Keizai Shimbun and Asahi Shimbun
Tender Offer Price:
- -------------------------------------------------------------------------------
Type of Securities Tender Offer Price
- -------------------------------------------------------------------------------
Shares \1,490 per share
- -------------------------------------------------------------------------------
Instruments Evidencing
Stock Subscription Rights -
- -------------------------------------------------------------------------------
Securities Representing
Stock Subscription Rights -
- -------------------------------------------------------------------------------
Convertible Bonds -
- -------------------------------------------------------------------------------
Bonds with Warrants -
- -------------------------------------------------------------------------------
Depositary Receipts -
- -------------------------------------------------------------------------------
The Tender Offer Price of \1,490 per share
proposed by the Bidder is an amount calculated
by adding a 50.5% premium to the latest
selling price of the shares of the Target
Company at 3:00 p.m. on November 12, 1999 (the
date prior to the announcement of this Tender
Offer) announced by the Japan Securities
Basis of Calculation Dealers Association. Such price has been
determined to enable the Bidder to purchase
as many shares as possible, taking into
consideration the high possibilities of
deregistration of the Target Company from the
over-the-counter market and other factors.
- -------------------------------------------------------------------------------
<PAGE> 9
- 5 -
Number of Shares or Other Securities Proposed to Be Purchased:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Type of Securities Number as Expressed with Reference to Shares
- ----------------------------------------------------------------------------------------------------------------
Number Proposed to Be Excess Number Proposed
Purchased to Be Purchased Total
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares 34,312,778 shares - 34,312,778 shares
- ----------------------------------------------------------------------------------------------------------------
Instruments Evidencing Stock
Subscription Rights - - -
- ----------------------------------------------------------------------------------------------------------------
Securities Representing Stock
Subscription Rights - - -
- ----------------------------------------------------------------------------------------------------------------
Convertible Bonds - - -
- ----------------------------------------------------------------------------------------------------------------
Bonds with Warrants - - -
- ----------------------------------------------------------------------------------------------------------------
Depositary Receipts - - -
- ----------------------------------------------------------------------------------------------------------------
Total (a) 34,312,778 shares
- ----------------------------------------------------------------------------------------------------------------
Total of Securities Other
Than Shares (b) ( - )
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(Note 1) Out of 110,263,022 shares of the Target Company held by the
Principal Shareholders, 109,713,022 shares are not subject to
acquisition under this Tender Offer. Therefore, such shares are
not included in the number proposed to be purchased (see "3.
Material Contracts Relating to Such Shares or Other Securities" of
"Item 3 Shares or Other Securities Owned and Traded by Bidder and
Special Related Parties").
(Note 2) Shares constituting less than one unit and Treasury Shares are
subject to the Tender Offer. (Provided, however, that the share
certificates must be tendered).
<PAGE> 10
- 6 -
5. SHAREHOLDING RATIO AFTER TENDER OFFER
Number of Shares Owned as of Filing Date of Tender Offer Registration Statement:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Number Owned by Bidder (of Which
Number of Securities Other Than - shares (c) ( - shares) (d)
Shares)
- -----------------------------------------------------------------------------------------------------------------
Number Owned by Special Related
Parties (of Which Number of Securities 110,272,740 shares (e) (7,167 shares) (f)
Other Than Shares)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Total Number of Outstanding Shares of Target Company (as of November 18, 1999)
<TABLE>
<CAPTION>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------
Total Number of Outstanding Shares 144,025,800 shares (g)
- -----------------------------------------------------------------------------------------------------------------
Number of Non-Voting Shares - shares (h)
- -----------------------------------------------------------------------------------------------------------------
Number of Treasury Shares and Shares Subject to Certain
Reciprocal Holding, as to Which Voting Power May Not Be 99 shares (i)
Exercised
- -----------------------------------------------------------------------------------------------------------------
Total Number of Outstanding Shares Based on which
Shareholding Ratio after Tender Offer Shall Be 144,025,701 shares (j)
Calculated: (g) - (h) - (i)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Shareholding Ratio After Tender Offer:
<TABLE>
<CAPTION>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Numerator (c) + (e) + (a) 144,032,967 shares (k)
- -----------------------------------------------------------------------------------------------------------------
Denominator (j) + (d) + (f) + (b) + (i) 144,032,967 shares (l)
- -----------------------------------------------------------------------------------------------------------------
Shareholding Ratio (k)/(l) x 100 100%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(Note 1) Among shares held by Special Related Parties, 552,551 shares
being the aggregate of the Foundation Tendered Shares and shares
held by officers of the Bidder are included in the number of
shares proposed to be purchased by the Bidder pursuant to the
Tender Offer ((a) above). Accordingly, such number of shares has
not been taken into account twice in calculating the shareholding
ratio (numerator (k)) after the Tender Offer.
(Note 2) As Treasury Shares are included in the shares to be acquired
pursuant to the Tender Offer, they have been added to the
denominator (l) to be used to calculate the shareholding ratio
after the Tender Offer.
<PAGE> 11
- 7 -
(Note 3) Fractions after the third decimal place have been rounded.
6. PERMISSION CONCERNING ACQUISITION OF SHARES OR OTHER SECURITIES
None.
7. MANNER OF TENDER AND MANNER OF CANCELLATION OF AGREEMENTS
(1) Manner of Tender:
----------------
(i) Tender Offer Agent: Nikko Salomon Smith Barney
Limited
2-20, Akasaka 5-chome,
Minato-ku, Tokyo
The Tender Offer Agent appoints the following as its
Sub-Agent to entrust it with certain business of the
Tender Offer Agent:
The Nikko Securities Co., Ltd.
3-1, Marunouchi 3-chome,
Chiyoda-ku, Tokyo
(ii) A tendering shareholder will be required to fill out
the "Tender Offer Application Form" and submit it
together with the share certificates representing the
shares to be tendered. If the relevant share
certificates are held in custody by the Tender Offer
Agent or the Sub-Agent (or by the Japan Securities
Depositary Center (the "JASDEC") through the Tender
Offer Agent or the Sub-Agent), please submit the
receipts for such custody instead of such share
certificates. Shareholders who have been receiving
monthly reports from the Tender Offer Agent or the
Sub-Agent regarding such shares held in custody by it
do not have to submit such receipt, either. A
tendering shareholder, when tendering, need to bring
its seal, as well as the "Tender Offer Application
Form" referred to above.
A tender may be made by submitting required documents
at Morgan Stanley Japan Ltd., Tokyo Branch (to become
Morgan Stanley Dean Witter Japan Limited from
December 1, 1999) which will act as an intermediary
to the Tender Offer Agent (hereinafter the
"Securities Dealer Intermediary"); provided, however,
that in the event of tender through the Securities
Dealer Intermediary, please take care with respect to
the number of days required for the relevant
procedures.
(iii) Foreign shareholders must tender their shares through
their standing agents in Japan.
(iv) Individual shareholders, when tendering, are required
to make an election regarding taxation on capital
gains on shares (Note 1). In cases of individual
shareholders who elect declaration taxation,
corporate shareholders, Foreign shareholders
tendering through their standing agents in Japan or
where an account is newly opened at
<PAGE> 12
- 8 -
Nikko Salomon Smith Barney Limited, Tokyo Branch and
The Nikko Securities Co., Ltd., some form of proof of
identity (Note 2) is also required to be submitted.
(Note 1) Election of either withholding or declaration
regarding capital gains on shares (for individual
shareholders):
(a) Shareholders who elect withholding taxation:
As any capital gain from the sale of the
shares would be subject to withholding
taxation, it is not necessary to file a
final return. In this case, an income tax
equal to 1.05% of the purchase price would
be withheld at the settlement of the Tender
Offer.
(b) Shareholders who elect declaration taxation:
As any capital gain from the sale of the
shares would be subject to declaration
taxation, the shareholder would need to file
a final tax return. In this case, while no
income tax will be withheld at the
settlement of the Tender Offer, tendering
shareholders would generally have to pay
income tax equal to 20% of the taxable
capital gain on the shares and a residence
tax equal to 6% of such taxable capital
gain.
(Note 2) Proof of Identity
Shareholders who elect to use declaration taxation
as explained in paragraph (b) of (Note 1), corporate
shareholders, foreign shareholders tendering through
their standing agents in Japan, or shareholders who
newly open their accounts at Nikko Salomon Smith
Barney Limited, Tokyo Branch or The Nikko Securities
Co., Ltd. will be required to submit one of the
following documents as proof of identity:
In the case of individual shareholders:
Resident's card (juminhyo)
Health Insurance Card (kenko hokensho) or
Driver's license or similar document.
In case of a corporate shareholder:
A certified copy of its commercial register
In case of a foreign shareholder:
In addition to the documentation specified
above concerning its standing agent, a copy
of the power of attorney or the contract
(specifying the name of the relevant
foreign shareholder, the name of its
<PAGE> 13
- 9 -
representative and its address outside
Japan) evidencing the existence of the
agency agreement between such shareholder
and its standing agent.
(v) Upon acceptance of each tender, the Tender Offer
Agent and the Sub-Agent will deliver a Tender Offer
Acceptance Card to the tendering shareholder (or to
the Securities Dealer Intermediary, if tender is made
through the Securities Dealer Intermediary).
(vi) Tender of shares will be accepted by the Tokyo branch
of the Tender Offer Agent as well as the head office
and any Japanese branch of the Sub-Agent until the
last day of the tender offer period (December 17,
1999).
(2) Manner of Cancellation of Agreements by Tendering
-------------------------------------------------
Shareholders:
-------------
Tendering shareholders may, at any time during the
tender offer period, cancel their agreements for tender of
shares.
If a tendering shareholder wishes to cancel its
agreement for tender of shares, it must deliver, or send by
mail, the cancellation notice (consisting of (i) the Tender
Offer Acceptance Card and (ii) a document stating that such
shareholder cancels its agreement for tender of shares) to the
person designated below not later than the last day of the
tender offer period. The cancellation of such agreement will
take effect at the time when the cancellation notice is
delivered to, or reaches, the person designated below.
Consequently, it should be noted that if the cancellation
notice is sent by mail, it must reach such person not later
than the last day of the tender offer period.
Persons authorized to receive cancellation notices:
Nikko Salomon Smith Barney Limited, Tokyo Branch
2-20, Akasaka 5-chome, Minato-ku, Tokyo
The Nikko Securities Co., Ltd.
3-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo
(3) Manner of Return of Shares or Other Securities:
-----------------------------------------------
If any tendering shareholder cancels its agreement
for tender of shares in the manner set forth in "(2) Manner of
Cancellation of Agreements by Tendering Shareholders" above,
the relevant share certificates will be promptly returned to
such shareholder in the manner set forth in "(4) MANNER OF
RETURN OF SHARES OR OTHER SECURITIES" UNDER "10. Manner of
Settlement" below after the completion of the procedure for
such cancellation.
<PAGE> 14
- 10 -
(4) Name and Location of Head Office of Securities Company and/or
-------------------------------------------------------------
Bank That Will Take Custody of, and Return, Shares or Other
----------------------------------------------------------
Securities:
-----------
Nikko Salomon Smith Barney Limited, Tokyo Branch
2-20, Akasaka 5-chome, Minato-ku, Tokyo
The Nikko Securities Co., Ltd.
3-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo
(5) Tender Offer For Non-Par Value Common Stock of the Company
----------------------------------------------------------
represented by ADSs in the United States:
-----------------------------------------
American Depositary Shares ("ADSs") representing shares of
non-par value common stock of the Target Company are listed on the New
York Stock Exchange. As of August 31, 1999 the number of shares of
non-par value common stock represented by ADSs was 8,482,200 (one ADS
represents one-half share of the non-par value common stock of the
Target Company). The Bidder will conduct a tender offer for ADSs in the
United States in accordance with the Securities Exchange Act of 1934
and Rules 14D and 13E and Rule 10b-13 under such Act in order to enable
ADS holders to participate in the tender offer.
ADS holders may participate in the above tender offer by
tendering to First Chicago Trust Company of New York in the United
States (hereinafter the "Depositary") from November 18, 1999 to
December 16, 1999, New York Time. In addition, ADS holders may cancel
their ADSs, receive the shares of non-par value common stock of the
Target Company represented by such ADSs and tender such shares to the
Tender Offer in Japan prior to the expiration thereof, in accordance
with the manner set forth in "(1) Manner of Tender" above. Therefore,
the number of shares or other securities proposed to be purchased set
out in "4. Tender Offer Period, Tender Offer Price and Number of Shares
or Other Securities Proposed to Be Purchased" above includes the
non-par value shares of common stock of the Target Company represented
by ADSs.
8. FUNDS REQUIRED FOR TENDER OFFER
(1) Funds Required for Tender Offer:
--------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchase Price (a) \51,126 million
- ------------------------------------------------------------------------------------------------
Non-Cash Consideration Type - Total Number -
- ------------------------------------------------------------------------------------------------
Fees (b) \500 million
- ------------------------------------------------------------------------------------------------
Others (c) \55 million
- ------------------------------------------------------------------------------------------------
Total (a) + (b) + (c) \555 million
- ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 15
- 11 -
(Note 1) The amount indicated under "Others (c)" represents an estimate
of miscellaneous expenses, including expenses for public notices
and other amounts relating to this Tender Offer.
(Note 2) In addition, other expenses, including those payable to the
Tender Offer Agent as well as legal fees will be incurred, but the
amounts of such expenses have not yet been determined.
(2) Deposits, Borrowings and Other Funds That May Be Applied for
------------------------------------------------------------
Tender Offer:
-------------
Deposit as of Day Immediately Prior to Filing Date:
- ----------------------------------------------------------------------
Type Amount
- ----------------------------------------------------------------------
- -
- ----------------------------------------------------------------------
Total - (a)
- ----------------------------------------------------------------------
Borrowings as of Day Immediately Prior to Filing Date:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Type of Lender Name of Lender Summary of Loan Agreement Amount
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Financial Institution
(1) - - -
- --------------------------------------------------------------------------------------------------------------
Financial Institution
(2) - - - -
- --------------------------------------------------------------------------------------------------------------
Others - - - -
- --------------------------------------------------------------------------------------------------------------
Total -
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 16
- 12 -
Borrowings Scheduled After Filing Date:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Name and Address of
Type of Lender Lender Summary of Loan Agreement Amount
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Financial Institution
(1) - - -
- ------------------------------------------------------------------------------------------------------------
It is expected that the
senior credit facility
will be unsecured and
will consist of one or
more term loans.
Repayments under the
credit facility will
begin in or about
December 2000 and end in
or about December 2005.
Financial Institution (2) Morgan Guaranty and The interest rate of the
Bank other loan syndicates facility will be the LIBO U.S.$505 million
Rate plus a margin equal
to 6.35% for amounts
borrowed in the first
eight months of the
facility and as
determined by Morgan
Guaranty based on the
Bidder's creditworthiness
thereafter.
- ------------------------------------------------------------------------------------------------------------
Others - - - -
- ------------------------------------------------------------------------------------------------------------
Total U.S.$505 million (b)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Other Manners of Financing:
- --------------------------------------------------------------------------------
Summary Amount
- --------------------------------------------------------------------------------
[S] [C]
- -
- --------------------------------------------------------------------------------
Total - (c)
- --------------------------------------------------------------------------------
Grand Total ((a) + (b) + (c)): U.S.$505 million
<PAGE> 17
- 13 -
(Note) The Bidder will enter into hedging arrangements with Morgan
Guaranty effectively fixing the interest cost under the facility
and translating the payments of principal and interest to Yen. The
credit facility will contain covenants that will restrict each of
the Bidder 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 the Bidder 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 ALAP, Apple Hold and its subsidiary
has jointly and severally guaranteed the obligations of the Bidder
under the credit facility. Other conditions of the senior credit
facility are expected to be those customary for similar debt
transactions.
(3) Relationship Between Bidder and Issuer of Securities Used as
--------------------------------------------------------------
Consideration for Tender Offer:
--------------------------------
Not applicable.
9. MATTERS RELATING TO ISSUER OF SECURITIES USED AS CONSIDERATION FOR
TENDER OFFER
Not applicable.
10. MANNER OF SETTLEMENT
(1) Name and Location of Head Office of Securities Company and/or
-------------------------------------------------------------
Bank that will Handle Settlement of Tender Offer:
-------------------------------------------------
Nikko Salomon Smith Barney Limited, Tokyo Branch
2-20, Akasaka 5-chome, Minato-ku, Tokyo
The Nikko Securities Co., Ltd.
3-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo
(2) Commencement Date of Settlement:
--------------------------------
Wednesday, December 22, 1999
(3) Manner of Settlement:
---------------------
Notice of purchase of shares will be mailed to tendering
shareholders at their addresses without delay after the expiration of
the tender offer period.
The purchase price of tendered shares will be paid in cash.
For individual shareholders who elect withholding taxation of capital
gains, the Tender Offer Agent or the Sub-Agent shall promptly after the
commencement date of settlement remit the purchase price to the
tendering shareholder (or if a Securities Dealer
<PAGE> 18
- 14 -
Intermediary is used, to said Securities Dealer Intermediary) at its
designated account after deduction of withholding tax equal to 1.05% of
the purchase price.
(4) Manner of Return of Shares or Other Securities:
-----------------------------------------------
If tendered shares are not purchased pursuant to the
conditions set out in "(2) Any Conditions for Revocation of Tender
Offer and Manner of Disclosure of Such Revocation" under "11. Other
Conditions and Manners of Tender Offer" below, then the share
certificates which must be returned as a result thereof will be
returned to the relevant tendering shareholders in the manner set forth
below promptly after the date of revocation thereof.
(i) Share certificates submitted to the Tender Offer
Agent or the Sub-Agent for tender representing shares
that are not purchased will be mailed or delivered to
the shareholder.
(ii) With respect to the share certificates held in
custody by the Tender Offer Agent or the Sub-Agent
(or the JASDEC through the Tender Offer Agent or the
Sub-Agent) that are tendered, share certificates
representing shares that are not purchased will be
returned to the same status as at the time of tender.
(iii) In the event that tender was passed on to the Tender
Offer Agent by the Securities Dealer Intermediary via
a transfer of shares between their accounts at the
JASDEC, shares that are not purchased will be
returned to the account of the Securities Dealer
Intermediary.
11. OTHER CONDITIONS AND MANNERS OF TENDER OFFER
(1) Any Conditions Listed in Each Sub-Paragraph of Paragraph 4 of
-------------------------------------------------------------
Article 27-13 of the Securities and Exchange Law:
------------------------------------------------
The Bidder will purchase all shares tendered.
(2) Any Conditions for Revocation of Tender Offer and Manner of
-----------------------------------------------------------
Disclosure of Such Revocation:
------------------------------
This Tender Offer may be revoked, if any of the events
specified in Article 14, Paragraph 1, Sub-paragraph 1, items (a)
through (e) and (g), Sub-paragraph 2, items (a) through (g) and (i) and
Sub-paragraph 3 of the Securities and Exchange Law Enforcement Order
occurs, or if there has been any material change in the circumstances
specified in Article 14, Paragraph 2, Sub-paragraphs 3 through 6 of the
Securities and Exchange Law Enforcement Order.
If this Tender Offer is to be revoked, public notice will be
given in Nihon Keizai Shimbun and Asahi Shimbun; provided, however,
that, if it is difficult to make public notice by the last day of the
tender offer period, such revocation shall be announced in the manner
prescribed in Article 20 of the Ministerial Ordinance
<PAGE> 19
- 15 -
Concerning Disclosure Relating to Tender Offer of Shares or Other
Securities by any Person Other than the Issuing Company (the
"Ministerial Ordinance"), which announcement shall forthwith be
followed by public notice.
(3) Matters Relating to Cancellation Rights of Tendered
---------------------------------------------------
Shareholders:
-------------
Tendering shareholders may cancel their agreements for tender
of shares at any time during the tender offer period. The manner of
such cancellation is set out in "(2) Manner of Cancellation of
Agreements by Tendering Shareholders" under "7. Manner of Tender and
Manner of Cancellation of Agreements" above.
Even if any tendering shareholder cancels its agreement for
tender of shares, the Bidder will not demand payment of damages or
penalties by such shareholder. Furthermore, expenses necessary for
returning the share certificates held in custody will be borne by the
Bidder.
(4) Manner of Disclosure of Any Change in Terms of Tender Offer:
------------------------------------------------------------
If any term of this Tender Offer is to be changed, public
notice thereof will be given in Nihon Keizai Shimbun and Asahi Shimbun;
provided, however, that, if it is difficult to make public notice by
the last day of the tender offer period, such change shall be announced
in the manner prescribed by Article 20 of the Ministerial Ordinance,
which announcement shall forthwith be followed by public notice. Shares
tendered prior to the date of such public notice will also be purchased
upon the terms so changed.
(5) Manner of Disclosure of Filing of Amendment to Tender Offer
-----------------------------------------------------------
Registration Statement:
-----------------------
If any amendment to the Tender Offer Registration Statement is
filed with the Director of the Kanto Local Finance Bureau, the contents
of such amendment will forthwith be announced in the manner prescribed
by Article 20 of the Ministerial Ordinance, to the extent that they are
relevant to the public notice of commencement of this Tender Offer. In
such case, the Tender Offer Explanatory Statement will be immediately
amended, and copies of the Tender Offer Explanatory Statement, as
amended, will be delivered to the tendering shareholders to which
copies of the Tender Offer Explanatory Statement, as initially
prepared, were delivered; provided, however, that, if such amendment is
immaterial, the amendment may be effected by preparing, and delivering
to the tendering shareholders, a document setting out the reason for
the amendment, the amended matters and the description after the
amendment.
(6) Manner of Disclosure of Results of Tender Offer:
------------------------------------------------
The results of this Tender Offer will be announced on the day
immediately following the last day of the tender offer period in the
manner prescribed by Article 20 of the Ministerial Ordinance.
<PAGE> 20
- 17 -
ITEM 2 MATTERS RELATING TO BIDDER
1. OUTLINE OF COMPANY
(1) History of Company:
------------------
The Bidder was established on November 1, 1999 as a
wholly-owned subsidiary of ALAP Hold Co., Ltd., a limited partnership
under the laws of the United States.
(2) Business Purpose and Outline of Business:
-----------------------------------------
(i) Business Purpose:
1. the import, export, sale and sale for
consignment of the following goods:
(1) soaps, cleansers, detergents,
quasi-pharmaceuticals, cosmetics and
cosmetic accessories;
(2) nutritionally-enriched food supplements
(containing nutritive elements such as
vitamins, calcium, proteins and fats, and
natural fibers), macaroni, spaghetti and
other noodles, food additives,
seasonings, jam, confectioneries and soft
drinks;
(3) coffee, tea, cocoa and the like;
(4) pet food;
(5) clothing, textile and accessories;
(6) writing materials, stationery, office
supplies;
(7) cooking utensils, tableware and household
goods;
(8) household electrical appliances;
(9) chemical products such as nylon, rayon
and vinal;
(10)leather, leather products and cloth
products such as bags;
(11)toys and playing materials;
(12)flowers and other plants; and
(13)medical instruments and health equipment;
<PAGE> 21
- 18 -
2. the publishing and sale of magazines and
other periodicals and books;
3. the import, export, production, and sale of
compact discs, cassette tapes, video tapes,
phonographic records and other types of
visual and audio software;
4. the import, export and sale of cameras,
photographic film, and photographic
equipment;
5. the import, export and sale of
telecommunications equipment, receiving set
of satellite broadcasting and any other types
of communication appliances or equipment and
all related software;
6. providing business with telecommunications
services by using satellites, cable lines and
Internet:
7. the consulting business and the intermediary
business related to the preceding two
paragraphs;
8. the liability insurance agency business;
9. the business of introduction of prospective
life insurance policy holders and the
business relating to life insurance
solicitation;
10. money loans;
11. design, manufacturing, sales and maintenance
of computer hardware and related equipment;
12. design, manufacturing, sales and maintenance
of computer software;
13. the establishment of shopping malls on the
Internet;
14. the electronic commerce business such as the
sale and intermediary business of goods by
using Internet;
15. providing business with contents such as
advertising and providing various information
by using satellites, cable lines and
Internet;
16. travel agency business in accordance with
the Travel Agency Business Law;
<PAGE> 22
- 19 -
17. sales of securities; and
18. any and all other business incidental to the
foregoing.
(ii) Outline of Business:
The Bidder was established by the Principal
Shareholders to implement the Tender Offer. After the
implementation of the Tender Offer, the Bidder plans to merger
with the Target Company and it will, as the surviving company,
assume and engage in the business of the Target Company.
(3) Amount of Paid-in Capital and Number of Outstanding Shares:
-----------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Amount of Paid-in Capital Number of Outstanding Shares
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
\10,000,000 50 shares
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(4) Principal Shareholders:
-----------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Name Address Number of Shares Owned Holding Ratio
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ALAP Hold Co., Ltd. 7575 Fulton Street East 50 shares 100%
Ada, Michigan, U.S.A.
- ----------------------------------------------------------------------------------------------------------------
Total 50 shares 100%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 23
- 20 -
(5) Resumes and Number of Shares Owned by Officers:
-----------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Title Name (Birth Date) Business Career Number of
Shares Owned
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
June 1983: Joined the U.S. Labor shares
Department as a contract
specialist
May 1985: Joined North American Van
Lines, Inc. as an
Representative Gary K. Sumihiro International Counsel
Director (October 22, 1956) Aug. 1988: Joined Amway U.S.A. as an
Assistant General Counsel 51
Jan. 1995: Loaned to Target Company as
General Counsel
Nov. 1997: Director of Target Company
(present position)
- ----------------------------------------------------------------------------------------------------------------
July 1970: Joined Nihon Tetra Pak K.K.
March 1981: Director and Assistant Chief
of Production for Nihon Tetra
Pak K.K.
Sept. 1984: Director and Chief of
Administration for Nihon
Tetra Pak K.K.
Yoshizo Matsushita Aug. 1989: Joined Target Company as
Director (January 1, 1935) Chief Financial Officer 2,500
Aug. 1990: Director of Finance of Target
Company
Feb. 1994: Director of Administration of
Target Company
April 1994: Director and Vice President
of Target Company (present
position)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 24
- 21 -
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Title Name (Birth Date) Business Career Number of
Shares Owned
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Feb. 1980: Joined Amway U.S.A.
Sept. 1987: General Manager of Amway
Thailand
Sept. 1991: General Manager of Amway GmbH
Sept. 1993: Director of New Market
Development, Amway U.S.A.
Jan. 1996: Vice President of New Market
Development, Amway U.S.A.
Director James B. Payne March 1996: Vice President of Amway 0
(September 30, 1953) Australia and Amway New
Zealand
Jan. 1997: Senior Vice President of
Amway U.S.A. and Director and
Senior Vice President of AAP
Sept. 1999: Senior Vice President of
Target Company (present
position)
- ----------------------------------------------------------------------------------------------------------------
June 1977: Joined Jones, Day, Reavis &
Pogue (law firm)
Jan. 1983: Partner of Jones, Day, Reavis
& Pogue
Oct. 1993: Vice President & General
Statutory Auditor Craig N. Meurlin Counsel of Amway U.S.A. 0
(June 19, 1952) Jan. 1994: Senior Vice President &
General Counsel of Amway
U.S.A. (present position)
Nov. 1994: Statutory Auditor of Target
Company (present position)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
2. FINANCIAL CONDITION
The Bidder is a corporation established on November 1, 1999 and since
not much time has elapsed from the date of its establishment, no financial
statements have been prepared.
<PAGE> 25
-22-
ITEM 3 SHARES OR OTHER SECURITIES OWNED AND TRADED BY BIDDER AND SPECIAL RELATED
PARTIES
1. SHARES OR OTHER SECURITIES OWNED AS OF FILING DATE
(1) Shares or Other Securities Owned by Bidder:
-------------------------------------------
<TABLE>
<CAPTION>
- --------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- --------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares - - -
- --------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing
Stock Subscription Rights - N/A -
- --------------------------- -------------------------- -------------------------- --------------------------
Securities Representing
Stock Subscription Rights - N/A -
- --------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- --------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- --------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts - N/A -
- --------------------------- -------------------------- -------------------------- --------------------------
Total - - -
- --------------------------- -------------------------- -------------------------- --------------------------
Total Number of
Securities Owned -
- --------------------------- --------------------------
(of Which Number of
Securities Other Than ( - )
Shares)
- --------------------------- --------------------------
</TABLE>
<PAGE> 26
-23-
(2) Shares or Other Securities Owned by Special Related Parties (in
---------------------------------------------------------------
Aggregate):
- -----------
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 110,265,272 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing
Stock Subscription Rights 7,167 shares N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing
Stock Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts
(Shares of Common Stock 301 shares N/A -
with No Par Value)
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 110,272,740 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of
Securities Owned 110,272,740 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than
Shares) (7,167 shares)
- ------------------------------- --------------------------
</TABLE>
<PAGE> 27
-24-
(3) Shares or Other Securities Owned by Each of Special Related Parties:
--------------------------------------------------------------------
Name: Gary K. Sumihiro
Address: (Business Address) 7-1, Udagawacho, Shibuya-ku, Tokyo
Occupation or Business: Representative Director of the Bidder and
Director of the Target Company
Contact Person: Yoshizo Matsushita
Vice President and Director
Amway Japan Limited
7-1, Udagawacho, Shibuya-ku, Tokyo
Relationship with Bidder: Gary K. Sumihiro is an officer of the Bidder.
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
Shares - - -
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Instruments Evidencing
Stock Subscription Rights 1,667 shares N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing
Stock Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts
(Shares of Common Stock 51 shares N/A -
with No Par Value)
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 1,718 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of
Securities Owned 1,718 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than (1,667 shares)
Shares)
- ------------------------------- --------------------------
</TABLE>
<PAGE> 28
-25-
Name: Yoshizo Matsushita
Address: (Business Address) 7-1, Udagawacho, Shibuya-ku, Tokyo
Occupation or Business: Director of the Bidder and Vice President and
Director of the Target Company
Contact Person: Yoshizo Matsushita
Vice President and Director
Amway Japan Limited
7-1, Udagawacho, Shibuya-ku, Tokyo
Relationship with Bidder: Yoshizo Matsushita is an officer of the Bidder.
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 2,250 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing Stock
Subscription Rights 5,500 shares N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts
(Shares of Common Stock with 250 shares N/A -
No Par Value)
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 8,000 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of Securities
Owned 8,000 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than Shares) (5,500 shares)
- ------------------------------- --------------------------
</TABLE>
<PAGE> 29
-26-
Name: Jay Van Andel Trust
Address: 901, 27-16, Koishikawa 3-chome, Bunkyo-ku, Tokyo
Standing Proxy: Sylphide Associates, Limited
Occupation or Business: Holder of shares of the Target Company
Contact Person: Above stated Standing Proxy
Relationship with Bidder: The special related party has entered into the
Shareholder and Voting Agreement with the Bidder
and ALAP (see "3. Material Contracts Relating to
Such Shares or Other Securities" below).
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 27,614,300 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts
(Shares of Common Stock with 11 shares N/A -
No Par Value)
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 27,614,311 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of Securities
Owned 27,614,311 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than Shares) ( - )
- ------------------------------- --------------------------
</TABLE>
<PAGE> 30
-27-
Name: Japan H.C.1. Inc.
Address: 901, 27-16, Koishikawa 3-chome, Bunkyo-ku, Tokyo
Standing Proxy: Sylphide Associates, Limited
Occupation or Business: Holder of shares of the Target Company
Contact Person: Above stated Standing Proxy
Relationship with Bidder: The special related party has entered into the
Shareholder and Voting Agreement with the Bidder
and ALAP (see "3. Material Contracts Relating to
Such Shares or Other Securities" below).
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 25,787,300 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 25,787,300 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of Securities
Owned 25,787,300 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than Shares) ( - )
- ------------------------------- --------------------------
</TABLE>
<PAGE> 31
-28-
Name: RDV (AJL) Holdings, Inc.
Address: 6-7, Nihonbashi Kabutocho, Chuo-ku, Tokyo
Standing Proxy: The Fuji Bank, Limited
Occupation or Business: Holder of shares of the Target Company
Contact Person: Above stated Standing Proxy
Relationship with Bidder: The special related party has entered into the
Shareholder and Voting Agreement with the Bidder
and ALAP (see "3. Material Contracts Relating to
Such Shares or Other Securities" below).
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 24,868,000 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 24,868,000 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of Securities
Owned 24,868,000 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than Shares) ( - )
- ------------------------------- --------------------------
</TABLE>
<PAGE> 32
-29-
Name: HDV (AJL) Holdings, Inc.
Address: 6-7, Nihonbashi Kabutocho, Chuo-ku, Tokyo
Standing Proxy: The Fuji Bank, Limited
Occupation or Business: Holder of shares of the Target Company
Contact Person: Above stated Standing Proxy
Relationship with Bidder: The special related party has entered into the
Shareholder and Voting Agreement with the Bidder
and ALAP (see "3. Material Contracts Relating to
Such Shares or Other Securities" below).
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 20,510,000 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 20,510,000 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of Securities
Owned 20,510,000 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than Shares) ( - )
- ------------------------------- --------------------------
</TABLE>
<PAGE> 33
-30-
Name: Richard & Helen DeVos Foundation
Address: 6-7, Nihonbashi Kabutocho, Chuo-ku, Tokyo
Standing Proxy: The Fuji Bank, Limited
Occupation or Business: Holder of shares of the Target Company
Contact Person: Above stated Standing Proxy
Relationship with Bidder: The special related party has entered into the
Shareholder and Voting Agreement with the Bidder
and ALAP (see "3. Material Contracts Relating to
Such Shares or Other Securities" below).
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 2,620,300 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 2,620,300 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of Securities
Owned 2,620,300 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than Shares) ( - )
- ------------------------------- --------------------------
</TABLE>
<PAGE> 34
-31-
Name: RDV GRIT Holdings, Inc.
Address: 6-7, Nihonbashi Kabutocho, Chuo-ku, Tokyo
Standing Proxy: The Fuji Bank, Limited
Occupation or Business: Holder of shares of the Target Company
Contact Person: Above stated Standing Proxy
Relationship with Bidder: The special related party has entered into the
Shareholder and Voting Agreement with the Bidder
and ALAP (see "3. Material Contracts Relating to
Such Shares or Other Securities" below).
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 2,396,800 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 2,396,800 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of Securities
Owned 2,396,800 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than Shares) ( - )
- ------------------------------- --------------------------
</TABLE>
<PAGE> 35
-32-
Name: RDV Capital Management L.P. II
Address: 6-7, Nihonbashi Kabutocho, Chuo-ku, Tokyo
Standing Proxy: The Fuji Bank, Limited
Occupation or Business: Holder of shares of the Target Company
Contact Person: Above stated Standing Proxy
Relationship with Bidder: The special related party has entered into the
Shareholder and Voting Agreement with the Bidder
and ALAP (see "3. Material Contracts Relating to
Such Shares or Other Securities" below).
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 2,296,000 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 2,296,000 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of Securities
Owned 2,296,000 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than Shares) ( - )
- ------------------------------- --------------------------
</TABLE>
<PAGE> 36
-33-
Name: Jay & Betty Van Andel Foundation
Address: 901, 27-16, Koishikawa 3-chome, Bunkyo-ku, Tokyo
Standing Proxy: Sylphide Associates, Limited
Occupation or Business: Holder of shares of the Target Company
Contact Person: Above stated Standing Proxy
Relationship with Bidder: The special related party has entered into the
Shareholder and Voting Agreement with the Bidder
and ALAP (see "3. Material Contracts Relating to
Such Shares or Other Securities" below).
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 1,987,000 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 1,987,000 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of Securities
Owned 1,987,000 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than Shares) ( - )
- ------------------------------- --------------------------
</TABLE>
<PAGE> 37
Name: HDV GRIT Holdings, Inc.
Address: 6-7, Nihonbashi Kabutocho, Chuo-ku, Tokyo
Standing Proxy: The Fuji Bank, Limited
Occupation or Business: Holder of shares of the Target Company
Contact Person: Above stated Standing Proxy
Relationship with Bidder: The special related party has entered into the
Shareholder and Voting Agreement with the Bidder
and ALAP (see "3. Material Contracts Relating to
Such Shares or Other Securities" below).
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 1,550,000 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts
(Shares of Common Stock with 11 shares N/A -
No Par Value)
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 1,550,011 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of Securities
Owned 1,550,011 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than Shares) ( - )
- ------------------------------- --------------------------
</TABLE>
<PAGE> 38
-35-
Name: Van Andel Institute
Address: 901, 27-16, Koishikawa 3-chome, Bunkyo-ku, Tokyo
Standing Proxy: Sylphide Associates, Limited
Occupation or Business: Holder of shares of the Target Company
Contact Person: Above stated Standing Proxy
Relationship with Bidder: The special related party has entered into the
Shareholder and Voting Agreement with the Bidder
and ALAP (see "3. Material Contracts Relating to
Such Shares or Other Securities" below).
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 536,000 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 536,000 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of Securities
Owned 536,000 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than Shares) ( - )
- ------------------------------- --------------------------
</TABLE>
<PAGE> 39
-36-
Name: Van Andel Education Institute
Address: 901, 27-16, Koishikawa 3-chome, Bunkyo-ku, Tokyo
Standing Proxy: Sylphide Associates, Limited
Occupation or Business: Holder of shares of the Target Company
Contact Person: Above stated Standing Proxy
Relationship with Bidder: The special related party has entered into the
Shareholder and Voting Agreement with the Bidder
and ALAP (see "3. Material Contracts Relating to
Such Shares or Other Securities" below).
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 48,700 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 48,700 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of Securities
Owned 48,700 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than Shares) ( - )
- ------------------------------- --------------------------
</TABLE>
<PAGE> 40
-37-
Name: Van Andel Research Institute
Address: 901, 27-16, Koishikawa 3-chome, Bunkyo-ku, Tokyo
Standing Proxy: Sylphide Associates, Limited
Occupation or Business: Holder of shares of the Target Company
Contact Person: Above stated Standing Proxy
Relationship with Bidder: The special related party has entered into the
Shareholder and Voting Agreement with the Bidder
and ALAP (see "3. Material Contracts Relating to
Such Shares or Other Securities" below).
<TABLE>
<CAPTION>
- ------------------------------- -------------------------- -------------------------- --------------------------
Number of Shares as to Number of Securities as
Number Owned Which Voting Power Is to Which Discretionary
Held Power Is Held
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Shares 48,600 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Instruments Evidencing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Securities Representing Stock
Subscription Rights - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Convertible Bonds - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Bonds with Warrants - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Depositary Receipts - N/A -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total 48,600 shares - -
- ------------------------------- -------------------------- -------------------------- --------------------------
Total Number of Securities
Owned 48,600 shares
- ------------------------------- --------------------------
(of Which Number of
Securities Other Than Shares) ( - )
- ------------------------------- --------------------------
</TABLE>
2. TRADING OF SHARES OR OTHER SECURITIES
None.
3. MATERIAL CONTRACTS RELATING TO SUCH SHARES OR OTHER SECURITIES
109,713,022 shares of the Target Company held by the Principal
Shareholders will be, after consummation of this Tender Offer, contributed
gratis as the First Contribution Shares or the Second Contribution Shares to
ALAP or (as the case may be) the Bidder.
<PAGE> 41
-38-
Furthermore, the Principal Shareholders, the Bidder and ALAP have
entered into the Shareholder Agreement, whereby they have agreed not to dispose
of the First Contribution Shares and the Purchased Shares and to exercise the
voting rights with respect to the First Contribution Shares, the Second
Contribution Shares and the Purchased Shares for approval of the Merger.
(See "3. Purposes of Tender Offer" under "Item 1 Outline of Tender
Offer" above.)
4. ANY CONTRACT UNDER WHICH SHARES OR OTHER SECURITIES WILL BE PURCHASED
AFTER FILING DATE OF TENDER OFFER STATEMENT
None.
<PAGE> 42
-39-
ITEM 4 TRANSACTIONS BETWEEN BIDDER AND TARGET COMPANY
1. ANY MATERIAL TRANSACTIONS BETWEEN BIDDER AND TARGET COMPANY OR ANY OF
ITS OFFICERS
None.
2. ANY AGREEMENT BETWEEN BIDDER AND TARGET COMPANY OR ANY OF ITS OFFICERS
The Bidder has already obtained the consent from the Target Company
with respect to this Tender Offer.
The Bidder, the Target Company and ALAP have entered into the Tender
Offer Agreement with respect to the consummation and the procedures of this
Tender Offer and the Merger on November 15, 1999. On the same day, the Bidder
and the Target Company have also entered into the Memorandum regarding Merger
(see "3. Purposes of Tender Offer" under "Item 1 Outline of Tender Offer"
above).
<PAGE> 43
-40-
ITEM 5 MATTERS RELATING TO TARGET COMPANY
1. PROFITS AND LOSS, ETC. FOR MOST RECENT THREE YEARS
<TABLE>
<CAPTION>
(in millions of yen)
- ------------------------------- -------------------------- -------------------------- --------------------------
End of Fiscal Year August 1996 August 1997 August 1998
- ------------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Sales 212,195 203,361 192,457
- ------------------------------- -------------------------- -------------------------- --------------------------
Sales Costs 55,587 57,278 62,177
- ------------------------------- -------------------------- -------------------------- --------------------------
Selling and Administrative
Expenses 102,429 104,463 103,552
- ------------------------------- -------------------------- -------------------------- --------------------------
Non-Operating Income 685 955 915
- ------------------------------- -------------------------- -------------------------- --------------------------
Non-Operating Costs 3,430 210 434
- ------------------------------- -------------------------- -------------------------- --------------------------
Net Profits (Net Losses) 25,130 26,638 12,778
- ------------------------------- -------------------------- -------------------------- --------------------------
Per Share Net Profit (yen) 168.09 181.71 88.71
- ------------------------------- -------------------------- -------------------------- --------------------------
Per Share Dividend (yen) 125.00 100 100
- ------------------------------- -------------------------- -------------------------- --------------------------
Per Share Net Asset (yen) 410.99 439.19 422.69
- ------------------------------- -------------------------- -------------------------- --------------------------
</TABLE>
(Note) Profits and loss, etc. are based on the annual securities report
of the Target Company filed on November 28, 1996, November 27,
1997 and November 26, 1998.
(in millions of yen)
- ------------------------------- --------------------------
End of Fiscal Year August 1999
- ------------------------------- --------------------------
Sales 143,797
- ------------------------------- --------------------------
Sales Costs 47,737
- ------------------------------- --------------------------
Selling and Administrative
Expenses 75,798
- ------------------------------- --------------------------
Non-Operating Income 1,697
- ------------------------------- --------------------------
Non-Operating Costs 604
- ------------------------------- --------------------------
Net Profits (Net Losses) 10,507
- ------------------------------- --------------------------
Per Share Net Profit (yen) 77.96
- ------------------------------- --------------------------
Per Share Dividend (yen) 100
- ------------------------------- --------------------------
Per Share Net Asset (yen) 395.52
- ------------------------------- --------------------------
<PAGE> 44
-41-
(Note) The above profits and loss, etc. are based on the summary report
on the non-consolidated results announced by the Target Company on
October 15, 1999.
2. SHARE PRICES
Name of Stock Exchange or Securities Dealers Association on Which Shares Are
Traded:
Japan Securities Dealers Association
<TABLE>
<CAPTION>
(in Yen)
- --------------- ------------- ------------- ------------- ------------ ------------- ------------- -------------
November
Month May June July August September October (Note)
- --------------- ------------- ------------- ------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Max. Price 1,300 1,310 1,270 1,320 1,230 1,160 1,500
- --------------- ------------- ------------- ------------- ------------ ------------- ------------- -------------
Min. Price 1,090 1,060 1,180 1,190 1,040 1,020 940
- --------------- ------------- ------------- ------------- ------------ ------------- ------------- -------------
</TABLE>
(Note) Up to the date immediately prior to the filing date of this tender
offer registration statement.
3. SHAREHOLDERS
(1) Shareholders in General:
------------------------
<TABLE>
<CAPTION>
As of August 31, 1998
- ----------------------------------------------------------------------------------------------------------------------
Distribution of shares (1 unit = 100 shares)
------------------------------------------------------------------------------------------- Odd-lot
shares
Government Foreign
/local Financial Securities Other corporations Individuals Total
government institutions companies corporations (Individuals) /local
- ---------------- ------------ ------------ ----------- ------------- ------------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of person 38 16 244 146 14,438 14,882
Shareholders (15)
- ---------------- ------------ ------------ ----------- ------------- ------------- ------------ ------------ ---------
Number Owned unit 21,285 635 17,468 1,294,441 106,425 1,440,254 shares
(219) 400
- ---------------- ------------ ------------ ----------- ------------- ------------- ------------ ------------ ---------
Holding Ratio 1.48 0.04 1.21 89.88 7.39 100.00
(0.02)
- ---------------- ------------ ------------ ----------- ------------- ------------- ------------ ------------ ---------
</TABLE>
(Note 1) Ninety-nine shares of treasury stock are included in the "Odd-lot
shares" classification.
(Note 2) The "Other corporations" classification includes 212 units in the
name of Japan Securities Depositary Center.
(Note 3) The information is based on the annual securities report of the
Target Company filed on November 26, 1998.
<PAGE> 45
-42-
(2) Shares Owned by Principal Shareholders and Officers:
----------------------------------------------------
(a) Principal Shareholders:
<TABLE>
<CAPTION>
As of February 28, 1999
- -------------------------------------------------------------------------------------------------------------------
Principal Shareholders
- -------------------------------------------------------------------------------------------------------------------
Number of
Name Address Shares Holding
Owned Ratio
- ------------------------------- --------------------------------------------------------- ------------ ------------
thousand
shares %
<S> <C> <C> <C>
Jay Van Andel Trust 901, 27-16, Koishikawa 3-chome, Bunkyo-ku, 27,614 19.17
Tokyo 112-0002
Standing Proxy: Sylphide Associates, Limited
- ------------------------------- --------------------------------------------------------- ------------ ------------
Japan H.C.1. Inc. 901, 27-16, Koishikawa 3-chome, Bunkyo-ku, 25,787 17.90
Tokyo 112-0002
Standing Proxy: Sylphide Associates, Limited
- ------------------------------- --------------------------------------------------------- ------------ ------------
RDV (AJL) Holdings, Inc. 2-1, Yaesu 1-chome, Chuo-ku, Tokyo 103-8671 24,868 17.26
Standing Proxy: Yasuda Trust & Banking Co., Ltd.
- ------------------------------- --------------------------------------------------------- ------------ ------------
HDV (AJL) Holdings, Inc. 2-1, Yaesu 1-chome, Chuo-ku, Tokyo 103-8671 20,510 14.24
Standing Proxy: Yasuda Trust & Banking Co., Ltd.
- ------------------------------- --------------------------------------------------------- ------------ ------------
Moxley and Company 7-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-8388 10,247 7.11
Standing Proxy: The Bank of Tokyo-Mitsubishi, Ltd.,
Securities Custody Department
- ------------------------------- --------------------------------------------------------- ------------ ------------
Richard & Helen DeVos 2-1, Yaesu 1-chome, Chuo-ku, Tokyo 103-8671 2,620 1.81
Foundation Standing Proxy: Yasuda Trust & Banking Co., Ltd.
- ------------------------------- --------------------------------------------------------- ------------ ------------
RDV GRIT Holdings, Inc. 2-1, Yaesu 1-chome, Chuo-ku, Tokyo 103-8671 2,396 1.66
Standing Proxy: Yasuda Trust & Banking Co., Ltd.
- ------------------------------- --------------------------------------------------------- ------------ ------------
RDV Capital Management L.P. II 2-1, Yaesu 1-chome, Chuo-ku, Tokyo 103-8671 2,296 1.59
Standing Proxy: Yasuda Trust & Banking Co., Ltd.
- ------------------------------- --------------------------------------------------------- ------------ ------------
Jay & Betty Van Andel 901, 27-16, Koishikawa 3-chome, Bunkyo-ku, 1,987 1.37
Foundation Tokyo 112-0002
Standing Proxy: Sylphide Associates, Limited
- ------------------------------- --------------------------------------------------------- ------------ ------------
HDV GRIT Holdings, Inc. 2-1, Yaesu 1-chome, Chuo-ku, Tokyo 103-8671 1,550 1.07
Standing Proxy: Yasuda Trust & Banking Co., Ltd.
- ------------------------------- --------------------------------------------------------- ------------ ------------
Total 119,877 83.23
- ------------------------------- --------------------------------------------------------- ------------ ------------
</TABLE>
(Note 1) The Target Company's American Depositary Receipts ("ADR") are
listed on the New York Stock Exchange. One American Depositary
Share ("ADS"), which is represented by one ADR, is equivalent to
one-half of one share of non-par
<PAGE> 46
-43-
value common stock. The shareholder or record for the ADRs is
Moxley and Company.
(Note 2) For the purpose of conducting a delayed secondary offering by the
Jay Van Andel Trust and HDV GRIT Holdings, Inc. (collectively, the
"Sellers"), AJL PEPS Trust, a registered investment company,
offered and sold in November 1995 to the public 15,657,620 Premium
Exchangeable Participating Shares (the "PEPS") at a purchase price
of $19.16 per PEPS. Each of the PEPS was exchanged on February 15,
1999, for 1.25 ADSs according to the terms of PEPS and the related
number of ADSs was delivered to the holders of PEPS. Since each of
the Sellers was the beneficial shareholders of half of such number
of ADSs until the exchange of the PEPS was made, the number of
shares of the Target Company represented by such ADSs was included
in the shareholding of each Seller in the previous Securities
Report. As a result of the above exchange, the number of shares of
each Seller was reduced by that used for exchange in the above
table.
(Note 3) The above addresses are based on the annual securities report of
the Target Company filed on November 26, 1998. The other
information is based on the semi-annual securities report of the
Target Company filed on May 31, 1999.
(Note 4) The above principal shareholders with Yasuda Trust & Banking Co.,
Ltd. acting as standing proxy have changed its standing proxy to
The Fuji Bank, Limited at 6-7, Nihonbashi Kabutocho, Chuo-ku,
Tokyo.
<PAGE> 47
-44-
(b) Officers:
<TABLE>
<CAPTION>
As of November 26, 1998
- -------------------------------------------------------------------------------------------------------------------
Officers
- -------------------------------------------------------------------------------------------------------------------
Number of
Name Title Shares Holding
Owned Ratio
- ------------------------------- --------------------------------------------------------- ------------ ------------
thousand
shares %
<S> <C> <C> <C>
Richard M. DeVos, Jr. Chairman and Director - -
- ------------------------------- --------------------------------------------------------- ------------ ------------
Stephen A. Van Andel Vice Chairman and Director - -
- ------------------------------- --------------------------------------------------------- ------------ ------------
Richard S. Johnson President and Representative Director 8 0.01
- ------------------------------- --------------------------------------------------------- ------------ ------------
Tomiaki Nagase Senior Vice President and Representative Director of 2 -
Distributor Relations, Marketing, Business Rules
Administration, Consumer Relations, Public Relations
and External Affairs
- ------------------------------- --------------------------------------------------------- ------------ ------------
Takashi Kure Vice President, Chief Planning Officer and Director of 4 -
Logistics, Information Services, Corporate Planing,
Customer Services and Headquarters Building
Construction Project
- ------------------------------- --------------------------------------------------------- ------------ ------------
Yoshizo Matsushita Vice President, Chief Financial Officer and Director of 2 -
Finance & Administration
- ------------------------------- --------------------------------------------------------- ------------ ------------
Masaru Iwata Executive Director of External Affairs and Public - -
Relations
- ------------------------------- --------------------------------------------------------- ------------ ------------
Gary K. Sumihiro Director, General Counsel and Corporate Secretary - -
- ------------------------------- --------------------------------------------------------- ------------ ------------
Naoto Kira Director of Human Resources - -
- ------------------------------- --------------------------------------------------------- ------------ ------------
Noboru Makino Director - -
- ------------------------------- --------------------------------------------------------- ------------ ------------
Yoshikazu Takaishi Director - -
- ------------------------------- --------------------------------------------------------- ------------ ------------
Koichi Kura Standing Statutory Auditor - -
- ------------------------------- --------------------------------------------------------- ------------ ------------
Craig N. Meurlin Statutory Auditor - -
- ------------------------------- --------------------------------------------------------- ------------ ------------
James J. Rosloniec Statutory Auditor - -
- ------------------------------- --------------------------------------------------------- ------------ ------------
</TABLE>
(Note 1) The information other than the holding ratio is based on the
annual securities report of the Target Company filed on November
26, 1998.
(Note 2) With respect to the holding ratio, fractions after the third
decimal place have been rounded.
<PAGE> 48
-45-
4. OTHERS
None.
<PAGE> 49
(Translation)
TENDER OFFER APPLICATION FORM
(FOR APPLICATION TO TENDER OFFER AGENT/ONLY FOR TENDER OFFER FOR SHARES OF
AMWAY JAPAN)
To: Nikko Salomon Smith Barney Limited
as Tender Offer Agent
I/We hereby tender shares in response to the tender offer as follows:
<TABLE>
<CAPTION>
- --------------------- ---------------------------------- --------------------------------------------------------
Application
Date Account Number Issue Name Code
- --------------------- ---------------------------------- --------------------------------------------------------
<S> <C> <C> <C> <C>
Branch Code Customer Code Amway Japan 9821
-------------- ------------------
- --------------------- ---------------------------------- --------------------------------------------------------
- ------------------- --------------------------------- ------------------------ -------------------------
Taxation on Taxation on Dividends Number of Shares
Capital Gains Paid to Corporation Tendered Amendment
- ------------------- --------------------------------- ------------------------ -------------------------
1. Withholding 5. No Tax on Constructive 5. Cancellation
3. Declaration Dividends 7. Addition
- ------------------- --------------------------------- ------------------------ -------------------------
- -----------------------------------------------------------------------------------------------------------------------
Address:
- -----------------------------------------------------------------------------------------------------------------------
Name of Corporation:
- ------------------------------------------------------------------------------------ (Seal of Representative)
Name of Representative:
- -----------------------------------------------------------------------------------------------------------------------
Name of Department/Division: Name of Contact Person:
- -----------------------------------------------------------------------------------------------------------------------
Telephone: Fax:
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
[ ] Transfer to Designated Bank (Registration No. )
[ ] Transfer to Financial Institution Described Below
-----------------------------------------------------------------------------------------------------
Account to Name of Financial Institution: Name of Branch:
Which Purchase
Price Will Be -----------------------------------------------------------------------------------------------------
Transferred Financial Name of Account Holder:
Institution [ ] Savings Account Account Number
Code [ ] Checking Account
------------ [ ] ----------------
- -----------------------------------------------------------------------------------------------------------------------
(Note) Please fill out form and affix seal.
Please be sure to specify readings of all kanji characters.
Please read Tender Offer Explanatory Sheet.
Before bringing in the original application form, please send the completed form by fax to the Agent for
prior confirmation. The Agent will then contact you to confirm that the form is in order
(Fax number: 03-5574-5990)
- -----------------------------------------------------------------------------------------------------------------------
For use by the Agent
- -----------------------------------------------------------------------------------------------------------------------
Status of Share Certificates Share Certificates In case of JASDEC
- -----------------------------------------------------------------------------------------------------------------------
Types In the Name of
[ ] On Deposit (Share Certificates)
[ ] On Deposit (JASDEC) Types Certificates Shares Himself/Agent Shares
[ ] Delivered (Share Certificates)
[ ] Delivered (JASDEC) Types Certificates Shares Himself/Agent Name of Participant
[ ] Others
Types Certificates Shares Himself/Agent Participant Code
- -----------------------------------------------------------------------------------------------------------------------
- ------------------------ ------------- --------------------- -------------- -------------------------------
Mnemonic No. Manager Handling Person Manager Sales
- ------------------------ ------------- --------------------- -------------- -------------------------------
SIGNATURE SALES NO.
- ------------------------ ------------- --------------------- -------------- ---------------- -------------
PRINT Extension
---------------- -------------
</TABLE>
<PAGE> 1
Exhibit (a)(22)
--- Please fold and detach card at perforation before mailing ---
AMWAY JAPAN LIMITED 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 N.A.J. Co., Ltd., 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 American
Depositary Shares ("ADSs") each representing one-half of one share of the common
stock of Amway Japan Limited (the "Company") 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 ADSs 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 ADSs 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 ADSs 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 ADSs 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 ADSs 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)(23)
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 shares of American
Depositary Shares ("ADSs") each representing one-half of one share of the common
stock of Amway Japan Limited (the "Company"). It has come to our attention that
N.A.J. Co., Ltd. has initiated an offer to purchase all outstanding shares of
common stock of Amway Japan Limited, including shares represented by ADSs. As
described below, you have the right to instruct Fidelity Management Trust
Company ("Fidelity"), as trustee of the Plan, concerning whether to tender the
ADSs of Amway Japan Limited 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 Japan Limited, including shares represented
by ADSs, at a price of 1,490 yen per share (the purchase price for each ADS will
equal one-half of this price (745 yen), and will be payable in and converted to
U.S. dollars).
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
N.A.J. Co., Ltd. (the "Purchaser"), a subsidiary of ALAP Hold Co.,
Ltd., 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, without par value, of Amway Japan Limited (the
"Shares"), at a price of 1,490 yen 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.
<PAGE> 2
The Purchaser's Offer to Purchase extends to the ADSs held by the Plan.
As of November 12, 1999, the Plan held approximately 91,502 ADSs. Only Fidelity,
as trustee of the Plan, can tender these ADSs 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 ADSs credited to your individual account in the
Plan. Unless otherwise required by applicable law, Fidelity will tender ADSs
credited to participant accounts in accordance with participant instructions and
Fidelity will not tender ADSs 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 ADSS 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 ADSs to the Company for less than "adequate
consideration," which Fidelity will determine based on the prevailing or closing
market price of the ADSs on or about the date the ADSs 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 ADSs on or about such
date, Fidelity may be unable to tender ADSs in accordance with participant
directions.
A tender of ADSs 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 ADSS CREDITED TO YOUR INDIVIDUAL
ACCOUNT UNDER THE PLAN. IF YOU WISH TO DIRECT FIDELITY CONCERNING THE TENDER OF
YOUR ADSS IN THE PLAN, YOU MUST COMPLETE AND RETURN THE ENCLOSED DIRECTION FORM.
FIDELITY MAKES NO RECOMMENDATION AS TO WHETHER TO DIRECT THE TENDER OF
ADSS OR WHETHER TO REFRAIN FROM DIRECTING THE TENDER OF ADSS. 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 ADSs 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 ADSs 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 ADSs will be
considered NOT TENDERED.
2
<PAGE> 3
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:
- CHECK BOX 1 if you want ALL of the ADSs 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 ADSs
credited to your individual account. SPECIFY THE PERCENTAGE
(in whole numbers) of ADSs 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 ADSS CREDITED TO YOUR INDIVIDUAL ACCOUNT
UNDER THE PLAN.
- CHECK BOX 3 if you do not want the ADSs 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 ADSs.
(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 ADSs
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 ADSs.
Unless the Offer is terminated or amended in accordance with its terms, the
Purchaser will then buy all outstanding Shares (and ADSs) that were tendered.
EFFECT OF TENDER ON YOUR ACCOUNT
Regardless of whether you elect to tender your ADSs, as of 4:00 p.m.,
Eastern Time, on XXXXday, December XX, you will NOT be able to make exchanges
out of the ADSs of Amway Japan Limited within your individual account until all
tender offer processing has been completed. Further, all distributions, loans
and withdrawals from balances in ADSs will be frozen after that time. However,
balances in ADSs will be utilized to calculate amounts eligible for
distributions, loans and withdrawals throughout the freeze. Contributions to and
exchanges from other investment
3
<PAGE> 4
options into ADSs 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.
For any ADSs 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 ADSs 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 ADSs 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 ADSS
OF AMWAY JAPAN LIMITED ARE DE-LISTED (AS DESCRIBED IN THE OFFER), FUTURE
CONTRIBUTIONS INTO ADSS OF AMWAY JAPAN LIMITED 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.
SHARES OUTSIDE THE PLAN
If you hold Shares or ADSs directly, you will receive, under separate
cover, tender offer materials directly from the Purchaser which can be used to
tender such ADSs directly to the Purchaser. THOSE TENDER OFFER MATERIALS MAY NOT
BE USED TO DIRECT FIDELITY TO TENDER OR NOT TENDER THE ADSS CREDITED TO YOUR
INDIVIDUAL ACCOUNT UNDER THE PLAN. The direction to tender or not tender ADSs
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 or ADSs.
FURTHER INFORMATION
If you require additional information concerning the procedure to
tender ADSs 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 AGREEMENT
DATED
NOVEMBER 15, 1999
by and among
AMWAY JAPAN LIMITED,
ALAP HOLD CO., LTD.
AND
N.A.J. CO., LTD.
<PAGE> 2
TABLE OF CONTENTS
ARTICLE PAGE
- ------- ----
ARTICLE I THE OFFER..........................................................2
1.1 The Offer.................................................2
1.2 Company Actions...........................................4
ARTICLE II INTENTION TO MERGE.................................................4
2.1 Intention to Merge........................................4
2.2 Principal Terms of Merger.................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................5
3.1 Organization..............................................5
3.2 Capitalization of the Company.............................5
3.3 Power and Authority.......................................5
3.4 Board Recommendations.....................................5
3.5 Consents and Approvals; No Violation......................6
3.6 Information Supplied......................................6
3.7 Brokers and Finders.......................................6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER........................6
4.1 Organization..............................................6
4.2 Power and Authority.......................................6
4.3 Consent and Approvals; No Violation.......................7
4.4 Information Supplied......................................7
4.5 Purchaser's Operations....................................7
4.6 Capitalization............................................7
4.7 Financing.................................................7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ALAP.............................7
5.1 Organization..............................................8
5.2 Authority Relative to this Agreement......................8
5.3 Consent and Approvals; No Violation.......................8
5.4 ALAP's Operations.........................................8
5.5 Capitalization............................................8
5.6 Financing.................................................8
ARTICLE VI COVENANTS..........................................................8
6.1 Consents and Approvals....................................8
6.2 Additional Actions........................................8
6.3 Insurance.................................................9
ARTICLE VII TERMINATION.......................................................9
7.1 Termination...............................................9
7.2 Effect of Termination....................................10
-i-
<PAGE> 3
ARTICLE VIII GENERAL PROVISIONS..............................................10
8.1 Amendment and Modification...................................10
8.2 Nonsurvival of Representations and Warranties................10
8.3 Notices......................................................10
8.4 Definitions; Interpretation..................................11
8.5 Specific Performance.........................................11
8.6 Counterparts.................................................11
8.7 Entire Agreement; No Third Party Beneficiaries...............11
8.8 Severability.................................................12
8.9 Governing Law................................................12
8.10 Assignment...................................................12
8.11 Extension; Waiver............................................12
8.12 Procedure For Termination, Amendment, Extension Or Waiver....12
8.13 Announcements................................................12
-ii-
<PAGE> 4
TENDER OFFER AGREEMENT
This Tender Offer Agreement (this "Agreement") is entered into as of
November 15, 1999, by and among Amway Japan Limited, a joint stock corporation
organized under the laws of Japan (the "Company"), ALAP Hold Co., Ltd., a Nevada
limited partnership ("ALAP"), and N.A.J. Co., Ltd., a joint stock corporation
organized under the laws of Japan ("Purchaser").
RECITALS
WHEREAS, the Board of Directors of the Company consisting of all
members other than those who are disqualified by Japanese law from participating
in any proceedings of the Board of Directors with respect to the transactions
contemplated by this Agreement, who currently are Messrs. DeVos, Van Andel and
Sumihiro (the "Disinterested Directors") has considered and acted upon a
proposal received from Purchaser, which is a wholly owned subsidiary of ALAP 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, no par value of the Company (the "Company Common
Stock"), and all the outstanding American Depositary Shares, each representing
one-half of one share of Company Common Stock (the "ADSs" and, together with the
Company Common Stock, the "Shares");
WHEREAS, the Principal Shareholders have advised the Board of Directors
that, in connection with the acquisition of the Shares, Purchaser proposes first
to conduct a tender offer (the "Offer") for all of the Shares as described
herein and, after consummation of the Offer, to take all steps necessary to
effect a merger (the "Merger") of the Company with and into Purchaser, with
Purchaser as the surviving entity (the "Surviving Corporation"), subject to the
negotiation of a definitive agreement providing for the Merger and approval of
the Merger by the Shareholders and the shareholders of Purchaser;
WHEREAS, the Principal Shareholders have informed Purchaser that they
will not tender their Shares in response to the Offer (other than a portion of
the Shares owned by one of the charitable foundations established by certain of
the Principal Shareholders ("Foundation Tendered Shares")) but such Principal
Shareholders will transfer substantially all of their Shares, including any
Shares not tendered by such charitable foundation in response to the Offer
("Offer Non-Tendered Shares"), to ALAP contemporaneously with the consummation
of the Offer and, no later than immediately prior to the effectiveness of the
Merger, the Principal Shareholders will transfer to ALAP the Shares that were
not transferred to ALAP contemporaneously with the consummation of the Offer
(the "Merger Non-Tendered Shares" and, together with the Offer Non-Tendered
Shares, the "Non-Tendered Shares");
WHEREAS, having received the advice of financial and legal advisors,
and following negotiation of the terms of the Offer and this Agreement, the
Board of Directors consisting of the Disinterested Directors has unanimously
determined that the Offer is fair to, and in the best interests of, the holders
of the Shares, other than holders of Non-Tendered Shares and Foundation Tendered
Shares (the "Public Shareholders");
WHEREAS, the Board of Directors consisting of the Disinterested
Directors has approved this Agreement and the Offer, and has adopted resolutions
approving this Agreement and
<PAGE> 5
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,
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 ALAP, the sole shareholder of
Purchaser, has approved this Agreement and the Offer; and
WHEREAS, except as otherwise contemplated by this Agreement, the
Principal Shareholders have agreed, and ALAP has agreed that after transfer to
it of any Non-Tendered Shares by the Principal Shareholders, not to dispose of
or otherwise transfer any 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 Merger, and
the Principal Shareholders have agreed, and the Principal Shareholders have
agreed to cause ALAP and Purchaser, as the case may be, to vote, and the
Principal Shareholders, ALAP and Purchaser have agreed to vote the Merger
Non-Tendered Shares, the Offer Non-Tendered Shares and the Purchased Shares,
respectively, in favor of the Merger 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
THE OFFER
1.1 THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article VII, 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 (a) all of the issued and outstanding shares
of the Company Common Stock at a price per share of (Y)1490, in cash (the
"Company Common Stock Offer Price") and (b) all of the issued and outstanding
ADSs, at a yen price per ADS equal to one-half of the Company Common Stock Offer
Price (the "ADS Offer Price" and, together with the Company Common Stock Offer
Price, the "Offer Price"). Payments of the ADS Offer Price will be made in U.S.
dollars by converting the yen price per ADS into U.S. dollars using the noon
buying rate in New York City for cable transfers of yen announced for customs
purposes by the Federal Reserve Bank of New York on the date of settlement of
the Offer in Japan. Purchaser may withhold and deduct amounts from such payments
in accordance with Section 1.1(c). The Offer in Japan shall be made pursuant to
the Registration Statement (as defined below), the Public Notice (as defined
below), the Explanatory Statement (as defined
2
<PAGE> 6
below) and the Application Form (as defined below) containing the terms and
conditions set forth in this Agreement. The Offer in the United States 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 or interpretations
of, applicable laws or any court order or injunction that have the effect of
making the Offer unlawful. Purchaser expressly reserves the right, subject to
compliance with the Exchange Act, the Securities and Exchange Law of Japan, as
amended (the "SEL"), the Securities and Exchange Law Enforcement Order, as
amended (the "Enforcement Order"), the Ministerial Ordinance (the "Ministerial
Ordinance") issued by the Japanese Ministry of Finance (the "MOF"), and the
Commercial Code of Japan relating to joint stock corporations and certain
related legislation (the "Commercial Code" and collectively with the SEL, the
Enforcement Order, and the Ministerial Ordinance, the "Applicable Japanese
Laws"), to modify the terms of the Offer. In no event shall Purchaser amend or
modify the terms of the Offer to (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, which is expected to be no
later than six trading days after the expiration date in Japan, accept for
payment, and pay for, all Shares validly tendered and not withdrawn pursuant to
the Offer.
(b) On the date of commencement of the Offer in Japan, Purchaser shall
make Public Notice in the Nihon Keizai Shimbun and Asahi Shimbun (the "Public
Notice"), shall file the Tender Offer Registration Statement (the "Registration
Statement") with the Director of the Kanto Local Finance Bureau ("DKLFB") and
shall make available in Japan the Tender Offer Application Form (the
"Application Form") and the Explanatory Statement (the "Explanatory Statement"
and, together with the Public Notice, the Registration Statement and the
Application Form, the "Domestic Offer Documents"). On the date of commencement
of the Offer in the United States, 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 (the 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 "Foreign
Offer Documents"). The "Domestic Offer Documents" and the "Foreign Offer
Documents" are collectively referred to herein as the "Offer Documents."
Purchaser agrees to take all necessary steps to cause the Domestic Offer
Documents and any related documents to be filed with the appropriate agencies or
authorities as required by the Applicable Japanese Laws or any other applicable
laws of Japan. Purchaser agrees to take all steps necessary to cause the
Schedule 14D-1 and Schedule 13E-3 to be filed with the SEC and the Foreign 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. The Company and its
counsel, as well as the Board of Directors consisting of the Disinterested
Directors and their counsel, shall be given reasonable opportunity to review and
comment upon the Offer Documents prior to their filing with the DKLFB and the
SEC and prior to dissemination to the Shareholders. Purchaser shall consider all
comments in good faith. Purchaser agrees to provide the Company, the Board of
Directors consisting of the Disinterested Directors and
3
<PAGE> 7
their counsel any comments Purchaser may receive from the DKLFB and 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 Income Tax Law and the Law Concerning the Special
Measures Relating to Taxes of Japan, the Internal Revenue Code of 1986, as
amended, or any other tax under any provision of domestic, 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.
1.2 COMPANY ACTIONS.
(a) The Company hereby consents to the Offer.
(b) On the date the Domestic Offer Documents are filed with the DKLFB,
the Company shall file the Tender Offer Opinion Statement with the DKLFB. On the
date the Foreign 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 3.4 and shall
mail the Schedule 14D-9 to the Shareholders located in the United States. 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 Tender Offer Opinion Statement and the Schedule
14D-9 prior to its filing with the DKLFB or the SEC or dissemination to the
Shareholders, and the Company shall consider such comments in good faith. The
Company agrees to provide Purchaser and its counsel any comments the Company or
its counsel may receive from the DKLFB or the SEC or its staff with respect to
the Tender Offer Opinion Statement or the Schedule 14D-9 promptly after the
receipt of such comments.
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish Purchaser promptly with mailing labels containing the names and
addresses of the record holders of Shares as of August 31, 1999, together with
copies of all lists of Shareholders 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, as
Purchaser may reasonably request in communicating the Offer to the Shareholders.
ARTICLE II
INTENTION TO MERGE
2.1 INTENTION TO MERGE. Promptly following consummation of the Offer,
Purchaser and the Company agree to take all steps required by law or as may be
otherwise necessary or advisable to effect the Merger, including without
limitation preparing and submitting for approval by their
4
<PAGE> 8
respective boards of directors of a definitive merger agreement to be entered
into between the Company and Purchaser (the "Merger Agreement") and convening of
their respective extraordinary general meetings of shareholders for the purpose
of considering the Merger. The obligations of Purchaser and the Company to
effect the Merger will be subject to Applicable Japanese Laws and the approval
of the Merger by the requisite vote of the Shareholders and the shareholders of
Purchaser. The parties acknowledge that, in the Shareholder Agreement,
Purchaser, ALAP and the Principal Shareholders have evidenced their intention to
effect the Merger and have agreed to certain voting and Share transfer
provisions designed to ensure that the Merger will occur.
2.2 PRINCIPAL TERMS OF MERGER. In the Merger, Purchaser will be the
Surviving Corporation and will assume all of the rights and obligations of the
Company in accordance with the laws of Japan. The Merger Agreement shall contain
those provisions which are set forth in the Memorandum Regarding Merger attached
hereto as Exhibit B, as well as provisions dealing with, among other things,
conversion or exchange of shares, issuance of capital stock of Purchaser,
cancellation of capital stock of Purchaser, share exchange ratios, articles of
association, capitalization, directors, officers, employees, insurance and
indemnification coverage for officers and directors, exchange of certificates,
rights of dissenting holders and the like as the parties shall negotiate in good
faith and as shall not be inconsistent with Exhibit B or violate Applicable
Japanese Laws.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser and ALAP as follows:
3.1 ORGANIZATION. The Company has been duly incorporated and is validly
existing as a corporation under the laws of Japan.
3.2 CAPITALIZATION OF THE COMPANY. As of the date hereof, the
authorized capital stock of the Company consists of 250,400,800 shares of
Company Common Stock. All outstanding shares of capital stock of the Company
have been validly issued, and are fully paid and nonassessable (meaning that no
further sums are payable to the Company on such shares).
3.3 POWER AND AUTHORITY. The Company has full corporate power and
authority to execute and deliver this Agreement and to fulfill its obligations
hereunder. This Agreement has been duly and validly executed and delivered by
the Company.
3.4 BOARD RECOMMENDATIONS. On November 15, 1999, the Board of Directors
consisting of the Disinterested Directors received an opinion of their financial
advisor, Goldman, Sachs & Co. ("Goldman"), that the Offer Price to be offered to
the Public Shareholders in the Offer is fair from a financial point of view to
such holders. A complete and correct signed copy of such opinion will be
delivered by the Board of Directors to Purchaser for purposes of inclusion in
Offer Documents. At a meeting of the Board of Directors duly called and held on
November 15, 1999, the Board of Directors consisting of the Disinterested
Directors duly, validly and unanimously (i) determined that the Offer is fair
to, and in the best interests of, the Public Shareholders, (ii) approved,
authorized and adopted this Agreement and (iii) resolved to recommend that the
Public Shareholders accept the Offer and tender their Shares in response to the
Offer.
5
<PAGE> 9
3.5 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 Articles of
Association, board of directors' regulations or share handling regulations; 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) filing of the
Tender Offer Opinion Statement with the DKLFB, (ii) the exemptive relief and
no-action position obtained from the SEC in that certain letter dated November
4, 1999, from the SEC, (iii) 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, (iv) the filing of a current report on the execution of this Agreement
and an amendment thereto on the execution of the Merger Agreement with the
DKLFB, (v) such additional actions, registrations or filings as would be
required in connection with the Merger and (vi) such additional actions,
registrations 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.
3.6 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 DKLFB or the SEC or as of the respective 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.
3.7 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 IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company and ALAP as follows:
4.1 ORGANIZATION. Purchaser is a company duly incorporated and is
validly existing as a corporation under the laws of Japan. Purchaser is a wholly
owned subsidiary of ALAP.
4.2 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
6
<PAGE> 10
this Agreement or to consummate the transactions contemplated hereby, subject,
in the case of the Merger, to the authorization, approval, execution and
delivery of the Merger Agreement and the approval of the Merger Agreement and
the Merger by the requisite vote of Purchaser's shareholders. This Agreement has
been duly and validly executed and delivered by Purchaser.
4.3 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:
(a) conflict with or violate any provision of Purchaser's Articles of
Association, board of directors' regulations or share handling regulations; 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 exemptive
relief and no-action position obtained from the SEC in that certain letter dated
November 4, 1999, from the SEC, (ii) 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, (iii) the filing by Purchaser
of the Registration Statement with the DKLFB, (iv) the filing of a securities
notification on the approval of the Merger Agreement by the requisite vote of
Purchaser's shareholders with the DKLFB, (v) such additional actions,
registrations or filings as would be required in connection with the Merger and
(vi) such additional actions, registrations 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.
4.4 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Purchaser or the Principal Shareholders specifically for use in the
Offer Documents will, at the time filed with the DKLFB or the SEC or as of the
respective 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.
4.5 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.
4.6 CAPITALIZATION. All of the capital stock of Purchaser has been duly
and validly issued and is held of record and owned beneficially solely by ALAP.
4.7 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.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ALAP
ALAP represents and warrants to the Company and Purchaser as
follows:
7
<PAGE> 11
5.1 ORGANIZATION. ALAP is a U.S. limited partnership duly organized,
validly existing and in good standing under the laws of Nevada.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. ALAP 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 ALAP have been duly and validly authorized by the general
partner of ALAP and no other limited partnership proceedings on the part of ALAP
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by ALAP.
5.3 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 ALAP of its obligations hereunder will not:
(a) conflict with any provision of the certificate of formation of
ALAP; or
(b) require on the part of ALAP any consent, approval, order,
authorization or permit of, or registration, filing or notification to, any
Governmental Authority or any third party.
5.4 ALAP'S OPERATIONS. ALAP 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.
5.5 CAPITALIZATION. All of the partnership interests of ALAP have been
duly and validly issued and are held of record and owned beneficially solely by
the Principal Shareholders.
5.6 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.
ARTICLE VI
COVENANTS
The parties hereto agree as follows:
6.1 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 Japanese,
U.S. Federal, state and local 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.
6.2 ADDITIONAL ACTIONS. Subject to the terms and conditions of this
Agreement, the parties hereto agree to use all commercially 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
8
<PAGE> 12
regulations, or to remove any injunctions or other impediments or delays, to
consummate and make effective the transactions contemplated by this Agreement.
6.3 INSURANCE.
(a) The Company shall (i) maintain, without amendment or modification,
for a period of not less than six years from consummation of the Offer the
Company's current directors' and officers' insurance and indemnification policy
to the extent that it provides coverage for events occurring prior to
consummation of the Offer (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 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.
(b) The provisions of this Section 6.3 shall survive the consummation
of the Offer and are intended to be for the benefit of, and will be enforceable
by, each Insured Party, his or her heirs and his or her representatives and are
in addition to, and not in substitution for any other rights which any such
person may have by contract or otherwise. The Company shall pay the reasonable
expenses, including reasonable attorneys' fees, that may be incurred by any
Insured Parties in enforcing rights to which such Insured Parties are entitled
under the provisions of this Section 6.3.
ARTICLE VII
TERMINATION
7.1 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement and the Offer may be terminated:
(a) By Mutual Consent. By mutual consent of Purchaser or ALAP on the
one hand and 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, obligation, injunction or other order which is in effect and has the
effect of making the Offer illegal or prohibits Purchaser from buying Shares in
the Offer or otherwise prohibits, directly or indirectly, consummation of the
Offer or if the conditions to consummation of the Offer cannot be satisfied;
provided, however, that the right to terminate this Agreement under this Section
7.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted directly or
indirectly in, the failure of such condition to occur.
(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 (B) fails to pay for Shares pursuant
to the Offer in accordance with Section 1.1(a) hereof.
9
<PAGE> 13
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 7.1 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 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 VIII
GENERAL PROVISIONS
8.1 AMENDMENT AND MODIFICATION. Subject to applicable law and subject
to Section 8.11, this Agreement may be amended, modified and supplemented in any
and all respects by written agreement of the parties hereto.
8.2 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement shall survive the date upon
which the Offer is consummated. This Section 8.2 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the date of consummation of the Offer.
8.3 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 or the Board of Directors
consisting of the Disinterested Directors:
Amway Japan Limited
7-1, Udagawa-cho
Shibuya-ku, Tokyo 150-0042, Japan
Attention: James B. Payne
Telephone: (81) (3) 5428-7770
Facsimile: (81) (3) 5428-7711
E-mail: [email protected]
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]
10
<PAGE> 14
(b) If to ALAP or Purchaser:
ALAP Hold Co., Ltd.
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) 586-7017
Facsimile: (216) 579-0212
E-mail: [email protected]
8.4 DEFINITIONS; INTERPRETATION. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article, Section or Exhibit to 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.
8.5 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 in Japan having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
8.6 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.
8.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. Except for that
certain Confidentiality Agreement, dated as of October 12, 1999, between the
Company and ALAP, and the Shareholder Agreement, 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 6.3, is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
11
<PAGE> 15
8.8 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.
8.9 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of Japan and the parties hereby irrevocably submit to
the non-exclusive jurisdiction of the Tokyo District Court.
8.10 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.
8.11 EXTENSION; WAIVER. Subject to Section 8.12, a party hereto, by
action taken or authorized by, in the case of the Company, the Board of
Directors consisting of the Disinterested Directors, in the case of Purchaser,
its board of directors or, in the case of ALAP, 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 any other party hereto,
(ii) waive any inaccuracies in the representations and warranties of any other
party hereto contained herein or in any document delivered pursuant hereto or
(iii) subject to Section 8.1, waive compliance with any of the agreements or
conditions of any other party 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 a
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
8.12 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 8.1 or an extension or waiver pursuant to Section
8.11 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 the Board of Directors consisting of the
Disinterested Directors or a duly authorized designee thereof, or require in the
case of ALAP, 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 the Company's rights or remedies under this Agreement,
(iii) extend the time for performance of Purchaser's or ALAP's respective
obligations under this Agreement or (iv) take any action to amend or otherwise
modify the Company's Articles of Association as in effect on the date hereof.
8.13 ANNOUNCEMENTS. None of the Company, Purchaser or ALAP 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.
12
<PAGE> 16
IN WITNESS WHEREOF, the Company, ALAP and Purchaser have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
AMWAY JAPAN LIMITED: ALAP HOLD CO., LTD.:
By: AP New Co., LLC, as
general partner
By:/s/Richard S. Johnson By:/s/Craig N. Meurlin
--------------------------- ---------------------------
Name:Richard S. Johnson Name:Craig N. Meurlin
Title:President and Representative Title:Manager
Director
N.A.J. CO., LTD.
By:/s/Gary K. Sumihiro
---------------------------
Name:Gary K. Sumihiro
Title:Director
<PAGE> 17
EXHIBIT A
---------
SHAREHOLDER AND VOTING AGREEMENT
by and among
ALAP HOLD CO., LTD.,
N.A.J. CO., LTD.
and
CERTAIN SHAREHOLDERS OF AMWAY JAPAN LIMITED
dated as of
November 15, 1999
<PAGE> 18
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
I. ACTIONS AGREED TO................................................................................-2-
1.1 Agreement to Take Action..................................................-2-
1.2 Negotiation of Merger Agreement...........................................-2-
II. REPRESENTATIONS AND WARRANTIES..................................................................-2-
2.1 Representations and Warranties of the Principal Shareholders..............-2-
2.2 Representations and Warranties of Parent..................................-3-
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 AND PURCHASER.......................................................-4-
4.1 Restriction on Transfer of Non-Tendered Shares,
Proxies and Noninterference...............................................-4-
4.2 Cooperation...............................................................-5-
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..................................................................-7-
5.11 Third Party Beneficiary...................................................-7-
</TABLE>
-i-
<PAGE> 19
SHAREHOLDER AND VOTING AGREEMENT
This SHAREHOLDER AND VOTING AGREEMENT, dated as of November 15, 1999
(this "Agreement"), is made and entered into among ALAP Hold Co., Ltd., a Nevada
limited partnership ("Parent"), N.A.J. Co., Ltd., a joint stock corporation
organized under the laws of Japan 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
Tender Offer Agreement (as defined below).
RECITALS:
WHEREAS, Parent, Purchaser and Amway Japan Limited, a joint stock
corporation organized under the laws of Japan (the "Company"), propose to enter
into a Tender Offer Agreement, dated as of November 15, 1999 (the "Tender Offer
Agreement"), pursuant to which Purchaser will conduct a tender offer (the
"Offer") for all of the Company's Common Stock and ADSs;
WHEREAS, the Tender Offer Agreement contemplates that, following
consummation of the Offer, the Company and Purchaser will enter into a merger
agreement (the "Merger Agreement") pursuant to which the Company will merge with
and into Purchaser (the "Merger");
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 (other than a
portion of the Principal Shares owned by one of the charitable foundations
established by certain of the Principal Shareholders ("Foundation Tendered
Shares")), but the Principal Shareholders will transfer that portion of their
Principal Shares, as indicated on Schedule A, including any Principal Shares not
tendered by the charitable foundation in response to the Offer ("Offer
Non-Tendered Shares"), to Parent or Purchaser contemporaneously with the
consummation of the Offer and, no later than immediately prior to the
effectiveness of the Merger, the Principal Shareholders will transfer to Parent
the Shares that were not transferred to Parent or Purchaser contemporaneously
with the consummation of the Offer (the "Merger Non-Tendered Shares" and,
together with the Offer Non-Tendered Shares, the "Non-Tendered Shares"). It
being understood that Parent may transfer any Non-Tendered Shares to Purchaser;
WHEREAS, following the Offer and the transfer of the Offer Non-Tendered
Shares to Parent, Parent will beneficially own and be entitled to dispose of (or
to direct the disposition of)
<PAGE> 20
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, Apple Hold Co., L.P., New AAP Limited, 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 Tender Offer Agreement, the Company and Purchaser have requested, and
as a condition to the agreement of the Banks to fund the Offer Price, 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 Tender Offer Agreement, the Parent and Purchaser have requested, and as
a condition to the agreement of the Banks to fund the Offer Price, 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. ACTIONS AGREED TO
1.1 AGREEMENT TO TAKE ACTION. Each Principal Shareholder agrees to take
all commercially reasonable efforts to cause the Company and Purchaser to enter
into the Merger Agreement and to effect the Merger. Purchaser agrees, as soon as
practicable following consummation of the Offer and following the execution and
delivery of the Merger Agreement, to take all steps necessary to duly call, give
notice of, convene and hold a meeting of its shareholders for approval or
adoption of the Merger Agreement and the Merger. In furtherance thereof, at any
meeting of the shareholders of the Company or Purchaser called to consider and
vote upon the adoption or approval of the Merger Agreement and the Merger (and
at any and all postponements and adjournments thereof), each Principal
Shareholder will vote, and the Principal Shareholders will cause Parent to vote,
Parent hereby agrees to vote, Parent will cause Purchaser to vote, and Purchaser
hereby agrees to vote, all of the Merger Non-Tendered Shares and the Offer
Non-Tendered Shares, as the case may be, and all shares of capital stock of
Purchaser, in favor of the adoption or approval of the Merger Agreement and the
Merger and in favor of any other matter necessary or appropriate for the
consummation of the transactions contemplated by the Merger Agreement that is
considered and voted upon at any such shareholders' meeting.
1.2 NEGOTIATION OF MERGER AGREEMENT. The parties agree to negotiate the
terms of the Merger Agreement in good faith.
<PAGE> 21
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, Purchaser and the Banks as of the date hereof and as of the closing date
for the Merger (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 Purchaser and the Principal Shareholders, as of the date hereof and
as of the Closing Date, as follows:
(a) ORGANIZATION. Parent is a U.S. limited partnership duly
organized, validly existing and in good standing under the laws of Nevada.
(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.
<PAGE> 22
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 Japan.
(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, subject, in the case of the Merger, to the authorization,
approval, execution and delivery of the Merger Agreement and the approval of the
Merger Agreement and the Merger by the requisite vote of Purchaser's
shareholders. 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 Articles of Incorporation; or
(ii) require on the part of Purchaser any consent,
approval, order, authorization or permit of, or registration, filing or
notification to, any Governmental Authority, except for (i) the exemptive relief
and no-action position obtained from the SEC in that certain letter dated
November 4, 1999, from the SEC in connection with the Offer, (ii) the filing by
Purchaser with the SEC of such reports under the Exchange Act as may be required
in connection with the Tender Offer Agreement (including, without limitation,
the Schedule 14D-1 and the Schedule 13E-3), and the transactions contemplated
thereby, (iii) the filing by Purchaser of the Registration Statement with the
DKLFB in connection with the Offer, (iv) the filing of a securities notification
on the approval of the Merger Agreement by the requisite vote of Purchaser's
shareholders with the DKLFB, (v) such additional actions, registrations or
filings as would be required in connection with the Merger and (vi) such
additional actions, registrations 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 Tender Offer 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
<PAGE> 23
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 AND PURCHASER
4.1 RESTRICTION ON TRANSFER OF NON-TENDERED SHARES, PROXIES AND
NONINTERFERENCE. Each of Parent and Purchaser hereby agrees that it will not,
directly or indirectly: (A) except as otherwise contemplated by this Agreement
or the Tender Offer 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" or "Purchaser Shares"); (B)
except pursuant to the terms of this Agreement, grant any proxies or powers of
attorney, deposit any Parent Shares or Purchaser Shares, as the case may be,
into a voting trust or enter into a voting agreement with respect to any Parent
Shares or Purchaser Shares, as the case may be; 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
or Purchaser to perform its obligations under this Agreement or preventing or
delaying the consummation of any of the transactions contemplated hereby.
4.2 COOPERATION. Each of Parent and Purchaser will cooperate fully with
the parties hereto in connection with their respective reasonable best efforts
to fulfill the conditions to (a) the Offer set forth in Article I to the Tender
Offer Agreement and (b) the Merger set forth in Article II of the Tender Offer
Agreement.
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 Tender Offer Agreement is terminated
in accordance with its terms or, if the Offer is consummated, upon the date the
Merger Agreement is terminated in accordance with its terms. In the event of
termination of this Agreement pursuant to this Section 5.1, this Agreement,
except as to these 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.
<PAGE> 24
5.3 GOVERNING LAW. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York and the parties hereby
irrevocably submit to the non-exclusive jurisdiction of such courts of competent
jurisdiction of the State of New York in New York County, the City of New York
or in the United States District Court for the Southern District of New York.
5.4 NOTICES. All notices and other communications hereunder shall
comply with the notice provisions of the Tender Offer 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]
with copies to (for those Principal Shareholders listed on
SCHEDULE A as the "Van Andel Family" and "Other"):
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.
<PAGE> 25
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, 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> 26
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the day and year first written above.
ALAP HOLD CO., LTD:
By: AP New Co., LLC, as general partner
By:
---------------------------
Name:
Title:
N.A.J. CO., LTD.
By:
---------------------------
Name:
Title:
PRINCIPAL SHAREHOLDERS:
JAY VAN ANDEL TRUST
By:
---------------------------
Name:
Title:
JAPAN HCI, INC.
By:
---------------------------
Name:
Title:
JAY AND BETTY VAN ANDEL FOUNDATION
By:
---------------------------
Name:
Title:
<PAGE> 27
Title:
RICHARD & HELEN DEVOS FOUNDATION
By:
---------------------------
Name:
Title:
RDV (AJL) HOLDINGS, INC.
By:
---------------------------
Name:
Title:
HDV (AJL) HOLDINGS, INC.
By:
---------------------------
Name:
Title:
RDV GRIT HOLDINGS, INC.
By:
---------------------------
Name:
Title:
HDV GRIT HOLDINGS, INC.
By:
---------------------------
Name:
Title:
RDV CAPITAL MANAGEMENT, L.P. II
By: RDV Corporation, as general partner
By:
---------------------------
Name:
Title:
<PAGE> 28
VAN ANDEL INSTITUTE
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
VAN ANDEL RESEARCH INSTITUTE
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
VAN ANDEL EDUCATION INSTITUTE
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
<PAGE> 29
SCHEDULE A
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
NUMBER OF MERGER NON- FOUNDATION
SHAREHOLDER PRINCIPAL TENDERED TENDERED
SHARES OWNED SHARES SHARES
- ---------------------------------------------------------------------------------------
I. VAN ANDEL FAMILY
<S> <C> <C> <C>
Jay Van Andel Trust *27,614,311
Japan HCI, Inc. 25,787,300
Jay and Betty Van Andel Foundation 1,987,000
II. DEVOS FAMILY
Richard & Helen DeVos Foundation 2,070,300 550,000
RDV (AJL) Holdings, Inc. 24,868,000 4,500,000
HDV (AJL) Holdings, Inc. 20,510,000
RDV Grit Holdings, Inc. 2,396,800
HDV Grit Holdings, Inc. *1,550,011
RDV Capital Management, L.P. II 2,296,000
III. OTHER
Van Andel Institute 536,000
Van Andel Research Institute 48,600
Van Andel Education Institute 48,700
TOTAL 110,263,022 4,500,000 550,000
- ---------------------------------------------------------------------------------------
</TABLE>
* Includes 11 shares that are held in ADS form at Michigan National Bank.
<PAGE> 30
EXHIBIT B
(Translation)
November 15, 1999
MEMORANDUM REGARDING MERGER
---------------------------
This Memorandum is entered into between N.A.J. Co., Ltd. ("NAJ") and
Amway Japan Limited ("AJL") in connection with the merger between NAJ and AJL.
Article 1 (Surviving Company)
AJL shall merge with and into NAJ, and NAJ shall survive and AJL shall
be dissolved (the "Merger").
Article 2 (Corporate Name)
The corporate name of the surviving company after the Merger ("New
AJL") shall be Amway Japan Limited.
Article 3 (Location of Head Office)
The head office of New AJL shall be situated at the place of the head
office of AJL (namely, 7-1, Udagawa-cho, Shibuya-ku, Tokyo).
Article 4 (Merger Ratio)
NAJ and AJL shall consult with each other to determine the merger ratio
based on the fair value of a share of each of NAJ and AJL, taking into
consideration the evaluation made by professional advisors; provided that such
professional advisors submit a valuation on which a reasonable determination can
be made that NAJ has positive value.
Article 5 (Matters Not Specified in this Memorandum)
Matters necessary with respect to the Merger other than the matters set
forth in this Memorandum shall be decided upon discussion between NAJ and AJL
and shall be set forth in a definitive merger agreement to be entered into
between the AJL and NAJ (the "Merger Agreement").
Article 6 (Conditions to Merger)
The parties acknowledge that consummation of the Merger will be subject
to approval of the Merger Agreement and the Merger by the requisite vote of the
respective Shareholders Meetings of AJL and NAJ. NAJ and AJL agree to take all
steps necessary to effect the Merger, including without limitation, preparing
and submitting for approval by their respective board of
<PAGE> 31
directors of the Merger Agreement and convening their respective extraordinary
general meetings of shareholders for considering the Merger.
IN WITNESS WHEREOF, the parties have prepared two copies of this
Memorandum and upon execution by the representatives of NAJ and AJL, they shall
each hold one copy of this Memorandum.
NAJ: N.A.J. Co., Ltd.
Gary K. Sumihiro
Representative Director-President
AJL: Amway Japan Limited
Richard S. Johnson
Representative Director-President
<PAGE> 1
Exhibit (c)(2)
SHAREHOLDER AND VOTING AGREEMENT
by and among
ALAP HOLD CO., LTD.,
N.A.J. CO., LTD.
and
CERTAIN SHAREHOLDERS OF AMWAY JAPAN LIMITED
dated as of
November 15, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
I. ACTIONS AGREED TO............................................................................................-2-
1.1 Agreement to Take Action..............................................................-2-
1.2 Negotiation of Merger Agreement.......................................................-2-
II. REPRESENTATIONS AND WARRANTIES..............................................................................-2-
2.1 Representations and Warranties of the Principal Shareholders..........................-2-
2.2 Representations and Warranties of Parent..............................................-3-
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 AND PURCHASER...................................................................-4-
4.1 Restriction on Transfer of Non-Tendered Shares,
Proxies and Noninterference -4-
4.2 Cooperation...........................................................................-5-
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..........................................................................-7-
5.9 Counterparts..........................................................................-7-
5.10 Headings..............................................................................-7-
5.11 Third Party Beneficiary...............................................................-7-
</TABLE>
<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 ALAP Hold Co., Ltd., a Nevada
limited partnership ("Parent"), N.A.J. Co., Ltd., a joint stock corporation
organized under the laws of Japan 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
Tender Offer Agreement (as defined below).
RECITALS:
WHEREAS, Parent, Purchaser and Amway Japan Limited, a joint stock
corporation organized under the laws of Japan (the "Company"), propose to enter
into a Tender Offer Agreement, dated as of November 15, 1999 (the "Tender Offer
Agreement"), pursuant to which Purchaser will conduct a tender offer (the
"Offer") for all of the Company's Common Stock and ADSs;
WHEREAS, the Tender Offer Agreement contemplates that, following
consummation of the Offer, the Company and Purchaser will enter into a merger
agreement (the "Merger Agreement") pursuant to which the Company will merge with
and into Purchaser (the "Merger");
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 (other than a
portion of the Principal Shares owned by one of the charitable foundations
established by certain of the Principal Shareholders ("Foundation Tendered
Shares")), but the Principal Shareholders will transfer that portion of their
Principal Shares, as indicated on Schedule A, including any Principal Shares not
tendered by the charitable foundation in response to the Offer ("Offer
Non-Tendered Shares"), to Parent or Purchaser contemporaneously with the
consummation of the Offer and, no later than immediately prior to the
effectiveness of the Merger, the Principal Shareholders will transfer to Parent
the Shares that were not transferred to Parent or Purchaser contemporaneously
with the consummation of the Offer (the "Merger Non-Tendered Shares" and,
together with the Offer Non-Tendered Shares, the "Non-Tendered Shares"). It
being understood that Parent may transfer any Non-Tendered Shares to Purchaser;
WHEREAS, following the Offer and the transfer of the Offer Non-Tendered
Shares to Parent, Parent will beneficially own and be entitled to dispose of (or
to direct the disposition of)
<PAGE> 4
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, Apple Hold Co., L.P., New AAP Limited, 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 Tender Offer Agreement, the Company and Purchaser have requested, and
as a condition to the agreement of the Banks to fund the Offer Price, 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 Tender Offer Agreement, the Parent and Purchaser have requested, and as
a condition to the agreement of the Banks to fund the Offer Price, 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. ACTIONS AGREED TO
1.1 AGREEMENT TO TAKE ACTION. Each Principal Shareholder agrees to take
all commercially reasonable efforts to cause the Company and Purchaser to enter
into the Merger Agreement and to effect the Merger. Purchaser agrees, as soon as
practicable following consummation of the Offer and following the execution and
delivery of the Merger Agreement, to take all steps necessary to duly call, give
notice of, convene and hold a meeting of its shareholders for approval or
adoption of the Merger Agreement and the Merger. In furtherance thereof, at any
meeting of the shareholders of the Company or Purchaser called to consider and
vote upon the adoption or approval of the Merger Agreement and the Merger (and
at any and all postponements and adjournments thereof), each Principal
Shareholder will vote, and the Principal Shareholders will cause Parent to vote,
Parent hereby agrees to vote, Parent will cause Purchaser to vote, and Purchaser
hereby agrees to vote, all of the Merger Non-Tendered Shares and the Offer
Non-Tendered Shares, as the case may be, and all shares of capital stock of
Purchaser, in favor of the adoption or approval of the Merger Agreement and the
Merger and in favor of any other matter necessary or appropriate for the
consummation of the transactions contemplated by the Merger Agreement that is
considered and voted upon at any such shareholders' meeting.
1.2 NEGOTIATION OF MERGER AGREEMENT. The parties agree to negotiate the
terms of the Merger Agreement in good faith.
<PAGE> 5
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, Purchaser and the Banks as of the date hereof and as of the closing date
for the Merger (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 Purchaser and the Principal Shareholders, as of the date hereof and
as of the Closing Date, as follows:
(a) ORGANIZATION. Parent is a U.S. limited partnership duly
organized, validly existing and in good standing under the laws of Nevada.
(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.
<PAGE> 6
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 Japan.
(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, subject, in the case of the Merger, to the authorization,
approval, execution and delivery of the Merger Agreement and the approval of the
Merger Agreement and the Merger by the requisite vote of Purchaser's
shareholders. 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 Articles of Incorporation; or
(ii) require on the part of Purchaser any consent,
approval, order, authorization or permit of, or registration, filing or
notification to, any Governmental Authority, except for (i) the exemptive relief
and no-action position obtained from the SEC in that certain letter dated
November 4, 1999, from the SEC in connection with the Offer, (ii) the filing by
Purchaser with the SEC of such reports under the Exchange Act as may be required
in connection with the Tender Offer Agreement (including, without limitation,
the Schedule 14D-1 and the Schedule 13E-3), and the transactions contemplated
thereby, (iii) the filing by Purchaser of the Registration Statement with the
DKLFB in connection with the Offer, (iv) the filing of a securities notification
on the approval of the Merger Agreement by the requisite vote of Purchaser's
shareholders with the DKLFB, (v) such additional actions, registrations or
filings as would be required in connection with the Merger and (vi) such
additional actions, registrations 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 Tender Offer 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,
<PAGE> 7
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 AND PURCHASER
4.1 RESTRICTION ON TRANSFER OF NON-TENDERED SHARES, PROXIES AND
NONINTERFERENCE. Each of Parent and Purchaser hereby agrees that it will not,
directly or indirectly: (A) except as otherwise contemplated by this Agreement
or the Tender Offer 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" or "Purchaser Shares"); (B) except
pursuant to the terms of this Agreement, grant any proxies or powers of
attorney, deposit any Parent Shares or Purchaser Shares, as the case may be,
into a voting trust or enter into a voting agreement with respect to any Parent
Shares or Purchaser Shares, as the case may be; 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
or Purchaser to perform its obligations under this Agreement or preventing or
delaying the consummation of any of the transactions contemplated hereby.
4.2 COOPERATION. Each of Parent and Purchaser will cooperate fully with
the parties hereto in connection with their respective reasonable best efforts
to fulfill the conditions to (a) the Offer set forth in Article I to the Tender
Offer Agreement and (b) the Merger set forth in Article II of the Tender Offer
Agreement.
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 Tender Offer Agreement is terminated
in accordance with its terms or, if the Offer is consummated, upon the date the
Merger Agreement is terminated in accordance with its terms. In the event of
termination of this Agreement pursuant to this Section 5.1, this Agreement,
except as to these 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.
<PAGE> 8
5.3 GOVERNING LAW. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York and the parties hereby
irrevocably submit to the non-exclusive jurisdiction of such courts of competent
jurisdiction of the State of New York in New York County, the City of New York
or in the United States District Court for the Southern District of New York.
5.4 NOTICES. All notices and other communications hereunder shall
comply with the notice provisions of the Tender Offer 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]
with copies to (for those Principal Shareholders
listed on SCHEDULE A as the "Van Andel Family"
and "Other"):
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.
<PAGE> 9
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, 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> 10
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the day and year first written above.
ALAP HOLD CO., LTD:
By: AP New Co., LLC, as general partner
By: /s/ Craig N. Meurlin
--------------------------------
Name: Craig N. Meurlin
Title: Manager for General Partner
N.A.J. CO., LTD.
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
JAPAN HCI, INC.
By: /s/ Jay Van Andel
-------------------------------
Name: Jay Van Andel
Title: Chief Executive Officer,
President, Treasurer
JAY AND BETTY VAN ANDEL FOUNDATION
By: /s/ Jay Van Andel
-------------------------------
Name: Jay Van Andel
Title: President
<PAGE> 11
RICHARD & HELEN DEVOS FOUNDATION
By: /s/ Jerry Tubergen
------------------------------------
Name: Jerry Tubergen
Title: Vice President, Secretary
RDV (AJL) HOLDINGS, INC.
By: /s/ Jerry Tubergen
------------------------------------
Name: Jerry Tubergen
Title: Vice President
HDV (AJL) HOLDINGS, INC.
By: /s/ Jerry Tubergen
------------------------------------
Name: Jerry Tubergen
Title: Vice President
RDV GRIT HOLDINGS, INC.
By: /s/ Jerry Tubergen
------------------------------------
Name: Jerry Tubergen
Title: Vice President
HDV GRIT HOLDINGS, INC.
By: /s/ Jerry Tubergen
------------------------------------
Name: Jerry Tubergen
Title: Vice President
RDV CAPITAL MANAGEMENT, L.P. II
By: RDV Corporation, as general partner
By: /s/ Jerry Tubergen
------------------------------------
Name: /s/ Jerry Tubergen
Title: President
<PAGE> 12
VAN ANDEL INSTITUTE
By: /s/ Peter C. Cook
------------------------------
Name: Peter C. Cook
Title: Trustee
By: /s/ David Van Andel
-------------------------------
Name: David Van Andel
Title: Trustee
VAN ANDEL RESEARCH INSTITUTE
By: /s/ David Van Andel
-------------------------------
Name: David Van Andel
Title: Trustee
By: /s/ Luis A. Tomatis
-------------------------------
Name: Luis A. Tomatis
Title: Trustee
VAN ANDEL EDUCATION INSTITUTE
By: /s/ David A. Van Andel
------------------------------
Name: David A. Van Andel
Title: Trustee
By: /s/ Luis A. Tomatis
------------------------------
Name: Luis A. Tomatis
Title: Trustee
<PAGE> 13
SCHEDULE A
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NUMBER OF MERGER NON- FOUNDATION
SHAREHOLDER PRINCIPAL TENDERED TENDERED
SHARES OWNED SHARES SHARES
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
I. VAN ANDEL FAMILY
- -----------------------------------------------------------------------------------------------------------------------
Jay Van Andel Trust *27,614,311
- -----------------------------------------------------------------------------------------------------------------------
Japan HCI, Inc. 25,787,300
- -----------------------------------------------------------------------------------------------------------------------
Jay and Betty Van Andel Foundation 1,987,000
- -----------------------------------------------------------------------------------------------------------------------
II. DEVOS FAMILY
- -----------------------------------------------------------------------------------------------------------------------
Richard & Helen DeVos Foundation 2,070,300 550,000
- -----------------------------------------------------------------------------------------------------------------------
RDV (AJL) Holdings, Inc. 24,868,000 4,500,000
- -----------------------------------------------------------------------------------------------------------------------
HDV (AJL) Holdings, Inc. 20,510,000
- -----------------------------------------------------------------------------------------------------------------------
RDV Grit Holdings, Inc. 2,396,800
- -----------------------------------------------------------------------------------------------------------------------
HDV Grit Holdings, Inc. *1,550,011
- -----------------------------------------------------------------------------------------------------------------------
RDV Capital Management, L.P. II 2,296,000
- -----------------------------------------------------------------------------------------------------------------------
III. OTHER
- -----------------------------------------------------------------------------------------------------------------------
Van Andel Institute 536,000
- -----------------------------------------------------------------------------------------------------------------------
Van Andel Research Institute 48,600
- -----------------------------------------------------------------------------------------------------------------------
Van Andel Education Institute 48,700
- -----------------------------------------------------------------------------------------------------------------------
TOTAL 110,263,022 4,500,000 550,000
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes 11 shares that are held in ADS form at Michigan National Bank.
<PAGE> 1
Exhibit (c)(3)
(Translation)
November 15, 1999
MEMORANDUM REGARDING MERGER
---------------------------
This Memorandum is entered into between N.A.J. Co., Ltd. ("NAJ") and
Amway Japan Limited ("AJL") in connection with the merger between NAJ and AJL.
Article 1 (Surviving Company)
AJL shall merge with and into NAJ, and NAJ shall survive and AJL shall
be dissolved (the "Merger").
Article 2 (Corporate Name)
The corporate name of the surviving company after the Merger ("New
AJL") shall be Amway Japan Limited.
Article 3 (Location of Head Office)
The head office of New AJL shall be situated at the place of the head
office of AJL (namely, 7-1, Udagawa-cho, Shibuya-ku, Tokyo).
Article 4 (Merger Ratio)
NAJ and AJL shall consult with each other to determine the merger ratio
based on the fair value of a share of each of NAJ and AJL, taking into
consideration the evaluation made by professional advisors; provided that such
professional advisors submit a valuation on which a reasonable determination can
be made that NAJ has positive value.
Article 5 (Matters Not Specified in this Memorandum)
Matters necessary with respect to the Merger other than the matters set
forth in this Memorandum shall be decided upon discussion between NAJ and AJL
and shall be set forth in a definitive merger agreement to be entered into
between the AJL and NAJ (the "Merger Agreement").
Article 6 (Conditions to Merger)
The parties acknowledge that consummation of the Merger will be subject
to approval of the Merger Agreement and the Merger by the requisite vote of the
respective Shareholders Meetings of AJL and NAJ. NAJ and AJL agree to take all
steps necessary to effect the Merger, including without limitation, preparing
and submitting for approval by their respective board of directors of the Merger
Agreement and convening their respective extraordinary general meetings of
shareholders for considering the Merger.
<PAGE> 2
IN WITNESS WHEREOF, the parties have prepared two copies of this
Memorandum and upon execution by the representatives of NAJ and AJL, they shall
each hold one copy of this Memorandum.
NAJ: N.A.J. Co., Ltd. /s/ Gary K. Sumihiro
---------------------------
Gary K. Sumihiro
Representative Director-President
AJL: Amway Japan Limited /s/ Richard S. Johnson
---------------------------
Richard S. Johnson
Representative Director-President
<PAGE> 1
Exhibit (g)
November 17, 1999
Amway Japan Limited
Tokyo, Japan
We agree to the inclusion in the Offer to Purchase for Cash by N.A.J. Co., Ltd.
dated November 18, 1999 of N.A.J. Co., Ltd., of our report, dated October 16,
1998 (February 19, 1999 as to Note 1), on our audits of the financial statements
of Amway Japan Limited as of August 31, 1997 and 1998 and for the three years in
the period ended August 31, 1998.
/s/ Deloitte Touche Tohmatsu
DELOITTE TOUCHE TOHMATSU
Tokyo, Japan
<PAGE> 1
Exhibit (h)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that N.A.J. Co., Ltd. (hereinafter referred to
as the "Company"), a corporation organized and existing under the laws of
Japan, and having its registered office at 7-1, Udagawacho, Shibuya-ku, Tokyo,
Japan does hereby constitute, designate and appoint Mr. Lawrence M. Call, Mr.
Lynn Lyall and Mr. Stephen A. Van Andel and each of them severally as its true
and lawful agent, with full power of substitution and revocation, to represent
and act for and in the name of the Company for the following purposes:
1) To prepare, execute and deliver the following agreements and documents
after making necessary modifications thereto:
(i) Tender Offer Statement on Schedule 14D-1 or any supplement or
amendment thereto;
(ii) Rule 13E-3 Translation Statement or any supplement or amendment
thereto;
(iii) Tender Offer Agreement with Amway Japan Limited ("AJL") and ALAP
Hold Co., Ltd.;
(iv) Shareholder and Voting Agreement with ALAP Hold Co., Ltd. and
certain shareholders of AJL;
(v) Information Agreement with Georgeson Shareholder Communications
Inc.;
(vi) Depositary Agreement with First Chicago Trust Company of New York;
(vii) Dealer Manager Agreement with Morgan Stanley & Co. Incorporated and
J.P. Morgan & Co.;
(viii) Senior Bank Financing Commitment Letter, Senior Bank Financing Fee
Letter and Credit Agreement with Morgan Guaranty Trust Company of
New York and other parties thereto;
(ix) Any and all agreements, certificates, documents and instruments
necessary, appropriate or advisable relating to the shares of AJL to
be filed or submitted to the New York Exchange, or any other U.S. or
non-U.S. securities exchange or over the counter trading market;
(x) Any and all documents required to be filed with any non-U.S.
regulatory authority and any U.S. state securities commission or
other regulatory authority; and
(xi) Any and all such other agreements, certificates, documents and
instruments necessary, desirable or appropriate for the
implementation of a tender offer for shares of AJL by the Company
and a merger between the Company and AJL following the tender offer.
<PAGE> 2
2) To perform any and all other acts necessary or incidental to the
performance of the foregoing powers herein granted.
IN WITNESS WHEREOF, the Company has caused this Power of Attorney to be
executed in its name and on its behalf by its duly authorized director on this
12th day of November, 1999.
N.A.J. Co., Ltd.
By:/s/Gary K. Sumihiro
-----------------------------
Gary K. Sumihiro
Representative Director
-2-
