SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
--------------------
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
</Table>
LIQUI-BOX CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
[LIQUI-BOX CORPORATION LOGO]
LIQUI-BOX CORPORATION
P. O. BOX 494
6950 WORTHINGTON-GALENA ROAD
WORTHINGTON, OHIO 43085
(614) 888-9280
April 25, 2002
Dear Shareholder:
You are cordially invited to attend the special meeting of shareholders of
Liqui-Box Corporation to be held on Tuesday, May 28, 2002, at 9:00 a.m., local
time, at the Hilton Columbus (Easton), 3900 Chagrin Drive, Columbus, Ohio. In
light of the transaction described below, this is an important meeting for our
shareholders, and I strongly encourage you to attend or submit a properly
executed proxy.
At the special meeting, you will be asked to vote upon a proposal to adopt
an Agreement and Plan of Merger, dated as of March 25, 2002, by and among
Liqui-Box, Enhance Packaging Technologies Inc., a wholly owned subsidiary of
DuPont Canada Inc., and EPT Newco, Inc. and to approve the merger contemplated
thereby. If the merger is completed, EPT Newco will be merged with and into
Liqui-Box, Liqui-Box will become a wholly owned subsidiary of Enhance Packaging
Technologies and you will be entitled to receive $67.00 in cash for each common
share of Liqui-Box that you own. DuPont Canada Inc. is a Canadian public company
whose shares are traded on the Toronto Stock Exchange (DUP.A), and it is
guaranteeing the obligations of its subsidiaries in connection with the proposed
transaction.
In connection with the proposed transaction, Liqui-Box's board of directors
formed a special committee comprised entirely of non-management, independent
directors to review and consider the proposed merger. The special committee
carefully reviewed and considered the terms and conditions of the merger and the
merger agreement. The special committee considered, among other things, the
opinion of McDonald Investments Inc., its financial advisor, that as of March
25, 2002, the $67.00 per share cash consideration to be received by Liqui-Box's
shareholders pursuant to the merger agreement was fair to the shareholders from
a financial point of view. The special committee unanimously approved the merger
and the merger agreement, determined that the merger and the merger agreement
are advisable, fair to and in the best interests of Liqui-Box and its
shareholders and recommended to the board of directors that it recommend that
you adopt the merger agreement and approve the merger.
Following the unanimous recommendation of the special committee, the board
of directors unanimously, without the participation of Samuel N. Davis,
Liqui-Box's vice-chairman and secretary, and me who abstained from voting
because of our financial interest in the merger and the transactions
contemplated thereby, approved the merger and the merger agreement and
determined that the merger and the merger agreement are advisable, fair to and
in the best interests of Liqui-Box and its shareholders. ACCORDINGLY, YOUR BOARD
OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ADOPTION OF THE MERGER AGREEMENT AND
APPROVAL OF THE MERGER.
The accompanying notice of meeting and proxy statement explain the proposed
merger and provide specific information concerning the special meeting. Please
read these materials carefully.
Your vote is important. Liqui-Box cannot complete the merger and
shareholders will not receive the $67.00 per share merger consideration unless
the holders of at least a majority of its outstanding common shares vote in
favor of adoption of the merger agreement and approval of the merger and the
other closing conditions are satisfied. As a result, your failure to vote would
have the same effect as a vote against adoption of the merger agreement and
approval of the merger. Samuel N. Davis and I have agreed to vote all of the
common shares that we have the right to vote in favor of adoption of the merger
agreement and approval of the merger. These shares represent approximately 37.3%
of the outstanding common shares. Please complete, sign and date the enclosed
proxy card and return it in the enclosed return envelope, whether or not you
plan to attend the special meeting. If you do attend the special meeting and
wish to vote in person, you may withdraw your proxy and vote in person.
If you have any questions prior to the special meeting or need further
assistance, please call Stewart M. Graves, president and chief operating
officer, at (614) 888-9280.
Sincerely,
/s/ Samuel B. Davis
--------------------------------------
SAMUEL B. DAVIS
Chairman, Chief Executive Officer and
Treasurer
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD.
[LIQUI-BOX CORPORATION LOGO]
LIQUI-BOX CORPORATION
P. O. BOX 494
6950 WORTHINGTON-GALENA ROAD
WORTHINGTON, OHIO 43085
(614) 888-9280
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, MAY 28, 2002
To the Shareholders of Liqui-Box Corporation:
Notice is hereby given that a special meeting of shareholders of Liqui-Box
Corporation, an Ohio corporation, will be held on Tuesday, May 28, 2002, at 9:00
a.m., local time, at the Hilton Columbus (Easton), 3900 Chagrin Drive, Columbus,
Ohio 43219, for the following purposes:
1. To consider and vote upon a proposal to adopt the Agreement and Plan of
Merger, dated as of March 25, 2002, by and among Liqui-Box, Enhance
Packaging Technologies Inc., a Canadian corporation and a wholly owned
subsidiary of DuPont Canada Inc. (Toronto Stock Exchange: DUP.A), and
EPT Newco, Inc., an Ohio corporation and a wholly owned subsidiary of
Enhance Packaging Technologies, and to approve the merger contemplated
thereby. Subject to the terms and conditions of the merger agreement, at
the effective time of the merger, (i) EPT Newco will be merged with and
into Liqui-Box, which will be the surviving corporation in the merger
and become a wholly owned subsidiary of Enhance Packaging Technologies
and (ii) each common share, without par value, of Liqui-Box outstanding
immediately prior to the effective time (other than shares held by
Liqui-Box or Enhance Packaging Technologies or any of their respective
parent entities or subsidiaries or shares with respect to which
dissenters' rights are perfected) will be automatically converted into
the right to receive $67.00 in cash; and
2. To transact such other business as may properly come before the special
meeting or any adjournment or postponement of the special meeting.
The accompanying proxy statement describes the merger and the merger
agreement, a copy of which is attached as Appendix A to the proxy statement.
Liqui-Box's board of directors has fixed the close of business on April 19,
2002, as the record date for the determination of shareholders entitled to
notice of, and to vote at, the special meeting and any adjournment or
postponement of the special meeting.
Shareholders who do not vote in favor of adoption of the merger agreement
and approval of the merger will have the right to dissent and seek appraisal of
the "fair cash value" of their common shares if they comply with the applicable
procedures required by Section 1701.85 of the Ohio Revised Code. A summary of
the provisions of Section 1701.85 is set forth in the accompanying proxy
statement under the heading "The Merger -- Rights of Dissenting Shareholders."
The entire text of Section 1701.85 is attached as Appendix C to the accompanying
proxy statement.
The proxy holders will vote the common shares represented by properly
executed proxies as directed on the proxy card. If no directions are given,
proxies will be voted "FOR" adoption of the merger agreement and approval of the
merger.
Your vote is important, regardless of the number of common shares you hold.
Please vote as soon as possible to make sure that your common shares are
represented at the special meeting, whether or not you expect to attend the
special meeting. To grant your proxy to vote your common shares, please
complete, sign and date the enclosed proxy card and return it promptly in the
enclosed return envelope. You may, of course, attend the special meeting, revoke
your proxy and vote in person even if you already returned your proxy card. If
you do not vote, it will have the same effect as a vote against adoption of the
merger agreement and approval of the merger.
By Order of the Board of Directors,
/s/ Samuel N. Davis
------------------------------------
SAMUEL N. DAVIS
Secretary
Worthington, Ohio
April 25, 2002
LIQUI-BOX CORPORATION
P. O. BOX 494
6950 WORTHINGTON-GALENA ROAD
WORTHINGTON, OHIO 43085
(614) 888-9280
PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, MAY 28, 2002
This proxy statement is being furnished to the shareholders of Liqui-Box
Corporation, an Ohio corporation, in connection with the solicitation of proxies
by and on behalf of Liqui-Box's board of directors for use at the special
meeting of the shareholders to be held on Tuesday, May 28, 2002, at the Hilton
Columbus (Easton), 3900 Chagrin Drive, Columbus, Ohio 43219, commencing at 9:00
a.m., local time.
At the special meeting, Liqui-Box's shareholders will be asked to consider
and vote upon the following:
- a proposal to adopt the Agreement and Plan of Merger, dated as of March
25, 2002, by and among Liqui-Box, Enhance Packaging Technologies Inc., a
Canadian corporation and a wholly owned subsidiary of DuPont Canada Inc.
(Toronto Stock Exchange: DUP.A), and EPT Newco, Inc., an Ohio corporation
and a wholly owned subsidiary of Enhance Packaging Technologies, and to
approve the merger contemplated thereby. In the merger:
- EPT Newco will be merged with and into Liqui-Box, which will be the
surviving corporation and become a wholly owned subsidiary of Enhance
Packaging Technologies, and
- each common share, without par value, of Liqui-Box outstanding
immediately prior to the effective time of the merger (other than
shares held by Liqui-Box or Enhance Packaging Technologies or any of
their respective parent entities or subsidiaries or shares with respect
to which dissenters' rights are perfected) will be automatically
converted into the right to receive $67.00 in cash; and
- such other business as may properly come before the special meeting or
any adjournment or postponement of the special meeting.
This proxy statement and the accompanying form of proxy are first being
sent to Liqui-Box's shareholders on or about April 25, 2002.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ADOPTION OF THE MERGER
AGREEMENT AND APPROVAL OF THE MERGER.
THE DATE OF THIS PROXY STATEMENT IS APRIL 25, 2002.
TABLE OF CONTENTS
<Table>
<Caption>
Summary Term Sheet.......................................... 1
Questions and Answers About the Merger...................... 6
Cautionary Statement Regarding Forward-Looking Statements... 9
The Special Meeting......................................... 10
Date, Place and Time...................................... 10
Purpose of the Special Meeting............................ 10
Record Date; Quorum....................................... 10
Voting and Revocation of Proxies.......................... 10
Vote Required; Board Recommendation....................... 11
Cost of Solicitation of Proxies........................... 11
Other Matters............................................. 11
The Merger.................................................. 12
The Parties............................................... 12
Liqui-Box.............................................. 12
Enhance Packaging Technologies......................... 12
EPT Newco.............................................. 12
DuPont Canada ......................................... 12
Effect of the Merger...................................... 12
Background of the Merger.................................. 12
Liqui-Box's Reasons for the Merger; Recommendation of the
Special Committee and the Board of Directors........... 16
Special Committee...................................... 16
Board of Directors..................................... 17
Opinion of Financial Advisor.............................. 17
Historical Stock Trading Analysis...................... 19
Comparable Public Company Analysis..................... 19
Comparable Transactions Analysis....................... 20
Premiums Paid Analysis................................. 20
Interests of Certain Persons in the Merger................ 21
Interests of Samuel B. Davis and Samuel N. Davis....... 22
Cash-Out of Outstanding Stock Options.................. 22
Indemnification........................................ 23
Interests of Stewart M. Graves......................... 23
Interests of Russell M. Gertmenian..................... 23
Federal Income Tax Consequences........................... 23
Accounting Treatment...................................... 24
Existing Relationships with Enhance Packaging
Technologies........................................... 24
Rights of Dissenting Shareholders......................... 24
</Table>
i
<Table>
<Caption>
Terms of the Merger Agreement............................... 26
Effective Time of the Merger.............................. 26
Manner and Basis of Converting Common Shares.............. 26
Stock Options............................................. 27
Other Employee Benefit Plans and Related Matters.......... 27
Representations and Warranties............................ 28
Covenants Relating to Conduct of Business Prior to the
Merger................................................. 29
No Solicitation........................................... 30
Additional Agreements in the Merger Agreement............. 31
Conditions to the Merger.................................. 32
Termination of the Merger Agreement....................... 33
Termination Fees and Expenses............................. 34
Selected Post-Merger Matters.............................. 34
Amendment of Merger Agreement............................. 34
Guarantee by DuPont Canada................................ 34
Shareholders Agreement...................................... 35
Regulatory Matters.......................................... 36
Market Price of Common Shares............................... 36
Security Ownership of Certain Beneficial Owners and
Management................................................ 37
Independent Public Accountants.............................. 38
Shareholder Proposals....................................... 38
Where You Can Find More Information......................... 39
</Table>
<Table>
Appendix A -- Agreement and Plan of Merger, dated as of March 25, 2002, by
and among Liqui-Box Corporation, Enhance Packaging
Technologies Inc. and EPT Newco, Inc.
Appendix B -- Opinion of McDonald Investments Inc.
Appendix C -- Section 1701.85 of the Ohio Revised Code Relating to Rights
of Dissenting Shareholders
</Table>
ii
SUMMARY TERM SHEET
This summary highlights selected information from this proxy statement and
may not contain all of the information that is important to you. To understand
the merger more fully and for a complete description of the legal terms of the
merger, you should carefully read this entire proxy statement, including the
appendices. We have included page references in this summary to direct you to a
more complete description of topics discussed in this proxy statement. The
merger agreement is attached as Appendix A to this proxy statement. We encourage
you to read the merger agreement because it is the legal document that governs
the merger.
THE PARTIES (PAGE 12)
Liqui-Box Corporation
P.O. Box 494
6950 Worthington-Galena Road
Worthington, Ohio 43085
(614) 888-9280
Liqui-Box manufactures dispensing packaging systems for liquids and other
flowable products for the bottled water, beverage, dairy, pharmaceutical,
processed food and wine industries. Liqui-Box's principal products include rigid
blow-molded containers, flexible bag-in-box containers, pouch containers and
customized filling systems. Liqui-Box operates nine production facilities in the
United States, one in the United Kingdom and one in India.
Enhance Packaging Technologies Inc.
7070 Mississauga Road
Mississauga, Ontario L5N 5M8
(905) 821-3300
Enhance Packaging Technologies supplies films and filling systems to a wide
range of customers in 30 countries, including dairies, drink beverage producers,
food producers, film converters and industrial customers. Enhance Packaging
Technologies is a wholly owned subsidiary of DuPont Canada Inc.
EPT Newco, Inc.
7070 Mississauga Road
Mississauga, Ontario L5N 5M8
(905) 821-3300
EPT Newco, an Ohio corporation, is a wholly owned subsidiary of Enhance
Packaging Technologies formed solely for the purpose of effecting the merger.
EPT Newco has not engaged in any other business activity.
DuPont Canada Inc.
7070 Mississauga Road
Mississauga, Ontario L5N 5M8
(905) 821-3300
DuPont Canada manufactures synthetic fibers, polymer resins, packaging
films, automotive finishes and industrial chemicals. It sells such products to
approximately 3,000 customers in Canada, the United States and 40 other
countries. E.I. du Pont de Nemours and Company (NYSE:DD) owns approximately 76%
of DuPont Canada's shares and the remaining shares are traded on the Toronto
Stock Exchange (DUP.A). DuPont Canada is guaranteeing the obligations of Enhance
Packaging Technologies and EPT Newco under the merger agreement.
EFFECT OF THE MERGER (PAGE 12)
EPT Newco will merge with and into Liqui-Box. You will receive $67.00 in
cash for each common share of Liqui-Box that you own. Liqui-Box will be the
surviving corporation and become a wholly owned subsidiary of Enhance Packaging
Technologies and an indirect wholly owned subsidiary of DuPont Canada.
1
THE SPECIAL MEETING (PAGE 10)
The special meeting will be held on Tuesday, May 28, 2002, at 9:00 a.m.,
local time, at the Hilton Columbus (Easton), 3900 Chagrin Drive, Columbus, Ohio
43219. At the special meeting, shareholders will vote upon a proposal to adopt
the merger agreement and approve the merger. The merger agreement provides for
the merger of EPT Newco with and into Liqui-Box. You may vote on the proposal to
adopt the merger agreement and approve the merger by completing, signing, dating
and returning the enclosed proxy card or by appearing at the special meeting and
voting in person.
VOTING AT THE SPECIAL MEETING (PAGE 10)
You are entitled to vote at the special meeting (either by proxy or in
person) if you owned common shares of Liqui-Box at the close of business on
April 19, 2002, the record date for the special meeting. On the record date,
there were 4,169,940 common shares of Liqui-Box outstanding. You are entitled to
one vote for each common share that you owned on the record date. If you
participate in the Liqui-Box Corporation Employees' Profit Sharing and Salary
Deferral Plan and/or the Liqui-Box Corporation Employee Stock Ownership Plan,
you are entitled to instruct the trustee of these plans how to vote common
shares allocated to your account under the plans. If you participate in the
Profit Sharing and Salary Deferral Plan and you do not instruct the trustee how
to vote your common shares, the trustee will not vote your common shares. If you
participate in the Employee Stock Ownership Plan and you do not instruct the
trustee how to vote your common shares, pursuant to the terms of the Employee
Stock Ownership Plan, the trustee will vote your common shares and any
unallocated common shares in accordance with the recommendation of the board of
directors.
VOTE REQUIRED (PAGE 11)
Adoption of the merger agreement and approval of the merger requires the
affirmative vote of the holders of at least a majority of the outstanding common
shares of Liqui-Box as of the record date. Samuel B. Davis, Liqui-Box's
chairman, chief executive officer and treasurer, and Samuel N. Davis,
Liqui-Box's vice chairman and secretary, who collectively have the right to
vote, either directly or as a result of voting and other trust agreements,
1,556,679 common shares, representing approximately 37.3% of the outstanding
common shares as of the record date, are required to vote in favor of adoption
of the merger agreement and approval of the merger under the shareholders
agreement that they have entered into with Enhance Packaging Technologies and
EPT Newco in connection with the merger. In addition, Liqui-Box's other
directors and executive officer have informed Liqui-Box that they intend to vote
in favor of adoption of the merger agreement and approval of the merger.
RECOMMENDATION TO SHAREHOLDERS (PAGE 11)
Your board of directors has unanimously, with the exception of Samuel B.
Davis and Samuel N. Davis who abstained from voting, approved the merger and the
merger agreement, believes the merger and the merger agreement are advisable,
fair to and in the best interests of Liqui-Box and its shareholders and
recommends that you vote FOR adoption of the merger agreement and approval of
the merger. In making these determinations, the board considered and relied, in
part, upon the unanimous recommendation of its special committee of non-
management, independent directors.
OPINION OF FINANCIAL ADVISOR (PAGE 17)
In deciding to approve the merger and the merger agreement, the special
committee and the board of directors considered, among other factors discussed
below in "The Merger -- Liqui-Box's Reasons for the Merger; Recommendation of
the Special Committee and the Board of Directors," the opinion of McDonald
Investments Inc., their financial advisor, that, as of March 25, 2002, the
$67.00 per share cash consideration to be paid in the merger was fair to
Liqui-Box's shareholders from a financial point of view. The opinion of McDonald
Investments is attached as Appendix B to this proxy statement. We encourage you
to read the opinion.
2
RIGHTS OF DISSENTING SHAREHOLDERS (PAGE 24)
Under Ohio law, if you do not vote for adoption of the merger agreement and
approval of the merger, you will have the right to dissent from the merger and
demand the "fair cash value" of your Liqui-Box common shares. This right is
generally known as "dissenters' rights." To perfect your dissenters' rights, you
must strictly follow all of the requirements of Section 1701.85 of the Ohio
Revised Code, the Ohio law governing dissenters' rights. A copy of Section
1701.85 is attached as Appendix C to this proxy statement.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (PAGE 21)
Executive officers and directors of Liqui-Box have interests in the merger
that are different from, or in addition to, the interests of other shareholders.
These interests include:
- Samuel B. Davis and Samuel N. Davis collectively beneficially own
1,738,518 common shares of Liqui-Box, representing approximately 40% of
the outstanding common shares as of the record date. They have each
entered into a shareholders agreement with Enhance Packaging Technologies
and EPT Newco in connection with the merger. Under the shareholders
agreement, Samuel B. Davis and Samuel N. Davis have agreed to vote in
favor of adoption of the merger agreement and approval of the merger and
have granted Enhance Packaging Technologies or EPT Newco an option to
purchase their common shares;
- Samuel B. Davis and Samuel N. Davis have each entered into a
noncompetition and nonsolicitation agreement with Liqui-Box in connection
with the merger. In consideration of executing these agreements,
Liqui-Box will pay Samuel B. Davis $4,000,000 and Samuel N. Davis
$2,000,000 upon cessation of their respective employment with Liqui-Box;
- Samuel N. Davis and DuPont Canada have discussed the terms of a possible
project-based consulting arrangement with Enhance Packaging Technologies
to be effective after the effective time of the merger and after the
termination of his employment. They have not executed any such consulting
arrangement as of the date of this proxy statement, and execution of such
a consulting arrangement is not a condition to the merger;
- under the merger agreement, Samuel B. Davis may purchase certain property
from Liqui-Box at its fair market value, as determined by an independent
appraiser, prior to the effective time of the merger;
- Liqui-Box's executive officers hold vested and unvested options to
purchase common shares of Liqui-Box. Under the merger agreement, each
outstanding stock option (whether or not then exercisable) will be
canceled at the effective time of the merger, and the holder of the stock
option will receive a cash payment equal to the excess of $67.00 over the
exercise price per common share subject to the option multiplied by the
number of common shares subject to the option;
- under the merger agreement, the surviving corporation will indemnify,
advance expenses to and hold harmless each present and former officer and
director of Liqui-Box with respect to acts and omissions occurring on or
prior to the effective time of the merger to the fullest extent permitted
by law for a period of six years;
- Stewart M. Graves, Liqui-Box's president and chief operating officer, and
DuPont Canada have discussed the terms of a possible employment agreement
to be effective after the effective time of the merger. They have not
executed such an employment agreement as of the date of this proxy
statement, and execution of such an employment agreement is not a
condition to completing the merger; and
- Russell M. Gertmenian, a director of Liqui-Box, is a partner in the law
firm of Vorys, Sater, Seymour and Pease LLP, which has served as
Liqui-Box's outside legal counsel and has provided legal services to
members of the Samuel B. Davis family, in connection with numerous
matters, including the merger, for which the firm has received and
expects to receive customary fees for the services performed.
3
FEDERAL INCOME TAX CONSEQUENCES (PAGE 23)
The merger will be a taxable transaction to you. For federal income tax
purposes, you will recognize gain or loss in an amount equal to the difference
between the cash you receive and your tax basis in your common shares. In
addition, you may be subject to taxes under applicable state, local and other
tax laws. We urge you to consult your own tax advisor to understand fully how
the merger will affect you.
NO SOLICITATION (PAGE 30)
Liqui-Box must terminate any existing activities, discussions or
negotiations concerning any acquisition transaction involving Liqui-Box. In
addition, Liqui-Box may not, directly or indirectly, encourage, solicit or
initiate any acquisition proposals. Liqui-Box's board of directors, however, may
consider an unsolicited acquisition proposal, and Liqui-Box may enter into a
binding agreement with respect to an unsolicited acquisition proposal that is
deemed by the board of directors, upon consultation with outside legal counsel
and financial advisors, to be superior to the merger.
CONDITIONS TO THE MERGER (PAGE 32)
Before the parties may complete the merger, they must satisfy or waive (to
the extent permitted by law) a number of conditions. These include that:
- Liqui-Box's shareholders adopt the merger agreement and approve the
merger at the special meeting;
- the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 expires or is terminated;
- no court or other governmental entity enacts, issues, enforces or enters
any law or order that restrains, enjoins or prohibits consummation of the
merger;
- the holders of not more than 10% of the outstanding common shares of
Liqui-Box properly exercise their dissenters' rights; and
- the parties materially comply with their representations, warranties and
covenants in the merger agreement.
TERMINATION OF THE MERGER AGREEMENT (PAGE 33)
The parties may agree jointly to terminate the merger agreement at any
time. In addition, either Liqui-Box or Enhance Packaging Technologies may
terminate the merger agreement if:
- the merger is not consummated by August 30, 2002 or, if a governmental
entity requests additional information, by the 30th day following
substantial compliance with such request, but in no event later than
September 30, 2002;
- Liqui-Box's shareholders do not adopt the merger agreement and approve
the merger at the special meeting; or
- any order restraining, enjoining or prohibiting the merger becomes final
and cannot be appealed.
Liqui-Box may also terminate the merger agreement if:
- Liqui-Box receives an unsolicited acquisition proposal that the board of
directors deems is a superior proposal, and Enhance Packaging
Technologies does not make an offer that is deemed by the special
committee to be at least as favorable to Liqui-Box's shareholders as the
superior proposal; or
- Enhance Packaging Technologies or EPT Newco materially breaches any of
their representations, warranties or covenants in the merger agreement.
4
Enhance Packaging Technologies may also terminate the merger agreement if:
- Liqui-Box's board of directors fails to recommend or reconfirm its
recommendation of, or withdraws or adversely modifies its recommendation
of, the merger agreement; or
- Liqui-Box materially breaches any of its representations, warranties or
covenants in the merger agreement.
TERMINATION FEES AND EXPENSES (PAGE 34)
Liqui-Box must pay Enhance Packaging Technologies a $12,000,000 termination
fee, plus all actual, out-of-pocket expenses that Enhance Packaging Technologies
incurs in connection with the merger, if any person makes an acquisition
proposal or announces an intention to make an acquisition proposal involving
Liqui-Box and the merger agreement is terminated:
- by Liqui-Box because its board of directors deems the unsolicited
acquisition proposal to be a superior proposal and authorizes Liqui-Box
to enter into a binding agreement concerning the superior proposal, and
Enhance Packaging Technologies does not make an offer that is deemed by
the special committee to be at least as favorable to Liqui-Box's
shareholders as the superior proposal;
- by Enhance Packaging Technologies because Liqui-Box's board of directors
fails to recommend or reconfirm its recommendation of, or withdraws or
adversely modifies its recommendation of, the merger agreement; or
- following the receipt of an unsolicited acquisition proposal, by either
party because the merger has not been consummated by August 30, 2002 or,
if a governmental entity requests additional information, by the 30th day
following substantial compliance with such request, but in no event later
than September 30, 2002.
REGULATORY MATTERS (PAGE 36)
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Liqui-Box
and Enhance Packaging Technologies may not complete the merger until they give
notice of, and furnish required information to, the Federal Trade Commission and
the Antitrust Division of the Department of Justice and the applicable waiting
period expires or is terminated. Liqui-Box and Enhance Packaging Technologies
filed the required notification and report forms and are awaiting regulatory
approval. In addition, the parties are required to file prior notice of the
merger with regulatory authorities in Ireland and Italy.
5
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT IS THE PROPOSED TRANSACTION?
A: Enhance Packaging Technologies, a wholly owned subsidiary of DuPont Canada
(Toronto Stock Exchange: DUP.A), will acquire Liqui-Box by merging EPT
Newco, a wholly owned subsidiary of Enhance Packaging Technologies, into
Liqui-Box. Liqui-Box will continue as the surviving corporation and become
a wholly owned subsidiary of Enhance Packaging Technologies and an indirect
wholly owned subsidiary of DuPont Canada. Liqui-Box will no longer be
publicly held, and its common shares will no longer be traded on The Nasdaq
National Market.
Q: WHAT WILL I RECEIVE FOR MY COMMON SHARES AFTER THE MERGER IS COMPLETED?
A: You will be entitled to receive $67.00 in cash for each common share that
you own at the effective time of the merger. DuPont Canada is guaranteeing
the obligations of Enhance Packaging Technologies and EPT Newco, including
the obligation to pay the merger consideration.
Q: WHY DID THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS APPROVE THE MERGER
AND THE MERGER AGREEMENT?
A: The special committee and the board of directors considered a number of
factors in approving the merger and the merger agreement, including:
- the premium that shareholders will receive for each common share of
Liqui-Box over the per share closing prices on March 22, 2002, the last
trading day prior to the date of execution of the merger agreement, and
on February 22, 2002, a date approximately one month before the date of
execution of the merger agreement;
- historical market prices of Liqui-Box's common shares;
- Liqui-Box's business and earnings prospects, short-term and long-term
product and business risks, management succession issues, the competitive
business environment in which Liqui-Box operates and business trends in
the flexible, plastic packaging industry;
- the opinion of McDonald Investments as to the fairness of the $67.00 per
share merger consideration from a financial point of view to the
shareholders of Liqui-Box, and the related analyses presented by McDonald
Investments;
- the terms and conditions of the merger agreement, including the right of
the board of directors to terminate the merger agreement in the exercise
of its fiduciary duties in connection with receipt of an acquisition
proposal deemed to be superior to that offered by Enhance Packaging
Technologies;
- DuPont Canada's and Enhance Packaging Technologies' stated intentions
with respect to the Liqui-Box business, including the stated intentions
regarding Liqui-Box's employees; and
- various other factors, as described in "The Merger -- Liqui-Box's Reasons
for the Merger; Recommendation of the Special Committee and the Board of
Directors."
Q: WHY DID THE BOARD OF DIRECTORS FORM THE SPECIAL COMMITTEE?
A: Two members of Liqui-Box's board of directors, Samuel B. Davis, the
chairman, chief executive officer and treasurer of Liqui-Box, and his son,
Samuel N. Davis, the vice-chairman and secretary of Liqui-Box, have
interests in the merger that may be different from, or in addition to, the
interests of Liqui-Box's shareholders. In addition, Russell M. Gertmenian,
a director, is a partner in the law firm of Vorys, Sater, Seymour and Pease
LLP, which has served as Liqui-Box's outside legal counsel and has provided
legal services to the Samuel B. Davis family, in connection with numerous
matters, including the merger, for which the firm has received and expects
to receive customary fees for the services performed. See "The
Merger -- Interests of Certain Persons in the Merger." To ensure that the
terms of the proposed transaction were reviewed separately by disinterested
directors, the board of directors formed the special committee which is
comprised entirely of non-management, independent directors. The members of
the special
6
committee are Charles R. Coate (chairman), Carl J. Aschinger, Jr., John
Trostheim and Robert L. Zieg. The special committee also retained its own
outside legal counsel, Bricker & Eckler LLP, to advise the special
committee in its review and deliberations. The board of directors made its
recommendation of the merger following the unanimous recommendation of the
special committee.
Q: WHEN AND WHERE IS THE SPECIAL MEETING?
A: The special meeting will be held on Tuesday, May 28, 2002, at 9:00 a.m.,
local time, at the Hilton Columbus (Easton), 3900 Chagrin Drive, Columbus,
Ohio 43219.
Q: WHO CAN VOTE AT THE SPECIAL MEETING?
A: Holders of common shares of Liqui-Box at the close of business on April 19,
2002, the record date, may vote at the special meeting. Participants in the
Liqui-Box Corporation Employees' Profit Sharing and Salary Deferral Plan
and the Liqui-Box Corporation Employee Stock Ownership Plan will be
entitled to instruct the trustee of these plans how to vote common shares
allocated to their accounts under the plans.
Q: WHAT VOTE IS REQUIRED TO ADOPT THE MERGER AGREEMENT AND APPROVE THE MERGER?
A: The holders of a majority of the outstanding common shares of Liqui-Box as
of the record date must vote FOR adoption of the merger agreement and
approval of the merger. Samuel B. Davis and Samuel N. Davis have each
entered into a shareholders agreement, pursuant to which they are required
to vote FOR adoption of the merger agreement and approval of the merger.
Collectively, they have the right to vote, either directly or as a result
of voting and other trust agreements, 1,556,679 common shares, representing
approximately 37.3% of the outstanding common shares as of the record date.
See "Shareholders Agreement" and "Security Ownership of Certain Beneficial
Owners and Management."
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading and considering the information in this proxy
statement, please mail your signed and completed proxy card in the enclosed
return envelope as soon as possible so that your common shares can be voted
at the special meeting.
Q: IF MY COMMON SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY COMMON SHARES FOR ME?
A: Your broker will vote your common shares only if you provide instructions
on how to vote. You should contact your broker and ask what directions your
broker will need from you. Your broker likely will not be able to vote your
common shares without instructions from you.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. You can change your vote at any time before your proxy is voted at the
special meeting. You can do this in one of three ways. First, you can
attend the special meeting and vote in person. Your attendance alone will
not, however, revoke your proxy. If you have instructed a broker to vote
your common shares, you must follow the directions received from your
broker to change those instructions. Second, you can complete and submit a
new proxy card. Third, you can send a written notice to the secretary of
Liqui-Box stating that you would like to revoke your proxy.
Q: WHAT HAPPENS IF I DO NOT SEND IN MY PROXY CARD, IF I DO NOT INSTRUCT MY
BROKER HOW TO VOTE OR IF I ABSTAIN FROM VOTING?
A: If you do not send in your proxy card, if you do not instruct your broker
how to vote your common shares or if you abstain from voting, it will have
the same effect as a vote against adoption of the merger agreement and
approval of the merger.
Q: SHOULD I SEND IN MY SHARE CERTIFICATES NOW?
A: No. After the merger is completed, you will receive written instructions
for delivering your share certificates for the cash payment.
7
Q: DO I HAVE THE RIGHT TO DISSENT AND SEEK APPRAISAL OF THE "FAIR CASH VALUE"
OF MY COMMON SHARES IF THE MERGER IS COMPLETED?
A: Yes. If you wish to exercise your dissenters' rights, you must not vote in
favor of adoption of the merger agreement and approval of the merger, and
you must strictly follow all of the other requirements of Section 1701.85
of the Ohio Revised Code, the Ohio law governing dissenters' rights. If you
comply with these requirements, you will have the right to receive the
"fair cash value" of your common shares, as determined under Section
1701.85, instead of the $67.00 per share as provided in the merger
agreement. The amount you will receive if you exercise your dissenters'
rights may be equal to, more than or less than $67.00 per share. See "The
Merger -- Rights of Dissenting Shareholders."
Q: WILL I OWE TAXES AS A RESULT OF THE MERGER?
A: In general, you will recognize gain or loss for federal income tax purposes
to the extent of the difference between the cash you receive and your tax
basis in the common shares that you exchange for cash. The cash you receive
may also be subject to taxes under applicable state, local and other tax
laws. See "The Merger -- Federal Income Tax Consequences."
Q: WHEN IS THE MERGER EXPECTED TO BE COMPLETED?
A: We are working toward completing the merger as quickly as possible. If the
shareholders adopt the merger agreement and approve the merger at the
special meeting and the other conditions to the merger are satisfied, we
expect to complete the merger shortly after the special meeting.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have more questions about the merger, you should contact:
Stewart M. Graves, President and Chief Operating
Officer
Liqui-Box Corporation
P. O. Box 494
6950 Worthington-Galena Road
Worthington, Ohio 43085
Telephone: (614) 888-9280
8
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement contains "forward-looking statements" (as defined in
the Private Securities Litigation Reform Act of 1995) relating to Liqui-Box that
are based upon management's current plans and expectations. These
forward-looking statements include, among others:
- statements concerning the prospects for completing the merger and the
possible or assumed future results of operations of Liqui-Box set forth
in "The Merger -- Background of the Merger," "The Merger -- Liqui-Box's
Reasons for the Merger; Recommendation of the Special Committee and the
Board of Directors" and "The Merger -- Opinion of Financial Advisor,"
including any forecasts and projections referred to therein;
- any statements preceded or followed by, or that include, the words
"believes," "expects," "anticipates," "intends," "estimates," "projects"
or similar expressions; and
- other statements contained in this proxy statement regarding matters that
are not historical facts.
Because these forward-looking statements are subject to risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. The factors that could cause actual
results to differ materially include, among others:
- the failure to satisfy any of the closing conditions in the merger
agreement, including the failure of Liqui-Box's shareholders to adopt the
merger agreement and approve the merger;
- United States and foreign governmental regulations;
- loss of customers as a result of the merger;
- reactions to the merger from Liqui-Box's suppliers and competitors;
- general economic conditions;
- capacity, efficiency and supply constraints;
- fluctuations in foreign currency exchange rates;
- weather conditions;
- competitive conditions;
- market acceptance of new and existing products; and
- other risks detailed from time to time in the reports that Liqui-Box
files with the Securities and Exchange Commission.
Except for ongoing obligations to disclose material information as required
by the federal securities laws, Liqui-Box undertakes no obligation to release
publicly any revisions or updates to any forward-looking statements to reflect
actual results or events, changes in assumptions or changes in factors affecting
such forward-looking statements.
9
THE SPECIAL MEETING
DATE, PLACE AND TIME
This proxy statement is being furnished to Liqui-Box's shareholders in
connection with the solicitation of proxies by and on behalf of Liqui-Box's
board of directors for use at the special meeting to be held on Tuesday, May 28,
2002, at the Hilton Columbus (Easton), 3900 Chagrin Drive, Columbus, Ohio 43219,
commencing at 9:00 a.m., local time.
PURPOSE OF THE SPECIAL MEETING
The purpose of the special meeting is to consider and vote upon a proposal
to adopt the Agreement and Plan of Merger, dated as of March 25, 2002, by and
among Liqui-Box, Enhance Packaging Technologies and EPT Newco and to approve the
merger contemplated thereby. A copy of the merger agreement is attached as
Appendix A to this proxy statement.
RECORD DATE; QUORUM
Only holders of record of common shares of Liqui-Box at the close of
business on April 19, 2002, the record date, are entitled to notice of, and to
vote at, the special meeting. On the record date, there were 4,169,940 common
shares of Liqui-Box outstanding, held by approximately 1,023 holders of record.
Each common share outstanding on the record date entitles the holder to one
vote on each matter submitted for shareholder approval at the special meeting.
The presence, in person or by properly executed proxy, at the special meeting of
the holders of a majority of the outstanding common shares entitled to vote at
the special meeting will constitute a quorum for the transaction of business.
VOTING AND REVOCATION OF PROXIES
A form of proxy card for use by shareholders at the special meeting
accompanies this proxy statement. All properly executed proxy cards that are
received prior to or at the special meeting and not revoked will be voted at the
special meeting in accordance with the instructions contained in the proxy
cards. If a shareholder executes and returns a proxy card and does not specify
otherwise, the common shares represented by the proxy card will be voted FOR
adoption of the merger agreement and approval of the merger in accordance with
the recommendation of Liqui-Box's board of directors. In such event, the holder
of those common shares will not have the right to dissent from the merger and
demand payment of the "fair cash value" of the holder's common shares.
A properly executed proxy card marked "abstain" will be included for
determining whether there is a quorum at the special meeting. However, a proxy
card marked "abstain" will not be voted. Because the affirmative vote of the
holders of at least a majority of the outstanding common shares is required to
adopt the merger agreement and approve the merger, a proxy card marked "abstain"
will have the same effect as a vote against adoption of the merger agreement and
approval of the merger.
Under the rules of The Nasdaq National Market, brokers who hold shares in
street name for clients typically have the authority to vote on "routine"
proposals when they have not received instructions from beneficial owners.
However, absent specific instructions from the beneficial owner of the shares,
brokers are not allowed to exercise their voting discretion with respect to
non-routine matters, such as adoption of the merger agreement and approval of
the merger. Proxies submitted without a vote by the brokers on these matters are
referred to as "broker non-votes." Broker non-votes will be included for
determining whether there is a quorum at the special meeting. However, because
the affirmative vote of the holders of a majority of the outstanding common
shares is required to adopt the merger agreement and approve the merger, broker
non-votes will have the same effect as a vote against adoption of the merger
agreement and approval of the merger.
Participants in the Liqui-Box Corporation Employees' Profit Sharing and
Salary Deferral Plan (the "401(k) Plan") and the Liqui-Box Corporation Employee
Stock Ownership Plan (the "ESOP") will receive from the trustee of these plans
this proxy statement and any other materials provided to shareholders of
Liqui-Box in connection with the merger, together with a form upon which
confidential voting instructions regarding the merger may be given to the
trustee. The trustee of the 401(k) Plan and the trustee of the ESOP will vote
the
10
common shares allocated to a participant's account under the 401(k) Plan and the
ESOP, respectively, in accordance with that participant's written voting
instructions. If the trustee of the 401(k) Plan does not receive written voting
instructions from a participant, the trustee will not vote that participant's
common shares. If the trustee of the ESOP does not receive written voting
instructions from a participant, pursuant to the terms of the ESOP, the trustee
will vote the common shares allocated to that participant's account under the
ESOP and any unallocated common shares in accordance with the recommendation of
the board of directors.
A shareholder who has executed and returned a proxy card may revoke it at
any time before it is voted at the special meeting by executing and returning a
proxy card bearing a later date, filing a written notice of revocation with the
secretary of Liqui-Box stating that the proxy is revoked or attending the
special meeting and voting in person. Simply attending the special meeting
without voting will not revoke a proxy.
VOTE REQUIRED; BOARD RECOMMENDATION
Under Ohio law, the holders of a majority of the outstanding common shares
of Liqui-Box as of the record date must vote FOR adoption of the merger
agreement and approval of the merger. Therefore, the affirmative vote of the
holders of at least 2,084,971 common shares will be necessary to adopt the
merger agreement and approve the merger. In connection with the merger, Samuel
B. Davis, Liqui-Box's chairman, chief executive officer and treasurer, and his
son, Samuel N. Davis, Liqui-Box's vice-chairman and secretary, who collectively
have the right to vote, either directly or as a result of voting and other trust
agreements, 1,556,679 common shares, representing approximately 37.3% of the
outstanding common shares as of the record date, have entered into a
shareholders agreement, pursuant to which they are required to vote their common
shares FOR adoption of the merger agreement and approval of the merger. See
"Shareholders Agreement." In addition, the other directors and executive officer
of Liqui-Box, who collectively have the right to vote 7,923 common shares, have
informed Liqui-Box that they intend to vote all of their common shares FOR
adoption of the merger agreement and approval of the merger. See "Security
Ownership of Certain Beneficial Owners and Management." As a result of these
arrangements, the affirmative vote of holders of an additional 520,369 common
shares is required to satisfy the voting requirement.
IN ACCORDANCE WITH THE UNANIMOUS RECOMMENDATION OF ITS SPECIAL COMMITTEE,
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ADOPTION OF THE MERGER
AGREEMENT AND APPROVAL OF THE MERGER.
COST OF SOLICITATION OF PROXIES
Liqui-Box will bear the costs of the solicitation of proxies. In addition
to solicitation of proxies by mail, the directors, officers and employees of
Liqui-Box may, without receiving any additional compensation, solicit proxies by
personal interview, telephone, telefax, telegram or otherwise. Arrangements will
also be made with brokerage firms and other custodians, nominees and fiduciaries
who are record holders of common shares for the forwarding of solicitation
materials to the beneficial owners of such common shares. Liqui-Box will
reimburse these brokers, custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses incurred in connection therewith.
OTHER MATTERS
Liqui-Box's board of directors is not aware of any matters to be presented
at the special meeting, other than adoption of the merger agreement and approval
of the merger as set forth in the notice of special meeting of shareholders
attached to this proxy statement. If any other matters are properly presented at
the special meeting, the persons named as proxies in the accompanying proxy card
will have discretionary authority to vote the common shares represented by duly
executed proxies on those matters in accordance with their discretion and
judgment.
YOU SHOULD NOT SEND ANY CERTIFICATES REPRESENTING COMMON SHARES WITH YOUR
PROXY CARD. IF THE MERGER IS COMPLETED, THE PROCEDURE FOR THE EXCHANGE OF
CERTIFICATES REPRESENTING COMMON SHARES WILL BE AS SET FORTH IN THIS PROXY
STATEMENT. SEE "TERMS OF THE MERGER AGREEMENT -- MANNER AND BASIS OF CONVERTING
COMMON SHARES."
11
THE MERGER
THE PARTIES
Liqui-Box. Liqui-Box is a leading manufacturer of dispensing packaging
systems for liquids and other flowable products, serving the bottled water,
beverage, dairy, pharmaceutical, processed food and wine industries. Liqui-Box
specializes in packages with unique dispensing capabilities to be used wherever
convenient, airtight, sanitary storage and delivery of products are critical.
Its principal products include rigid blow-molded containers, flexible bag-in-box
containers, pouch containers and customized filling systems. Liqui-Box operates
nine production facilities in the United States, one in the United Kingdom and
one in India. Liqui-Box is an Ohio corporation and was incorporated in January
1962. Liqui-Box's principal executive offices are located at 6950
Worthington-Galena Road, Worthington, Ohio 43085; the telephone number is (614)
888-9280.
Enhance Packaging Technologies. Enhance Packaging Technologies, which
includes Prepac of France, supplies films and filling systems to a wide range of
customers, including dairies, drink beverage producers, food producers, film
converters and industrial customers in 30 countries. Its brands include
Enhance(R) flexible packaging systems, SclairFilm(R) polyethylene films,
Dartek(R) nylon films and Vexar(R) netting. It is also the Canadian master
distributor of Mylar(R) polyester films. Enhance Packaging Technologies is a
Canadian corporation and a wholly owned subsidiary of DuPont Canada Inc. and was
incorporated in 1999. Enhance Packaging Technologies' principal executive
offices are located at 7070 Mississauga Road, Mississauga, Ontario L5N 5M8; the
telephone number is (905) 821-3300.
EPT Newco. EPT Newco is an Ohio corporation formed on March 22, 2002, as a
wholly owned subsidiary of Enhance Packaging Technologies solely for the purpose
of effecting the merger. EPT Newco has not engaged in any business activity
other than in connection with the merger. EPT Newco's principal executive
offices are located at 7070 Mississauga Road, Mississauga, Ontario L5N 5M8; the
telephone number is (905) 821-3300.
DuPont Canada. DuPont Canada is a diversified science company that
manufactures synthetic fibers, polymer resins, packaging films, automotive
finishes and industrial chemicals. It sells such products to approximately 3,000
customers in Canada, the United States and 40 other countries. E.I. du Pont de
Nemours and Company (NYSE:DD) owns approximately 76% of DuPont Canada's shares
and the remaining shares are traded on the Toronto Stock Exchange (DUP.A).
DuPont Canada is a Canadian corporation and was incorporated in 1910. DuPont
Canada's principal executive offices are located at 7070 Mississauga Road,
Mississauga, Ontario L5N 5M8; the telephone number is (905) 821-3300.
EFFECT OF THE MERGER
At the effective time of the merger, EPT Newco will be merged with and into
Liqui-Box, which will be the surviving corporation in the merger and become a
wholly owned subsidiary of Enhance Packaging Technologies and an indirect wholly
owned subsidiary of DuPont Canada. Each common share of Liqui-Box outstanding
immediately prior to the effective time (other than shares held by Liqui-Box or
Enhance Packaging Technologies or any of their respective parent entities or
subsidiaries or shares with respect to which dissenters' rights are perfected)
will be automatically converted into the right to receive $67.00 in cash.
BACKGROUND OF THE MERGER
In August 2001, on more than one occasion, Ash Sahi, vice president of
DuPont Canada and president of Enhance Packaging Technologies, telephoned Samuel
N. Davis, Liqui-Box's vice chairman and secretary, requesting a meeting
regarding a possible transaction involving Liqui-Box and DuPont Canada. During
the last of Mr. Sahi's telephone requests, Mr. Samuel N. Davis agreed to meet
with Mr. Sahi on August 22, 2001.
On Wednesday, August 22, 2001, Stewart M. Graves, Liqui-Box's president and
chief operating officer, and Mr. Samuel N. Davis met with Dave W. Colcleugh,
chairman, president and chief executive officer of DuPont Canada, and Mr. Sahi
in Worthington, Ohio. During this meeting, Messrs. Colcleugh and Sahi expressed
DuPont Canada's interest in considering the acquisition of Liqui-Box. Messrs.
Samuel N. Davis and Graves informed Messrs. Colcleugh and Sahi that Liqui-Box's
board of directors was not then soliciting offers to purchase
12
Liqui-Box. Shortly after this meeting, Messrs. Samuel N. Davis and Graves
discussed Dupont Canada's expression of interest with Mr. Samuel B. Davis,
Liqui-Box's chairman, chief executive officer and treasurer, who confirmed that
the board of directors was not then soliciting offers to purchase Liqui-Box.
On Friday, November 2, 2001, Mr. Graves and Mr. Colcleugh had a telephone
conversation during which Mr. Colcleugh reiterated DuPont Canada's interest in
considering the acquisition of Liqui-Box. Mr. Graves again informed Mr.
Colcleugh that Liqui-Box was not then interested in a business combination with
DuPont Canada. Mr. Colcleugh then stated that DuPont Canada had reviewed its
position and would like to meet again to discuss a potential transaction.
On Tuesday, November 27, 2001, Messrs. Samuel B. Davis and Graves and
Messrs. Colcleugh and Sahi met in Worthington, Ohio to discuss DuPont Canada's
renewed interest in acquiring Liqui-Box. During this meeting, the parties agreed
to continue their discussions subject to execution of a mutually acceptable
confidentiality agreement by DuPont Canada. On Friday, November 30, 2001, DuPont
Canada executed a confidentiality agreement provided by Liqui-Box.
Upon execution of the confidentiality agreement, Mr. Sahi requested a
meeting with Mr. Graves to discuss DuPont Canada's plans regarding due
diligence. On Monday, December 10, 2001, Mr. Graves met with Messrs. Colcleugh
and Sahi in Toronto to establish a plan and timetable for DuPont Canada's
initial due diligence. Mr. Samuel B. Davis informed the members of the board of
directors of the discussions with DuPont Canada through periodic e-mail
correspondence but noted that the discussions were still at a very preliminary
stage and that no board action was necessary unless and until the discussions
progressed.
These preliminary meetings and discussions were followed by DuPont Canada's
delivery of a written, non-binding (with the exception of provisions relating to
exclusivity) letter of intent to Liqui-Box and Mr. Samuel B. Davis on December
12, 2001. In the letter of intent, DuPont Canada expressed its interest in
acquiring all of the outstanding common shares of Liqui-Box (including
outstanding options to purchase common shares) for cash. DuPont Canada proposed
that the total cash consideration would be based on an enterprise value for
Liqui-Box in the range of $280,000,000 to $311,000,000. The letter of intent
also included provisions, intended to be legally binding, prohibiting (i)
Liqui-Box from soliciting any other acquisition proposals or continuing any
existing discussions regarding acquisition proposals until an unspecified date
in February 2002 and (ii) Mr. Samuel B. Davis from disposing of any of his
common shares of Liqui-Box prior to an unspecified date in February 2002 (other
than to DuPont Canada). On January 14, 2002, the parties executed the letter of
intent which had been revised to change the date of expiration of the
exclusivity period to March 15, 2002. The letter of intent did not address the
amount of consideration that Messrs. Samuel B. Davis and Samuel N. Davis would
receive for executing a shareholders agreement and noncompetition and
nonsolicitation agreements. However, the amount discussed by Messrs. Sahi and
Graves was in the range of $10,000,000 to $20,000,000. Again, Mr. Samuel B.
Davis provided periodic e-mail and/or telephonic updates to members of the board
of directors regarding the course of negotiations.
On January 18, 2002, the board of directors of Liqui-Box held a special
meeting to discuss the potential transaction with DuPont Canada. Mr. Samuel B.
Davis reviewed with the directors the status of discussions with DuPont Canada.
At the request of Mr. Samuel B. Davis, representatives of Vorys, Sater, Seymour
and Pease LLP ("VSS&P"), Liqui-Box's outside legal counsel, reviewed with the
directors their fiduciary duties under Ohio law in connection with the
transaction, the potential structure for the transaction (either a tender offer
or a one-step merger), the general process associated with the sale of a public
company, the role of a financial advisor and fairness opinion in such a
transaction and the other steps that the board of directors could consider to
ensure the fairness of the transaction to the shareholders. At the request of
Mr. Samuel B. Davis, representatives of McDonald Investments also gave a general
presentation regarding their potential role as financial advisor to the board
and/or a special committee of directors in connection with the transaction and
described their credentials and experience in these kinds of transactions.
Following these presentations, the directors engaged in extensive discussions
regarding the potential transaction. At the conclusion of the meeting, the board
established a special committee comprised entirely of non-management,
independent directors (Charles R. Coate (chairman), Carl J. Aschinger, Jr., John
Trostheim and Robert L. Zieg) to review the terms of a possible transaction with
DuPont Canada on behalf of Liqui-Box and its shareholders and authorized the
special committee to engage a financial
13
advisor. The board and the special committee subsequently engaged McDonald
Investments to act as their financial advisor on March 14, 2002, and the special
committee subsequently engaged Bricker & Eckler LLP to act as its outside legal
counsel on March 19, 2002.
Shortly after execution of the letter of intent on January 14, 2002, Mr.
Sahi requested that Mr. Graves and certain members of his management team make
themselves available for management interviews in connection with DuPont
Canada's due diligence. In response to this request, Robert G. Adamson,
Liqui-Box's director of marketing and international sales, Robert A. Valentine,
Liqui-Box's chief financial officer, and Mr. Graves made a presentation to, and
answered questions from, DuPont Canada's management team and advisors on Sunday,
January 20, 2002 in Toronto. Over the course of the following two weeks, DuPont
Canada continued its due diligence, including visiting Liqui-Box's manufacturing
facilities located in the United States with Mr. Graves, and during the week of
January 28, 2002, reviewing documents provided by Liqui-Box in a data room
assembled in Worthington, Ohio.
On Friday, February 8, 2002, DuPont Canada's outside legal counsel, Ballard
Spahr Andrews & Ingersoll, LLP ("Ballard Spahr"), delivered to VSS&P an initial
draft of the merger agreement. On Thursday, February 28, 2002, Liqui-Box and
DuPont Canada and their respective advisors met in Columbus, Ohio to discuss the
general terms of the transaction and the initial draft of the merger agreement.
Among other matters, the parties engaged in extensive discussions concerning the
amount and application of the termination fee if Liqui-Box terminated the merger
agreement in response to an acquisition proposal from a third party and the
scope of (i) the proposed shareholders agreement pursuant to which Messrs.
Samuel B. Davis and Samuel N. Davis would commit to vote their common shares in
favor of the merger and sell their common shares to DuPont Canada and (ii) the
proposed noncompetition and nonsolicitation agreements pursuant to which Messrs.
Samuel B. Davis and Samuel N. Davis would agree not to compete with Liqui-Box
after the merger. DuPont Canada did not, however, address the purchase price,
other than to indicate that it still intended for the purchase price to be based
on an enterprise value in the range of $280,000,000 to $311,000,000. At the
conclusion of the meeting, DuPont Canada informed Liqui-Box that it intended to
structure the transaction as a one-step merger as opposed to a tender offer
followed by a second-step merger.
On Thursday, March 7, 2002, Ballard Spahr delivered a revised draft of the
merger agreement to VSS&P. The revised draft reflected DuPont Canada's decision
to structure the transaction as a one-step merger and to have its wholly owned
subsidiary, Enhance Packaging Technologies, be a party to the merger agreement
(rather than DuPont Canada). On Wednesday and Thursday, March 13 and 14, 2002,
Liqui-Box and DuPont Canada and their respective advisors again met in Columbus,
Ohio to discuss the transaction and resolve the open issues in the merger
agreement. At these meetings, the parties discussed the purchase price
extensively and, subject to the approval of their respective boards, agreed in
principle that the purchase price would be based on an enterprise value of
$296,000,000 and that Messrs. Samuel B. Davis and Samuel N. Davis would
collectively receive $10,000,000 in consideration of executing the
noncompetition and nonsolicitation agreements. On Friday, March 15, 2002, the
parties extended the exclusivity period set forth in the letter of intent, dated
January 14, 2002, from March 15, 2002 to March 29, 2002.
Following the meeting on March 14, 2002 and continuing through the
execution of the merger agreement on March 25, 2002, Liqui-Box and DuPont Canada
and their respective advisors negotiated the remaining open issues in the merger
agreement, the shareholders agreement and the noncompetition and nonsolicitation
agreements during a series of conference calls. From the time of its engagement
through March 25, 2002, Bricker & Eckler also reviewed the merger agreement, the
shareholders agreement and the noncompetition and nonsolicitation agreements on
behalf of the special committee and participated in certain of the negotiations
thereof. During a conference call on the evening of Friday, March 22, 2002,
DuPont Canada formally proposed a purchase price of $66.20 per share and
explained that this price was based on (i) an enterprise value of $296,000,000,
(ii) the amount of cash estimated to be in the business on the closing date and
(iii) the amount of the proceeds from the exercise or cancellation of all
outstanding (vested and unvested) options to purchase common shares of
Liqui-Box. In addition, Messrs. Samuel B. Davis and Samuel N. Davis would
collectively receive $10,000,000 in consideration of executing the
noncompetition and nonsolicitation agreements.
14
On Saturday, March 23, 2002, Liqui-Box's board of directors and its special
committee held a concurrent special meeting to consider the merger and the
merger agreement and the transactions contemplated thereby. Before the full
board, (i) VSS&P summarized the material terms of, and the resolution of key
issues in, the merger agreement, the shareholders agreement and the
noncompetition and nonsolicitation agreements and reviewed the directors'
fiduciary duties; (ii) McDonald Investments reviewed the methodologies that it
used to analyze the fairness of the merger and rendered its oral opinion
(subsequently confirmed by delivery of a written opinion dated March 25, 2002)
that the then proposed $66.20 per share cash consideration to be received by
Liqui-Box's shareholders was fair from a financial point of view; and (iii) Mr.
Samuel B. Davis discussed the terms of the merger and the merger agreement,
trends in the flexible, plastic packaging industry and Liqui-Box's prospects.
Mr. Samuel B. Davis, on behalf of himself and Mr. Samuel N. Davis, also
indicated that in their judgment, the $10,000,000 agreed to by them in
consideration of executing the noncompetition and nonsolicitation agreements was
more than reasonable and that they would be willing to reduce that amount to
$6,000,000 with the $4,000,000 difference being added to the per share
consideration to be received by Liqui-Box's shareholders (thereby increasing the
per share cash consideration from $66.20 to $67.00).
After Mr. Samuel B. Davis' presentation, the full board meeting was
temporarily adjourned, and the special committee, with the participation of
Bricker & Eckler, continued its meeting to review and evaluate the merger. After
extensive discussion concerning the terms of the merger and the merger
agreement, including the interests of Messrs. Samuel B. Davis and Samuel N.
Davis in the merger, and subject to the conditions discussed below, the special
committee unanimously approved the merger and the merger agreement, determined
that the merger and the merger agreement are advisable, fair to and in the best
interests of Liqui-Box and its shareholders and recommended that the full board
recommend to the shareholders that they adopt the merger agreement and approve
the merger. The special committee's recommendation was subject, however, to (i)
Messrs. Samuel B. Davis' and Samuel N. Davis' continued willingness and
agreement to reduce the aggregate consideration that they would receive in
consideration of executing the noncompetition and nonsolicitation agreements
from $10,000,000 to $6,000,000 with the $4,000,000 difference being added to the
per share cash consideration to be received by Liqui-Box's shareholders (thereby
increasing the per share cash consideration from $66.20 to $67.00) and (ii)
Liqui-Box's management striving to make certain minor changes to the merger
agreement during the final negotiations prior to execution. See " -- Liqui-Box's
Reasons for the Merger; Recommendation of the Special Committee and the Board of
Directors."
Thereafter, the full board reconvened, and the special committee delivered
its recommendation to the full board. After further discussion and the continued
willingness and agreement of Messrs. Samuel B. Davis and Samuel N. Davis to
reduce the aggregate consideration that they would receive in consideration of
executing the noncompetition and nonsolicitation agreements from $10,000,000 to
$6,000,000 with the $4,000,000 difference being added to the per share cash
consideration to be received by the shareholders (thereby increasing the per
share cash consideration from $66.20 to $67.00), the full board unanimously,
with the exception of Messrs. Samuel B. Davis and Samuel N. Davis who abstained
from voting because of their financial interests in the merger and the
transactions contemplated thereby, approved the merger, the merger agreement,
the shareholders agreement and the noncompetition and nonsolicitation agreements
and the transactions contemplated thereby, determined that the merger and the
merger agreement are advisable, fair to and in the best interests of Liqui-Box
and its shareholders and recommended that Liqui-Box's shareholders adopt the
merger agreement and approve the merger. See " -- Liqui-Box's Reasons for the
Merger; Recommendation of the Special Committee and the Board of Directors."
On Monday, March 25, 2002, the board of directors of DuPont Canada approved
the merger and the merger agreement (including the $67.00 per share price), and
the parties negotiated the final open issues in the merger agreement, the
shareholders agreement and the noncompetition and nonsolicitation agreements and
then executed the agreements. In its written opinion dated March 25, 2002,
McDonald Investments confirmed that the increased cash consideration of $67.00
per share to Liqui-Box's shareholders was fair from a financial point of view.
On the morning of Tuesday, March 26, 2002, the parties issued a joint press
release announcing the merger.
15
LIQUI-BOX'S REASONS FOR THE MERGER; RECOMMENDATION OF THE SPECIAL COMMITTEE AND
THE BOARD OF DIRECTORS
In determining that the merger and the merger agreement are advisable, fair
to and in the best interests of Liqui-Box and its shareholders, the special
committee and the board of directors consulted with Liqui-Box's management,
McDonald Investments, Liqui-Box's financial advisor, and their respective legal
counsel, Bricker & Eckler for the special committee, and VSS&P for the board of
directors, and considered numerous factors discussed below that supported their
recommendations.
Special Committee. In reaching its determination, the special committee
considered the following factors that supported its recommendation:
- the per share cash consideration of $67.00 to be paid in the merger
represents a premium for Liqui-Box's common shares of approximately 36%
over the per share closing price on March 22, 2002, the last trading day
prior to the date of execution of the merger agreement, and approximately
39% over the closing price on February 22, 2002, a date approximately one
month before the date of execution of the merger agreement;
- historical market prices of Liqui-Box's common shares;
- the opinion of McDonald Investments that as of March 25, 2002 and based
upon and subject to certain assumptions, factors and limitations, the
merger price of $67.00 per common share was fair from a financial point
of view to the holders of Liqui-Box's common shares and the related
analyses prepared by McDonald Investments. See " -- Opinion of Financial
Advisor";
- a review of Liqui-Box's business and earnings prospects, short-term and
long-term product and business risks, management succession issues, the
competitive business environment in which Liqui-Box operates and business
trends in the flexible, plastic packaging industry;
- a review of the prospects of continuing to operate as an independent
company, including the anticipated short-term and long-term value to
shareholders of remaining an independent company and the risks associated
with remaining an independent company;
- the benefits to Liqui-Box, over the long-term, from increased financial
strength, the opportunity to benefit from costs savings and other
benefits of size and operating efficiencies;
- the payment of the merger consideration solely in cash, which provides
certainty of value to Liqui-Box's shareholders;
- the ability of Liqui-Box and Enhance Packaging Technologies to complete
the merger, including the fact that the merger is not subject to a
financing contingency on the part of Enhance Packaging Technologies and
that DuPont Canada is guaranteeing the obligations of Enhance Packaging
Technologies;
- the terms of the merger agreement, including the right of Liqui-Box's
board of directors to terminate the merger agreement in the exercise of
its fiduciary duties in connection with receipt by Liqui-Box of an
acquisition proposal deemed to be superior to that offered by Enhance
Packaging Technologies. See "Terms of the Merger Agreement -- No
Solicitation";
- the special committee being comprised entirely of non-management,
independent directors;
- the requirement of the affirmative vote of the holders of a majority of
the outstanding common shares of Liqui-Box to adopt the merger agreement
and approve the merger;
- the ability of Liqui-Box's shareholders who do not support the merger to
obtain the "fair cash value" of their common shares if they properly
exercise their dissenters' rights under Ohio law. See " -- Rights of
Dissenting Shareholders";
- DuPont Canada's and Enhance Packaging Technologies' stated intentions
with respect to the Liqui-Box business, including their stated intentions
regarding Liqui-Box's employees; and
16
- the social and economic effects of the merger on the employees, customers
and suppliers of Liqui-Box and on the communities where they operate,
including the intention of Enhance Packaging Technologies to maintain
operations in Worthington, Ohio following the merger.
The special committee also considered a variety of risks and other possibly
negative factors in its deliberations concerning the merger. In particular, the
special committee considered:
- that Liqui-Box will no longer exist as an independent company and its
shareholders will forego the upside opportunity embedded in Liqui-Box's
stand-alone business plan as well as possible growth and potential
business combinations;
- the interests of Liqui-Box's executive officers, including Samuel B.
Davis and Samuel N. Davis, in the merger, the merger agreement and the
transactions contemplated thereby; and
- whether the terms of the merger agreement that prohibit Liqui-Box from
soliciting other acquisition proposals and require Liqui-Box to pay a
termination fee if it terminates the merger agreement based on another
acquisition proposal will prevent others from proposing an alternative
transaction that may be more advantageous to Liqui-Box's shareholders.
See "Terms of the Merger Agreement -- No Solicitation" and "Terms of the
Merger Agreement -- Termination Fees and Expenses."
Board of Directors. In reaching its determination, Liqui-Box's board of
directors considered and relied upon the factors considered by the special
committee, the special committee's conclusions, recommendation and unanimous
approval of the merger and the merger agreement and McDonald Investments'
opinion that as of March 25, 2002 and subject to the considerations set forth in
the written opinion, the $67.00 per share cash consideration to be received by
Liqui-Box's shareholders was fair to Liqui-Box's shareholders from a financial
point of view.
The foregoing discussion describes the material factors considered by the
special committee and the board of directors in their consideration of the
merger. Because of the variety of factors considered, the special committee and
the board did not find it practicable to, and did not make specific assessments
of, quantify or otherwise assign relative weights to the specific factors
considered in reaching their determination. The determination to approve the
merger and the merger agreement was made after consideration of all of the
factors as a whole. In addition, individual members of the special committee and
the board of directors may have given different weights to different factors.
OPINION OF FINANCIAL ADVISOR
The special committee and the board of directors of Liqui-Box retained
McDonald Investments to render an opinion as to the fairness from a financial
point of view of the consideration to be received by Liqui-Box's shareholders in
the merger. McDonald Investments was retained by Liqui-Box on the basis of,
among other things, its experience and expertise in transactions of this nature
and its familiarity with the packaging industry.
As part of its investment banking business, McDonald Investments is
customarily engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and estate planning purposes. On March 23, 2002,
McDonald Investments delivered its oral opinion to Liqui-Box's special committee
and board of directors, and on March 25, 2002, McDonald Investments delivered
its written opinion to the effect that, as of such date, and based upon the
assumptions and other matters set forth therein, the consideration to be
received in the merger was fair, from a financial point of view, to Liqui-Box's
shareholders. No restrictions were imposed by Liqui-Box upon McDonald
Investments as to investigations made or procedures followed by McDonald
Investments in rendering its fairness opinion.
MCDONALD INVESTMENTS' OPINION IS DIRECTED TO LIQUI-BOX'S SPECIAL COMMITTEE
AND BOARD OF DIRECTORS AND ADDRESSES ONLY THE FAIRNESS, FROM A FINANCIAL POINT
OF VIEW, TO LIQUI-BOX'S SHAREHOLDERS, OF THE CONSIDERATION TO BE RECEIVED IN THE
MERGER. MCDONALD INVESTMENTS' OPINION IS NOT A RECOMMENDATION TO ANY SHAREHOLDER
TO VOTE SHARES IN FAVOR OF ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE
MERGER, NOR DOES IT ADDRESS LIQUI-BOX'S UNDERLYING BUSINESS DECISION TO PURSUE
THE MERGER.
17
McDonald Investments has advised Liqui-Box's board of directors that it
does not believe that any person (including any Liqui-Box shareholder) other
than the directors has the legal right to rely on this opinion for any claim
arising under state law and that, should any such claim be brought against
McDonald Investments, this assertion will be raised as a defense. In the absence
of governing authority, this assertion will be resolved by the final
adjudication of such issue by a court of competent jurisdiction. Resolution of
this matter under state law, however, will have no effect on the rights and
responsibilities of McDonald Investments under the federal securities laws or on
the rights and responsibilities of Liqui-Box's board of directors under
applicable law.
We urge you to read the full text of McDonald Investments' opinion, which
is attached to this proxy statement as Appendix B, for assumptions made and
matters considered in, and the limits of, McDonald Investments' review of the
merger and related matters.
Although McDonald Investments evaluated the financial terms of the merger,
McDonald Investments did not recommend the price to be paid in the transaction.
The consideration to be received by Liqui-Box's shareholders in the merger was
determined by negotiations between Liqui-Box and Enhance Packaging Technologies.
McDonald Investments did not participate in those negotiations. McDonald
Investments was not authorized by Liqui-Box's management or board of directors
to solicit, nor did it solicit, third party indications of interest for the
acquisition of all or any part of Liqui-Box.
In rendering its opinion, McDonald Investments, among other things,
reviewed:
- the merger agreement, including the schedules thereto;
- the shareholders agreement among Enhance Packaging Technologies, EPT
Newco, Samuel B. Davis and Samuel N. Davis entered into in connection
with the merger;
- the noncompetition and nonsolicitation agreement between Samuel B. Davis
and Liqui-Box entered into in connection with the merger;
- the noncompetition and nonsolicitation agreement between Samuel N. Davis
and Liqui-Box entered into in connection with the merger;
- publicly available information about Liqui-Box, including its Annual
Reports on Form 10-K for each of the five years ended December 31, 2000,
its Quarterly Report on Form 10-Q for the period ended September 30, 2001
and a draft of its Annual Report on Form 10-K for the year ended December
31, 2001;
- certain internal information, primarily financial in nature and including
projections, furnished to McDonald Investments by Liqui-Box's management
for purposes of its analysis;
- publicly available information about the trading of, and the trading
market for, Liqui-Box's common shares;
- publicly available information about some other companies that McDonald
Investments thought were comparable to Liqui-Box and the trading markets
for their securities; and
- publicly available information concerning the nature and terms of some
other transactions that McDonald Investments considered relevant.
For purposes of its opinion, McDonald Investments assumed and relied upon
the accuracy and completeness of all of the information provided to it or
publicly available and relied upon the representations and warranties of the
parties to the merger agreement. McDonald Investments was not engaged to, and
did not independently attempt to, verify any of such information. McDonald
Investments also relied upon Liqui-Box's management as to the reasonableness and
achievability of the financial and operating projections (and the assumptions
and bases therefor) provided to it and assumed that those projections reflect
management's best currently available estimates and judgments. McDonald
Investments was not engaged to assess the reasonableness or achievability of
those projections or the assumptions on which they were based and expressed no
view as to these matters. McDonald Investments did not conduct an appraisal of
any of Liqui-Box's assets, properties or facilities nor was it furnished with
any such evaluation or appraisal. McDonald Investments also assumed that the
conditions to the
18
transaction as set forth in the merger agreement would be satisfied and that the
sale of Liqui-Box would be completed on a timely basis in the manner
contemplated by the merger agreement.
The following discussion summarizes the financial analyses that McDonald
Investments performed in order to render its opinion. McDonald Investments
derived implied prices for Liqui-Box's common shares based upon its judgment
about what these analyses suggested about Liqui-Box's value. In reading this
summary, please note that McDonald Investments' opinion was based on its
consideration of the collective results of all of these analyses, together with
other factors referred to in its opinion letter. McDonald Investments did not
give any individual analysis greater or lesser weight in rendering its opinion.
Historical Stock Trading Analysis. McDonald Investments reviewed the
trading history of Liqui-Box's common shares over the past five years. McDonald
Investments calculated the average closing price, daily volume and high and low
daily closing prices for the common shares for various periods within that
five-year time frame, as indicated by the table below:
<Table>
<Caption>
DAILY CLOSING PRICE
PERIOD AVERAGE AVERAGE -------------------
PERIOD START DATE CLOSE DAILY VOLUME HIGH LOW
- ------ ---------- ------- ------------ -------- --------
Latest Month......................... 2/26/02 $50.33 5,860 $52.95 $48.85
Last 3 Months........................ 12/26/01 $47.00 4,508 $52.95 $41.25
Last 6 Months........................ 9/26/01 $44.90 3,982 $52.95 $38.97
Last 12 Months....................... 3/26/01 $43.03 4,479 $52.95 $36.51
Last 2 Years......................... 3/27/00 $42.70 4,858 $53.00 $31.63
Last 5 Years......................... 3/25/97 $44.17 4,729 $57.00 $31.63
</Table>
McDonald Investments noted that, based upon these share prices, the $67.00 per
share consideration to be received by Liqui-Box's shareholders in the merger was
greater than the highest closing price that Liqui-Box's common shares had
achieved during the period under review.
Comparable Public Company Analysis. McDonald Investments compared
historical and projected operating and financial performance for Liqui-Box to
corresponding publicly available information for seven publicly traded companies
in the specialty plastic packaging industry. The companies used in McDonald
Investments' comparable public company analysis were AptarGroup, Inc., Bemis
Co., Ivex Packaging Corp., Pactiv Corp., Sealed Air Corp., Sonoco Products Co.
and Winpak Ltd. McDonald Investments selected these companies because, based on
publicly available data, it believed that they possessed general business,
operating and financial characteristics representative of companies in the
industry in which Liqui-Box operates. However, you should note that each of the
comparable companies is distinguishable from Liqui-Box in certain respects.
For each of the comparable companies, McDonald Investments examined certain
publicly available financial data, including sales, earnings before interest,
taxes, depreciation and amortization, or "EBITDA," earnings before interest and
taxes, or "EBIT," net income for 2001 and projected net income for 2002.
McDonald Investments also examined balance sheet items and the trading
performance of the common stock of each of the comparable companies. McDonald
Investments then calculated the ratio of each comparable company's "enterprise
value" to that company's net sales, EBITDA and EBIT for the latest 12 months, as
well as the ratio of each comparable company's "equity value" to its 2001 net
income and projected 2002 net income. As used in McDonald Investments' analysis,
the term "enterprise value" means the total market value of the common stock
outstanding plus the principal amount of total debt, preferred stock and
minority interests, less cash and investments. The term "equity value" means the
total market value of each company's outstanding common stock.
19
McDonald Investments then compared the median multiples of net sales,
EBITDA, EBIT, 2001 net income and 2002 projected net income for the comparable
companies to the multiples represented by the merger consideration. The
following table illustrates that comparison.
<Table>
<Caption>
COMPARABLE PROPOSED
COMPANY LIQUI-BOX
MEDIAN TRANSACTION
----------- -----------
Enterprise Value to 2001:
Net Sales................................................. 1.5x 2.1x
EBITDA.................................................... 8.7x 9.5x
EBIT...................................................... 13.1x 13.1x
Equity Value to:
Net Income -- 2001 (actual)............................... 18.9x 22.3x
Net Income -- 2002 (est.)................................. 17.1x 19.9x
</Table>
McDonald Investments noted that the implied multiples represented by the
merger consideration exceeded the median multiples for the comparable companies
in each of the categories under review, with the exception of enterprise value
to EBIT, where the multiples were comparable. McDonald Investments also applied
the median comparable company multiples to Liqui-Box's net sales, EBITDA and
EBIT and to its 2001 net income and projected 2002 net income to calculate
implied prices per share for Liqui-Box's common shares. This analysis suggested
prices per share for Liqui-Box ranging from $47.18 to $65.59, as compared to the
merger consideration of $67.00 per share.
Comparable Transactions Analysis. McDonald Investments reviewed
information on 18 acquisition transactions in the specialty plastic packaging
industry to determine relevant valuation multiples for transactions that it
deemed similar to the merger. McDonald Investments focused on specialty plastic
packaging transactions that were announced within the past five years, had
enterprise values exceeding $100,000,000, involved a United States company and
were publicly disclosed.
McDonald Investments determined the median multiples of enterprise value to
net sales, EBITDA and EBIT represented by the purchase price paid in the
comparable transactions and compared those to the multiples represented by the
proposed merger. That comparison is illustrated below:
<Table>
<Caption>
COMPARABLE PROPOSED
TRANSACTION LIQUI-BOX
MEDIAN TRANSACTION
----------- -----------
Enterprise Value to 2001:
Net Sales................................................. 1.1x 2.1x
EBITDA.................................................... 7.7x 9.5x
EBIT...................................................... 11.6x 13.1x
</Table>
McDonald Investments noted that the implied multiples represented by the
merger consideration exceeded the median multiples for the comparable companies
in each of the categories under review. The median multiples paid in the
comparable transactions suggested an equity value per share for Liqui-Box
ranging from $36.69 per share to $59.14 per share, as compared to the merger
consideration of $67.00 per share.
Premiums Paid Analysis. McDonald Investments also analyzed the premiums
paid in 60 acquisitions completed during the period from January 1, 2000 to
March 22, 2002 in which cash was used as the form of consideration. McDonald
Investments focused on publicly disclosed transactions with values between
$100,000,000 and $1,000,000,000, and excluded transactions involving companies
in the technology and software, retail and financial services industries.
McDonald Investments then calculated the premiums to the market price of the
common stock of the target companies involved in these transactions at various
points prior to announcement and calculated a median premium for each of those
dates. McDonald Investments then compared
20
those median premiums to the premiums represented by the merger consideration.
This comparison is illustrated by the table below:
<Table>
<Caption>
CASH
CONSIDERATION PROPOSED
TRANSACTIONS LIQUI-BOX
MEDIAN TRANSACTION
------------- -----------
Stock Premiums:
One day................................................... 28.5% 33.7%
One week.................................................. 37.3% 32.8%
One month................................................. 44.4% 34.0%
</Table>
McDonald Investments noted that the premium represented by the merger
consideration of $67.00 per share exceeded the median premium to the target
corporation's market price one day prior to announcement, but was below the
median premiums to the target corporation's market price one week and one month
prior to announcement.
Although the material aspects of McDonald Investments' analyses are
described above, this summary does not purport to be a complete description of
McDonald Investments' analyses. Preparing a fairness opinion is a complex
process not necessarily susceptible to summary description. McDonald Investments
believes that its analyses must be considered as a whole and that selecting
portions of its analyses and of the factors considered by it, without
considering all of those factors and analyses, could create a misleading view of
the process underlying its analyses. McDonald Investments considered the results
of all of these analyses in rendering its opinion. The analyses were prepared
solely for the purpose of providing its opinion as to the fairness, from a
financial point of view, of the consideration to be received in the merger by
Liqui-Box's shareholders and do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities may actually be sold.
None of the companies used in McDonald Investments' comparable company
analysis is identical to Liqui-Box, and none of the comparable transactions is
identical to the merger. That means that an analysis of comparable publicly
traded companies and comparable acquisition transactions is not a mathematical
exercise. Instead, that analysis involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies to and transactions to which Liqui-Box and the merger are compared.
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 such analyses.
As described above, McDonald Investments' opinion and presentation to
Liqui-Box's special committee and board of directors was one of many factors
considered by the special committee and the board of directors in making their
determinations to approve the merger and the merger agreement.
The term "fair from a financial point of view" is a standard phrase
contained in investment banking fairness opinions and refers to the fact that
McDonald Investments' opinion is addressed solely to the financial attributes of
the consideration to be paid in connection with the merger.
McDonald Investments is a full service securities firm and as such, in the
ordinary course of its business may from time to time effect transactions for
its own account or the account of customers, and hold long or short positions in
the securities of, or in options on the securities of, Liqui-Box and affiliates
of Dupont Canada.
Liqui-Box has agreed to pay McDonald Investments a fee of $400,000 for its
financial advisory services, $100,000 of which is contingent on closing.
Liqui-Box has also agreed to reimburse McDonald Investments for its
out-of-pocket expenses and has agreed to indemnify McDonald Investments under
certain circumstances.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the board of directors, shareholders
should be aware that certain executive officers and directors of Liqui-Box,
including Samuel B. Davis and his son, Samuel N. Davis, will receive payments
and other benefits in connection with the merger which result in their having
interests in the merger that are different from, or in addition to, the
interests of other shareholders. The special committee and the
21
board of directors were aware of these interests and considered them, among
other things, in approving the merger and the merger agreement.
Interests of Samuel B. Davis and Samuel N. Davis. Collectively, Samuel B.
Davis and Samuel N. Davis beneficially own 1,738,518 common shares of Liqui-Box,
representing approximately 40.0% of the outstanding common shares. Specifically,
Samuel B. Davis beneficially owns 1,654,733 common shares, and Samuel N. Davis
beneficially owns 83,785 common shares, representing approximately 38.2% and
2.0%, respectively, of the outstanding common shares. See "Security Ownership of
Certain Beneficial Owners and Management." Because of their significant
ownership interests in Liqui-Box, Enhance Packaging Technologies required them
to execute a shareholders agreement pursuant to which they each have agreed to
vote in favor of adoption of the merger agreement and approval of the merger and
have granted Enhance Packaging Technologies an option to purchase their common
shares. See "Shareholders Agreement." Under the terms of the merger agreement
and the shareholders agreement, neither Samuel B. Davis nor Samuel N. Davis will
be entitled to receive a price per share for his common shares that exceeds the
price being paid to the other shareholders of Liqui-Box. However, because of
their significant ownership interests, they could be deemed to have interests in
the merger that are different from, or in addition to, the interests of
Liqui-Box's other shareholders.
In connection with the merger, Samuel B. Davis and Samuel N. Davis have
also entered into noncompetition and nonsolicitation agreements with Liqui-Box.
Because of their many years of experience in the flexible, plastic packaging
industry, Enhance Packaging Technologies required each of them to execute such
an agreement in connection with the merger. Following the effective time of the
merger, neither Samuel B. Davis nor Samuel N. Davis intends to serve in any
capacity for the surviving corporation. Under the noncompetition and
nonsolicitation agreements, Samuel B. Davis and Samuel N. Davis have agreed not
to engage in any business that competes with Liqui-Box and not to solicit
Liqui-Box's employees or customers for a period of five years following their
cessation of employment with Liqui-Box and not to disclose to any third party
any confidential business information that they acquired during their service at
Liqui-Box. In consideration of executing such agreements, Liqui-Box has agreed
to pay Samuel B. Davis and Samuel N. Davis $4,000,000 and $2,000,000,
respectively, upon their cessation of employment.
Samuel N. Davis and DuPont Canada have discussed the terms of a possible
project-based consulting arrangement with Enhance Packaging Technologies to be
effective after the effective time of the merger and after the termination of
his employment. They have not executed any such consulting arrangement as of the
date of this proxy statement, and execution of such a consulting arrangement is
not a condition to the merger.
Under the merger agreement, Samuel B. Davis has the right, but not the
obligation, to purchase prior to the effective time of the merger certain
property owned by Liqui-Box, including an executive retreat located in Powell,
Ohio, a condominium located in Sanibel Island, Florida and an automobile that he
currently uses. Pursuant to the merger agreement, if Samuel B. Davis exercises
this right, he must purchase any such property at its fair market value as
determined by an independent appraiser and pay the purchase price in cash at the
time of sale.
Cash-Out of Outstanding Stock Options. Liqui-Box has previously granted
stock options to its employees, including its executive officers. Under the
merger agreement, at the effective time of the merger, each outstanding option
to purchase common shares of Liqui-Box (whether or not then exercisable) will be
canceled, and the holder of the option will be entitled to receive a cash
payment equal to the excess of $67.00 over the exercise price per common share
subject to the option multiplied by the number of unexercised common shares
subject to the option. Each payment will be made net of applicable withholding
taxes. A total of approximately $29,968,677 will be paid to employees (including
executive officers) of Liqui-Box in connection with the cancellation of their
outstanding stock options (prior to reduction for any amounts required to be
withheld for taxes). See "Terms of the Merger Agreement -- Stock Options."
The following table sets forth the aggregate amount that each executive
officer of Liqui-Box will be paid in connection with the cancellation of his
outstanding stock options (whether or not exercisable) at the effective time of
the merger. Liqui-Box does not anticipate granting any additional stock options
to any executive officer or
22
other employee prior to the effective time. None of Liqui-Box's non-management,
outside directors holds any stock options.
<Table>
<Caption>
CASH PAYMENT FOR
NAME OF EXECUTIVE OFFICER TITLE/POSITION STOCK OPTIONS
- ------------------------- -------------- ----------------
Samuel B. Davis........ Chairman, Chief Executive Officer and
Treasurer $11,907,758
Samuel N. Davis........ Vice Chairman and Secretary $ 3,579,893
Stewart M. Graves...... President and Chief Operating Officer $ 3,567,500
</Table>
Indemnification. The merger agreement requires the articles of
incorporation of the surviving corporation to contain provisions no less
favorable with respect to indemnification than those currently set forth in
Liqui-Box's amended articles of incorporation. Enhance Packaging Technologies
has also agreed that the surviving corporation will not amend, repeal or
otherwise modify such provisions for a period of six years after the effective
time of the merger in any manner that would affect adversely the rights
thereunder of the directors or officers of Liqui-Box at or prior to the
effective time with respect to any act or omission occurring on or prior to the
effective time. The merger agreement further requires that for a period of six
years after the effective time the surviving corporation will indemnify, advance
expenses to and hold harmless each present and former director and officer of
Liqui-Box, to the fullest extent permitted under applicable law, with respect to
any act or omission in his capacity as a director or officer of Liqui-Box
occurring on or prior to the effective time if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
Liqui-Box, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Interests of Stewart M. Graves. Stewart M. Graves, Liqui-Box's president
and chief operating officer, and DuPont Canada have discussed the terms of a
possible employment agreement to be effective after the effective time of the
merger. They have not executed such an employment agreement as of the date of
this proxy statement, and execution of such an employment agreement is not a
condition to completing the merger.
Interests of Russell M. Gertmenian. Russell M. Gertmenian, a director of
Liqui-Box, is a partner in VSS&P, which has served as Liqui-Box's outside legal
counsel and has provided legal services to members of the Samuel B. Davis
family, in connection with numerous matters, including the merger, for which the
firm has received and expects to receive customary fees for the services
performed.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material federal income tax consequences
of the merger to Liqui-Box's shareholders. This summary is based on the Internal
Revenue Code of 1986, as amended, existing and proposed regulations thereunder,
Internal Revenue Service rulings and pronouncements, reports of congressional
committees, judicial decisions and current administrative rulings and practice,
all as in effect on the date of this proxy statement. Any change to the
foregoing sources could be retroactive and, accordingly, the following
statements and conclusions could be modified or altered. Liqui-Box has not
requested a ruling from the Internal Revenue Service with respect to the matters
discussed in this summary, and there is no assurance that the Internal Revenue
Service will agree with the conclusions set forth in this summary. In addition,
Liqui-Box has not requested or received a tax opinion with respect to the
federal income tax consequences of the merger.
This summary does not address all of the federal income tax consequences
that may be relevant to particular shareholders in light of their personal
circumstances or to certain types of shareholders (such as shareholders who hold
their common shares as part of a hedging, straddle, conversion or other
integrated transaction, corporations, insurance companies, foreign individuals
and entities, financial institutions and tax-exempt entities) who may be subject
to special treatment under the federal income tax laws. It also does not address
the federal income tax consequences to shareholders who acquired their common
shares through the exercise of stock options or otherwise as compensation.
Furthermore, this summary does not address any tax consequences under state,
local or foreign laws.
For federal income tax purposes, a shareholder who exchanges his or her
common shares for cash pursuant to the merger or who receives cash in exchange
for common shares pursuant to the exercise of dissenters' rights will be treated
as having sold his or her common shares for cash in a taxable transaction. The
shareholder will
23
recognize gain or loss on the exchange in an amount equal to the difference
between the cash received and the shareholder's adjusted tax basis in the common
shares. The gain or loss will be a capital gain or loss if the shareholder held
the common shares as a capital asset at the effective time of the merger, and
may qualify as long-term capital gain or loss if the shareholder held the common
shares for more than one year at the effective time of the merger. For certain
non-corporate shareholders (including individuals), any long-term capital gain
will be taxed at a maximum federal income tax rate of 20%. Short-term capital
gain will be taxed as ordinary income. Ordinary income of individuals is
currently taxed at a maximum federal income tax rate of 38.6%. For corporate
shareholders, long-term capital gain will continue to be subject to ordinary
income tax rates applicable to corporations.
Shareholders generally will be required to provide the payment agent in the
merger with their correct taxpayer identification numbers (certified under
penalties of perjury) on the Substitute Form W-9 included as part of the letter
of transmittal sent to shareholders pursuant to the merger. An individual's
taxpayer identification number is his or her social security number. A
shareholder who does not provide the payment agent with a correct taxpayer
identification number may be subject to a $50 fine imposed by the Internal
Revenue Service. In addition, payments made to a shareholder may be subject to
backup withholding if: (i) a shareholder fails to furnish a taxpayer
identification number, (ii) a shareholder furnishes an incorrect taxpayer
identification number, (iii) Liqui-Box, Enhance Packaging Technologies or the
payment agent is notified by the Internal Revenue Service that the shareholder
failed to report interest or (iv) under certain circumstances, a shareholder
fails to provide a certified statement, signed under penalty of perjury, that
the taxpayer identification number provided is the correct number and that the
shareholder is not subject to backup withholding.
If backup withholding applies, the payment agent will withhold 30% of any
payment made to the shareholder. Backup withholding is not an additional tax but
is credited against the federal income tax liability of the taxpayer subject to
the withholding. If backup withholding results in an overpayment of a taxpayer's
federal income taxes, that taxpayer may obtain a refund from the Internal
Revenue Service.
Generally, a shareholder may avoid backup withholding by completing the
Substitute Form W-9 included as part of the letter of transmittal and certifying
that the taxpayer identification number included therein is correct and that the
shareholder is not subject to backup withholding.
Shareholders are urged to consult their tax advisors as to the particular
tax consequences to them of participating in the merger, including the
applicability of any state, local or foreign tax laws, changes in applicable tax
laws and any pending or proposed legislation.
ACCOUNTING TREATMENT
The merger will be accounted for by Enhance Packaging Technologies
following the "purchase" method of accounting in accordance with generally
accepted accounting principles.
EXISTING RELATIONSHIPS WITH ENHANCE PACKAGING TECHNOLOGIES
Liqui-Box has never conducted business with, nor has it had any business
relationship with, Enhance Packaging Technologies prior to the transactions
described in the merger agreement. As of the date of this proxy statement,
neither Enhance Packaging Technologies nor any of its affiliates owns any common
shares of Liqui-Box.
RIGHTS OF DISSENTING SHAREHOLDERS
The following summary is a description of the steps you must take if you
desire to perfect dissenters' rights with respect to the merger. The summary is
not intended to be complete and is qualified in its entirety by reference to
Section 1701.85 of the Ohio Revised Code, a copy of which is attached as
Appendix C to this proxy statement. We recommend that you consult with your own
counsel if you have questions with respect to your rights under Section 1701.85.
"Dissenters' rights" is your right to dissent from the merger and to have
the "fair cash value" of your common shares determined by a court and paid in
cash. The "fair cash value" of a common share is the amount
24
that a willing seller who is under no compulsion to sell would be willing to
accept and that a willing buyer who is under no compulsion to purchase would be
willing to pay. The "fair cash value" is determined as of the day prior to the
day on which the vote of the shareholders to adopt the merger agreement and
approve the merger is taken. When determining the "fair cash value," any
appreciation or depreciation in market value resulting from the proposed merger
is excluded. In no event can the "fair cash value" of a common share exceed the
amount specified in the demand of the particular shareholder discussed below.
To perfect your dissenters' rights, you must satisfy each of the following
conditions:
- you must be the record holder of the dissenting shares at the close of
business on April 19, 2002. If you have a beneficial interest in common
shares held of record in the name of any other person for which you
desire to perfect dissenters' rights, you must cause the shareholder of
record to timely and properly act to perfect such rights;
- you must not vote in favor of adoption of the merger agreement and
approval of the merger. You waive your dissenters' rights if you vote for
adoption of the merger agreement and approval of the merger;
- on or before the tenth day following the shareholders' vote adopting the
merger agreement and approving the merger, you must serve a written
demand on Liqui-Box for the "fair cash value" of the dissenting shares.
The written demand must specify your name and address, the number of
common shares as to which relief is sought and the amount that you claim
as the "fair cash value" of the common shares for which you are
exercising dissenters' rights;
- if requested by Liqui-Box, you must submit to Liqui-Box your certificates
for the dissenting shares within 15 days after receipt of Liqui-Box's
request. Liqui-Box will then endorse the certificates with a legend that
demand for the "fair cash value" has been made; and
- if you and Liqui-Box cannot agree on the "fair cash value" of your
dissenting shares, either you or Liqui-Box must, within three months
after service of your written demand, file or join in a petition in the
Court of Common Pleas of Franklin County, Ohio, for a determination of
the "fair cash value" of the dissenting shares.
If you dissent from the merger, your right to be paid the "fair cash value"
of your common shares will terminate if:
- for any reason, the merger is not completed;
- you fail to serve a timely and appropriate written demand upon Liqui-Box;
- you do not, upon request of Liqui-Box, make timely and appropriate
surrender of the certificates evidencing your dissenting shares for
endorsement of a legend that demand for the "fair cash value" of such
common shares has been made;
- you withdraw your demand with the consent of the board of directors of
Liqui-Box;
- you and Liqui-Box have not agreed upon the "fair cash value" of your
dissenting shares and you have not timely filed or joined in an
appropriate petition in the Court of Common Pleas of Franklin County,
Ohio; or
- you otherwise fail to comply with the requirements of Section 1701.85 of
the Ohio Revised Code.
25
TERMS OF THE MERGER AGREEMENT
The following description of the merger agreement describes the material
provisions of the merger agreement and may not contain all of the information
that is important to you. The full text of the merger agreement is attached as
Appendix A to this proxy statement and is incorporated in this proxy statement
by reference. We urge you to read the merger agreement in its entirety because
it is the legal document that governs the merger.
EFFECTIVE TIME OF THE MERGER
The closing of the merger will take place on the second business day
following the date when the last of the conditions to the merger set forth in
the merger agreement is satisfied or waived, or at any other time and date that
Liqui-Box and Enhance Packaging Technologies agree upon in writing. On the
closing date of the merger, the parties will file a certificate of merger with
the Secretary of State of the State of Ohio. At that time, or at any later time
set forth in the certificate of merger, the merger will become effective. At the
effective time, EPT Newco will be merged with and into Liqui-Box, the separate
corporate existence of EPT Newco will cease and Liqui-Box will continue as the
surviving corporation and a wholly owned subsidiary of Enhance Packaging
Technologies.
MANNER AND BASIS OF CONVERTING COMMON SHARES
At the effective time of the merger, by virtue of the merger and without
any action on the part of any Liqui-Box shareholder, Liqui-Box, Enhance
Packaging Technologies or EPT Newco:
- each issued and outstanding common share of Liqui-Box (other than any
common shares owned by Liqui-Box or Enhance Packaging Technologies or any
of their respective parent entities or subsidiaries and common shares
held by shareholders who have properly exercised dissenters' rights under
Ohio law) will be converted into the right to receive $67.00 in cash;
- all common shares of Liqui-Box will no longer be outstanding, will be
canceled and retired and will cease to exist;
- any common shares of Liqui-Box held by Liqui-Box, as treasury shares, or
Enhance Packaging Technologies or any of their respective parent entities
or subsidiaries will be canceled and retired without payment of any
consideration and will cease to exist; and
- each issued and outstanding common share of EPT Newco will be converted
into and become one common share of the surviving corporation.
Common shares held by a shareholder who has not voted in favor of adoption
of the merger agreement and approval of the merger and who has exercised
dissenters' rights in accordance with Ohio law will not be converted into the
right to receive the $67.00 per share merger consideration, unless such
shareholder fails to perfect or withdraws or otherwise loses his or her
dissenters' rights. If, after the effective time, such shareholder fails to
perfect or withdraws or otherwise loses his or her dissenters' rights, such
common shares will be treated as if they had been converted as of the effective
time into the right to receive the $67.00 per share merger consideration. See
"The Merger -- Rights of Dissenting Shareholders."
Prior to the effective time of the merger, Enhance Packaging Technologies
or EPT Newco will designate a bank or trust company to serve as the payment
agent for Liqui-Box's shareholders in connection with the merger. Immediately
prior to the effective time, EPT Newco will deposit with the payment agent
sufficient funds to pay the merger consideration to Liqui-Box's shareholders.
Promptly after the effective time of the merger, the payment agent will
mail to each holder of record of Liqui-Box's common shares (other than
dissenting shareholders) (i) a form of letter of transmittal and (ii)
instructions for use in effecting the surrender of common share certificates in
exchange for payment of the merger consideration. Upon surrender of a common
share certificate for cancellation to the payment agent, together with a duly
executed letter of transmittal and any other documents the payment agent
requires, the payment agent will pay the holder of such common share certificate
the $67.00 per share merger consideration, less any applicable withholding
taxes, and the surrendered common share certificate will be canceled. No
interest
26
will be paid or accrued on the merger consideration payable upon the surrender
of a common share certificate. In order for a person other than the registered
holder of the surrendered common share certificate to receive the payment, the
surrendered common share certificate must be properly endorsed or otherwise be
in proper form for transfer. In addition, the person requesting payment must
either pay any transfer or other taxes required by reason of the payment being
made to a person other than the registered holder or establish to the
satisfaction of the payment agent that such tax has been paid or is not
applicable.
All cash paid upon surrender of certificates formerly representing common
shares of Liqui-Box in accordance with the merger agreement will be deemed to
have been paid in full satisfaction of all rights pertaining to the common
shares so surrendered. Following the effective time of the merger, no transfer
of any common shares of Liqui-Box will be made on the transfer books of the
surviving corporation.
All funds that the payment agent holds for payment that remain
undistributed to Liqui-Box's shareholders six months after the effective time of
the merger will be delivered to the surviving corporation. Any holders of
unsurrendered common share certificates may then look only to the surviving
corporation for payment of the merger consideration to which they are entitled.
None of Enhance Packaging Technologies, EPT Newco, Liqui-Box or the payment
agent will be liable to any person in respect of merger consideration delivered
to a public official under any applicable abandoned property, escheat or similar
law. All funds deposited with the payment agent will be invested by the payment
agent in accordance with Enhance Packaging Technologies' or EPT Newco's
instructions and all earnings on the funds will inure to the benefit of the
surviving corporation.
If your Liqui-Box common share certificate has been lost, stolen or
destroyed, you will be entitled to payment only upon signing an affidavit to
that effect, and if required by the surviving corporation, granting an indemnity
reasonably satisfactory to the surviving corporation against claims by any other
party related to your Liqui-Box common share certificate.
STOCK OPTIONS
At the effective time of the merger, each outstanding option to purchase
common shares of Liqui-Box, whether or not then exercisable, will be canceled,
and the holder of the option will be entitled to receive a cash payment equal to
the excess of $67.00 over the exercise price per common share subject to the
option multiplied by the number of unexercised common shares subject to the
option. Enhance Packaging Technologies will cause the surviving corporation to
make the cash payment upon surrender of the stock option and any other documents
reasonably requested to the surviving corporation. This payment will be made net
of applicable withholding taxes and will be paid without interest. The merger
agreement requires Liqui-Box to take all actions necessary to implement the
cash-out of the stock options, terminate, as of the effective time, each of
Liqui-Box's stock option plans, delete any provision in any Liqui-Box employee
benefit plan providing for the issuance, transfer or grant of any capital stock
of Liqui-Box and ensure that, following the effective time, no holder of a
Liqui-Box stock option or participant in a Liqui-Box stock option plan or
employee benefit plan has any right to acquire capital stock of Liqui-Box. See
"The Merger -- Interests of Certain Persons in the Merger."
OTHER EMPLOYEE BENEFIT PLANS AND RELATED MATTERS
Under the merger agreement, Liqui-Box will, immediately prior to the
closing of the merger, take action to either amend, terminate, merge,
consolidate or transfer the assets of the 401(k) Plan and the ESOP if required
by Enhance Packaging Technologies. In addition, Liqui-Box will amend the ESOP to
provide that benefits will be distributed solely in cash as of the effective
time of the merger. For a period of one year following the merger, Enhance
Packaging Technologies will provide, or cause the surviving corporation to
provide, to persons who are employed by Liqui-Box at the time of the merger
employee benefit plans and arrangements which are substantially similar in the
aggregate to those provided to Liqui-Box's employees immediately prior to the
merger. These employee benefits may be provided by Enhance Packaging
Technologies (i) by continuing Liqui-Box's current employee benefit plans; (ii)
by allowing Liqui-Box's employees to participate in plans sponsored or
maintained by Enhance Packaging Technologies or its affiliates; (iii) by
establishing new plans; or (iv) through some combination of (i), (ii) and (iii).
To the extent that Liqui-Box's employees participate in any employee benefit
plans sponsored, maintained or established by Enhance Packaging Technologies or
its affiliates after the
27
merger, Enhance Packaging Technologies will give such employees full credit, for
eligibility and vesting purposes, for all service credit that they had with
Liqui-Box and its affiliates prior to the merger in a comparable plan.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties made by
Liqui-Box, including representations and warranties relating to:
- the organization, standing and qualification of Liqui-Box and its
subsidiaries and similar corporate matters;
- Liqui-Box's capital structure;
- the authorization, execution, delivery, performance and enforceability of
the merger agreement;
- the special committee's and the board of directors' approval of the
merger agreement, the shareholders agreement and the merger;
- the regulatory and statutory approvals required to be obtained by
Liqui-Box in connection with the merger;
- the absence of any material violation or breach of, or default under, the
articles of incorporation and code of regulations (or similar documents)
of Liqui-Box and its subsidiaries, applicable laws and contracts binding
upon Liqui-Box, in connection with the merger and otherwise;
- the absence of any liability for brokerage fees, commissions or finders'
fees in connection with the merger, other than fees incurred in
connection with the special committee's engagement of McDonald
Investments;
- the receipt of McDonald Investments' opinion as to the fairness from a
financial point of view of the merger consideration;
- this proxy statement's compliance as to form in all material respects
with the Securities Exchange Act of 1934, as amended, and the accuracy of
the information supplied by Liqui-Box for use in this proxy statement;
- the shareholder vote required to adopt the merger agreement and approve
the merger;
- the inapplicability of any Ohio antitakeover statutes;
- the absence of material adverse changes or events since December 30,
2000;
- the compliance and accuracy of Liqui-Box's reports filed with the
Securities and Exchange Commission and the financial statements included
therein;
- the absence of any material litigation or undisclosed liabilities;
- information concerning material contracts binding upon Liqui-Box and its
subsidiaries;
- the taxes of Liqui-Box and its subsidiaries;
- the employee benefit plans of Liqui-Box and its subsidiaries, their
compliance with applicable laws, including certain provisions of the
Employee Retirement Income Security Act of 1974, and similar matters;
- labor and employment matters;
- environmental matters;
- the intellectual property rights of Liqui-Box and its subsidiaries;
- regulatory matters, including Liqui-Box's compliance with the applicable
requirements of the Food and Drug Administration and other governmental
entities;
28
- real and personal property owned and leased by Liqui-Box;
- Liqui-Box's possession of all material licenses, permits, registrations,
approvals and other governmental authorizations required to conduct its
business;
- the absence of any use of corporate funds for unlawful contributions;
- the status of certain employment and non-compete agreements with
employees; and
- the accuracy of the information relating to Liqui-Box set forth in the
merger agreement and provided to Enhance Packaging Technologies and EPT
Newco in connection with the merger.
The merger agreement also contains representations and warranties made by
Enhance Packaging Technologies and EPT Newco, including representations and
warranties relating to:
- the organization of Enhance Packaging Technologies and EPT Newco and
similar corporate matters;
- the authorization, execution, delivery, performance and enforceability of
the merger agreement;
- the regulatory and statutory approvals required to be obtained by Enhance
Packaging Technologies or EPT Newco in connection with the merger;
- the absence of any material violation or breach of, or default under,
Enhance Packaging Technologies' or EPT Newco's certificate of
incorporation or bylaws (or similar documents) and applicable laws or
changes in contracts binding upon Enhance Packaging Technologies or EPT
Newco, in connection with the merger;
- the absence of any liability for brokerage fees, commissions or finders'
fees in connection with the merger, other than fees incurred in
connection with DuPont Canada's engagement of Lehman Brothers Inc. and
CCFL Advisory Services Inc.; and
- the financing of the merger.
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO THE MERGER
Liqui-Box has agreed that during the period after the date of the merger
agreement until the effective time of the merger, Liqui-Box and its subsidiaries
will conduct their respective businesses in the ordinary and usual course, use
commercially reasonable efforts to preserve their respective business
organizations substantially intact and substantially maintain their existing
relations and goodwill with customers, suppliers, distributors, creditors,
lessors, employees and business associates. Liqui-Box has also agreed that
during the period after the date of the merger agreement until the effective
time of the merger, Liqui-Box will not, without Enhance Packaging Technologies'
prior written consent:
- issue, sell, pledge, dispose of or encumber any shares of capital stock
of its subsidiaries;
- amend its articles of incorporation or code of regulations;
- split, combine or otherwise reclassify its outstanding shares of capital
stock;
- declare, set aside or pay any dividend payable in cash, stock or property
in respect of any capital stock; or
- repurchase, redeem or otherwise acquire any shares of its capital stock,
other than as provided in the merger agreement.
In addition, Liqui-Box has agreed that, during the period after the date of
the merger agreement until the effective time of the merger, neither Liqui-Box
nor any of its subsidiaries will take any of the following actions without
Enhance Packaging Technologies' prior written consent:
- issue, sell, pledge, dispose of or encumber any shares of, or securities
convertible into or exchangeable or exercisable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares
of its capital stock, voting debt or any other property or assets;
29
- transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of
or encumber any of its properties or assets or incur or modify any
material indebtedness or other liability;
- make any commitments for, make or authorize any capital expenditures
involving amounts in excess of $100,000 in the aggregate or, by any
means, make any commitments for, make or authorize any acquisition of, or
investment in, assets or stock of any other person;
- hire any new management employees;
- enter into any new agreements or commitments for any severance or
termination pay to, or enter into any employment or severance agreement
with, any of its directors, officers or employees;
- enter into or guarantee any loans to employees;
- terminate, establish, adopt, enter into, make any new grants or awards
under, amend or otherwise modify, any employee benefit plan or increase
or accelerate the salary, wage, bonus or other compensation of any
employees, officers or directors (except for increases made in the
ordinary course of business consistent with past practice) or pay or
agree to pay any pension, retirement allowance or other employee benefit
not required by any existing employee benefit plan;
- settle or compromise any claims or litigation or modify, amend or
terminate any material contract or waive, release or assign any rights or
claims;
- make any material tax election or permit any insurance policy naming it
as a beneficiary or loss-payable payee to be canceled or terminated,
except in the ordinary course of business;
- change any of the accounting practices or principles used by it, except
as may be required as a result of a change in law or generally accepted
accounting principles;
- adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization;
- offer to, or enter into an agreement to, do any of the foregoing; and
- take any action that would, or that could reasonably be expected to,
result in any of the representations or warranties of Liqui-Box in the
merger agreement becoming untrue.
NO SOLICITATION
Liqui-Box has agreed to, and to cause its affiliates and the officers,
directors, employees, representatives and agents of Liqui-Box and its
subsidiaries to, cease and terminate any existing activities, discussions or
negotiations, if any, with any party with respect to an acquisition transaction
(as defined below). Liqui-Box has also agreed not to, and to not permit any of
its affiliates and any of the officers, directors, employees, representatives
and agents of Liqui-Box and its subsidiaries to, directly or indirectly,
encourage, solicit, initiate or participate in discussions or negotiations with,
or provide any nonpublic information to, any person with respect to an
acquisition proposal (as defined below) or otherwise facilitate any acquisition
proposal.
Liqui-Box may, however:
- furnish information and access to, and participate in discussions and
negotiations with, any person who has made a bona fide, written and
unsolicited acquisition proposal after the date of the merger agreement
(provided any information furnished, discussions and negotiations are
subject to a confidentiality agreement that contains terms no less
restrictive than the terms of the confidentiality agreement between
Liqui-Box and Enhance Packaging Technologies), and
- enter into a binding written agreement concerning a superior proposal (as
defined below),
in each case, only if Liqui-Box has notified Enhance Packaging Technologies
within 24 hours that Liqui-Box has received an acquisition proposal, including
the identity of the person making, and the material terms of, the acquisition
proposal, and provided Enhance Packaging Technologies with five days advance
notice of its intention to provide any information to, or enter into an
agreement with, any person making an acquisition proposal.
30
Nothing in the merger agreement limits the board of directors from
complying with Section 14e-2 or Schedule 14D-9 of the Securities Exchange Act of
1934, as amended.
The merger agreement defines the term "acquisition transaction" to mean any
acquisition or exchange of all or any material portion of the assets of, or any
equity interest in, Liqui-Box or any of its subsidiaries (by direct purchase
from Liqui-Box, tender or exchange offer or otherwise) or any business
combination, merger or similar transaction (including an exchange of stock or
assets) with or involving Liqui-Box or any of its subsidiaries.
The merger agreement defines the term "acquisition proposal" to mean any
inquiry or the making of any offer or proposal (including any offer or proposal
to Liqui-Box's shareholders) concerning an acquisition transaction.
The merger agreement defines the term "superior proposal" to mean any
acquisition proposal that the board of directors determines in good faith, after
consultation with Liqui-Box's outside legal counsel and financial advisors, is
reasonably likely to be consummated (if accepted), taking into account all
legal, financial and regulatory aspects of the proposal and the person making
the proposal, and would, if consummated, result in a transaction more favorable
to Liqui-Box's shareholders than the merger with Enhance Packaging Technologies.
ADDITIONAL AGREEMENTS IN THE MERGER AGREEMENT
The merger agreement provides for the following additional agreements:
- Liqui-Box will call and hold the special meeting and recommend to its
shareholders the adoption of the merger agreement and approval of the
merger;
- Liqui-Box will prepare and file this proxy statement and have it cleared
by the Securities and Exchange Commission;
- Liqui-Box and Enhance Packaging Technologies will cooperate with each
other and use commercially reasonable efforts to take, or cause to be
taken, all actions necessary, proper or advisable to complete the merger,
including commercially reasonable efforts to accomplish the following:
- preparation and filing of all necessary applications, notices,
petitions, filings and other documents, including those required under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act") and applicable federal and state securities laws,
- obtaining all permits, consents, approvals and authorizations necessary
or advisable,
- contesting and resisting any action that is in effect and that
restricts or prohibits the completion of the merger, and
- taking all actions necessary to avoid or eliminate impediments under
any antitrust law that may be asserted by any governmental entity or
other party;
- Liqui-Box and Enhance Packaging Technologies will each furnish to the
other all information reasonably necessary or advisable in connection
with the merger and consult with each other regarding information
relating to the other party that is included in any filing with a
governmental entity or third party;
- Liqui-Box and Enhance Packaging Technologies will keep each other
apprised of matters relating to the completion of the merger;
- Liqui-Box will give Enhance Packaging Technologies prompt notice of any
change that has resulted or is reasonably likely to result in a change in
any representation or warranty of Liqui-Box in the merger agreement or
have a material adverse effect on Liqui-Box;
- Enhance Packaging Technologies will give Liqui-Box prompt notice of any
event, fact, circumstance or occurrence that is reasonably likely to have
an adverse effect on the ability of Enhance Packaging Technologies or EPT
Newco to complete the merger or comply with their respective obligations
under the merger agreement;
31
- Liqui-Box will provide Enhance Packaging Technologies access to certain
information concerning Liqui-Box and its subsidiaries until the earlier
of the effective time of the merger or the termination of the merger
agreement;
- the surviving corporation will use commercially reasonable efforts to
cause Liqui-Box's common shares to be delisted from The Nasdaq National
Market and de-registered under the Securities Exchange Act of 1934, as
amended;
- Liqui-Box will consult with, and obtain the approval of, Enhance
Packaging Technologies prior to issuing any public statement or making
any filing with a governmental entity concerning the merger;
- Liqui-Box will obtain releases of any guarantees by Liqui-Box of loans to
its employees;
- Liqui-Box will execute and record the documents necessary to establish
title to Liqui-Box's real property located in Worthington, Ohio and
Ashland, Ohio in the name of Liqui-Box;
- all costs and expenses incurred in connection with the merger will be
paid by the party incurring such cost or expense; and
- if any antitakeover statute becomes applicable to the merger, Liqui-Box
and Enhance Packaging Technologies and their respective boards of
directors will grant such approvals and take such other lawful actions as
are necessary to complete the merger and otherwise act to eliminate or
minimize the effect of such antitakeover statute.
CONDITIONS TO THE MERGER
The obligations of Liqui-Box, Enhance Packaging Technologies and EPT Newco
to complete the merger are subject to the satisfaction or waiver of the
following conditions:
- the holders of a majority of the outstanding common shares of Liqui-Box
entitled to vote at the special meeting have adopted the merger agreement
and approved the merger;
- any applicable waiting period under the HSR Act has expired or been
terminated; and
- no court or other governmental entity has enacted, issued, enforced or
entered any law or order that restrains, enjoins or otherwise prohibits
consummation of the merger.
The obligation of Enhance Packaging Technologies and EPT Newco to complete
the merger is subject to the satisfaction or waiver of the following additional
conditions:
- each representation and warranty made by Liqui-Box in the merger
agreement is true and correct at and as of the closing date of the
merger, except to the extent that any failure to be true and correct has
not had, and would not be reasonably likely to have, a material adverse
effect on Liqui-Box;
- Liqui-Box has performed and complied with, in all material respects, all
of the covenants required to be performed or complied with by it through
the closing date of the merger; and
- the holders of not more than 10% of the outstanding common shares of
Liqui-Box have properly exercised their dissenters' rights.
The obligation of Liqui-Box to complete the merger is subject to the
following additional condition:
- each representation and warranty made by Enhance Packaging Technologies
and EPT Newco in the merger agreement is true and correct at and as of
the closing date of the merger.
32
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated and the merger may be abandoned at
any time prior to the effective time of the merger:
- by the mutual written consent of Liqui-Box, Enhance Packaging
Technologies and EPT Newco;
- by either Liqui-Box or Enhance Packaging Technologies if:
- the merger has not been consummated by August 30, 2002 or, if a
governmental entity requests additional information, the 30th day
following the date when such governmental entity has deemed Liqui-Box
or Enhance Packaging Technologies to be in substantial compliance with
the request for additional information but in no event later than
September 30, 2002 (the "Termination Date") (provided that the right to
terminate will not be available to any party that has breached in any
material respect its obligations under the merger agreement in any
manner that has been the proximate cause of, or resulted in, the
failure to consummate the merger by the Termination Date),
- the holders of a majority of the outstanding common shares of Liqui-Box
entitled to vote at the special meeting do not adopt the merger
agreement and approve the merger at the special meeting, or
- any order permanently restraining, enjoining or otherwise prohibiting
the merger has become final and non-appealable;
- by Liqui-Box if:
- the board of directors authorizes Liqui-Box to enter into a binding
agreement concerning a superior proposal, Liqui-Box notifies Enhance
Packaging Technologies in writing that it intends to enter into such an
agreement and Enhance Packaging Technologies does not make, within five
business days of receipt of Liqui-Box's notice, a written offer that is
deemed by the special committee, in consultation with outside legal
counsel and financial advisors, to be at least as favorable to
Liqui-Box's shareholders as the superior proposal, or
- Enhance Packaging Technologies or EPT Newco has breached any of their
representations or warranties in the merger agreement in any material
respect or failed to perform any of their obligations, agreements or
covenants in the merger agreement in any material respect and such
failure to perform is not cured within five business days of receipt of
notice; and
- by Enhance Packaging Technologies if:
- Liqui-Box's board of directors fails to recommend or withdraws or
adversely modifies its approval or recommendation of the merger
agreement or fails to reconfirm its recommendation of the merger
agreement within two business days after Enhance Packaging
Technologies' written request, or
- Liqui-Box has breached any of its representations or warranties in the
merger agreement (except to the extent that such breach has not had,
and is not reasonably likely to have, a material adverse effect on
Liqui-Box) or failed to perform its obligations, agreements or
covenants in the merger agreement in any material respect and such
failure to perform is not cured within five business days of receipt of
notice.
If the merger agreement is terminated by either Liqui-Box or Enhance
Packaging Technologies, the merger agreement will become void and of no effect
with no liability on any party to the merger agreement, except that certain
provisions (such as confidentiality, payment of brokers' fees and applicable
termination fees and expenses and the enforcement of remedies) will continue to
apply following such termination, and that no such termination will relieve any
party from liability for any willful breach thereof.
33
TERMINATION FEES AND EXPENSES
Liqui-Box will be required to pay Enhance Packaging Technologies a
termination fee of $12,000,000, plus all actual, documented out-of-pocket costs,
charges and expenses incurred by Enhance Packaging Technologies in connection
with the merger, if any person has made an acquisition proposal or announced an
intention to make an acquisition proposal and the merger agreement is
terminated:
- by Liqui-Box because Liqui-Box's board of directors has determined that
the acquisition proposal constitutes a superior proposal and has
authorized Liqui-Box to enter into a binding agreement concerning the
superior proposal, Enhance Packaging Technologies has not made, within
five business days of receipt of Liqui-Box's notice that it intends to
enter into a binding agreement concerning the superior proposal, a
written offer that is deemed by the special committee, in consultation
with outside legal counsel and financial advisors, to be at least as
favorable to Liqui-Box's shareholders as the superior proposal and all
other conditions to Liqui-Box's right to terminate have been satisfied;
- by Enhance Packaging Technologies because Liqui-Box's board of directors
has failed to recommend or has withdrawn or adversely modified its
approval or recommendation of the merger agreement or failed to reconfirm
its recommendation of the merger agreement within two business days of
Enhance Packaging Technologies' written request; or
- by either party because the merger has not been consummated by the
Termination Date.
SELECTED POST-MERGER MATTERS
After the effective time of the merger:
- EPT Newco will cease to exist as a corporation, and Liqui-Box, as the
surviving corporation, will succeed to all of the assets, rights and
obligations of EPT Newco;
- the articles of incorporation of EPT Newco in effect immediately prior to
the effective time, as amended to change the corporate name to "Liqui-Box
Corporation," will be the articles of incorporation of Liqui-Box, as the
surviving corporation, until duly amended;
- the code of regulations of EPT Newco in effect immediately prior to the
effective time will be the code of regulations of Liqui-Box, as the
surviving corporation, until duly amended; and
- the individuals who are the directors and the officers of EPT Newco
immediately prior to the effective time will be the directors and the
officers of Liqui-Box, as the surviving corporation, until their
respective successors are duly elected or appointed and qualified or
until their earlier death, resignation or removal.
AMENDMENT OF MERGER AGREEMENT
Subject to applicable law, the merger agreement may be modified or amended
only by written agreement executed and delivered by duly authorized officers of
each of Liqui-Box, Enhance Packaging Technologies and EPT Newco at any time
prior to the effective time of the merger.
GUARANTEE BY DUPONT CANADA
DuPont Canada has guaranteed the obligations of Enhance Packaging
Technologies, EPT Newco and the surviving corporation under the merger
agreement, including the obligation to pay the cash merger consideration to
Liqui-Box's shareholders.
34
SHAREHOLDERS AGREEMENT
In connection with the merger, Samuel B. Davis and Samuel N. Davis have
entered into a shareholders agreement, dated as of March 25, 2002, with Enhance
Packaging Technologies and EPT Newco. Under the shareholders agreement, Samuel
B. Davis and Samuel N. Davis have agreed that, during the term of the
shareholders agreement, at any meeting of Liqui-Box's shareholders and in any
action by written consent of Liqui-Box's shareholders, each of them will:
- vote all common shares of Liqui-Box which he then has the right to vote
in favor of the merger;
- not vote any common shares of Liqui-Box which he then has the right to
vote in favor of any action or agreement which would result in a breach
in any material respect of any covenant, representation or warranty or
any other obligation of Liqui-Box under the merger agreement; and
- vote all common shares of Liqui-Box which he then has the right to vote
against any action or agreement which would impede, interfere with or
attempt to discourage the merger, including, but not limited to (i) any
proposal opposed by Enhance Packaging Technologies or EPT Newco, (ii) any
acquisition proposal (other than the merger) involving Liqui-Box or any
of its subsidiaries, (iii) any change in the management or board of
directors of Liqui-Box, (iv) any material change in the present
capitalization or dividend policy of Liqui-Box or (v) any other material
change in Liqui-Box's corporate structure or business.
In the event that either Samuel B. Davis or Samuel N. Davis does not comply with
the foregoing voting provisions, he shall be deemed to have irrevocably
appointed designees of Enhance Packaging Technologies or EPT Newco as his
attorneys, agents and proxies for purposes of voting the common shares of
Liqui-Box which he then is or may be entitled to vote at any meeting of
Liqui-Box's shareholders or with respect to which he is or may be entitled to
act by written consent.
Under the shareholders agreement, each of Samuel B. Davis and Samuel N.
Davis has also granted Enhance Packaging Technologies or EPT Newco an
irrevocable option to purchase, subject to certain adjustments set forth in the
shareholders agreement, (i) all of the common shares of Liqui-Box which he holds
at a price of $67.00 per share and (ii) all of the stock options to purchase
common shares of Liqui-Box which he holds at a price equal to the excess of
$67.00 per share over the applicable exercise price per share, payable in cash
without interest. This option is exercisable at any time after the date on which
all waiting periods under the HSR Act and the antitrust, competition, foreign
investment or similar laws of any foreign countries or supranational commissions
or boards that require pre-merger notification or filings applicable to the
merger have expired or been terminated. This option and the shareholders
agreement expire on the earliest of (i) the effective time of the merger, (ii)
August 30, 2002 and (iii) the date that Enhance Packaging Technologies notifies
Samuel B. Davis and Samuel N. Davis that it no longer intends to acquire control
of Liqui-Box.
In addition, under the shareholders agreement, Samuel B. Davis and Samuel
N. Davis have agreed that, during the term of the shareholders agreement, each
of them will not:
- sell, sell short, transfer, pledge, hypothecate, assign or otherwise
dispose of, or enter into any contract, option, hedging arrangement or
other arrangement or understanding with respect to the sale, transfer,
pledge, hypothecation, assignment or other disposition of, any of the
common shares of Liqui-Box or options to purchase common shares which he
holds or over which he has dispositive power;
- deposit any of the common shares of Liqui-Box or options to purchase
common shares which he holds or over which he has dispositive power into
a voting trust, or grant any proxies or enter into a voting agreement
with respect to any of such shares or options; or
- initiate, solicit or encourage, directly or indirectly, any inquiries or
the making or implementation of any proposal that constitutes, or may
reasonably be expected to lead to, any acquisition proposal or enter into
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain an acquisition proposal or agree to or endorse any
acquisition proposal (except that, as a director of Liqui-Box, each may
conduct himself in the manner expressly permitted under the merger
agreement with respect to acquisition proposals).
35
REGULATORY MATTERS
Under the HSR Act, the merger may not be completed until the parties give
notice of, and furnish certain information relating to, the merger to the
Federal Trade Commission and the Antitrust Division of the Department of Justice
and a specified waiting period (generally 30 days) has expired or been
terminated by those regulatory agencies. On April 17, 2002, Liqui-Box and
Enhance Packaging Technologies each filed the required notification and report
forms under the HSR Act with the Federal Trade Commission and the Antitrust
Division of the Department of Justice. On or before May 17, 2002, the regulatory
agencies may grant early termination of the required waiting period or may
request additional information and other documentary materials from either or
both of Liqui-Box and Enhance Packaging Technologies or their respective
affiliates. If a request for additional information or other documentary
materials is made by the Federal Trade Commission or the Antitrust Division of
the Department of Justice, either of the regulatory agencies may extend the
required waiting period before the merger may be completed for an additional 30
days following substantial compliance with the request for additional
information or other documentary materials by both parties, unless the waiting
period is terminated earlier by such agencies. Expiration or termination of the
waiting period under the HSR Act is a condition to completion of the merger.
Prior to the merger, the parties also are required to give joint notice of
the merger to the Minister of Enterprise, Trade & Employment in Ireland (the
"Minister") under Section 5 of the Mergers, Takeovers and Monopolies (Control)
Acts 1978 to 1996. No formal clearance or approval from the Minister is required
to complete the merger after the notice has been given. However, within 30 days
after receiving the notice, the Minister may refer the matter to the Competition
Authority in Ireland for investigation. If so referred, the Competition
Authority has an additional 30 days to report on whether the merger is likely to
restrict competition or operate against the common good in Ireland. Based upon
the report of the Competition Authority, the Minister must assess whether the
merger would be likely to prevent or restrict competition or trade in any goods
or services in Ireland. The parties filed the required notice with the Minister
on or about April 24, 2002.
In addition, prior to the merger, the parties are required to give joint
notice of the merger to the Italian Anti-Trust Authority (the "Authority") under
Article 5 of the Antitrust Law (no 287 of 10 October 1990) of Italy. No formal
clearance or approval from the Authority is required to complete the merger
after the notice has been given. However, within 30 days after receiving the
notice, the Authority may commence a formal investigation of the merger. If
within the 30 day period the Authority determines that the merger may limit or
restricts competition in Italy, the Authority may extend its investigation for
an additional 45 days and, if the merger has not been completed, may order the
parties not to proceed with the merger until the Authority's investigation has
been completed. The parties filed the required notice with the Authority on
April 22, 2002.
MARKET PRICE OF COMMON SHARES
Liqui-Box's common shares are traded on The Nasdaq National Market under
the symbol "LIQB." On March 25, 2002, the last trading day prior to the public
announcement of the merger agreement, the high, low and closing sales price of
Liqui-Box's common shares were $50.51, $50.10 and $50.10, respectively. On April
22, 2002, the last trading day prior to the printing of this proxy statement,
the high, low and closing sales price of Liqui-Box's common shares were $66.75,
$66.65 and $66.75, respectively. You are urged to obtain current market
quotations for Liqui-Box's common shares.
36
The following table sets forth, for the fiscal quarters indicated, the high
and low closing sales price of Liqui-Box's common shares as reported by the
National Quotations Bureau, Inc. and the cash dividends declared by the board of
directors during those fiscal quarters:
<Table>
<Caption>
CASH DIVIDENDS
FISCAL YEAR ENDED DECEMBER 29, 2001 HIGH LOW PER SHARE(1)
- ----------------------------------- ------ ------ ------------------
First Quarter...................................... $43.37 $36.38 $0.20
Second Quarter..................................... $45.20 $36.51 $0.20
Third Quarter...................................... $44.99 $38.10 $0.20
Fourth Quarter..................................... $45.39 $38.97 $0.20
</Table>
<Table>
<Caption>
CASH DIVIDENDS
FISCAL YEAR ENDED DECEMBER 30, 2000 HIGH LOW PER SHARE(1)
- ----------------------------------- ------ ------ ------------------
First Quarter...................................... $52.50 $44.13 $0.20
Second Quarter..................................... $51.50 $44.00 $0.20
Third Quarter...................................... $53.00 $31.63 $0.20
Fourth Quarter..................................... $40.13 $32.38 $0.20
</Table>
- ---------------
(1) Under Liqui-Box's credit facility, dividends are limited to 50% of its
consolidated net income.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of common shares of Liqui-Box as of April 19, 2002 (unless otherwise
indicated) by (i) each person or group known by Liqui-Box to beneficially own
more than 5% of the common shares; (ii) each executive officer of Liqui-Box;
(iii) each director of Liqui-Box; and (iv) all executive officers and directors
of Liqui-Box as a group.
<Table>
<Caption>
AMOUNT AND NATURE PERCENT OF
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) CLASS(2)
- ------------------------ -------------------------- ----------
Samuel B. Davis(3)................................... 1,654,733(4) 38.2%
Samuel N. Davis(5)................................... 83,785(6) 2.0%
Stewart M. Graves(7)................................. 20,135(8) *
Charles R. Coate(9).................................. 2,963 *
Russell M. Gertmenian(9)............................. 2,600(10) *
Carl J. Aschinger, Jr.(9)............................ 1,895 *
John Trostheim(9).................................... 200 *
Robert L. Zieg(9).................................... 130 *
All executive officers and directors as a group (8
persons)........................................... 1,766,441 40.4%
T. Rowe Price Associates, Inc. ...................... 414,550(11) 9.8%
100 E. Pratt Street
Baltimore, Maryland 21202
</Table>
- ---------------
* Less than one percent of the outstanding common shares.
(1) Unless otherwise noted, the beneficial owner has sole voting and
dispositive power with respect to all common shares reflected in the table.
The mailing address for each of the executive officers and directors of
Liqui-Box is P.O. Box 494, 6950 Worthington-Galena Road, Worthington, Ohio
43085.
(2) The percent of class is based upon 4,169,940 common shares outstanding on
April 19, 2002, plus the number of common shares, if any, as to which the
named person has the right to acquire beneficial ownership upon the
exercise of stock options which are presently exercisable or exercisable
within 60 days of April 19, 2002.
(3) Samuel B. Davis is the chairman, chief executive officer and treasurer of
Liqui-Box.
37
(4) Includes (i) 500,000 common shares beneficially owned by Samuel B. Davis as
trustee under the Samuel B. Davis 2002 Grantor Retained Annuity Trust; (ii)
293,939 common shares beneficially owned by Samuel B. Davis as trustee
under the Samuel B. Davis Revocable Trust; (iii) 163,371 common shares
beneficially owned by Samuel B. Davis as successor trustee under the Davis
Family Trust F/B/O Samuel B. Davis; (iv) 163,371 common shares beneficially
owned by Samuel B. Davis as successor trustee under the Davis Family Trust
F/B/O Joan D. Guylas; (v) 163,371 common shares beneficially owned by
Samuel B. Davis as successor trustee under the Davis Family Trust F/B/O
Jane D. Ferger; (vi) 127,027 common shares beneficially owned by Samuel B.
Davis in his capacity as voting trustee of a voting trust (Samuel B. Davis
exercises sole voting power with respect to the common shares deposited in
the voting trust; however, the person who deposited the common shares in
the voting trust retained dispositive power, subject to a right of first
refusal in Samuel B. Davis, and the right to receive dividends thereon. The
voting trust expires on September 29, 2003.); (vii) 158,005 common shares
subject to options, which are presently exercisable or exercisable within
60 days of April 19, 2002; and (viii) 85,649 common shares held for the
account of Samuel B. Davis under the 401(k) Plan and the ESOP. Does not
include 11,643 common shares as to which Samuel B. Davis' wife has sole
voting and dispositive power and he disclaims beneficial ownership.
(5) Samuel N. Davis is the vice chairman and secretary of Liqui-Box.
(6) Includes (i) 3,475 common shares held in an indirect trust under which
Samuel N. Davis has no voting power but has shared dispositive power; (ii)
20,359 common shares subject to options, which are presently exercisable or
exercisable within 60 days of April 19, 2002; and (iii) 1,983 common shares
held for the account of Samuel N. Davis under the 401(k) Plan and the ESOP.
(7) Mr. Graves is the president and chief operating officer of Liqui-Box.
(8) Includes (i) 20,000 common shares subject to options, which are presently
exercisable or exercisable within 60 days of April 19, 2002; and (ii) 135
common shares held for the account of Mr. Graves under the 401(k) Plan and
the ESOP.
(9) Messrs. Coate, Gertmenian, Aschinger, Trostheim and Zieg are directors of
Liqui-Box.
(10) Includes 1,600 common shares held as custodian for his son.
(11) Based on information set forth in a Schedule 13G dated February 14, 2002
which was filed by T. Rowe Price Associates, Inc. and T. Rowe Price
Small-Cap Value Fund, Inc. Based on the Schedule 13G, T. Rowe Price
Associates, Inc. has sole voting power with respect to 136,450 common
shares and sole dispositive power with respect to 414,550 common shares.
Based on the Schedule 13G, T. Rowe Price Small-Cap Value Fund, Inc. has
sole voting power with respect to 253,300 common shares.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP has served as Liqui-Box's independent public
accountants since 1995. One or more representatives of Deloitte & Touche LLP
will attend the special meeting, will have the opportunity to make a statement
at the special meeting if they so desire to do so and will be available to
respond to appropriate questions.
SHAREHOLDER PROPOSALS
If the merger is completed, there will be no public participation in any
future meetings of shareholders of Liqui-Box. However, if the merger is not
completed, Liqui-Box's shareholders will continue to be entitled to attend and
participate in Liqui-Box's shareholder meetings subject to applicable law. With
respect to the 2002 annual meeting of shareholders, if the merger is not
completed, Liqui-Box will inform its shareholders in a timely manner in
accordance with the requirements of applicable law of the dates by which (i)
proposals by shareholders intended to be presented at the 2002 annual meeting of
shareholders must be received by the secretary of Liqui-Box in order to be
considered for inclusion in the proxy statement relating to such meeting and
(ii) proposals by shareholders intended to be presented at the 2002 annual
meeting of shareholders (but not sought to be included in the proxy statement
relating to such meeting) must be received by the secretary of Liqui-Box in
order to avoid
38
the individuals acting under proxies solicited by the board of directors having
discretionary authority to vote on such proposals without discussion of such
proposals in the proxy statement.
WHERE YOU CAN FIND MORE INFORMATION
Liqui-Box files annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended. You may read and copy any reports,
statements or other information that Liqui-Box files at the public reference
room of the Securities and Exchange Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, DC 20549. You may also call the Securities
and Exchange Commission at 1-800-SEC-0330 for further information on the public
reference room. Liqui-Box's Securities and Exchange Commission filings are also
available to the public at the website maintained by the Securities and Exchange
Commission at http://www.sec.gov.
If you would like to request any documents from Liqui-Box, please do so in
writing or by telephone. Requests should be directed to: Liqui-Box Corporation,
P.O. Box 494, 6950 Worthington-Galena Road, Worthington, Ohio 43085, Attention
Stewart M. Graves, president and chief operating officer (telephone number:
614-888-9280).
Liqui-Box has not authorized anyone to give any information or to make any
representation about the proposed merger or Liqui-Box that is different from, or
adds to, the information contained in this proxy statement. Therefore, if anyone
gives you different or additional information, you should not rely upon it. The
information contained in this proxy statement speaks only as of the date of this
proxy statement unless the information specifically indicates that another date
applies.
39
APPENDIX A
AGREEMENT AND PLAN OF MERGER
Among
LIQUI-BOX CORPORATION,
ENHANCE PACKAGING TECHNOLOGIES INC.
and
EPT NEWCO, INC.
Dated as of March 25, 2002
TABLE OF CONTENTS
<Table>
<Caption>
SECTION PAGE
- ------- ----
ARTICLE I
Definitions
ARTICLE II
The Merger; Closing; Effective Time
2.1 The Merger.................................................. A-4
2.2 Closing..................................................... A-4
2.3 Effective Time.............................................. A-5
ARTICLE III
Articles of Incorporation and Code of Regulations of the Surviving
Corporation
3.1 The Articles of Incorporation............................... A-5
3.2 The Code of Regulations..................................... A-5
ARTICLE IV
Officers and Directors of the Surviving Corporation
4.1 Directors................................................... A-5
4.2 Officers.................................................... A-5
ARTICLE V
Effect of the Merger on Outstanding Securities; Exchange of Certificates
5.1 Effect on Outstanding Securities............................ A-5
5.2 Surrender and Payment....................................... A-6
5.3 Adjustment of Price Per Share............................... A-7
ARTICLE VI
Representations and Warranties
6.1 Representations and Warranties of the Company............... A-7
6.2 Representations and Warranties of the Parent and the Merger
Subsidiary.................................................. A-18
ARTICLE VII
Covenants
7.1 Company Interim Operations.................................. A-19
7.2 Acquisition Proposals....................................... A-20
7.3 Company Shareholder Approval; Proxy Statement............... A-22
7.4 Approvals and Consents; Cooperation......................... A-22
7.5 Filings; Other Actions; Notification........................ A-23
7.6 Access...................................................... A-23
7.7 Delisting; De-registration.................................. A-24
7.8 Publicity................................................... A-24
7.9 Benefits.................................................... A-24
7.10 Expenses.................................................... A-25
7.11 Indemnification............................................. A-25
7.12 Antitakeover Statutes....................................... A-26
7.13 Release of Company Guarantees............................... A-26
</Table>
A-i
<Table>
<Caption>
SECTION PAGE
- ------- ----
7.14 Sale of Certain Items....................................... A-26
7.15 Title to Real Property...................................... A-26
ARTICLE VIII
Conditions
8.1 Conditions to the Obligations of the Parent and the Merger
Subsidiary.................................................. A-26
8.2 Conditions to the Obligations of the Company................ A-27
ARTICLE IX
Termination
9.1 Termination by Mutual Consent............................... A-27
9.2 Termination by Either the Parent or the Company............. A-27
9.3 Termination by the Company.................................. A-27
9.4 Termination by the Parent................................... A-28
9.5 Effect of Termination and Abandonment....................... A-28
ARTICLE X
Miscellaneous and General
10.1 Survival.................................................... A-29
10.2 Modification or Amendment................................... A-29
10.3 Waiver of Conditions........................................ A-29
10.4 Counterparts................................................ A-29
10.5 Governing Law and Venue; Waiver of Jury Trial............... A-29
10.6 Notices..................................................... A-30
10.7 Entire Agreement............................................ A-30
10.8 No Third Party Beneficiaries................................ A-31
10.9 Obligations of the Parent and of the Company................ A-31
10.10 Severability................................................ A-31
10.11 Specific Performance........................................ A-31
10.12 Interpretation.............................................. A-31
10.13 Assignment.................................................. A-31
</Table>
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Schedules and Exhibits
<Table>
Schedule 6.1(a) Organization, Good Standing and Qualification
Schedule 6.1(b) Capital Structure
Schedule 6.1(d) Governmental Filings; No Violations
Schedule 6.1(j) Absence of Certain Changes
Schedule 6.1(k) Company Reports; Financial Statements
Schedule 6.1(l) Litigation and Liabilities
Schedule 6.1(n) Certain Agreements
Schedule 6.1(o) Taxation
Schedule 6.1(p) Employee Benefits
Schedule 6.1(q) Labor Matters
Schedule 6.1(r) Environmental Matters
Schedule 6.1(s) Intellectual Property
Schedule 6.1(t) Certain Regulatory Matters
Schedule 6.1(u) Real and Personal Property
Schedule 6.1(x) Employment and Non-Compete Agreements
Schedule 7.1 Company Interim Operations
Schedule 7.14 Sale of Certain Items
</Table>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 25, 2002, (this
"Agreement"), among Liqui-Box Corporation, an Ohio corporation (the "Company"),
Enhance Packaging Technologies Inc., a Canadian corporation (the "Parent"), and
EPT Newco, Inc., an Ohio corporation and a wholly owned subsidiary of the Parent
(the "Merger Subsidiary").
RECITALS
WHEREAS, the respective boards of directors of the Parent, the Merger
Subsidiary and the Company have each approved the Merger (as defined herein) and
have determined that it is in the best interests of their respective companies
and shareholders for the Parent to acquire the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, the respective boards of directors of the Parent, the Merger
Subsidiary and the Company have each approved the merger of the Merger
Subsidiary into the Company, with the Company surviving (the "Merger"), upon the
terms and subject to the conditions set forth in this Agreement and in
accordance with the Ohio General Corporation Law (the "OGCL"), whereby each
issued and outstanding common share, without par value, of the Company (the
"Common Stock"), except any shares of Common Stock owned directly or indirectly
by the Parent or the Company or any of their respective Subsidiaries or Parent
Entities (as defined herein) (the "Excluded Shares") and any shares of Common
Stock held by Persons (as defined herein) who object to the Merger and comply
with all of the provisions of Ohio law concerning the rights of shareholders to
dissent from the Merger and require appraisal of their shares of Common Stock
(the "Dissenting Shares"), will be converted into the right to receive a price
per share of U.S. $67.00 in cash (the "Price Per Share") upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the board of directors of the Company has unanimously, with the
exception of Samuel B. Davis and Samuel N. Davis, who abstained, approved this
Agreement and the Merger, has determined that the Merger is fair to and in the
best interests of the Company's shareholders, has declared the Merger advisable
and has resolved to recommend that the Company's shareholders adopt this
Agreement and approve the Merger;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, certain of the Company's shareholders are entering into an agreement
with the Parent and the Merger Subsidiary (the "Shareholders Agreement"),
pursuant to which such shareholders are agreeing to take certain actions to
support the transactions contemplated by this Agreement; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, certain employees of the Company are entering into employment
agreements and/or non-competition agreements with the Company.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
Definitions
"Acquisition Proposal" has the meaning set forth in Section 7.2(b).
"Acquisition Transaction" has the meaning set forth in Section 7.2(a).
"Adjusted Working Capital" means total current assets and short term
borrowings less total current liabilities and cash and cash equivalents.
"Agreement" has the meaning set forth in the Introductory Paragraph.
"Antitakeover Statute" has the meaning set forth in Section 6.1(i).
"Articles" has the meaning set forth in Section 3.1.
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"Business Day" has the meaning set forth in Section 2.2.
"Certificate" has the meaning set forth in Section 5.1(a)(ii).
"Certificate of Merger" has the meaning set forth in Section 2.3.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"COBRA" has the meaning set forth in Section 6.1(p)(i).
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" has the meaning set forth in the Recitals.
"Company" has the meaning set forth in the Introductory Paragraph.
"Company ESOP" has the meaning set forth in Section 7.9(b).
"Company Intellectual Property" has the meaning set forth in Section
6.1(s)(ii).
"Company Material Adverse Effect" means any change in or effect on the
business of the Company and its Subsidiaries that is materially adverse to the
business, operations, results of operations, assets (including intangible
assets), capitalization, liabilities (contingent or otherwise), condition
(financial or otherwise) or prospects of the Company and its Subsidiaries, taken
as a whole, including, but not limited to, (a) the loss of a significant
customer, (b) the loss or impairment of the right to use any material Company
Intellectual Property or (c) the threat or commencement of significant or
material litigation against the Company.
"Company Material Contracts" has the meaning set forth in Section 6.1(n).
"Company Option" has the meaning set forth in Section 6.1(b).
"Company Owned IP" has the meaning set forth in Section 6.1(s)(i).
"Company Reports" has the meaning set forth in Section 6.1(k).
"Company Requisite Vote" has the meaning set forth in Section 6.1(c)(i).
"Company Shareholders Meeting" has the meaning set forth in Section 7.3(a).
"Company 401(k) " has the meaning set forth in Section 7.9(b).
"Compensation and Benefit Plans" has the meaning set forth in Section
6.1(p)(i).
"Contracts" has the meaning set forth in Section 6.1(d)(ii).
"Controlled Group Affiliate" means any trade or business (whether or not
incorporated) that is a member of a "controlled group" of which the Company is a
member or under "common control" with the Company (within the meaning of Section
414(b), (c), (m) or (o) of the Code).
"Depositary" has the meaning set forth in Section 5.2(a).
"Dissenting Shares" has the meaning set forth in the Recitals.
"Effective Time" has the meaning set forth in Section 2.3.
"Employees" has the meaning set forth in Section 6.1(p)(i).
"Environmental Law" means each federal, state, local and foreign law,
regulation, order, decree, permit, authorization, common law or agency
requirement relating to pollution, protection or preservation of public or
employee health or the environment, including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata and natural
resources, and including, without limitation, each law, regulation, order,
decree, permit, authorization, common law or agency requirement relating to
emissions, discharges, releases or threatened releases of Hazardous Substances,
or otherwise relating to the generation, storage, treatment, containment
(whether above ground or underground), disposal, transport or handling of
Hazardous Substances, or
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the preservation of the environment or mitigation of adverse effects thereon,
each law, regulation, order, decree, permit, authorization, common law or agency
requirement relating to noise, odor, indoor air, employee exposure, wetlands,
contamination or any injury or threat of injury to persons or property relating
to any Hazardous Substance and each law, regulation, order, decree, permit,
authorization, common law or agency requirement with regard to record keeping,
notification, disclosure and reporting requirements respecting Hazardous
Substances. Environmental Law includes, but is not limited to, the Clean Air
Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Toxic
Substances Control Act, the Occupational Health and Safety Act, the Safe
Drinking Water Act, the Hazardous Materials Transportation Act and the Emergency
Planning and Community Right to Know Act.
"ERISA" has the meaning set forth in Section 6.1(p)(i).
"Exchange Act" has the meaning set forth in Section 2.2.
"Excluded Shares" has the meaning set forth in the Recitals.
"FDA" has the meaning set forth in Section 6.2(t)(i).
"Foreign Merger Laws" has the meaning set forth in Section 6.1(d)(i).
"GAAP" has the meaning set forth in Section 6.1(k).
"Governmental Entity" has the meaning set forth in Section 6.1(d)(i).
"Hazardous Substance" shall mean pollutants, contaminants, toxic or
hazardous substances, materials and wastes, including, without limitation, any
chemicals, petroleum or petroleum products, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radioactive materials or radon, lead or
lead-based paints, materials or plumbing, dioxins, persistent bioaccumulative
materials, pharmaceutical, biological and/or medical waste or materials or any
other material regulated by or subject to Environmental Laws.
"HSR Act" has the meaning set forth in Section 6.1(d)(i).
"Intellectual Property Rights" has the meaning set forth in Section
6.1(s)(viii).
"Knowledge" means, (a) with respect to an individual and a particular fact
or other matter, such individual is actually aware of such fact or other matter
after due inquiry; and (b) with respect to a Person other than an individual and
a particular fact or other matter, Samuel B. Davis, Samuel N. Davis, Stewart
Graves, Marisa Bash, Peter Linn, Kim Spath, Sheffield Sweet or Robert Valentine
has, or at any time had, "Knowledge" of such fact or matter, as defined in (a).
"Laws" has the meaning set forth in Section 6.1(m).
"Merger" has the meaning set forth in the Recitals.
"Merger Consideration" has the meaning set forth in Section 5.1(a)(ii).
"Merger Subsidiary" has the meaning set forth in the Introductory
Paragraph.
"OGCL" has the meaning set forth in the Recitals.
"Order" has the meaning set forth in Section 8.1(f).
"Parent" has the meaning set forth in the Introductory Paragraph.
"Parent Entity" means any entity which owns or controls directly or
indirectly at least fifty percent (50%) of the securities or ownership interests
having by their terms ordinary voting power to elect fifty percent (50%) of the
board of directors of any Person.
"Payment Fund" has the meaning set forth in Section 5.2(a).
"Pension Plan" has the meaning set forth in Section 6.1(p)(ii).
"Person" has the meaning set forth in Section 5.2(b).
A-3
"Plant Managers" means Jeff Bradway, Sr., Scott Falwell, Gerry Ivy, Bob
Johnson, Linda Cline, Lou Pershin, D.P. Saxena, Roger Schulz, Greg Skinner, Joe
Valdez and Kenny Strauss.
"Preferred Stock" has the meaning set forth in Section 6.1(b).
"Price per Share" has the meaning set forth in the Recitals.
"Proxy Statement" has the meaning set forth in Section 7.3(b).
"Regulations" has the meaning set forth in Section 3.2.
"Regulatory Agency" has the meaning set forth in Section 6.1(t)(i).
"SEC" has the meaning set forth in Section 6.1(g).
"Shareholders Agreement" has the meaning set forth in the Recitals.
"Special Committee" means a special committee of the Board of Directors of
the Company comprised entirely of non-management, independent directors.
"Stock Plans" has the meaning set forth in Section 6.1(b).
"Subsidiary" means, with respect to the Company, the Parent or the Merger
Subsidiary, as the case may be, any entity of which at least fifty percent (50%)
of the securities or ownership interests having by their terms ordinary voting
power to elect fifty percent (50%) of the board of directors or other Persons
performing similar functions is directly or indirectly owned or controlled by
such party or by one or more of its respective Subsidiaries or by such party and
any one or more of its respective Subsidiaries.
"Superior Proposal" has the meaning set forth in Section 7.2(c).
"Surviving Corporation" has the meaning set forth in Section 2.1.
"Taxes" means any taxes of any kind, including but not limited to those on
or measured by or referred to as income, gross receipts, capital, sales, use, ad
valorem, franchise, profits, license, withholding, employment, payroll, premium,
value added, property or windfall profits taxes, transfer taxes, customs, duties
or similar fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts imposed
by any Governmental Entity.
"Tax Return" means any return, report or statement required to be filed
with any Governmental Entity with respect to Taxes.
"Third Party Licenses" has the meaning set forth in Section 6.1(s)(i).
"Voting Debt" has the meaning set forth in Section 6.1(b).
"Warning Letter" has the meaning set forth in Section 6.1(t)(i).
"1990 Plan" has the meaning set forth in Section 6.1(b).
ARTICLE II
The Merger; Closing; Effective Time
2.1 THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as defined herein) the Merger Subsidiary
shall be merged into the Company. The Company shall be the surviving corporation
in the Merger (sometimes hereinafter referred to as the "Surviving Corporation")
and shall continue to be governed by the laws of the State of Ohio. The Merger
shall have the effects specified in the OGCL.
2.2 CLOSING. The closing of the Merger (the "Closing") shall take place
(a) at the offices of Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market
Street, Philadelphia, Pennsylvania at 10:00 a.m. on the second (2nd) business
day (as defined in Rule 14d-1(g)(3) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) ("Business Day") following the satisfaction or
waiver of all conditions to the obligations of
A-4
the parties to consummate the transactions contemplated hereby (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of those conditions), or (b) at such other place
and time and/or on such other date as the Parent and the Company may agree to in
writing (the "Closing Date").
2.3 EFFECTIVE TIME. At the Closing, the Company and the Merger Subsidiary
will cause a Certificate of Merger (the "Certificate of Merger") to be executed,
acknowledged and filed with the Secretary of State of the State of Ohio as
provided in Section 1701.01 of the OGCL. The Merger shall become effective at
the time when the Certificate of Merger has been duly filed with the Secretary
of State of the State of Ohio or, if agreed to by the Parent and the Company,
such later time or date set forth in the Certificate of Merger (the "Effective
Time").
ARTICLE III
Articles of Incorporation and Code of Regulations of the Surviving Corporation
3.1 THE ARTICLES OF INCORPORATION. The articles of incorporation of the
Company shall be amended as of the Effective Time so that they are identical to
the articles of incorporation of the Merger Subsidiary in effect immediately
prior to the Effective Time, except that Article FIRST of the articles of
incorporation shall provide that the name of the Company shall be the name of
the Surviving Corporation, and such articles of incorporation shall be the
articles of incorporation of the Surviving Corporation (the "Articles").
3.2 THE CODE OF REGULATIONS. The code of regulations of the Company shall
be amended as of the Effective Time so that it is identical to the code of
regulations of the Merger Subsidiary in effect immediately prior to the
Effective Time, and such code of regulations shall be the code of regulations of
the Surviving Corporation (the "Regulations").
ARTICLE IV
Officers and Directors of the Surviving Corporation
4.1 DIRECTORS. The directors of the Merger Subsidiary immediately prior
to the Effective Time shall, from and after the Effective Time, be the directors
of the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Articles and the Regulations.
4.2 OFFICERS. The officers of the Merger Subsidiary immediately prior to
the Effective Time shall, from and after the Effective Time, be the officers of
the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Articles and the Regulations.
ARTICLE V
Effect of the Merger on Outstanding Securities; Exchange of Certificates
5.1 EFFECT ON OUTSTANDING SECURITIES. At the Effective Time, as a result
of the Merger and without any action on the part of the Company, the Parent, the
Merger Subsidiary or any holder of any capital stock of the Company:
(a) MERGER CONSIDERATION.
(i) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time (other than the Excluded Shares and the Dissenting
Shares) shall be converted into and represent the right to receive the Price per
Share.
(ii) All shares of Common Stock shall no longer be outstanding and
shall be canceled and retired and shall cease to exist, and certificates
formerly representing shares of Common Stock (the "Certificates") (other than
the Excluded Shares and the Dissenting Shares) shall be converted into and
represent the right to
A-5
receive the Price per Share multiplied by the number of shares of Common Stock
formerly represented by such Certificate (the "Merger Consideration").
(iii) Each outstanding Company Option (as defined herein) shall be
canceled or exercised in accordance with Section 7.9(a).
(b) CANCELLATION OF EXCLUDED SHARES. Each Excluded Share issued and
outstanding immediately prior to the Effective Time shall cease to be
outstanding, shall be canceled and retired without payment of any consideration
therefor and shall cease to exist.
(c) TREATMENT OF DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of Common Stock outstanding immediately prior
to the Effective Time and held by a shareholder who has not voted in favor of
the Merger or consented thereto in writing and who is entitled to and has
demanded appraisal for such shares of Common Stock in accordance with the OGCL
shall not be converted into a right to receive the Price per Share, unless such
shareholder fails to perfect or withdraws or otherwise loses its right to
appraisal. If after the Effective Time such shareholder fails to perfect or
withdraws or otherwise loses its right to appraisal, such shares of Common Stock
shall be treated as if they had been converted as of the Effective Time into a
right to receive the Price per Share. The Company shall give the Parent and the
Merger Subsidiary prompt notice of any demands received by the Company for
appraisal of shares of Common Stock, and the Parent shall have the right to
participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of the Parent, make
any payment with respect to, or settle or offer to settle, any such demands,
except as otherwise required under applicable law.
(d) THE MERGER SUBSIDIARY. Each common share, without par value, of
the Merger Subsidiary issued and outstanding immediately prior to the Effective
Time shall be converted into and represent the right to receive one common
share, without par value, of the Surviving Corporation.
5.2 SURRENDER AND PAYMENT.
(a) DEPOSITARY. Prior to the Effective Time, the Parent or the Merger
Subsidiary shall designate a bank or trust company (the "Depositary") to act as
agent for the shareholders in connection with the Merger and to receive and
distribute the Payment Fund (as defined below). Immediately prior to the
Effective Time, the Merger Subsidiary shall deposit with the Depositary cash in
an aggregate amount equal to the product of (i) the number of shares of Common
Stock issued and outstanding immediately prior to the Effective Time (other than
the Excluded Shares), multiplied by (ii) the Price per Share (the "Payment
Fund"). The Depositary shall cause the Payment Fund to be (i) held for the
benefit of the holders of shares of Common Stock and (ii) promptly applied to
making the payments provided for in Section 5.1(a). The Payment Fund shall not
be used for any purpose that is not provided for herein.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Parent or the Surviving Corporation shall cause the
Depositary to mail to each holder of record of outstanding shares of Common
Stock (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Depositary) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Depositary, together with a letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Depositary, the Depositary shall
pay the holder of such Certificate the Merger Consideration in respect of such
Certificate, less any required withholding taxes, and the Certificate so
surrendered shall forthwith be canceled. If any portion of the Merger
Consideration is to be paid to a person (as defined in the Exchange Act) (a
"Person") other than the registered holder of the shares represented by the
Certificate or Certificates surrendered in exchange therefor, it shall be a
condition to such payment that the Certificate or Certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Depositary any transfer or
other taxes required as a result of such payment to a Person other than the
registered holder of such shares or establish to the satisfaction of the
Depositary that such tax has been paid or is not payable. Until surrendered as
contemplated by this Section 5.2(b), each Certificate (other than Certificates
representing Excluded Shares or Dissenting Shares) shall be
A-6
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration upon such surrender.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK. All Merger
Consideration paid upon the surrender of Certificates in accordance with the
terms of this Article V shall be deemed to have been paid in full satisfaction
of all rights pertaining to the shares of Common Stock theretofor represented by
such Certificates. After the close of business on the Closing Date, there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Depositary for
any reason, they shall be canceled and exchanged as provided in this Article V,
except as otherwise provided by law.
(d) UNCLAIMED FUNDS. Any portion of the Payment Fund made available to
the Depositary pursuant to Section 5.2(a) that remains unclaimed by holders of
the Certificates for six (6) months after the Effective Time shall be delivered
to the Surviving Corporation and any holders of Certificates who have not
theretofor complied with this Article V shall thereafter look only to the
Surviving Corporation for payment of their claim for Merger Consideration.
(e) NO LIABILITY. None of the Parent, the Merger Subsidiary, the
Company or the Depositary shall be liable to any Person in respect of any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate has not been
surrendered prior to five (5) years after the Effective Time (or immediately
prior to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any public
official), any shares, cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any Person previously entitled thereto.
(f) INVESTMENT OF FUNDS. The Payment Fund shall be invested by the
Depositary in accordance with the instructions of the Parent or the Merger
Subsidiary and all earnings thereon shall inure to the benefit of the Merger
Subsidiary.
(g) LOST CERTIFICATES. In the event that any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Merger Subsidiary, the granting of an indemnity reasonably
satisfactory to the Merger Subsidiary against any claim that may be made against
it, the Surviving Corporation or the Depositary with respect to such
Certificate, the Depositary will issue, in exchange for such lost, stolen or
destroyed Certificate, the Merger Consideration with respect to such
Certificate, to which such Person is entitled pursuant hereto.
5.3 ADJUSTMENT OF PRICE PER SHARE. In the event that, subsequent to the
date of this Agreement but prior to the Effective Time, the outstanding shares
of Common Stock shall have been changed into a different number of shares or a
different class as a result of a stock split, reverse stock split, stock
dividend, subdivision, reclassification, split, combination, exchange,
recapitalization or other similar transaction, the Price per Share shall be
appropriately adjusted.
ARTICLE VI
Representations and Warranties
6.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Parent and the Merger Subsidiary, except as set
forth in the disclosure schedules delivered to the Parent and the Merger
Subsidiary on the date of this Agreement and attached hereto, that, as of the
date hereof (or, if made as of a specified date, as of such date):
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company and
each of its Subsidiaries are corporations or partnerships duly incorporated,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation or organization. The Company and each of its
Subsidiaries are qualified to do business and in good standing as foreign
corporations or partnerships in each jurisdiction where the
A-7
ownership or operation of their respective properties and assets or conduct of
their respective businesses requires such qualification, except where the
failure to be so qualified or in such good standing, when taken together with
all other such failures, is not reasonably likely to have a Company Material
Adverse Effect. The Company has made available to the Parent complete and
correct copies of the articles of incorporation and code of regulations (or
similar documents) of the Company and each of its Subsidiaries, each as amended
to date. The articles of incorporation and code of regulations (or similar
documents) of the Company and each of its Subsidiaries so made available are in
full force and effect. The Company and each of its Subsidiaries have all
requisite corporate or partnership power and authority to own and operate their
respective properties and assets and to carry on their respective businesses as
presently conducted.
Schedule 6.1(a) lists each Subsidiary of the Company and its jurisdiction
of incorporation or formation. Except as set forth on Schedule 6.1(a), all of
the outstanding capital stock of, or other ownership interests in, each such
Subsidiary is owned by the Company, directly or indirectly, free and clear of
all pledges, claims, liens, charges, encumbrances and security interests of any
kind or nature whatsoever. Except for the equity or other ownership interests in
its Subsidiaries and except as set forth on Schedule 6.1(a), the Company does
not own, directly or indirectly, an ownership interest in any corporation,
partnership, joint venture or other entity.
(b) CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, of which 4,168,380 shares were
outstanding as of the close of business on March 22, 2002, and 2,000,000
preferred shares, without par value, (the "Preferred Stock"), none of which were
outstanding as of the close of business on March 22, 2002. All of the
outstanding shares of Common Stock have been duly authorized and are validly
issued, fully paid and nonassessable. The Company has no shares of Common Stock
or Preferred Stock subject to issuance, except (i) 500,000 shares of Common
Stock reserved for issuance under the 1990 Liqui-Box Corporation Stock Option
Plan, as amended (the "1990 Plan"), and (ii) 500,000 shares of Common Stock
reserved for issuance under the Liqui-Box Shares Stock Option Plan, as amended
(together with the 1990 Plan, the "Stock Plans"). Options to acquire 796,670
shares of Common Stock were outstanding as of March 22, 2002 (each, a "Company
Option"). Schedule 6.1(b) sets forth a correct and complete list of each
outstanding Company Option as of March 22, 2002, including the holder, date of
grant, exercise price and number of shares of Common Stock subject thereto. As
of March 22, 2002, there are no shares of capital stock of the Company
authorized, issued or outstanding except as set forth above and, except as set
forth above or as set forth on Schedule 6.1(b), there are no preemptive rights
or any outstanding subscriptions, options, warrants, rights or convertible
securities or any agreements or commitments of any character to which the
Company is a party or may be bound relating to the issued or unissued capital
stock or other securities of the Company. The Company does not have outstanding
any bonds, debentures, notes or other obligations, the holders of which have the
right to vote (or which are convertible into or exercisable for securities
having the right to vote) with the shareholders of the Company on any matter
("Voting Debt"). Except for the Stock Plans, at or after the Effective Time,
neither the Company, the Surviving Corporation, the Parent nor their respective
affiliates will have any obligation to issue, transfer or sell any shares or
securities of the Company, the Surviving Corporation, the Parent or any of their
respective affiliates pursuant to any Compensation and Benefit Plan (as defined
herein). Since January 31, 2002, the Company has not issued, granted or entered
into any agreement relating to any subscription, option, warrant, right or
convertible security or any agreement or commitment of any character to which
the Company is a party or may be bound relating to the issued or unissued
capital stock or other securities of the Company.
(c) CORPORATE AUTHORITY; APPROVAL.
(i) The Company has all requisite corporate power and authority and
has taken all corporate action necessary in order to execute and deliver and
perform its obligations under this Agreement and, subject only to obtaining the
adoption of this Agreement by a majority of the shares of Common Stock
outstanding as of the record date of the Company's shareholders meeting (the
"Company Requisite Vote"), to consummate the Merger. This Agreement is a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms subject to (A) applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or similar laws from time to
time in effect affecting creditors' rights generally, and (B) general principles
of equity, whether such principles are considered in a proceeding at law or in
equity.
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(ii) The Special Committee has, and the board of directors of the
Company has, upon the recommendation of the Special Committee, at a meeting duly
called and held, unanimously, with the exception of Samuel B. Davis and Samuel
N. Davis, who abstained, (A) approved this Agreement, the Shareholders Agreement
and the Merger and the transactions contemplated hereby and thereby in
accordance with the OGCL, including but not limited to specifically for purposes
of Chapter 1704 thereof, (B) determined that the Merger is fair to and in the
best interests of the Company's shareholders and declared the Merger advisable
and (C) recommended that the shareholders of the Company adopt this Agreement
and approve the Merger.
(d) GOVERNMENTAL FILINGS; NO VIOLATIONS.
(i) Other than any filings and/or notices required pursuant to (A)
Section 2.3, (B) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") and the antitrust, competition, foreign investment or
similar laws of any foreign countries or supranational commissions or boards
that require pre-merger notifications or filings with respect to the Merger
(collectively, "Foreign Merger Laws") and (C) the Exchange Act and state
securities or "blue sky" laws, no notices or other filings are required to be
made by the Company with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by the Company from, any U.S.
or foreign governmental or regulatory authority, agency, commission, body or
other governmental entity ("Governmental Entity"), in connection with the
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Merger and the other transactions contemplated hereby.
(ii) Except as set forth on Schedule 6.1(d)(ii), the execution,
delivery and performance of this Agreement by the Company does not and will not,
and the consummation by the Company of the Merger and the other transactions
contemplated hereby in accordance with the terms hereof will not, constitute or
result in (A) a breach or violation of, or a default under, the articles of
incorporation or code of regulations (or similar documents) of the Company or
any of its Subsidiaries, (B) a breach or violation of, a default under or the
acceleration of, any obligations or the creation of a lien, pledge, security
interest or other encumbrance on the assets of the Company or any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant to, any
contract, agreement, license, lease, note, mortgage, indenture or other
obligation (collectively, the "Contracts") binding upon the Company or any of
its Subsidiaries or any Laws (as defined herein) or governmental or non-
governmental permit or license to which the Company or any of its Subsidiaries
is subject or (C) any change in the rights or obligations of any party under any
of the Contracts binding upon the Company or any of its Subsidiaries, except, in
the case of clauses (B) or (C), for such exceptions as would not, individually
or in the aggregate, have or be reasonably likely to have a Company Material
Adverse Effect.
(e) BROKERS AND FINDERS. Neither the Company nor any of its
Subsidiaries, officers, directors or employees has employed any broker or finder
or incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the Merger or the other transactions contemplated by this
Agreement or the Shareholders Agreement, except that the Special Committee has
engaged McDonald Investments Inc. as its financial advisor, the arrangements
with which have been disclosed to the Parent prior to the date hereof.
(f) OPINION OF FINANCIAL ADVISOR. The board of directors of the
Company and/or the Special Committee has received a written opinion of McDonald
Investments Inc. to the effect that, as of the date hereof, the consideration to
be received by the holders of shares of Common Stock pursuant to the Merger is
fair to such holders from a financial point of view.
(g) PROXY STATEMENT. The Proxy Statement (as defined herein) and any
other documents to be filed by the Company with the Securities and Exchange
Commission (the "SEC") in connection with the Merger and the other transactions
contemplated hereby will, when filed with the SEC, comply as to form in all
material respects with the applicable provisions of the Exchange Act and the
rules and regulations thereunder. Neither the Proxy Statement nor any other
documents required to be filed by the Company with the SEC in connection with
the transactions contemplated hereby shall, at the respective times that the
Proxy Statement, any such other filings by the Company or any amendments or
supplements thereto are filed with the SEC or are first published, sent or given
to shareholders of the Company, as the case may be, 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 made therein, in light of
the circumstances under which they are made, not misleading. Notwithstanding the
foregoing, the
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Company makes no representation or warranty with respect to the statements made
in any of the foregoing documents based on and in conformity with information
supplied by or on behalf of the Parent or the Merger Subsidiary in writing
specifically for inclusion therein.
(h) REQUIRED VOTE OF COMPANY SHAREHOLDERS. The only vote of the
shareholders of the Company required to adopt this Agreement and to approve the
Merger and the transactions contemplated hereby and thereby, is the Company
Requisite Vote.
(i) ANTITAKEOVER STATUTES. The board of directors of the Company has
taken all necessary action to approve the transactions contemplated by this
Agreement and the Shareholders Agreement, including but not limited to, approval
for purposes of Chapter 1704 of the OGCL, of both (i) any "Chapter 1704
transaction" (as defined in Section 1704.01 of the OGCL) and (ii) any purchase
of any shares of Common Stock, such that the restrictions under Chapter 1704 of
the OGCL shall not apply to such transactions, assuming that neither the Parent
nor the Merger Subsidiary nor any of the Parent Entities constituted an
"interested shareholder" (as defined in Section 1704.01 of the OGCL) prior to
the date of such approval. Other than Chapter 1704 of the OGCL and Section
1707.043 of the Ohio Revised Code, no "fair price," "moratorium," "control share
acquisition" or other antitakeover statute or regulation (each, an "Antitakeover
Statute") is applicable to the Company, the Parent, the Merger Subsidiary, this
Agreement, the Shareholders Agreement, the Merger or the other transactions
contemplated hereby or thereby.
(j) ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule
6.1(j), since December 30, 2000, the Company and its Subsidiaries have conducted
their respective businesses in all material respects only in the ordinary and
usual course of such businesses and there has not been (i) any event or change
or combination of events or changes that, individually or in the aggregate, has
had or is reasonably likely to have a Company Material Adverse Effect; (ii) any
damage, destruction or other casualty loss with respect to any asset or property
owned, leased or otherwise used by the Company or any of its Subsidiaries, that
has had or is reasonably likely to have a Company Material Adverse Effect; (iii)
any declaration, setting aside or payment of any dividend or other distribution
in respect of the capital stock of the Company; or (iv) except as disclosed in
the Company Reports (as defined herein), any change by the Company in accounting
principles, practices or methods. Except as set forth on Schedule 6.1(j), since
January 31, 2002, there has not been any increase in the compensation payable or
that could become payable by the Company or any of its Subsidiaries to officers
or key employees of the Company or any of its Subsidiaries, or any amendment to
any of the Compensation and Benefit Plans.
(k) COMPANY REPORTS; FINANCIAL STATEMENTS. Except as set forth on
Schedule 6.1(k), the Company and, to the extent applicable, each of its then or
current Subsidiaries has made all filings required to be made by it with the SEC
since the beginning of the period covering the past three (3) full fiscal years
(collectively, including any such reports filed subsequent to the date hereof,
the "Company Reports"). The Company has made available to the Parent each
registration statement, report, proxy statement or information statement filed
with the SEC by it since the beginning of the period covering the past three (3)
full fiscal years, including, without limitation, (i) the Company's Annual
Report on Form 10-K for the fiscal year (fifty two weeks) ended December 30,
2000, (ii) the Company's Quarterly Reports on Form 10-Q for the periods ended
March 31, 2001, June 30, 2001 and September 29, 2001 and (iii) the Company's
Proxy Statement filed on March 19, 2001, all in the form (including exhibits,
annexes and any amendments thereto) filed with the SEC. As of their respective
dates, the Company Reports complied in all material respects, or will comply in
all material respects, with the requirements of applicable statutes and
regulations and did not, and will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading. Each of the balance sheets included in the
Company Reports (including the related notes and schedules) presents fairly, or
will present fairly, in all material respects, the financial position of the
Company and its consolidated Subsidiaries as of its date and each of the
statements of income and of changes in financial position included in the
Company Reports (including any related notes and schedules) presents fairly, or
will present fairly, in all material respects, the results of operations,
retained earnings and changes in financial position, as the case may be, of the
Company and its Subsidiaries for the periods set forth therein (except as
otherwise noted therein and subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that will not be material in amount
or effect), in each case in accordance with United States generally accepted
accounting principles ("GAAP")
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consistently applied during the periods involved, except, in the case of
unaudited financial statements, as permitted by SEC Form 10-Q and SEC Form 8-K,
and except as may be noted therein. Other than the Company Reports specifically
recited in clauses (i) through (iii) of the second sentence of this Section
6.1(k), the Company has not, on or prior to the date hereof, filed any other
definitive reports or statements with the SEC since December 30, 2000.
The Company has made available to the Parent its unaudited financial
statements for the fiscal year ended December 31, 2001. The balance sheet
included in such financial statements presents fairly, in all material respects,
the financial position of the Company and its consolidated Subsidiaries as of
December 31, 2001 and the statements of income and of changes in financial
position included in such financial statements present fairly, in all material
respects, the results of operations, retained earnings and changes in financial
position, as the case may be, of the Company and its Subsidiaries for the fiscal
year ended December 31, 2001 (except as otherwise noted therein), in each case
in accordance with GAAP consistently applied during the periods involved, except
as may be noted therein. Since December 31, 2001, there has not been any
material change to the level of working capital reflected in such financial
statements, except in the ordinary course of business.
As of March 21, 2002, based on an analysis of the Company's books and
records, the Company's Adjusted Working Capital and cash and cash equivalents,
net of borrowings, were as set forth on Schedule 6.1(k) and there has not been
any material change in this amount, except in the ordinary of business.
(l) LITIGATION AND LIABILITIES. Except as disclosed on Schedule
6.1(l), there are no and, to the Knowledge of the Company or any of the Plant
Managers, there are no facts which would constitute or give rise to any, (i)
civil, criminal, administrative or regulatory actions, suits, claims, hearings,
investigations or proceedings pending or, to the Knowledge of the Company or any
of the Plant Managers, threatened against the Company or any of its Subsidiaries
or (ii) obligations or liabilities, individually or in the aggregate, whether or
not accrued, contingent or otherwise and whether or not required to be
disclosed, including those relating to matters involving any Environmental Law,
in each case, that have, or would be reasonably likely to have, a Company
Material Adverse Effect.
(m) COMPLIANCE. Neither the Company nor any of its Subsidiaries is in
default or violation of (i) its articles of incorporation or code of regulations
(or similar documents), (ii) any law, ordinance, rule, regulation, order,
judgment, decree, arbitration award, license or permit of any Governmental
Entity (collectively, "Laws") or any non-governmental permit or license
applicable to the Company or any of its Subsidiaries or by which its or any of
their respective properties are bound or (iii) any Contract to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or its or any of their respective properties are bound or affected,
except, in each case, for any defaults or violations that, individually or in
the aggregate, will not have a Company Material Adverse Effect, or prevent or
materially delay the transactions contemplated by this Agreement.
(n) CERTAIN AGREEMENTS. Schedule 6.1(n) sets forth (i) all amendments
to the agreements listed as exhibits to the Company's Annual Report on Form 10-K
for the fiscal year ended December 30, 2000, (ii) any other agreement within the
meaning set forth in item 601(b)(10) of Regulation S-K of Title 17, Part 229 of
the Code of Federal Regulations, (iii) all contracts or commitments calling for
the Company to spend or receive in excess of $250,000 per annum, (iv) all
contracts relating to money borrowed in excess of $10,000, (v) all agreements
with respect to settlement of litigation, (vi) all loans or guarantees of loans
to employees and (vii) all contracts not disclosed pursuant to (i) through (vi)
above materially restricting the Company's business in any way or which would
materially restrict the Parent's business as the parent of the Surviving
Corporation (the "Company Material Contracts"), all of which are valid and in
full force and effect, except to the extent that they have previously expired in
accordance with their terms. Neither the Company nor its Subsidiaries has
violated any provision of, or committed or failed to perform any act which, with
or without notice, lapse of time, or both, is reasonably likely to constitute a
default under the provisions of, any such Company Material Contract, except for
any default which has not had, and is not reasonably likely to have, a Company
Material Adverse Effect, and neither the Company nor any of its Subsidiaries has
received notice that any party to any Company Material Contract intends to
cancel, terminate or otherwise materially modify the terms of any applicable
Company Material Contract. To the Knowledge of the Company, no counterparty to
any such Company Material Contract
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has materially violated any provision of, or committed or failed to perform any
act which, with or without notice, lapse of time or both, is reasonably likely
to constitute a material default or other breach under the provisions of, such
Company Material Contract.
(o) TAXATION. Except as set forth on Schedule 6.1(o):
(i) Except where the failure to file Tax Returns, to pay Taxes or to
provide adequate reserves, individually or in the aggregate, would not have a
Company Material Adverse Effect: (A) the Company and each of its Subsidiaries
have timely filed all Tax Returns required to be filed by them in the manner
provided by law; (B) all such Tax Returns are true, correct and complete in all
material respects; and (C) the Company and each of its Subsidiaries have timely
paid all Taxes due or required to be withheld from amounts owing to any
employee, creditor or third party or have provided adequate reserves in their
financial statements for any Taxes that have not been paid, whether or not shown
as being due on any Tax Returns.
(ii) No material claim for unpaid Taxes (other than for Taxes not yet
due) has become a lien or encumbrance of any kind against the property of the
Company or any of its Subsidiaries or, to the Knowledge of the Company, is being
asserted against the Company or any of its Subsidiaries.
(iii) No audit, examination, investigation or other proceeding in
respect of Taxes is, to the Knowledge of the Company, pending, being conducted
or threatened by a Tax authority involving the Company or any of its
Subsidiaries.
(iv) No material issues have been raised by the relevant taxing
authority in connection with any examination of the Tax Returns filed by the
Company and its Subsidiaries that have not been resolved.
(v) No extension or waiver of the statute of limitations on the
assessment of any Taxes has been granted by the Company or any of its
Subsidiaries and is currently in effect.
(vi) Neither the Company nor any of its Subsidiaries is a party to,
is bound by or has any obligation under, or potential liability with regard to,
any Tax sharing agreement, Tax indemnification agreement or similar contract or
arrangement.
(vii) To the Knowledge of the Company, no power of attorney has been
granted by or with respect to the Company or any of its Subsidiaries with
respect to any matter relating to Taxes.
(viii) To the Knowledge of the Company, neither the Company nor any
of its Subsidiaries (A) has been a member of an affiliated group filing a
consolidated, combined or unitary Tax Return (other than a group the common
parent of which was the Company) or (B) has any liability for Taxes of any
person (other than the Company or any of its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any other similar provision of state, local or
foreign law), as a transferee or successor, by contract or otherwise.
(ix) Neither the Company nor any of its Subsidiaries is a party to
any agreement, plan, contract or arrangement that would result, separately or in
the aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code.
(x) To the Knowledge of the Company, neither the Company nor any of
its Subsidiaries has any material intercompany gain or loss arising as a result
of an intercompany transaction within the meaning of Treasury Regulation Section
1.1502-13 (or similar provision under state, local or foreign law) that has not
been taken into account or any excess loss accounts within the meaning of
Treasury Regulation Section 1.1502-19.
(xi) The Company is not and has not been a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(ii) of the Code.
(xii) Neither the Company nor any of its Subsidiaries has been the
subject of a material Tax ruling that has continuing effect.
(xiii) Neither the Company nor any of its Subsidiaries has agreed to
include, or, to the Knowledge of the Company, is required to include, in income
any material adjustment under either Section 481(a) or 482 of
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the Code (or an analogous provision of state, local or foreign law) by reason of
a change in accounting method or otherwise.
(p) EMPLOYEE BENEFITS.
(i) The Company Reports accurately describe in all material respects
all material incentive, bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option and other stock based plans, all
employment or severance agreements, plans, policies or arrangements, other
employee benefit plans and any applicable "change of control" or similar
provisions in any plan, agreement, policy or arrangement which covers current or
former employees of the Company and its Controlled Group Affiliates (the
"Compensation and Benefit Plans") or with respect to which the Company or any of
its Controlled Group Affiliates may have any liability. The Compensation and
Benefit Plans and all other benefit plans, agreements, policies or arrangements
covering current or former employees or directors of the Company and its
Controlled Group Affiliates (the "Employees"), including, but not limited to,
"employee benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), are listed on
Schedule 6.1(p)(i). True and complete copies of all documents relating to the
Compensation and Benefit Plans or any other plan, agreement, policy or
arrangement listed on Schedule 6.1(p)(i), including written interpretations
thereof and summary plans descriptions required under ERISA, and such other
benefit plans, agreements, policies or arrangements, including, but not limited
to, any trust instruments and/or insurance contracts, if any, forming a part of
any such plans and agreements, and all amendments thereto have been provided to
the Parent. The following items have also been provided to the Parent with
respect to each Compensation and Benefit Plan as applicable: (A) the three (3)
most recent Form 5500 annual reports (including all schedules and financial
statements); (B) the most recent favorable determination letter issued by the
Internal Revenue Service with respect to each such plan; (C) any governmental
audit report or correction program memorandum; (D) any governmental opinion,
ruling, determination or notice of action or disposition with regard to any such
plan; (E) the results of any testing relating to any such plan, including
testing of coverage, non-discrimination requirements, 401(k) and 401(m)
compliance, benefit limitations, etc.; and (F) a schedule of all persons who are
receiving, or who are eligible to elect to receive, health care continuation
("COBRA") coverage with respect to the Company or a Controlled Group Affiliate.
(ii) To the Knowledge of the Company, the Compensation and Benefit
Plans have been administered in compliance with all applicable law and, except
as set forth on Schedule 6.1(p)(ii), with their terms. Each Plan which is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA (a
"Pension Plan") and which is intended to be qualified under Section 401(a) of
the Code is so qualified and has received a favorable determination letter from
the Internal Revenue Service, and the Company is not aware of any circumstances
likely to result in revocation of any such favorable determination letter. There
is no pending or, to the Knowledge of the Company, threatened litigation,
governmental audit or investigation relating to any Compensation and Benefit
Plan. Neither the Company nor any of its Controlled Group Affiliates has engaged
in a transaction with respect to any Compensation and Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
could subject the Company or any of its Subsidiaries to a tax or penalty imposed
by either Section 4975 of the Code or Section 502(i) of ERISA.
(iii) Except as disclosed on Schedule 6.1(p)(iii), neither the
Company nor any of its Controlled Group Affiliates has or has ever had any
obligation or liability with respect to an employee benefit plan which is
subject to Title IV of ERISA, or which is a "multiemployer plan" within the
meaning of Section 3(37) or 4001(a)(3) of ERISA. There is no entity (other than
the Company or any of its Subsidiaries) which is or was a Controlled Group
Affiliate of the Company. No notice of a "reportable event" within the meaning
of Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Compensation and Benefit Plan
within the 12-month period ending on the date hereof.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan have been timely made or accrued on the Company's
financial statements and all insurance premiums required to have been paid as of
the Closing Date will have been paid.
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(v) Except as disclosed on Schedule 6.1(p)(v), neither the Company
nor any of its Controlled Group Affiliates has any obligations for retiree
health and life benefits under any Compensation and Benefit Plan. The Company or
its Controlled Group Affiliates may amend or terminate any Compensation and
Benefit Plan at any time without incurring any material liability thereunder.
(vi) Except as disclosed on Schedule 6.1(p)(vi), the consummation of
the transactions contemplated by this Agreement will not (A) entitle any
Employees to severance pay, (B) accelerate the time of payment or vesting or
trigger any material payment or funding (through a grantor trust or otherwise)
of compensation or benefits under, materially increase the amount payable or
trigger any other material obligation pursuant to, any of the Compensation and
Benefit Plans or (C) result in payments under any of the Compensation and
Benefit Plans which may not be deductible under Section 162(m) or Section 280G
of the Code.
(vii) There are no actions, suits or claims (other than routine
claims for benefits in the ordinary course) pending or, to the Knowledge of the
Company, threatened with respect to the Compensation and Benefit Plans and there
are no facts which could give rise to any such actions, suits or claims.
(viii) Each of the Company and its Controlled Group Affiliates has
complied in all material respects with the reporting and disclosure requirements
of ERISA.
(ix) To the Knowledge of the Company, each Compensation and Benefit
Plan which is a "group health plan" (as such term is defined in section
5000(b)(1) of the Code) complies and has complied with the applicable
requirements of Section 4980B of the Code, Sections 601-609 of ERISA (COBRA) and
Sections 701-734 of ERISA (HIPAA), including without limitation, the
certification requirements under Section 701(e) of ERISA.
(q) LABOR MATTERS.
(i) Schedule 6.1(q)(i) sets forth the name, title, current annual
compensation rate (including base, bonus and commissions) of each present
employee of the Company and each of its Subsidiaries whose annual compensation
rate (including base, bonus and commission) for 2001 was more than $75,000;
includes organizational charts of the Company and each of its Subsidiaries; and
lists any collective bargaining, union or other employee association agreements,
employee handbook and any reports and/or plans prepared or adopted pursuant to
the Equal Employment Opportunity Act of 1972, as amended. As a matter of policy,
the Company requires all new employees to execute a confidentiality agreement
protecting proprietary processes and information. There are no leased employees
(within the meaning of Section 414(n) of the Code) who must be taken into
account in applying the requirements of Section 414(n)(3) of the Code and
independent contractors providing services have been properly characterized as
such.
(ii) Except as set forth on Schedule 6.1(q)(ii), (A) the Company and
each of its Subsidiaries is in compliance with all applicable laws and
collective bargaining agreements respecting employment and employment practices,
terms and conditions of employment and wages and hours and occupational safety
and health, except where the failure to be in such compliance has not had, and
is not reasonably likely to have, a Company Material Adverse Effect, (B) to the
Knowledge of the Company, neither the Company nor any of its Subsidiaries is
engaged in any unfair labor practice within the meaning of Section 8 of the
National Labor Relations Act and (C) there is no action, suit or legal,
administrative, arbitration, grievance or other proceeding pending or, to the
Knowledge of the Company or any of the Plant Managers, threatened, or any
investigation pending or, to the Knowledge of the Company or any of the Plant
Managers, threatened against the Company or any Subsidiary relating to any
thereof and, to the Knowledge of the Company or any of the Plant Managers, no
basis exists for any such action, suit or legal, administrative, arbitration,
grievance or other proceeding or investigation.
(iii) There is no labor strike, dispute, slowdown or stoppage
actually pending or, to the Knowledge of the Company or any of the Plant
Managers, threatened against the Company or any of its Subsidiaries.
(iv) Except as set forth on Schedule 6.1(q)(iv), none of the
employees of the Company or any of its Subsidiaries is a member of or
represented by any labor union and, to the Knowledge of the Company or any
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of the Plant Managers, there are no attempts of whatever kind and nature being
made to organize any of such employees.
(v) Without limiting the generality of paragraph (iv) above, no
certification or decertification is pending or was filed within the past three
(3) years respecting the employees of the Company or any of its Subsidiaries
and, to the Knowledge of the Company or any of the Plant Managers, no
certification or decertification petition is being or was circulated among the
employees of the Company or any of its Subsidiaries within the past three (3)
years.
(vi) No collective bargaining or similar agreement, arbitration or
court decision, decree or order or governmental order which is binding on the
Company or any of its Subsidiaries in any way materially limits or restricts the
Company or any of its Subsidiaries from relocating or closing any of its
operations.
(vii) Neither the Company nor any of its Subsidiaries has experienced
any organized work stoppage in the last five (5) years.
(viii) Except as disclosed on Schedule 6.1(q)(viii) and Schedule
6.1(l), there are no charges, administrative proceedings or formal complaints of
discrimination (including but not limited to discrimination based upon sex, age,
marital status, race, national origin, sexual orientation, handicap or veteran
status) pending or, to the Knowledge of the Company or any of the Plant
Managers, threatened, or any investigation pending or, to the Knowledge of the
Company or any of the Plant Managers, threatened before the Equal Employment
Opportunity Commission or any federal, state or local agency or court, except
for charges, proceedings or complaints that have not had, and would not be
reasonably likely to have a Company Material Adverse Effect.
(r) ENVIRONMENTAL MATTERS. (i) To the Knowledge of the Company and the
Plant Managers, the Company and its Subsidiaries are, and within the period of
all applicable statutes of limitations have been, in compliance with all
applicable Environmental Laws and have submitted all required reports to the
appropriate Governmental Authority; (ii) except as set forth on Schedule
6.1(r)(ii), the Company has received all air, water and waste permits and
approvals required for the emission and/or disposal of solid, liquid and gaseous
materials from its operations at all sites, including any permits for
construction under the Clean Air Act, or has documentation to establish
exemptions from such permits or approvals, and is operating in conformance with
such permits and approvals required under any Environmental Laws; (iii) to the
Knowledge of the Company or any of the Plant Managers, no property currently or
formerly owned or operated by the Company or any of its Subsidiaries (including
soils, groundwater, surface water, buildings or other structures) has been
contaminated with any Hazardous Substance which would subject the Company to
liability under Environmental Laws or require remediation to meet applicable
standards; (iv) except as set forth on Schedule 6.1(r)(iv), neither the Company
nor any of its Subsidiaries is subject to any liability for Hazardous Substance
disposal or contamination on any third party property; (v) neither the Company
nor any of its Subsidiaries is subject to liability for any release or, to the
Knowledge of the Company or any of the Plant Managers, threat of release of any
Hazardous Substance; (vi) except as set forth on Schedule 6.1(r)(vi), neither
the Company nor any of its Subsidiaries has received any notice, demand, letter,
claim or request for information indicating that it may be in violation of or
subject to liability under any Environmental Law; (vii) neither the Company nor
any of its Subsidiaries is subject to any order, decree, injunction or other
arrangement with any Governmental Entity or any indemnity or other agreement
with any third party relating to liability under any Environmental Law; (viii)
to the Knowledge of the Company or any of the Plant Managers, except as set
forth on Schedule 6.1(r)(viii), none of the properties of the Company or any of
its Subsidiaries contain any underground storage tanks or any Hazardous
Substance, except to the extent that such Hazardous Substances are used in the
ordinary course of business and used and disposed of in accordance with
Environmental Laws; (ix) there are no other circumstances or conditions
involving the Company or any of its Subsidiaries that could reasonably be
expected to result in any claims, liability, investigations, costs or
restrictions on the ownership, use, or transfer of any property in connection
with any Environmental Law; and (x) to the Knowledge of the Company or any of
the Plant Managers, Schedule 6.1(r)(x) sets forth a list of all environmental
reports, studies, assessments and sampling data, all permits and permit
applications, all correspondence to and from Governmental Entities pertaining to
or required for compliance with Environmental Laws, all inspection reports,
evaluations and audit reports concerning compliance with Environmental Laws
(whether conducted internally or by a third party, including any Governmental
Entity), all documentation establishing
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exemptions from permits or approvals, a representative list of Hazardous
Substances currently used in the Company's operations, and the entities that
currently remove and dispose of regulated waste materials, and all relevant and
material records relating to compliance with Environmental Laws.
(s) INTELLECTUAL PROPERTY.
(i) Schedule 6.1(s)(i) sets forth a correct and complete list of each
of the following items: (A) all material patents and applications therefor,
registrations of trademarks (including service marks) and applications therefor,
and registrations of copyrights and applications therefor that are owned by the
Company or any of its Subsidiaries (collectively, the "Company Owned IP"), (B)
all material licenses, agreements and contracts relating to the Company
Intellectual Property (as defined herein) pursuant to which the Company or any
of its Subsidiaries are entitled to use any Company Intellectual Property owned
by any third party (collectively, the "Third Party Licenses") and (C) all
material licenses, agreements and contracts under which the Company or any of
its Subsidiaries has granted any third party the right to use any Company
Intellectual Property.
(ii) Except as set forth on Schedule 6.1(s)(ii), the Company or one
of its Subsidiaries is the owner of, or is licensed to use, or otherwise
possesses legally enforceable rights in, all material intellectual property,
including, without limitation, all material patents and patent applications,
supplementary protection certificates and patent extensions, trademarks and
trademark applications, service mark and service mark registrations, logos,
commercial symbols, business name registrations, trade names, copyrights and
copyright registrations, computer software, domain names, mask works and mask
work registration applications, industrial designs and applications for
registration of such industrial designs, including, without limitation, any and
all applications for renewal, extensions, reexaminations and reissues of any of
the foregoing material intellectual property rights where applicable,
inventions, compounds, structures, trade secrets, formulae, know-how, technical
information, research data, research raw data, laboratory notebooks, procedures,
designs, proprietary technology and information held or used in the business of
the Company and its Subsidiaries (collectively, the "Company Intellectual
Property").
(iii) The Company and its Subsidiaries are the sole legal and
beneficial owners of all of the Company Intellectual Property, except for the
Company Intellectual Property that is the subject of the Third Party Licenses or
where failure to own Company Intellectual Property would not have, or be
reasonably likely to have, a Company Material Adverse Effect.
(iv) Except as set forth on Schedule 6.1(s)(iv), the Company has not
entered into any agreements or licenses or created any mortgages, liens,
security interests, leases, pledges, encumbrances, equities, claims, charges,
options, restrictions, rights of first refusal, title retention agreements or
other exceptions to title which materially adversely affect the Company
Intellectual Property or materially restrict the use by the Company or any of
its Subsidiaries of the Company Intellectual Property.
(v) The Company and its Subsidiaries are in compliance with the Third
Party Licenses, except where the failure to be in compliance would not have a
Company Material Adverse Effect.
(vi) The Company and its Subsidiaries have the right to license to
third parties the use of the Company Owned IP.
(vii) All registrations and filings relating to the Company Owned IP
are in good standing, except where the failure to be in good standing would not
have a Company Material Adverse Effect.
(viii) To the Knowledge of the Company, the manufacturing, marketing,
distribution, sale and use of products by the Company or its Subsidiaries,
licensees or sublicensees in the countries where the Company has conducted or
proposes to conduct such activities, does not infringe the patents, patent
applications, trademarks, trademark applications, service marks, service mark
applications, copyrights, copyright applications, proprietary trade names,
publication rights, computer programs (including source code and object code),
domain names, inventions, know-how, trade secrets, technology, processes,
confidential information and all other intellectual property rights throughout
the world (collectively, the "Intellectual Property Rights") of any third party,
except to the extent that such infringement has not had, and would not be
reasonably likely to have a Company Material Adverse Effect.
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(ix) There are no allegations, claims or proceedings instituted,
pending or, to the Knowledge of the Company, threatened which challenge the
rights possessed by the Company or its Subsidiaries to use the Company
Intellectual Property or the validity or effectiveness of the Company
Intellectual Property, including without limitation any interferences,
oppositions, cancellations or other contested proceedings, except for any
allegations, claims or proceedings that have not had, and are not reasonably
likely to have, a Company Material Adverse Effect.
(x) To the Knowledge of the Company, there is no unauthorized use,
infringement or misappropriation of the Company Owned IP by any third party,
including any employee or former employee of the Company or any of its
Subsidiaries.
(xi) Except as set forth on Schedule 6.1(s)(i), the Company and its
Subsidiaries have not granted any licenses, immunities, options or other rights
to the Company Intellectual Property which could provide a third party with a
defense to patent infringement proceedings, whether domestic or foreign.
(xii) Commercially reasonable measures have been taken to maintain
the confidentiality of the inventions, trade secrets, formulae, know-how,
technical information, research data, research raw data, laboratory notebooks,
procedures, designs, proprietary technology and information of the Company and
its Subsidiaries, and all other information the value of which to the Company or
any of its Subsidiaries is contingent upon maintenance of the confidentiality
thereof.
(t) CERTAIN REGULATORY MATTERS.
(i) Schedule 6.1(t)(i) sets forth a complete and accurate list for
the last five years, of (A) all Warning Letters (as defined below) and letters
or notices issued by the Food and Drug Administration (the "FDA") or any other
Governmental Entity that is concerned with the quality, identity, purity,
safety, marketing or manufacturing of the products sold by the Company or its
Subsidiaries (any such governmental entity, a "Regulatory Agency") to the
Company or any of its Subsidiaries; (B) all product problem reporting program
complaints or reports filed by the Company or any of its Subsidiaries with a
Regulatory Agency; (C) all product recalls conducted by or issued to the Company
or any of its Subsidiaries and any requests from the FDA or any other Regulatory
Agency requesting the Company or any of its Subsidiaries to cease to market any
product; and (D) any civil penalty actions begun by the FDA or any other
Regulatory Agency against the Company or any of its Subsidiaries and all consent
decrees and all documents relating to the negotiation of and compliance with any
such consent decree issued with respect to the Company or any of its
Subsidiaries. The Company has made available to Parent copies of all documents
referred to on Schedule 6.1(t)(i) and any other written communications between
the Company or any of its Subsidiaries on the one hand, and the FDA or any other
Regulatory Agency on the other hand, that describe matters that could have a
Company Material Adverse Effect or discuss material issues concerning the
quality, identity, purity or safety of any such product or product line as well
as copies of all complaints and other information required to be maintained by
the Company pursuant to applicable law. For purposes of this Section 6.1(t)(i),
"Warning Letter" means a letter characterized by the FDA or any other Regulatory
Agency as a warning letter, a notice of adverse finding, observation of
noncompliance or a similar letter or report in which FDA or any other Regulatory
Agency expresses the opinion that violations of law, regulation or guideline
have occurred.
(ii) With such exceptions as will not have or be reasonably likely to
have a Company Material Adverse Effect and except as set forth on Schedule
6.l(t)(ii), (A) the Company (or, if applicable, one of its Subsidiaries) has
obtained all consents, approvals, certifications, authorizations and permits of,
and has made all filings with, or notifications to, all Regulatory Agencies
pursuant to applicable requirements of all FDA regulations and consent decrees,
and all applicable state and foreign laws, and regulations applicable to the
Company or any of its Subsidiaries; (B) all representations made by the Company
or any of its Subsidiaries in connection with any such consents, approvals,
certifications, authorizations, permits, filings and notifications were true and
correct in all material respects at the time such representations and warranties
were made, and the Company's products, and the products of its Subsidiaries,
substantially comply with, and perform in accordance with the specifications
described in, such representations; (C) the Company and its Subsidiaries and
their respective products and all of the facilities and entities which
manufacture such products are in substantial compliance with all applicable FDA
or any other Regulatory Agency rules, regulations and consent decrees, and
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all applicable state and foreign laws, rules and regulations (including Good
Manufacturing Practices) applicable to the Company's or its Subsidiaries'
business; and (D) none of the consents, approvals, authorizations,
registrations, certifications, permits, filings or notifications that it or any
of its Subsidiaries has received or made to operate their respective businesses
has been or, to the Knowledge of the Company, are being revoked or challenged.
(u) REAL AND PERSONAL PROPERTY. The Company and its Subsidiaries have
good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to the
business of the Company and its Subsidiaries, taken as a whole, in each case
free and clear of all liens, encumbrances and defects except such as are
described on Schedule 6.1(u). Except as set forth on Schedule 6.1(u), any real
property and facilities held under lease by the Company and its Subsidiaries are
held by them under valid, subsisting and enforceable leases with remaining terms
of at least two (2) years, except as would not have a Company Material Adverse
Effect.
(v) LICENSES AND PERMITS. The Company and each of its Subsidiaries has
obtained all material licenses, registrations, permits, approvals and other
governmental authorizations and non-governmental permits and licenses required
to conduct its business as presently conducted. Such authorizations are in full
force and effect and neither the Company nor any of its Subsidiaries has
received notice of proceedings relating to the revocation or modification of any
such license, registration, permit, approval or other governmental authorization
and non-governmental permits and licenses.
(w) CORRUPT PRACTICES. Neither the Company nor any of its
Subsidiaries, nor, to the Knowledge of the Company, any director, officer or
employee of the Company or any of its Subsidiaries has, directly or indirectly,
used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds, made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment or
violated any provision of the Foreign Corrupt Practices Act of 1977, as amended,
or the rules and regulations thereunder.
(x) EMPLOYMENT AND NON-COMPETE AGREEMENTS. The employment agreements
and non-compete agreements with the employees of the Company listed on Schedule
6.1(x) attached hereto have been executed by such employees prior to or
contemporaneously with the execution of this Agreement and such agreements
remain in full force and effect and, to the Knowledge of the Company, none of
the employees listed on Schedule 6.1(x) is in breach or violation of his or her
employment agreement or non-compete agreement.
(y) DISCLOSURE. All information relating to or concerning the Company
or any of its Subsidiaries set forth in this Agreement and provided to the
Parent and the Merger Subsidiary pursuant to Section 6.1 hereof and otherwise in
connection with the transactions contemplated hereby is true and correct in all
material respects and the Company has not omitted to state any material fact
necessary in order to make the statements made herein or otherwise, in light of
the circumstances under which they were made, not misleading.
6.2 REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE MERGER
SUBSIDIARY. The Parent and the Merger Subsidiary each hereby represent and
warrant to the Company, except as set forth in the disclosure schedules
delivered to the Company on the date of this Agreement and attached hereto,
that, as of the date hereof:
(a) ORGANIZATION AND GOOD STANDING. The Parent is a corporation
organized under the laws of Canada and the Merger Subsidiary is a corporation in
good standing under the laws of the State of Ohio and each of them has all
requisite corporate power and authority to own and operate its properties and
assets and to carry on its business as presently conducted. The Merger
Subsidiary has not, and prior to the Effective Time will not have, conducted any
activities other than those required for the Merger and has no, and prior to the
Effective Time will have no, assets, liabilities or obligations, except as
contemplated in connection with its execution, delivery and performance of this
Agreement and the Shareholders Agreement and the transactions contemplated
hereby and thereby.
(b) CORPORATE AUTHORITY. No vote of holders of capital stock of the
Parent is necessary to approve this Agreement, the Merger or the other
transactions contemplated hereby. The Parent and the Merger Subsidiary have all
requisite corporate power and authority and have taken all corporate action
(including approval of the
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Parent's parent and of the majority shareholder of the Parent's parent)
necessary in order to execute, deliver and perform their respective obligations
under this Agreement and to consummate the Merger. This Agreement is a valid and
binding agreement of the Parent and the Merger Subsidiary, enforceable against
each of the Parent and the Merger Subsidiary in accordance with its terms
subject to (i) applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or similar laws from time to time in effect affecting
creditors' rights generally, and (ii) general principles of equity, whether such
principles are considered in a proceeding at law or in equity.
(c) GOVERNMENTAL FILINGS; NO VIOLATIONS.
(i) Other than any filings and/or notices required pursuant to (A)
Section 2.3, (B) the HSR Act and Foreign Merger Laws and (C) the Exchange Act or
state securities or "blue sky" laws and the "takeover" laws of any state, no
notices or other filings are required to be made by the Parent or the Merger
Subsidiary with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Parent or the Merger Subsidiary
from, any Governmental Entity, in connection with the execution and delivery of
this Agreement by the Parent and the Merger Subsidiary and the consummation by
the Parent and the Merger Subsidiary of the Merger and the other transactions
contemplated hereby, except those that the failure to make or obtain are not,
individually or in the aggregate, reasonably likely to prevent, materially delay
or materially impair the ability of the Parent or the Merger Subsidiary to
consummate the transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by the
Parent and the Merger Subsidiary do not and will not, and the consummation by
the Parent and the Merger Subsidiary of the Merger and the other transactions
contemplated hereby will not, constitute or result in (A) a breach or violation
of, or a default under, the certificate of incorporation or bylaws (or similar
documents) of the Parent or the Merger Subsidiary, (B) a breach or violation of,
a default under or the acceleration of, any obligation or the creation of a
lien, pledge, security interest or other encumbrance on the assets of the Parent
or the Merger Subsidiary (with or without notice, lapse of time or both)
pursuant to, any Contracts binding upon the Parent or the Merger Subsidiary or
any Laws or governmental or non-governmental permit or license to which the
Parent or the Merger Subsidiary is subject or (C) any change in the rights or
obligations of any party under any of the Contracts binding upon the Parent or
the Merger Subsidiary, except, in the case of clause (B) or (C) above, for
breach, violation, default, acceleration, creation or change that, individually
or in the aggregate, is not reasonably likely to prevent, materially delay or
materially impair the ability of the Parent or the Merger Subsidiary to
consummate the transactions contemplated by this Agreement.
(d) BROKERS AND FINDERS. Neither the Parent nor any of its
Subsidiaries, officers, directors or employees has employed any broker or finder
or incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the Merger or the other transactions contemplated by this
Agreement or the Shareholders Agreement, except that DuPont Canada Inc., the
sole shareholder of the Parent, has employed Lehman Brothers Inc. and CCFL
Advisory Services Inc. as its financial advisors.
(e) FINANCING. Prior to the Effective Time, the Parent or the Merger
Subsidiary will have the funds necessary to consummate the Merger and the other
transactions contemplated hereby on the terms contemplated hereby.
ARTICLE VII
Covenants
7.1 COMPANY INTERIM OPERATIONS. The Company covenants and agrees as to
itself and its Subsidiaries that, after the date hereof and prior to the
Effective Time, except as expressly contemplated by this Agreement or as set
forth on Schedule 7.1 or except with the prior written consent of Parent, which
consent shall not be unreasonably delayed, conditioned or withheld:
(a) the business of the Company and its Subsidiaries shall be conducted
in the ordinary and usual course and, to the extent consistent therewith, the
Company and its Subsidiaries shall use their respective
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commercially reasonable efforts to preserve their respective business
organizations substantially intact and substantially maintain their existing
relations and goodwill with customers, suppliers, distributors, creditors,
lessors, employees and business associates;
(b) the Company shall not (i) issue, sell, pledge, dispose of or
encumber any capital stock owned by it in any of its Subsidiaries; (ii) amend
its articles of incorporation or code of regulations; (iii) split, combine or
reclassify its outstanding shares of capital stock; (iv) declare, set aside or
pay any dividend payable in cash, stock or property in respect of any capital
stock; or (v) repurchase, redeem or otherwise acquire, except in connection with
the Stock Plans or employment arrangements, or permit any of its Subsidiaries to
purchase or otherwise acquire, any shares of its capital stock or any securities
convertible into or exchangeable or exercisable for any shares of its capital
stock;
(c) neither the Company nor any of its Subsidiaries shall (i) issue,
sell, pledge, dispose of or encumber any shares of, or securities convertible
into or exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its capital stock of
any class or any Voting Debt or any other property or assets (other than the
issuance of shares of Common Stock pursuant to the Company Options); (ii)
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any other property or assets (including capital stock of any of its
Subsidiaries) or incur or modify any material indebtedness or other liability;
or (iii) make any commitments for, make or authorize any capital expenditures
involving amounts in excess of $100,000 in the aggregate or, by any means, make
any commitments for, make or authorize any acquisition of, or investment in,
assets or stock of any other Person;
(d) except as may be required by existing contractual commitments, as
contemplated by this Agreement or as required by applicable law, neither the
Company nor any of its Subsidiaries shall (i) hire any new management employees;
(ii) enter into any new agreements or commitments for any severance or
termination pay to, or enter into any employment or severance agreement with,
any of its directors, officers or employees; (iii) enter into or guarantee any
loans to employees; or (iv) terminate, establish, adopt, enter into, make any
new grants or awards under, amend or otherwise modify, any Compensation and
Benefit Plans or increase or accelerate the salary, wage, bonus or other
compensation of any employees, officers or directors (except for increases in
salaries, wages and cash bonuses of nonexecutive employees made in the ordinary
course of business consistent with past practice) or pay or agree to pay any
pension, retirement allowance or other employee benefit not required by any
existing Compensation and Benefit Plan;
(e) neither the Company nor any of its Subsidiaries shall settle or
compromise any claims or litigation or modify, amend or terminate any of the
Company Material Contracts or waive, release or assign any rights or claims;
(f) neither the Company nor any of its Subsidiaries shall make any
material Tax election or permit any insurance policy naming it as a beneficiary
or loss-payable payee to be canceled or terminated, except in the ordinary and
usual course of business;
(g) except as may be required as a result of a change in law or GAAP,
neither the Company nor any of its Subsidiaries shall change any of the
accounting practices or principles used by it;
(h) neither the Company nor any of its Subsidiaries shall adopt a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries not constituting an inactive Subsidiary;
(i) neither the Company nor any of its Subsidiaries will offer to, or
enter into an agreement to, do any of the foregoing; and
(j) the Company shall not, and shall not permit any of its Subsidiaries
to, take any action that would, or that could reasonably be expected to, result
in any of the representations or warranties of the Company in Section 6.1
becoming untrue.
7.2 ACQUISITION PROPOSALS.
(a) The Company shall, and shall cause its affiliates and the officers,
directors, employees, representatives and agents of the Company and its
Subsidiaries (including, without limitation, any investment banker, attorney or
accountant retained by the Company or any of its Subsidiaries) to, immediately
cease and terminate
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any existing activities, discussions or negotiations, if any, with any parties
(other than the Parent and the Merger Subsidiary, any affiliate or associate of
the Parent and the Merger Subsidiary or any designees of the Parent and the
Merger Subsidiary) conducted heretofore with respect to any acquisition or
exchange of all or any material portion of the assets of, or any equity interest
in, the Company or any of its Subsidiaries (by direct purchase from the Company,
tender or exchange offer or otherwise) or any business combination, merger or
similar transaction (including an exchange of stock or assets) with or involving
the Company or any of its Subsidiaries (an "Acquisition Transaction"), other
than the Merger.
(b) Except as set forth in Section 7.2(c), the Company shall not, and
shall not permit its affiliates and the officers, directors, employees,
representatives and agents of the Company and its Subsidiaries (including,
without limitation, any investment banker, attorney or accountant retained by
the Company or any of its Subsidiaries) to, directly or indirectly, encourage,
solicit, initiate or participate in discussions or negotiations with, or provide
any nonpublic information or data to, any Person (other than the Parent and the
Merger Subsidiary, any affiliate or associate of the Parent and the Merger
Subsidiary or any designees of the Parent and the Merger Subsidiary) with
respect to any inquiries or the making of any offer or proposal (including,
without limitation, any offer or proposal to the shareholders of the Company)
concerning an Acquisition Transaction (an "Acquisition Proposal") or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal.
(c) The Company may furnish information and access, but only in response
to a request for information or access, to any Person making a bona fide written
Acquisition Proposal to the Board of Directors of the Company after the date
hereof which was not encouraged, solicited or initiated by the Company or any of
its affiliates or any officer, director, employee, representative or agent of
the Company or any of its Subsidiaries (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of its
Subsidiaries) on or after the date hereof and may participate in discussions and
negotiate with such Person concerning any such Acquisition Proposal and may
authorize the Company to enter into a binding written agreement concerning a
Superior Proposal. An Acquisition Proposal shall be deemed to be a "Superior
Proposal" if and only if the board of directors of the Company determines in
good faith, after consultation with outside legal counsel and financial advisors
to the Company, that such Acquisition Proposal, if accepted, is reasonably
likely to be consummated, taking into account all legal, financial and
regulatory aspects of the proposal and the Person making the proposal, and
would, if consummated, result in a transaction more favorable to the Company's
shareholders than the transaction contemplated by this Agreement.
(d) Nothing in this Agreement shall prohibit the board of directors of
the Company from, to the extent applicable, complying with Rule 14e-2 or
Schedule 14D-9 promulgated under the Exchange Act with regard to an Acquisition
Proposal. The Company will notify the Parent within twenty-four (24) hours if
any such inquiries or proposals are received by, any information is requested
from, or any negotiations or discussions are sought to be initiated or continued
with the Company and shall in such notice indicate the identity of the offeror
and the material terms and conditions of any such Acquisition Proposal and
thereafter shall keep the Parent reasonably informed, on a current basis, of the
status and material terms of such Acquisition Proposal and the status of such
negotiations or discussions, providing copies to the Parent of any Acquisition
Proposals made in writing.
(e) The Company shall provide the Parent with five (5) days advance
notice of, in each and every case, its intention to either provide any
information to or enter into any agreement with any Person making any
Acquisition Proposal. Prior to providing information to or negotiating with any
other party, the Company and such other party will enter into a confidentiality
or non-disclosure agreement containing terms no less restrictive than the terms
of the letter agreement between the Company and the Parent dated November 30,
2001. The Company agrees not to release any third party from, or waive any
provisions of, any such confidentiality or non-disclosure agreement and will use
commercially reasonable efforts to enforce any such agreements at the request of
and on behalf of the Parent.
(f) The Company will inform its affiliates and the officers, directors,
employees, representatives and agents of the Company and its Subsidiaries
(including, without limitation, any investment banker, attorney or accountant
retained by the Company or any of its Subsidiaries) of the obligations
undertaken in this Section 7.2.
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7.3 COMPANY SHAREHOLDER APPROVAL; PROXY STATEMENT.
(a) The Company, acting through its board of directors, shall (i) call a
meeting of its shareholders (the "Company Shareholders Meeting") for the purpose
of voting to adopt this Agreement and to approve the Merger as soon as possible
following the date of this Agreement, (ii) hold the Company Shareholders Meeting
as promptly as practicable following the date of this Agreement and (iii)
recommend to its shareholders the adoption of this Agreement and the approval of
the Merger. Notwithstanding the foregoing, the board of directors of the Company
may withdraw, modify or amend any recommendation that the shareholders approve
the Merger if the Company receives a Superior Proposal.
(b) The Company will, within ten (10) Business Days after the date of
this Agreement, prepare and file a preliminary proxy statement (the "Proxy
Statement") with respect to the Company Shareholders Meeting with the SEC, will
respond to any comments of the SEC or its staff and any request by the SEC or
its staff for amendments or supplements to the Proxy Statement or for additional
information within five (5) Business Days and will supply the Parent with copies
of all correspondence between the Company or any of its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. The Parent and the Merger Subsidiary shall furnish to
the Company all information regarding the Parent, the Merger Subsidiary and
their affiliates that may be required (pursuant to the Exchange Act and other
applicable Laws) to be set forth in the Proxy Statement. The Company shall give
the Parent and its counsel the opportunity to review the Proxy Statement and any
supplements or amendments thereto prior to their being filed with the SEC and
shall give the Parent and its counsel the opportunity to review all replies to
comments and responses to requests for additional information prior to their
being filed with, or sent to, the SEC. Each of the Company and the Parent agrees
to use commercially reasonable efforts, after consultation with the other
parties hereto, to respond promptly to all such comments of and requests by the
SEC. Within two (2) Business Days after the Proxy Statement has been cleared by
the SEC, the Company shall mail the Proxy Statement to the shareholders of the
Company. If at any time prior to the approval of this Agreement by the Company's
shareholders there shall occur any event which should be set forth in an
amendment or supplement to the Proxy Statement, the Company will prepare and
mail to its shareholders such an amendment or supplement.
(c) The Company represents and warrants that the Proxy Statement and any
supplements or amendments thereto will comply in all material respects with
applicable provisions of the Exchange Act and, at the respective times filed
with the SEC and distributed to shareholders of the Company, will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided that the Company makes no representation or warranty as to
any information included in the Proxy Statement and any supplements or
amendments thereto that was provided by the Parent or the Merger Subsidiary. The
Parent represents and warrants that none of the information supplied by the
Parent or the Merger Subsidiary for inclusion in the Proxy Statement and any
supplements or amendments thereto will, at the respective times that they are
filed with the SEC and distributed to shareholders of the Company, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
7.4 APPROVALS AND CONSENTS; COOPERATION.
(a) The Company and the Parent shall cooperate with each other and use
(and shall cause their respective Subsidiaries to use) commercially reasonable
efforts to take or cause to be taken all actions, and do or cause to be done all
things, necessary, proper or advisable under this Agreement, the Shareholders
Agreement and applicable Laws to consummate and make effective the Merger and
the other transactions contemplated by this Agreement and the Shareholders
Agreement, as soon as possible, including preparing and filing as promptly as
practicable all documentation to effect all necessary applications, notices,
petitions, filings and other documents and to obtain as promptly as practicable
all permits, consents, approvals and authorizations necessary or advisable to be
obtained from any third party and/or any Governmental Entity in order to
consummate the Merger or any of the other transactions contemplated by this
Agreement and the Shareholders Agreement.
(b) The Company and the Parent each agree to use commercially reasonable
efforts to take or cause to be taken all appropriate action, and do or cause to
be done such things as may be necessary under federal or state securities laws
or the HSR Act or Foreign Merger Laws applicable to or necessary for, and will
file as promptly
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as practicable and, if appropriate, use commercially reasonable efforts to have
declared effective or approved, all documents and notifications with the SEC and
other Governmental Entities that they deem necessary or appropriate for, the
consummation of the Merger or any of the other transactions contemplated hereby
and each party shall give the other information reasonably requested by such
other party pertaining to it and its Subsidiaries and affiliates to enable such
other party to take such actions.
(c) The Company, the Parent and the Merger Subsidiary each agree to use
commercially reasonable efforts to contest and resist any action, including
legislative, administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent) that is in effect and that restricts,
prevents or prohibits the consummation of the Merger or any of the other
transactions contemplated by this Agreement, including, without limitation, by
pursuing available avenues of administrative and judicial appeal.
(d) The Company, the Parent and the Merger Subsidiary each agree to use
commercially reasonable efforts to take any and all actions necessary to avoid
or eliminate each and every impediment under any antitrust law that may be
asserted by any Governmental Entity or any other party so as to enable the
parties to close the transactions contemplated hereby by the date specified in
Section 9.2(a) provided, however, that nothing in this Section 7.4 shall
require, or be construed to require, the Parent to proffer to, or agree to, sell
or hold separate and agree to sell, before or after the Effective Time, any
assets, businesses or interest in any assets or businesses of the Parent, the
Company or any of their respective affiliates (or to consent to any sale of, or
agreement to sell, by the Company any of its assets or businesses) or to agree
to any material change or restriction in the operations of any such assets or
businesses and provided, further, that nothing in this Section 7.4 shall
require, or be construed to require, a proffer or agreement that would, in the
reasonable judgment of the Parent, be likely to have an adverse effect on the
benefits to the Parent of the transactions contemplated by this Agreement.
(e) Subject to applicable Laws relating to the exchange of information,
the Parent and the Company shall have the right to review in advance, and to the
extent practicable each will consult the other on, all the information relating
to the Parent or the Company, as the case may be, and any of their respective
Subsidiaries and affiliates, that appear in any filing made with, or written
materials submitted to, any third party and/or any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement and the Shareholders Agreement. In exercising the foregoing right,
each of the Company and the Parent shall act reasonably and as promptly as
practicable.
7.5 FILINGS; OTHER ACTIONS; NOTIFICATION.
(a) The Company and the Parent each shall, upon request, furnish the
other with all information concerning itself, its Subsidiaries, affiliates,
directors, officers and shareholders or stockholders and such other matters as
may be reasonably necessary or advisable in connection with the Proxy Statement
or any other statement, filing, notice or application made by or on behalf of
the Parent, the Company or any of their respective Subsidiaries to any
Governmental Entity in connection with the Merger and the transactions
contemplated by this Agreement and the Shareholders Agreement.
(b) The Company and the Parent each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by the Parent, the Company or any of their respective
Subsidiaries from any third party or any Governmental Entity with respect to the
Merger and the other transactions contemplated by this Agreement and the
Shareholders Agreement. The Company shall give prompt notice to the Parent of
any change that has resulted in or is reasonably likely to result in a change in
any representation or warranty in Section 6.1 or a Company Material Adverse
Effect and the Parent shall give the Company prompt notice of any event, fact,
circumstance or occurrence that would be reasonably likely to have an adverse
effect on the ability of the Parent or the Merger Subsidiary to complete the
Merger or to comply with their respective obligations contained in this
Agreement.
7.6 ACCESS. From the date hereof until the earlier of the Effective Time
or the termination of this Agreement, upon reasonable notice, the Company shall
afford to the officers, employees, financial advisors, attorneys, accountants
and other representatives of the Parent reasonable access to all of its and its
Subsidiaries' properties, books and records (including security position
listings or other information concerning beneficial and
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record owners of the Company's securities), their Contracts or other commitments
and their officers, management employees and representatives and, during such
period, the Company shall furnish promptly to the Parent, consistent with its
obligations under this Agreement and its other legal obligations, all
information reasonably requested concerning its business, properties and
personnel.
7.7 DELISTING; DE-REGISTRATION. The Surviving Corporation shall use
commercially reasonable efforts to cause the Shares to be delisted from the
Nasdaq National Market and de-registered under the Exchange Act as soon as
practicable following the Effective Time.
7.8 PUBLICITY. The initial press release relating to this Agreement and
the Merger shall be a joint press release, the content of which shall be
prepared by the Parent in consultation with the Company, and thereafter the
Company shall consult with and obtain approval of the Parent prior to issuing
any press releases or otherwise making public statements with respect to the
transactions contemplated by this Agreement and prior to making any filings with
any Governmental Entity with respect to the transactions contemplated by this
Agreement; provided, however, that the Company may issue any press release or
make any public statement or make any filing it believes in good faith is
required by applicable law or the rules and regulations of the SEC (in which
case the Company will use its reasonable best efforts to give the Parent prior
notice).
7.9 BENEFITS.
(a) STOCK OPTIONS.
(i) The board of directors of the Company (or, if appropriate, any
committee administering the Stock Plans) shall adopt such resolutions or take
such other actions as are required to adjust the terms of all outstanding
Company Options to provide that, at the Effective Time, each Company Option
outstanding (whether or not vested) shall be canceled in exchange for the right
to receive a cash payment of, or can only be exercised for net cash equal to, an
amount equal to (A) the excess, if any, of (1) the Price per Share over (2) the
exercise price per share of Common Stock subject to such Company Option,
multiplied by (B) the number of shares of Common Stock for which such Company
Option shall not theretofor have been exercised. Upon surrender to the Surviving
Corporation at the address set forth in Section 10.6 of Company Options and/or
such other documents as may reasonably be requested by the Surviving
Corporation, the Parent hereby agrees to cause the Surviving Corporation to
deliver to the registered holders of such Company Options (as indicated in the
records of the Company) such cash payment. After the date of this Agreement,
neither the board of directors of the Company nor any committee thereof shall
cause any Company Option to become exercisable as a result of the execution of
this Agreement or the consummation of the transactions contemplated hereby.
(ii) All amounts payable pursuant to this Section 7.9 shall be
subject to any required withholding of taxes and shall be paid without interest.
(iii) The board of directors of the Company shall take all necessary
action to terminate the Stock Plans as of the Effective Time and the board of
directors of the Company shall take all necessary action to delete the
provisions in any other Compensation and Benefit Plan providing for the
issuance, transfer or grant of any capital stock of the Company or any interest
in respect of any capital stock of the Company as of the Effective Time, and the
Company shall ensure that following the Effective Time no holder of a Stock
Option or any participant in any Stock Plan or other Compensation and Benefit
Plan shall have any right thereunder to acquire any capital stock of the Company
or the Surviving Corporation.
(b) EMPLOYEE BENEFITS. If required by the Parent, the Company shall,
immediately prior to the Closing Date, take action to terminate, merge,
consolidate, transfer the assets of or otherwise amend the Company's Employees'
Profit Sharing and Salary Deferral Plan and Trust (the "Company 401(k)") and the
Liqui-Box Corporation Employees' Stock Ownership Plan (the "Company ESOP"),
provided that any action required by the Parent will be in compliance with all
applicable requirements of the Code and regulations thereunder so that the
tax-qualified status of the Company 401(k) and the Company ESOP will be
maintained. The Company will provide to the Parent resolutions of the board of
directors of the Company authorizing any such required action. Except for those
benefits provided to employees listed on Schedule 6.1(x), with regard to other
employee benefits, at and for a period of one (1) year after the Closing, the
Parent shall provide such benefits to the Employees by either (i) continuing the
relevant Compensation and Benefit Plans; (ii) allowing the Employees to
participate in plans sponsored or maintained by the Parent or an affiliate of
the Parent;
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(iv) establishing new plans or (iii) some combination of (i), (ii) and (iii);
provided, that, in the aggregate, the benefits under any such plans are
substantially similar to the benefits provided under the relevant Compensation
and Benefit Plans prior to the Closing. To the extent that the Employees
participate in any employee benefit plans sponsored or maintained by the Parent
or an affiliate of the Parent or in any newly-established plan after the
Closing, the Employees will receive credit for service under each such plan, for
eligibility and/or vesting purposes, for all service credit that they had with
the Company and its Controlled Group Affiliates prior to the Closing in a
comparable plan.
7.10 EXPENSES. The Surviving Corporation shall pay all charges and
expenses, including those of the Depositary, in connection with the transactions
contemplated in Article V. Except as otherwise provided in Section 9.5(b),
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement, the Shareholders Agreement and the Merger and
the other transactions contemplated by this Agreement and the Shareholders
Agreement shall be paid by the party incurring such expense.
7.11 INDEMNIFICATION.
(a) The articles of incorporation of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification than are
set forth in Article VI of the Amended Articles of Incorporation of the Company,
which provisions shall not be amended, repealed or otherwise modified for a
period of six (6) years from the Effective Time in any manner that would affect
adversely the rights thereunder of individuals who at or prior to the Effective
Time were directors or officers of the Company, with respect to any act or
omission in their capacity as an officer or director of the Company occurring on
or prior to the Effective Time, unless such modification shall be required by
law.
(b) The Company shall, to the fullest extent permitted under applicable
law and regardless of whether the Merger becomes effective, indemnify and hold
harmless, and after the Effective Time, the Surviving Corporation shall, to the
fullest extent permitted under applicable law, indemnify and hold harmless each
present and former director and officer of the Company (collectively, the
"Indemnified Parties") against all costs and expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
settlement amounts paid in connection with any claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or directly
pertaining to any action or omission in their capacity as an officer or director
of the Company occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, for a period of six (6) years
after the Effective Time, in each case to the fullest extent permitted under
applicable law (and shall pay any expenses in advance of the final disposition
of such action or proceeding to each Indemnified Party to the fullest extent
permitted under applicable law, upon receipt from the Indemnified Party to whom
expenses are advanced of an undertaking to repay such advances required under
applicable law) if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation, and with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and with respect to any
criminal action or proceeding, he had reasonable cause to believe that his
conduct was unlawful. In the event of any such claim, action, suit, proceeding
or investigation, (i) the Company or the Surviving Corporation, as the case may
be, shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Parties and reasonably satisfactory to the Parent promptly after
statements therefor are received and (ii) the Company or the Surviving
Corporation, as the case may be, shall cooperate with the Indemnified Parties in
the defense of any such matter. In the event that any claim for indemnification
is asserted or made within such six-year period, all rights to indemnification
in respect of such claim shall continue until the final disposition of such
claim.
(c) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and
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assigns of the Company or the Surviving Corporation, as the case may be, or at
the Parent's option, the Parent, shall assume the obligations set forth in this
Section 7.11.
(d) The provisions of this Section 7.11 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties as
intended third party beneficiaries and their heirs and estates and shall be
binding on all successors and assigns of the Parent and the Surviving
Corporation.
7.12 ANTITAKEOVER STATUTES. If any Antitakeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement or the Shareholders Agreement, each of the Parent and the Company and
their respective boards of directors shall grant such approvals and take such
lawful actions as are reasonably practicable so that such transactions may be
consummated as promptly as practicable on the terms contemplated by this
Agreement or the Shareholders Agreement or by the Merger and otherwise act to
eliminate or minimize the effects of such statute or regulation on such
transactions; provided, however, that in no event shall the Parent be required
to take any actions which, in its reasonable judgment, would subject it to undue
burden or expense.
7.13 RELEASE OF COMPANY GUARANTEES. Prior to the Effective Time, the
Company shall obtain releases of any guarantees by the Company of loans to
employees.
7.14 SALE OF CERTAIN ITEMS. Prior to the Effective Time, if so requested
in writing by Samuel B. Davis, the Company shall sell to Samuel B. Davis the
items listed on Schedule 7.14 at their fair market value, as determined by
independent appraisers selected by the Company, for cash due at the time of such
sale.
7.15 TITLE TO REAL PROPERTY. Prior to the Effective Time, the Company
shall execute and record the documents necessary to establish title to the
Worthington, Ohio property and the Ashland, Ohio property in the Company.
ARTICLE VIII
Conditions
8.1 CONDITIONS TO THE OBLIGATIONS OF THE PARENT AND THE MERGER
SUBSIDIARY. The obligations of the Parent and the Merger Subsidiary are subject
to the satisfaction or waiver at or prior to the Closing of each of the
following conditions:
(a) SHAREHOLDER APPROVAL. The shareholders of the Company shall have
adopted this Agreement and approved the Merger at the Company Shareholders
Meeting.
(b) REGULATORY CONSENTS. Any waiting period applicable to the
consummation of the Merger under the HSR Act or any Foreign Merger Laws shall
have expired or been terminated.
(c) REPRESENTATIONS AND WARRANTIES. The representations and warranties
set forth in Section 6.1 above (disregarding any qualifications contained
therein regarding materiality or Company Material Adverse Effect) shall be true
and correct at and as of the Closing Date, except to the extent that such breach
has not had, or would not be reasonably likely to have, a Company Material
Adverse Effect.
(d) COVENANTS. The Company shall have performed and complied with all
of its covenants set forth in Article 7 in all material respects through the
Closing Date.
(e) DISSENTERS. No more than ten percent (10%) of the outstanding
shares of Common Stock shall be Dissenting Shares.
(f) NO INJUNCTIONS OR RESTRAINTS. (i) No court or Governmental Entity
of competent jurisdiction shall have enacted, issued, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) (collectively, an "Order") that is in
effect and restrains, enjoins or otherwise prohibits consummation of the Merger;
provided, however, that prior to invoking this provision, each party shall use
commercially reasonable efforts to have any such Order lifted or withdrawn, and
(ii) no Governmental Entity shall have instituted any proceeding seeking any
such Order.
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8.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company are subject to the satisfaction or waiver at or prior to the Closing of
each of the following conditions:
(a) SHAREHOLDER APPROVAL. The shareholders of the Company shall have
adopted this Agreement and approved the Merger at the Company Shareholder
Meeting.
(b) REGULATORY CONSENTS. Any waiting period applicable to the
consummation of the Merger under the HSR Act or any Foreign Merger Laws shall
have expired or been terminated.
(c) REPRESENTATIONS AND WARRANTIES. The representations and warranties
set forth in Section 6.2 above shall be true and correct at and as of the
Closing Date.
(d) NO INJUNCTIONS OR RESTRAINTS. (i) No court or Governmental Entity
of competent jurisdiction shall have enacted, issued, enforced or entered any
Order that is in effect and restrains, enjoins or otherwise prohibits
consummation of the Merger; provided, however, that prior to invoking this
provision, each party shall use commercially reasonable efforts to have any such
Order lifted or withdrawn, and (ii) no Governmental Entity shall have instituted
any proceeding seeking any such Order.
ARTICLE IX
Termination
9.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by shareholders of the Company referred to in
Section 8.1(a), by mutual written consent of the Company, the Parent and the
Merger Subsidiary.
9.2 TERMINATION BY EITHER THE PARENT OR THE COMPANY. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Parent or the board of directors of the Company if:
(a) the Merger shall not have been consummated by August 30, 2002,
whether such date is before or after the date of approval by the shareholders of
the Company referred to in Section 8.1(a); provided, however, that if a request
for additional information is received from a Governmental Entity or pursuant to
the HSR Act or Foreign Merger Laws, then such date shall be extended to the
thirtieth (30th) day following the date when such Governmental Entity has deemed
the Parent and/or the Company, as applicable, to be in substantial compliance
with such request for additional information, but in any event not later than
September 30, 2002, provided that the right to terminate this Agreement pursuant
to this Section 9.2(a) shall not be available to any party that has breached in
any material respect its obligations under this Agreement in any manner that
shall have been the proximate cause of, or resulted in, the failure to
consummate the Merger by the date referred to in this Section 9.2(a);
(b) the Company Shareholders Meeting shall have been convened, held and
completed and the approval referred to in Section 8.1(a) shall not have been
obtained thereat or at any adjournment or postponement thereof; or
(c) any Order permanently restraining, enjoining or otherwise
prohibiting the Merger shall become final and non-appealable (whether before or
after the approval referred to in Section 8.1(a)), provided, however, that the
right to terminate this Agreement pursuant to this Section 9.2(c) shall not be
available to any party that has breached its covenant in Section 7.4 to use
commercially reasonable efforts to prevent such Order from being issued and to
use commercially reasonable efforts to cause such Order to be vacated, withdrawn
or lifted.
9.3 TERMINATION BY THE COMPANY. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time by action of the
board of directors of the Company if:
(a) the board of directors of the Company authorizes the Company,
subject to compliance with the terms of this Agreement, including Section 7.2,
to enter into a binding written agreement concerning a Superior Proposal and the
Company notifies the Parent in writing that it intends to enter into such an
agreement, attaching the most current version of such agreement to such notice;
provided, however, that the Company (x) will not enter into a binding agreement
concerning a Superior Proposal until at least the first calendar day following
the fifth (5th) Business Day after it has provided the written notice to the
Parent required thereby, (y) will notify the
A-27
Parent promptly if its intention to enter into the binding written agreement
referred to in such notice shall change at any time after giving such
notification and (z) will not terminate this Agreement or enter into a binding
agreement if the Parent has, within the period referred to in clause (x) of this
sentence, made a written offer that is deemed by the Special Committee, in
consultation with its outside legal counsel and financial advisors, to be at
least as favorable to the Company's shareholders as the Superior Proposal; or
(b) any representation or warranty of the Parent or the Merger
Subsidiary in this Agreement shall not be true and correct in any material
respect, as if such representation or warranty was made as of such time on or
after the date of this Agreement; or the Parent or the Merger Subsidiary shall
have failed to perform in any material respect any obligation or to comply in
any material respect with any agreement or covenant of the Parent or the Merger
Subsidiary to be performed or complied with by it under this Agreement and
which, in any such case, shall not have been cured within five (5) Business Days
following receipt of notice thereof.
9.4 TERMINATION BY THE PARENT. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time by action of the
Parent if:
(a) the board of directors of the Company shall have failed to
recommend, or shall have withdrawn or adversely modified its approval or
recommendation of, the Merger or failed to reconfirm its recommendation of the
Merger within two (2) Business Days after a written request by the Parent to do
so, or shall have resolved to do any of the foregoing; or
(b) any representation or warranty of the Company in this Agreement
(disregarding any qualifications contained therein regarding materiality or
Company Material Adverse Effect) shall not be true and correct, as if such
representation or warranty was made as of such time on or after the date of this
Agreement, except to the extent that such failure to be true and correct has not
had, and is not reasonably likely to have, a Company Material Adverse Effect, or
the Company shall have failed to perform in any material respect any obligation
or to comply in any material respect with any agreement or covenant of the
Company to be performed or complied with by it under this Agreement and which,
in any such case, shall not have been cured within five (5) Business Days
following receipt of notice thereof.
9.5 EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article IX, this Agreement (other than as set forth
in Section 10.1) shall become void and of no effect with no liability of any
party hereto (or any of its directors, officers, employees, agents, legal and
financial advisors or other representatives); provided, however, that, except as
otherwise provided herein, no such termination shall relieve any party hereto of
any liability or damages resulting from any willful breach of this Agreement or
for payment of the termination fees or expenses payable pursuant to Section
9.5(b).
(b) In the event that (i)(A) a bona fide Acquisition Proposal shall have
been made to the Company or any of its shareholders or any Person shall have
announced an intention (whether or not conditional) to make an Acquisition
Proposal with respect to the Company, and on or following the date of this
Agreement, such Acquisition Proposal, announcement or intention is or becomes
publicly known, and (B) on or following the date on which such Acquisition
Proposal, announcement or intention is or becomes publicly known, this Agreement
is terminated by either the Parent or the Company pursuant to Section 9.2(a), or
(ii) this Agreement is terminated (A) by the Company pursuant to Section 9.3(a)
or (B) by the Parent pursuant to Section 9.4(a), then the Company shall
promptly, but in no event later than two (2) Business Days after the date of
such termination if terminated by the Parent or the Merger Subsidiary and
simultaneously if terminated by the Company pay to the Parent a termination fee
of $12,000,000 in cash payable by wire transfer of same day funds to an account
to be specified by the Parent and shall promptly, but in no event later than two
(2) Business Days after the date of notification by the Parent of the amount,
reimburse the Parent for all actual, documented out-of-pocket costs, charges and
expenses actually incurred by DuPont Canada Inc., the Parent or the Merger
Subsidiary in connection with this Agreement and the Shareholders Agreement and
the transactions contemplated by this Agreement and the Shareholders Agreement,
including, without limitation, fees and expenses of accountants, attorneys and
financial advisors, in cash by wire transfer of same day funds to an account to
be specified by the Parent. The Company acknowledges that the agreements
contained in this Section 9.5(b) are an integral part of the transactions
contemplated by this Agreement and that, without these agreements, the Parent
and the Merger Subsidiary would not enter into this Agreement; accordingly, if
the Company fails to promptly pay the amount due pursuant to this
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Section 9.5(b) and, in order to obtain such payment, the Parent or the Merger
Subsidiary commences a suit which results in a binding nonappealable judgment
rendered by a court of competent jurisdiction against the Company for the fee
set forth in this paragraph (b), the Company shall pay to the Parent or the
Merger Subsidiary its costs and expenses (including reasonable attorneys' fees)
in connection with such suit, together with interest on the amount of the fee at
the prime rate of The Chase Manhattan Bank in effect on the date such payment
was required to be made.
ARTICLE X
Miscellaneous and General
10.1 SURVIVAL. This Article X and the agreements of the Company, the
Parent and the Merger Subsidiary contained in Articles II, III, IV and V and
Sections 7.9 (Benefits), 7.10 (Expenses) and 7.11 (Indemnification) shall
survive the consummation of the Merger. This Article X and the agreements of the
Company, the Parent and the Merger Subsidiary contained in Section 7.10
(Expenses), and Section 9.5 (Effect of Termination and Abandonment) shall
survive the termination of this Agreement. All other agreements and all
representations, warranties and covenants in this Agreement shall not survive
the consummation of the Merger or the termination of this Agreement.
10.2 MODIFICATION OR AMENDMENT. Subject to the provisions of applicable
law, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
10.3 WAIVER OF CONDITIONS. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
10.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
10.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS
OF THE STATE OF DELAWARE AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA
LOCATED IN THE COUNTY OF NEW CASTLE, DELAWARE SOLELY IN RESPECT OF THE
INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND THE
SHAREHOLDERS AGREEMENT AND OF THE DOCUMENTS REFERRED TO IN THIS AGREEMENT AND
THE SHAREHOLDERS AGREEMENT, AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN
ANY ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION OR ENFORCEMENT HEREOF OR
OF ANY SUCH DOCUMENT, THAT IT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT
OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT
THE VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT OR THE
SHAREHOLDERS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO
SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH A DELAWARE STATE
OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT
JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH
DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY
SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 10.6 OR IN SUCH
OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE
THEREOF.
A-29
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT OR THE SHAREHOLDERS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE SHAREHOLDERS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.5.
10.6 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
if to the Parent or the Merger Subsidiary:
Enhance Packaging Technologies Inc.
7070 Mississauga Road
Mississauga, Ontario L5N 5M8
Attention: General Counsel
Fax: (905) 821-5651
with copies to:
Justin P. Klein, Esq.
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
Fax: (215) 864-8999
if to the Company:
Liqui-Box Corporation
6950 Worthington-Galena Road
Worthington, Ohio 43085
Attention: Samuel B. Davis
Fax: (614) 888-0982
with copies to:
Ronald A. Robins, Jr., Esq.
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
Columbus, Ohio 43215
Fax: (614) 719-4926
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
10.7 ENTIRE AGREEMENT. This Agreement (including any exhibits hereto) and
the letter agreement between the Company and the Parent dated November 30, 2001
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties both written and oral, among the
parties, with respect to the subject matter hereof.
A-30
10.8 NO THIRD PARTY BENEFICIARIES. Except as provided in Section 7.11
(Indemnification), this Agreement is not intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.
10.9 OBLIGATIONS OF THE PARENT AND OF THE COMPANY. Whenever this
Agreement requires a Subsidiary of the Parent to take any action, such
requirement shall be deemed to include an undertaking on the part of the Parent
to cause such Subsidiary to take such action. Whenever this Agreement requires a
Subsidiary of the Company to take any action, such requirement shall be deemed
to include an undertaking on the part of the Company to cause such Subsidiary to
take such action and, after the Effective Time, on the part of the Surviving
Corporation to cause such Subsidiary to take such action.
10.10 SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
10.11 SPECIFIC PERFORMANCE. The parties hereto each acknowledge that, in
view of the uniqueness of the subject matter hereof, the parties hereto would
not have an adequate remedy at law for money damages if this Agreement were not
performed in accordance with its terms, and therefore agree that the parties
hereto shall be entitled to specific enforcement of the terms hereof in addition
to any other remedy to which the parties hereto may be entitled at law or in
equity.
10.12 INTERPRETATION. The table of contents and Article, Section and
Paragraph headings herein are for convenience of reference only, do not
constitute part of this Agreement and shall not be deemed to limit or otherwise
affect any of the provisions hereof. Where a reference in this Agreement is made
to a Section, Schedule or Exhibit, such reference shall be to a Section of or a
Schedule or Exhibit to this Agreement unless otherwise indicated. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
10.13 ASSIGNMENT. This Agreement shall not be assignable by operation of
law or otherwise; provided, however, that either of the Parent or the Merger
Subsidiary may assign its rights and obligations under this Agreement to any of
the Parent's Subsidiaries or affiliates, in the event of which, all references
herein to the Parent or to the Merger Subsidiary shall be deemed references to
such other Subsidiary or affiliate or Subsidiaries or affiliates. Any purported
assignment made in contravention of this Agreement shall be null and void.
[Remainder of page intentionally left blank]
A-31
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
duly authorized officers of the parties hereto as of the date hereof.
LIQUI-BOX CORPORATION
By: /s/ SAMUEL B. DAVIS
------------------------------------
Name: Samuel B. Davis
Title: Chairman, Chief Executive
Officer and Treasurer
ENHANCE PACKAGING TECHNOLOGIES INC.
By: /s/ ASH SAHI
------------------------------------
Name: Ash Sahi
Title: President and Chief
Executive Officer
EPT NEWCO, INC.
By: /s/ ASH SAHI
------------------------------------
Name: Ash Sahi
Title: President and Chief
Executive Officer
GUARANTEE OF DUPONT CANADA INC.
DuPont Canada Inc., on behalf of itself and its successors and assigns,
hereby guarantees the obligations of the Parent, the Merger Subsidiary and the
Surviving Corporation and their successors and assigns with respect to this
Agreement.
DUPONT CANADA INC.
By: /s/ DAVE W. COLCLEUGH
------------------------------------
Name: Dave W. Colcleugh
Title: Chairman, President and
Chief Executive Officer
A-32
APPENDIX B
MARCH 25, 2002
PERSONAL AND CONFIDENTIAL
- ----------------------------------------
Special Committee of the Board of Directors
and the Board of Directors
Liqui-Box Corporation
6950 Worthington-Galena Rd.
Worthington, Ohio 43085
Members of the Special Committee and the Board:
You have requested our opinion as to the fairness, from a financial point
of view, to the holders of the issued and outstanding Common Shares, without par
value (the "Common Shares") of Liqui-Box Corporation (the "Company") pursuant to
the Agreement and Plan of Merger dated as of March 25, 2002 (the "Merger
Agreement") by and among the Company, Enhance Packaging Technologies Inc.
("Parent") and EPT Newco, Inc., a wholly-owned subsidiary of Parent ("Merger
Sub"). Parent is a wholly-owned subsidiary of DuPont Canada Inc. ("DuPont
Canada").
You have advised us that the Merger Agreement contemplates that at the
closing of the transactions contemplated thereby, among other things, Merger Sub
will be merged with and into the Company, the Company will become a wholly-owned
subsidiary of Parent, and each Common Share of the Company issued and
outstanding as of the closing date (other than shares owned by Parent or the
Company and any of their respective parent entities and subsidiaries and any
shares as to which appraisal rights have been perfected in accordance with
provisions of applicable law) will be converted into the right to receive the
amount of $67.00 per share in cash (the "Merger Consideration"). You have also
advised us that payment of the Merger Consideration is guaranteed by DuPont
Canada.
McDonald Investments Inc., as part of its investment banking business, is
customarily 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.
In connection with rendering this opinion, we have reviewed and analyzed,
among other things, the following: (i) the Merger Agreement, including the
exhibits and schedules thereto; (ii) the Shareholders Agreement dated as of
March 25, 2002 by and among Parent, Merger Sub and the shareholders of the
Company listed on Schedule I thereto; (iii) the Noncompetition and
Nonsolicitation Agreement dated March 25, 2002 between the Company and Samuel B.
Davis; (iv) the Noncompetition and Nonsolicitation Agreement dated March 25,
2002 between the Company and Samuel N. Davis; (v) certain publicly available
information concerning the Company, including its Annual Reports on Form 10-K of
the Company for each of the years in the five year period ended December 31,
2000, its Quarterly Report on Form 10-Q of the Company for the period ended
September 30, 2001 and a draft of its Annual Report on Form 10-K for the year
ended December 31, 2001; (vi) certain internal information, primarily financial
in nature and including projections, furnished to us by the Company's management
for purposes of our analysis; (vii) certain publicly available information
concerning the trading of, and the trading market for, the Common Shares; (viii)
certain publicly available information with respect to certain other companies
that we believe to be comparable to the Company and the trading markets for
certain of such other companies' securities; and (ix) certain publicly available
information concerning the nature and terms of certain other transactions that
we consider relevant to our inquiry. We have also met with certain officers and
employees of the Company to discuss the business and prospects of the Company,
as well as other matters we believe relevant to our inquiry.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided us or publicly available and have assumed and relied upon
the representations and warranties of the Company contained in the Merger
Agreement. We have not
B-1
Special Committee of the Board of Directors
and the Board of Directors
March 25, 2002
Page 2
been engaged to, and have not independently attempted to, verify any of such
information. We have also relied upon the management of the Company as to the
reasonableness and achievability of the financial and operating projections (and
the assumptions and bases therefor) provided to us and, with your consent, we
have assumed that such projections reflect management's best currently available
estimates and judgments. We have not been engaged to assess the reasonableness
or achievability of such projections or the assumptions on which they were based
and express no view as to such projections or assumptions. In addition, we have
not evaluated or appraised any of the assets, properties or facilities of the
Company nor have we been furnished with any such evaluation or appraisal. We
have also assumed that the conditions to the merger as set forth in the Merger
Agreement would be satisfied and that the merger would be consummated on a
timely basis in the manner contemplated by the Merger Agreement.
It should be noted that this opinion is based on economic and market
conditions and other circumstances existing on, and information made available
as of, the date hereof and does not address any matters subsequent to such date.
We have not been engaged to solicit indications of interest or to otherwise
explore the viability of any alternative transaction to the merger. In addition,
our opinion is, in any event, limited to the fairness, as of the date hereof,
from a financial point of view, of the Merger Consideration and does not address
the Company's underlying business decision to effect the merger or any other
terms of the merger. It should be noted that although subsequent developments
may affect this opinion, we do not have any obligation to update, revise or
reaffirm our opinion.
We have acted as the Company's financial advisor in connection with the
merger and will receive a fee for our services, a portion of which is contingent
upon completion of the merger. We have also received a retainer and will receive
a fee for our services in rendering this opinion, and the Company has agreed to
indemnify us under certain circumstances.
In the ordinary course of our business, we may actively trade securities of
the Company for our own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
It is understood that this opinion was prepared for the confidential use of
the special committee, board of directors and senior management of the Company
and may not be disclosed, summarized, excerpted from or otherwise publicly
referred to without our prior written consent. Our opinion does not constitute a
recommendation to any shareholder of the Company as to how such shareholder
should vote at the shareholders' meeting held in connection with the merger. We
consent to the inclusion of this opinion in the Company's proxy statement with
respect to the merger.
We were engaged by the special committee and the board to render this
opinion in connection with the discharge of their fiduciary obligations. We have
advised the special committee and the board that we do not believe that any
person (including a shareholder of the Company) other than the directors has the
legal right to rely on this opinion for any claim arising under state law and
that, should any such claim be brought against us, this assertion will be raised
as a defense. In the absence of governing authority, this assertion will be
resolved by the final adjudication of such issue by a court of competent
jurisdiction. Resolution of this matter under state law, however, will have no
effect on the rights and responsibilities of McDonald Investments under the
federal securities laws or on the rights and responsibilities of the Company's
board of directors under applicable law.
B-2
Special Committee of the Board of Directors
and the Board of Directors
March 25, 2002
Page 3
Based upon and subject to the foregoing and such other matters as we
consider relevant, it is our opinion that as of the date hereof, the Merger
Consideration is fair, from a financial point of view, to the shareholders of
the Company.
Very truly yours,
/s/ MCDONALD INVESTMENTS INC.
--------------------------------------
McDONALD INVESTMENTS INC.
B-3
APPENDIX C
SECTION 1701.85 OF THE OHIO REVISED CODE --
DISSENTING SHAREHOLDER'S DEMAND FOR FAIR CASH VALUE OF SHARES.
(A)(1) A shareholder of a domestic corporation is entitled to relief as a
dissenting shareholder in respect of the proposals described in sections
1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with this
section.
(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of the
shares of the corporation as to which he seeks relief as of the date fixed for
the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall not
have been voted in favor of the proposal. Not later than ten days after the date
on which the vote on the proposal was taken at the meeting of the shareholders,
the dissenting shareholder shall deliver to the corporation a written demand for
payment to him of the fair cash value of the shares as to which be seeks relief,
which demand shall state his address, the number and class of such shares, and
the amount claimed by him as the fair cash value of the shares.
(3) The dissenting shareholder entitled to relief under division (C) of
section 1701.84 of the Revised Code in the case of a merger pursuant to section
1701.80 of the Revised Code and a dissenting shareholder entitled to relief
under division (E) of section 1701.84 of the Revised Code in the case of a
merger pursuant to section 1701.801 [1701.80.1] of the Revised Code shall be a
record holder of the shares of the corporation as to which he seeks relief as of
the date on which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
section 1701.80 or 1701.801 [1701.80.1] of the Revised Code, the dissenting
shareholder shall deliver to the corporation a written demand for payment with
the same information as that provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the new
entity, whether the demand is served before, on, or after the effective date of
the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the address
specified in his demand, a request for the certificates representing the shares
as to which he seeks relief, the dissenting shareholder, within fifteen days
from the date of the sending of such request, shall deliver to the corporation
the certificates requested so that the corporation may forthwith endorse on them
a legend to the effect that demand for the fair cash value of such shares has
been made. The corporation promptly shall return such endorsed certificates to
the dissenting shareholder. A dissenting shareholder's failure to deliver such
certificates terminates his rights as a dissenting shareholder, at the option of
the corporation, exercised by written notice sent to the dissenting shareholder
within twenty days after the lapse of the fifteen-day period, unless a court for
good cause shown otherwise directs. If shares represented by a certificate on
which such a legend has been endorsed are transferred, each new certificate
issued for them shall bear a similar legend, together with the name of the
original dissenting holder of such shares. Upon receiving a demand for payment
from a dissenting shareholder who is the record holder of uncertificated
securities, the corporation shall make an appropriate notation of the demand for
payment in its shareholder records. If uncertificated shares for which payment
has been demanded are to be transferred, any new certificate issued for the
shares shall bear the legend required for certificated securities as provided in
this paragraph. A transferee of the shares so endorsed, or of uncertificated
securities where such notation has been made, acquires only such rights in the
corporation as the original dissenting holder of such shares had immediately
after the service of a demand for payment of the fair cash value of the shares.
A request under this paragraph by the corporation is not an admission by the
corporation that the shareholder is entitled to relief under this section.
(B) Unless the corporation and the dissenting shareholder have come to an
agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving or
new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas
C-1
of the county in which the principal office of the corporation that issued the
shares is located or was located when the proposal was adopted by the
shareholders of the corporation, or, if the proposal was not required to be
submitted to the shareholders, was approved by the directors. Other dissenting
shareholders, within that three-month period, may join as plaintiffs or may be
joined as defendants in any such proceeding, and any two or more such
proceedings may be consolidated. The complaint shall contain a brief statement
of the facts, including the vote and the facts entitling the dissenting
shareholder to the relief demanded. No answer to such a complaint is required.
Upon the filing of such a complaint, the court, on motion of the petitioner,
shall enter an order fixing a date for a hearing on the complaint and requiring
that a copy of the complaint and a notice of the filing and of the date for
hearing be given to the respondent or defendant in the manner in which summons
is required to be served or substituted service is required to be made in other
cases. On the day fixed for the hearing on the complaint or any adjournment of
it, the court shall determine from the complaint and from such evidence as is
submitted by either party whether the dissenting shareholder is entitled to be
paid the fair cash value of any shares and, if so, the number and class of such
shares. If the court finds that the dissenting shareholder is so entitled, the
court may appoint one or more persons as appraisers to receive evidence and to
recommend a decision on the amount of the fair cash value. The appraisers have
such power and authority as is specified in the order of their appointment. The
court thereupon shall make a finding as to the fair cash value of a share and
shall render judgment against the corporation for the payment of it, with
interest at such rate and from such date as the court considers equitable. The
costs of the proceeding, including reasonable compensation to the appraisers to
be fixed by the court, shall be assessed or apportioned as the court considers
equitable. The proceeding is a special proceeding and final orders in it may be
vacated, modified, or reversed on appeal pursuant to the Rules of Appellate
Procedure and, to the extent not in conflict with those rules, Chapter 2505. of
the Revised Code. If, during the pendency of any proceeding instituted under
this section, a suit or proceeding is or has been instituted to enjoin or
otherwise to prevent the carrying out of the action as to which the shareholder
has dissented, the proceeding instituted under this section shall be stayed
until the final determination of the other suit or proceeding. Unless any
provision in division (D) of this section is applicable, the fair cash value of
the shares that is agreed upon by the parties or fixed under this section shall
he paid within thirty days after the date of final determination of such value
under this division, the effective date of the amendment to the articles, or the
consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event, payment shall be made immediately to a holder
of uncertificated securities entitled to such payment. In the case of holders of
shares represented by certificates, payment shall be made only upon and
simultaneously with the surrender to the corporation of the certificates
representing the shares for which the payment is made.
(C) If the proposal was required to be submitted to the shareholders of the
corporation, fair cash value as to those shareholders shall be determined as of
the day prior to the day on which the vote by the shareholders was taken and, in
the case of a merger pursuant to section 1701.80 or 1701.801 [1701.80.1] of the
Revised Code, fair cash value as to shareholders of a constituent subsidiary
corporation shall be determined as of the day before the adoption of the
agreement of merger by the directors of the particular subsidiary corporation.
The fair cash value of a share for the purposes of this section is the amount
that a willing seller who is under no compulsion to sell would be willing to
accept and that a willing buyer who is under no compulsion to purchase would be
willing to pay, but in no event shall the fair cash value of a share exceed the
amount specified in the demand of the particular shareholder. In computing such
fair cash value, any appreciation or depreciation in market value resulting from
the proposal submitted to the directors or to the shareholders shall be
excluded.
(D)(1) The right and obligation of a dissenting shareholder to receive such
fair cash value and to sell such shares as to which he seeks relief, and the
right and obligation of the corporation to purchase such shares and to pay the
fair cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied with this section,
unless the corporation by its directors waives such failure;
(b) The corporation abandons the action involved or is finally
enjoined or prevented from carrying it out, or the shareholders rescind
their adoption of the action involved;
(c) The dissenting shareholder withdraws his demand, with the consent
of the corporation by its directors;
C-2
(d) The corporation and the dissenting shareholder have not come to an
agreement as to the fair cash value per share, and neither the shareholder
nor the corporation has filed or joined in a complaint under division (B)
of this section within the period provided in that division.
(2) For purposes of division (D)(1) of this section, if the merger or
consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or the
comparable representatives of any other surviving or new entity.
(E) From the time of the dissenting shareholder's giving of the demand
until either the termination of the rights and obligations arising from it or
the purchase of the shares by the corporation, all other rights accruing from
such shares, including voting and dividend or distribution rights, are
suspended. If during the suspension, any dividend or distribution is paid in
money upon shares of such class or any dividend, distribution, or interest is
paid in money upon any securities issued in extinguishment of or in substitution
for such shares, an amount equal to the dividend, distribution, or interest
which, except for the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon the fair cash
value of the shares. If the right to receive fair cash value is terminated other
than by the purchase of the shares by the corporation, all rights of the holder
shall be restored and all distributions which, except for the suspension, would
have been made shall be made to the holder of record of the shares at the time
of termination.
C-3
- --------------------------------------------------------------------------------
SPECIAL MEETING PROXY - LIQUI-BOX CORPORATION
- --------------------------------------------------------------------------------
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 28, 2002
The undersigned hereby constitutes and appoints Carl J. Aschinger and Robert L.
Zieg, and each of them, proxies of the undersigned, with full power of
substitution, to attend the Special Meeting of Shareholders to be held on May
28, 2002 and to vote all of the common shares of Liqui-Box Corporation which the
undersigned is entitled to vote at such Special Meeting and any adjournment(s)
or postponement(s) thereof as set forth below.
The undersigned hereby acknowledges receipt of the accompanying Notice of
Special Meeting and Proxy Statement relating to the Special Meeting of
Shareholders to be held on May 28, 2002 and hereby expressly revokes any and all
proxies heretofore given or executed by the undersigned with respect to the
common shares represented by this proxy.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED BY THE
UNDERSIGNED SHAREHOLDER. IF NO SPECIFICATION IS MADE, THE COMMON SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR PROPOSAL NO. 1. IF ANY OTHER MATTERS
ARE PROPERLY BROUGHT BEFORE THE SPECIAL MEETING OR ANY ADJOURNMENT(S) THEREOF,
THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON SUCH MATTERS.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
+
000000 0000000000 0 0000
LIQUI-BOX CORPORATION 000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
[BAR CODE] 000000000.000 ext
000000000.000 ext
MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY)
ADD 1
ADD 2 Holder Account Number
ADD 3 C 1234567890 JNT
ADD 4
ADD 5 [BAR CODE]
ADD 6
Use a BLACK pen. Mark with Mark this box with an X if you
an X inside the grey areas [X] [ ] have made changes to your name
as shown in this example. or address details above.
- --------------------------------------------------------------------------------
SPECIAL MEETING PROXY CARD
- --------------------------------------------------------------------------------
A ISSUES
The Board of Directors recommends a vote FOR the following proposal.
FOR AGAINST ABSTAIN
1. TO ADOPT THE AGREEMENT AND PLAN OF [ ] [ ] [ ]
MERGER IN THE FORM ATTACHED AS
APPENDIX A TO THE PROXY MATERIALS
DATED APRIL 25, 2002 AND TO APPROVE
THE MERGER CONTEMPLATED THEREBY.
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the Special Meeting or any adjournment(s)
thereof.
B AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
Please sign here exactly as your name appears herein. If common shares are
registered in two names, both should sign. When signing as attorney, executor,
administrator, trustee, guardian or corporate official, please give your full
title. Please note any change of address on this proxy.
Signature 1 - Please keep signature within the box Signature 2 - Please keep signature within the box Date (dd/mm/yyyy)
------------------------------------------------- ------------------------------------------------- ----------------
| | | | | / / |
| | | | | / / |
------------------------------------------------- ------------------------------------------------- ----------------
2 U P X A758 +
[LIQUI-BOX CORPORATION LETTERHEAD]
April 25, 2002
To: Participants in the Liqui-Box Corporation Employee Stock Ownership
Plan:
On Tuesday, May 28, 2002, Liqui-Box Corporation will hold a
special meeting of shareholders (the "Special Meeting") to consider and vote
upon a proposal to adopt an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of March 25, 2002, by and among Liqui-Box, Enhance
Packaging Technologies Inc., a Canadian corporation and a wholly owned
subsidiary of DuPont Canada Inc., and EPT Newco, Inc., an Ohio corporation and a
wholly owned subsidiary of Enhance Packaging Technologies Inc., and to approve
the merger contemplated thereby (the "Merger"). In the Merger, (i) EPT Newco
will be merged with and into Liqui-Box, which will be the surviving corporation
and become a wholly owned subsidiary of Enhance Packaging Technologies, and (ii)
each common share, without par value, of Liqui-Box outstanding immediately prior
to the effective time of the Merger (other than shares held by Liqui-Box or
Enhance Packaging Technologies or any of their respective parent entities or
subsidiaries or shares with respect to which dissenters' rights are perfected)
will be automatically converted into the right to receive $67.00 in cash.
As a participant in the Liqui-Box Corporation Employee Stock
Ownership Plan (the "ESOP"), pursuant to Section 20.01 of the ESOP, you are
entitled to instruct the trustee of the ESOP how to vote the common shares
allocated to your account under the ESOP at the Special Meeting. In order to
instruct the trustee how to vote the common shares allocated to your account
under the ESOP, you must properly complete the enclosed confidential voting
instruction form. To assist you in deciding how to instruct the trustee to vote
the common shares allocated to your account under the ESOP, we have also
enclosed the proxy solicitation materials sent to the registered shareholders of
Liqui-Box in connection with the Special Meeting (which materials describe the
Merger Agreement and the Merger).
Please complete, date and sign the enclosed confidential
voting instruction form and promptly return it in the enclosed return envelope.
Your voting instructions will be treated confidentially by the trustee. If the
trustee of the ESOP does not receive your voting instructions, pursuant to the
terms of the ESOP, the trustee will vote the common shares allocated to your
account under the ESOP for adoption of the Merger Agreement and approval of the
Merger in accordance with the recommendation of the Board of Directors of
Liqui-Box.
Very truly yours,
THE LIQUI-BOX CORPORATION EMPLOYEE
STOCK OWNERSHIP PLAN
----------------------------------------------------------------
SPECIAL MEETING CONFIDENTIAL VOTING INSTRUCTION FORM - LIQUI-BOX
CORPORATION
----------------------------------------------------------------
CONFIDENTIAL VOTING INSTRUCTION FORM
FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 28, 2002
The undersigned participant in the Liqui-Box Corporation Employee Stock
Ownership Plan (the "ESOP") hereby directs the trustee of the ESOP to
vote all common shares of Liqui-Box Corporation allocated to the
undersigned's account under the ESOP in accordance with the voting
instructions set forth below at the Special Meeting of Shareholders of
Liqui-Box Corporation to be held on May 28, 2002, and any
adjournment(s) or postponement(s) thereof.
IF NO VOTING INSTRUCTIONS ARE GIVEN BELOW BY THE UNDERSIGNED, THE
TRUSTEE OF THE ESOP WILL VOTE THE COMMON SHARES ALLOCATED TO THE
UNDERSIGNED'S ACCOUNT UNDER THE ESOP FOR PROPOSAL NO. 1 IN ACCORDANCE
WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS OF LIQUI-BOX
CORPORATION.
The undersigned hereby acknowledges receipt of the accompanying Notice
of Special Meeting and Proxy Statement relating to the Special Meeting
of Shareholders to be held on May 28, 2002 and hereby expressly revokes
any and all voting instructions heretofore given or executed by the
undersigned with respect to the common shares allocated to the
undersigned's account under the ESOP and represented by this
confidential voting instruction form.
PLEASE MARK, SIGN, DATE AND RETURN THIS CONFIDENTIAL VOTING INSTRUCTION
FORM PROMPTLY USING THE ENCLOSED ENVELOPE.
+
000000 0000000000 0 0000
LIQUI-BOX CORPORATION
000000000.000 ext
000000000.000 ext
000000000.000 ext
[BAR CODE] 000000000.000 ext
000000000.000 ext
000000000.000 ext
MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY)
ADD 1
ADD 2 HOLDER ACCOUNT NUMBER
ADD 3 C 1234567890 JNT
ADD 4
ADD 5 [BAR CODE]
ADD 6
Use a black pen. Mark with [ ] Mark this box with an X if you
an X inside the grey areas have made changes to your name
as shown in this example. [X] or address details above.
- --------------------------------------------------------------------------------
SPECIAL MEETING CONFIDENTIAL VOTING INSTRUCTION FORM
- --------------------------------------------------------------------------------
A ISSUES
The Board of Directors recommends a vote FOR the following proposal.
FOR AGAINST ABSTAIN
1. TO ADOPT THE AGREEMENT AND PLAN OF [ ] [ ] [ ]
MERGER IN THE FORM ATTACHED AS
APPENDIX A TO THE PROXY MATERIALS
DATED APRIL 25, 2002 AND TO APPROVE
THE MERGER CONTEMPLATED THEREBY.
B AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
Please sign here exactly as your name appears herein. If common shares are
registered in two names, both should sign. When signing as attorney, executor,
administrator, trustee, guardian or corporate official, please give your full
title. Please note any change of address on this confidential voting instruction
form.
<Table>
Signature 1 - Please keep signature within the box Signature 2 - Please keep signature within the box Date (dd/mm/yyyy)
-------------------------------------------------- -------------------------------------------------- -----------------
| | | | | / / |
| | | | | / / |
-------------------------------------------------- -------------------------------------------------- -----------------
[ ] 2 U P X A7583 +
</Table>
[LIQUI-BOX CORPORATION LETTERHEAD]
April 25, 2002
To: Participants in the Liqui-Box Corporation Employees' Profit Sharing and
Salary Deferral Plan:
On Tuesday, May 28, 2002, Liqui-Box Corporation will hold a
special meeting of shareholders (the "Special Meeting") to consider and vote
upon a proposal to adopt an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of March 25, 2002, by and among Liqui-Box, Enhance
Packaging Technologies Inc., a Canadian corporation and a wholly owned
subsidiary of DuPont Canada Inc., and EPT Newco, Inc., an Ohio corporation and a
wholly owned subsidiary of Enhance Packaging Technologies Inc., and to approve
the merger contemplated thereby (the "Merger"). In the Merger, (i) EPT Newco
will be merged with and into Liqui-Box, which will be the surviving corporation
and become a wholly owned subsidiary of Enhance Packaging Technologies, and (ii)
each common share, without par value, of Liqui-Box outstanding immediately prior
to the effective time of the Merger (other than shares held by Liqui-Box or
Enhance Packaging Technologies or any of their respective parent entities or
subsidiaries or shares with respect to which dissenters' rights are perfected)
will be automatically converted into the right to receive $67.00 in cash.
As a participant in the Liqui-Box Corporation Employees'
Profit Sharing and Salary Deferral Plan (the "401(k) Plan"), pursuant to Section
7.13 of the 401(k) Plan, you are entitled to instruct the trustee of the 401(k)
Plan how to vote the common shares allocated to your account under the 401(k)
Plan at the Special Meeting. In order to instruct the trustee how to vote the
common shares allocated to your account under the 401(k) Plan, you must properly
complete the enclosed confidential voting instruction form. To assist you in
deciding how to instruct the trustee to vote the common shares allocated to your
account under the 401(k) Plan, we have also enclosed the proxy solicitation
materials sent to the registered shareholders of Liqui-Box in connection with
the Special Meeting (which materials describe the Merger Agreement and the
Merger).
Please complete, date and sign the enclosed confidential
voting instruction form and promptly return it in the enclosed return envelope.
Your voting instructions will be treated confidentially by the trustee. If the
trustee of the 401(k) Plan does not receive your voting instructions, pursuant
to the terms of the 401(k) Plan, the trustee will not vote the common shares
allocated to your account under the 401(k) Plan.
Very truly yours,
THE LIQUI-BOX CORPORATION
EMPLOYEES' PROFIT SHARING AND
SALARY DEFERRAL PLAN
----------------------------------------------------------------
SPECIAL MEETING CONFIDENTIAL VOTING INSTRUCTION FORM - LIQUI-BOX
CORPORATION
----------------------------------------------------------------
CONFIDENTIAL VOTING INSTRUCTION FORM
FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 28, 2002
The undersigned participant in the Liqui-Box Corporation Employees'
Profit Sharing and Salary Deferral Plan (the "401(k) Plan") hereby
directs the trustee of the 401(k) Plan to vote all common shares of
Liqui-Box Corporation allocated to the undersigned's account under the
401(k) Plan in accordance with the voting instructions set forth below
at the Special Meeting of Shareholders of Liqui-Box Corporation to be
held on May 28, 2002, and any adjournment(s) or postponement(s)
thereof.
IF NO VOTING INSTRUCTIONS ARE GIVEN BELOW BY THE UNDERSIGNED, THE
TRUSTEE OF THE 401(k) PLAN WILL NOT VOTE THE COMMON SHARES ALLOCATED TO
THE UNDERSIGNED'S ACCOUNT UNDER THE 401(k) PLAN.
The undersigned hereby acknowledges receipt of the accompanying Notice
of Special Meeting and Proxy Statement relating to the Special Meeting
of Shareholders to be held on May 28, 2002 and hereby expressly revokes
any and all voting instructions heretofore given or executed by the
undersigned with respect to the common shares allocated to the
undersigned's account under the 401(k) Plan and represented by this
confidential voting instruction form.
PLEASE MARK, SIGN, DATE AND RETURN THIS CONFIDENTIAL VOTING INSTRUCTION
FORM PROMPTLY USING THE ENCLOSED ENVELOPE.
+
000000 0000000000 0 0000
LIQUI-BOX CORPORATION
000000000.000 ext
000000000.000 ext
[BAR CODE] 000000000.000 ext
000000000.000 ext
MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY) 000000000.000 ext
ADD 1 000000000.000 ext
ADD 2
ADD 3
ADD 4 HOLDER ACCOUNT NUMBER
ADD 5 C 1234567890 JNT
ADD 6
[BAR CODE]
Use a black pen. Mark with [ ] Mark this box with an X if you
an X inside the grey areas [X] have made changes to your name
as shown in this example. or address details above.
- --------------------------------------------------------------------------------
SPECIAL MEETING CONFIDENTIAL VOTING INSTRUCTION FORM
- --------------------------------------------------------------------------------
A ISSUES
The Board of Directors recommends a vote FOR the following proposal.
FOR AGAINST ABSTAIN
1. TO ADOPT THE AGREEMENT AND PLAN OF [ ] [ ] [ ]
MERGER IN THE FORM ATTACHED AS
APPENDIX A TO THE PROXY MATERIALS
DATED APRIL 25, 2002 AND TO APPROVE
THE MERGER CONTEMPLATED THEREBY.
B AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
Please sign here exactly as your name appears herein. If common shares are
registered in two names, both should sign. When signing as attorney, executor,
administrator, trustee, guardian or corporate official, please give your full
title. Please note any change of address on this confidential voting instruction
form.
<Table>
Signature 1 - Please keep signature within the box Signature 2 - Please keep signature within the box Date (dd/mm/yyyy)
------------------------------------------------- ------------------------------------------------- ----------------
| | | | | / / |
| | | | | / / |
------------------------------------------------- ------------------------------------------------- ----------------
[ ] 2 U P X A7582 +
</Table>