-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BUk0KeqS3F250WZECApfC3ViWzfmmU6yGlZQaJoxEwvqm6mY8dT5vnsPDW8hGpNk P98eI67Bz+eZmlBdSom82g== 0000950152-99-009266.txt : 19991119 0000950152-99-009266.hdr.sgml : 19991119 ACCESSION NUMBER: 0000950152-99-009266 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 21 FILED AS OF DATE: 19991118 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMWAY ASIA PACIFIC LTD CENTRAL INDEX KEY: 0000914601 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 000000000 FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-57181 FILM NUMBER: 99760510 BUSINESS ADDRESS: STREET 1: 28F CITICORP CENTRE STREET 2: 18 WHITFIELD RD CITY: CAUSEWAY BAY HONG KO STATE: K3 BUSINESS PHONE: 8525700878 MAIL ADDRESS: STREET 1: 28F CITICORP CENTRE STREET 2: 18 WHITFIELD RD CITY: CAUSEWAY BAY STATE: K3 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NEW AAP LTD CENTRAL INDEX KEY: 0001099147 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 0830 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 7575 FULTON STREET EAST CITY: ADA STATE: MI ZIP: 49355 BUSINESS PHONE: 6167876000 MAIL ADDRESS: STREET 1: 7575 FULTON STREET EAST CITY: ADA STATE: MI ZIP: 49355 SC 14D1 1 AMAY ASIA PACIFIC LTD./NEW AAP LIMITED SC 14D1 1 ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------- SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 AMWAY ASIA PACIFIC LTD. (Name of Issuer) NEW AAP LIMITED (Bidder) COMMON STOCK, $0.01 PAR VALUE PER SHARE (Title of class of securities) G0352M 10 8 (CUSIP Number of Class of Securities) CRAIG N. MEURLIN, ESQ. SENIOR VICE PRESIDENT AND GENERAL COUNSEL AMWAY CORPORATION 7575 FULTON STREET EAST ADA, MICHIGAN 49355 (616) 787-6000 (Name, Address and Telephone Number of Person Authorized to Receive Notice and Communications on Behalf of Bidder) COPY TO: THOMAS C. DANIELS, ESQ. JONES, DAY, REAVIS & POGUE NORTH POINT 901 LAKESIDE AVENUE CLEVELAND, OHIO 44114 (216) 586-3939 --------------------------- CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------- TRANSACTION VALUATION AMOUNT OF FILING FEE* - --------------------------------------------------------------------------------------------- $152,971,740.00 $30,595.00 - --------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. AMOUNT PREVIOUSLY PAID: FILING PARTY: FORM OR REGISTRATION NO.: DATE FILED:
(Continued on following pages) Page 1 of 7 Pages - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 SCHEDULE 14D-1 CUSIP No. G0352M 10 8 Page 1 of 7 - --------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS NEW AAP LIMITED S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS - --------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - --------------------------------------------------------------------------------- 3 SEC USE ONLY - --------------------------------------------------------------------------------- 4 SOURCES OF FUNDS BK - --------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ] PURSUANT TO ITEMS 2(e) or 2(f) N/A - --------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Bermuda - --------------------------------------------------------------------------------- 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0 - --------------------------------------------------------------------------------- 8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES [ ] CERTAIN SHARES - --------------------------------------------------------------------------------- 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 0 - --------------------------------------------------------------------------------- 10 TYPE OF REPORTING PERSON CO - ---------------------------------------------------------------------------------
2 3 ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Amway Asia Pacific Ltd., and the address of its principal executive office is 38/F The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong. (b) This Tender Offer Statement on Schedule 14D-1 relates to a tender offer by New AAP Limited, a Bermuda corporation (the "Purchaser"), to purchase all the outstanding shares of the Common Stock of Amway Asia Pacific Ltd., a Bermuda corporation (the "Company"), par value $.01 per share (the "Common Stock" or "Shares"), that are beneficially owned by the shareholders of the Company. The Offer is being made pursuant to the Tender Offer and Amalgamation Agreement (the "Amalgamation Agreement"), dated November 15, 1999, among the Company, Purchaser and Apple Hold Co., L.P., a limited partnership organized under the laws of Bermuda ("Hold Co."). Hold Co. is the parent of Purchaser and an entity controlled and beneficially owned, directly and indirectly, by the principal shareholders of the Company, along with certain corporations, trusts, foundations and other entities established by or for the benefit of the principal shareholders and their respective families. The Amalgamation Agreement provides for, among other things, Purchaser to first conduct the Offer and then for the Company and Purchaser to amalgamate, with the Company as the surviving company. The purchase price for each share of Common Stock will be $18.00 in cash (the "Purchase Price"). There will be deducted from the Purchase Price paid to each holder any U.S. backup or other applicable withholding taxes which may be required to be withheld. The Offer is for all Shares of the Company or any lesser number of Shares tendered and not withdrawn. The Offer is for all Shares of the Company or any lesser number of Shares tendered and not withdrawn. The Offer will expire, unless extended, at 12:00 midnight, New York City time, on December 17, 1999. The Offer is being made upon the terms and subject to the conditions set forth in the Offer to Purchase, dated November 18, 1999 (the "Offer to Purchase"), and in a related Letter of Transmittal (the "Letter of Transmittal," which, together with the Offer to Purchase, constitutes the "Offer"). Copies of the Offer to Purchase and the related Letter of Transmittal are filed as Exhibits (a)(1) and (a)(2), respectively, hereto. As of September 30, 1999, there were approximately 56,441,960 shares of Common Stock held by approximately 2,166 record holders issued and outstanding. The information set forth in "Introduction" in the Offer to Purchase is incorporated herein. (c) The information set forth in "The Offer - Market Information; Dividends and Dividend Policy" in the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a) - (d), (g) This Statement is filed by Purchaser. The information set forth in "The Offer - Certain Information Regarding Purchaser" in the Offer to Purchase and in Schedule I - "PURCHASER EXECUTIVE OFFICERS AND DIRECTORS; AAP EXECUTIVE OFFICERS AND DIRECTORS" thereto is incorporated herein by reference. (e) - (f) During the last five years, none of Purchaser's executive officers or directors were (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors); or (ii) party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding were or are subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS, OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) - (b) The information set forth in "Introduction," "Special Factors - The Offer, Amalgamation and Related Transactions; Amalgamation Agreement" and "The Offer - Background of the Offer; Contacts with AAP" in the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) - (b) The information set forth in "The Offer - Source and Amount of Funds" in the Offer to Purchase is incorporated herein by reference. (c) Not applicable. 3 4 ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a), (d), (f) The information set forth in "Introduction," "Special Factors - - The Offer, Amalgamation and Related Transactions; Amalgamation Agreement," "Special Factors - Purpose of the Offer and Amalgamation; Other Transactions," "Special Factors - Certain Effects of the Amalgamation" and "The Offer - Certain Effects of the Offer" in the Offer to Purchase is incorporated herein by reference. (b) - (c), (e), (g) Not applicable. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) - (b) The information set forth in "Introduction," "Special Factors - The Offer; Amalgamation and Related Transactions; Amalgamation Agreement," "Special Factors - Interests of Certain Persons," "The Offer - Interests of Certain Persons" and "The Offer - Transactions and Agreements Concerning the Shares" in the Offer to Purchase is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in "Introduction," "Special Factors - The Offer, Amalgamation and Related Transactions; Amalgamation Agreement," "The Offer - Background of the Offer; Contacts with AAP" and in "The Offer - Transactions and Agreements Concerning the Shares" in the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in "Introduction," "The Offer - Fees and Expenses" and in "The Offer - Miscellaneous" in the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. Not applicable. ITEM 10. ADDITIONAL INFORMATION. (a) The information set forth in "Introduction" and "Special Factors -- Interests of Certain Persons" in the Offer to Purchase is incorporated herein by reference. (b) The information set forth in "The Offer - Certain Legal Matters; Regulatory Approvals" in the Offer to Purchase is incorporated herein by reference. (c) Not applicable. (d) The information set forth in "The Offer - Certain Effects of the Offer" in the Offer to Purchase is incorporated herein by reference. (e) Not applicable. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively, is incorporated herein by reference. 4 5 ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a) (1) Form of Offer to Purchase, dated November 18, 1999. (2) Form of Letter of Transmittal. (3) Form of Notice of Guaranteed Delivery. (4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (5) Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (6) Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (7) Form of Letter to the Company's Holders of Common Stock. (8) Form of Press Release "Amway Asia Pacific's Principal Shareholders to Commence Tender Offer for Outstanding Public Shares" issued by the Company and the Principal Shareholders on November 15, 1999. (9) Form of Communications to Amway Distributors, dated November 15, 1999. (10) Form of Tender Offer Announcement to Amway Management and Employees, dated November 15, 1999. (11) Form of Press Release "Amway Asia Pacific's Principal Shareholders Commence Tender Offer For Outstanding Public Shares" issued by the Company and the Public Shareholders on November 18, 1999. (12) Form of Summary Advertisement published on November 18, 1999. (13) Form of Trustee Direction Form from the 401(k) Trustee. (14) Form of Letter to Participants of the 401(k) Plan. (b) (1) Form of Senior Bank Financing Commitment Letter, among Purchaser, Hold Co., ALAP Hold Co., Ltd., N.A.J. Co., Ltd., Amway Corporation and Morgan Guaranty Trust Company of New York, Tokyo Branch, dated November 15, 1999. (2) Form of Term Sheet Regarding the Credit Facility. (c) (1) Tender Offer and Amalgamation Agreement, dated November 15, 1999 among the Company, Purchaser and Hold Co. (2) Shareholder and Voting Agreement, by and among Hold Co., Purchaser and Certain Shareholders of the Company, dated as of November 15, 1999. (d) Not applicable. (e) Not Applicable. (f) Not Applicable. (g) Consent of KPMG LLP. (h) Power of Attorney for Purchaser.
5 6 SIGNATURES After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 18, 1999 NEW AAP LIMITED By: /s/ CRAIG N. MEURLIN ------------------------------------ Name: Craig N. Meurlin Title: Vice President, Assistant Secretary 6 7 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ----------- ----------- (a) (1) Form of Offer to Purchase, dated November 18, 1999. (2) Form of Letter of Transmittal. (3) Form of Notice of Guaranteed Delivery. (4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (5) Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (6) Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (7) Form of Letter to the Company's Holders of Common Stock. (8) Form of Press Release "Amway Asia Pacific's Principal Shareholders to Commence Tender Offer for Outstanding Public Shares" issued by the Company and the Principal Shareholders on November 15, 1999. (9) Form of Communications to Amway Distributors, dated November 15, 1999. (10) Form of Tender Offer Announcement to Amway Management and Employees, dated November 15, 1999. (11) Form of Press Release "Amway Asia Pacific's Principal Shareholders Commence Tender Offer For Outstanding Public Shares" issued by the Company and the Public Shareholders on November 18, 1999. (12) Form of Summary Advertisement published on November 18, 1999. (13) Form of Trustee Direction Form from the 401(k) Trustee. (14) Form of Letter to Participants of the 401(k) Plan. (b) (1) Form of Senior Bank Financing Commitment Letter, among Purchaser, Hold Co., ALAP Hold Co., Ltd., N.A.J. Co., Ltd., Amway Corporation and Morgan Guaranty Trust Company of New York, Tokyo Branch, dated November 15, 1999. (2) Form of Term Sheet Regarding the Credit Facility. (c) (1) Tender Offer and Amalgamation Agreement, dated November 15, 1999 among the Company, Purchaser and Hold Co. (2) Shareholder and Voting Agreement, by and among Hold Co., Purchaser and Certain Shareholders of the Company, dated as of November 15, 1999. (d) Not applicable. (e) Not Applicable. (f) Not Applicable. (g) Consent of KPMG LLP. (h) Power of Attorney for Purchaser.
7 EX-99.A.1 2 EXHIBIT (A)(1) 1 Exhibit (a)(1) OFFER TO PURCHASE FOR CASH BY NEW AAP LIMITED FOR ALL OUTSTANDING SHARES OF COMMON STOCK OF AMWAY ASIA PACIFIC LTD. AT $18.00 PER SHARE OF COMMON STOCK THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED. New AAP Limited., a Bermuda corporation ("Purchaser"), hereby offers to purchase all the outstanding shares of the Common Stock of Amway Asia Pacific Ltd., a Bermuda corporation ("AAP"), par value $.01 per share (the "Common Stock" or "Shares"), that are beneficially owned by shareholders (the "Shareholders") of AAP in accordance with the terms and conditions described or referred to in this Offer to Purchase and the accompanying Letter of Transmittal (the "Offer"). The Offer is being made pursuant to the Tender Offer and Amalgamation Agreement (the "Amalgamation Agreement"), dated November 15, 1999, among AAP, Purchaser and Apple Hold Co., L.P., a limited partnership organized under the laws of Bermuda ("Hold Co."). Hold Co. is the parent of Purchaser and an entity controlled and beneficially owned, directly and indirectly, by the principal shareholders of AAP, along with certain corporations, trusts, foundations and other entities established by or for the benefit of the principal shareholders and their respective families (collectively, the "Principal Shareholders"). The Amalgamation Agreement provides for, among other things, Purchaser to first conduct the Offer and then for AAP and Purchaser to amalgamate (the "Amalgamation"), with AAP as the surviving company. The purchase price for each share of Common Stock will be $18.00 in cash (the "Purchase Price"). There will be deducted from the Purchase Price paid to each holder any U.S. backup or other applicable withholding taxes which may be required to be withheld. The Offer is for all Shares of AAP or any lesser number of Shares tendered and not withdrawn. The Offer will expire, unless extended, at 12:00 midnight, New York City time, on December 17, 1999. Purchaser has been informed by the Principal Shareholders that the they will not tender their Shares in response to the Offer. The Principal Shareholders will contribute their Shares ("Non-Tendered Shares") to Hold Co. contemporaneously with the consummation of the Offer. THE BOARD OF DIRECTORS OF AAP (WITH MESSRS. RICHARD M. DEVOS, JR., DOUGLAS L. DEVOS AND STEPHEN A. VAN ANDEL NOT PARTICIPATING) (THE "DISINTERESTED DIRECTORS") HAS UNANIMOUSLY (1) DETERMINED THAT THE OFFER AND THE AMALGAMATION ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES, OTHER THAN NON-TENDERED SHARES (THE "PUBLIC SHAREHOLDERS"), (2) APPROVED THE AMALGAMATION AGREEMENT AND (3) RESOLVED TO RECOMMEND THAT THE PUBLIC SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER. THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED OR SUBJECT TO ANY OTHER CONDITIONS. THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. Questions and requests for assistance may be directed to Georgeson Shareholder Communications Inc. (the "Information Agent") or Morgan Stanley & Co. Incorporated and J.P. Morgan Securities Inc. (each a "Dealer Manager" and collectively, the "Dealer Managers") at their respective addresses and telephone numbers set forth on the back page of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal and other related materials may be obtained from the Information Agent or brokers, dealers, commercial banks and trust companies. The Common Stock is listed and principally traded on the New York Stock Exchange (the "NYSE") under the symbol "AAP" and is also listed on the Australian Stock Exchange Limited ("ASX") under the symbol "AMW." On November 12, 1999, the last full NYSE trading day prior to the public announcement of the Offer, the closing sales price of the Common Stock on the NYSE was $11.75 per share and on November 16, 1999, the last full trading day prior to the date of this Offer to Purchase (the "Commencement Date") for which quotations could be obtained, the closing sales price was $17.81. The Purchase Price is $18.00 per share. On November 15, 1999, the last full ASX trading day prior to the public announcement of the Offer, the closing sales price of the Common Stock on the ASX was AU$17.50 per share and on November 17, 1999, the last full trading day prior to the Commencement Date, the closing sales price was AU$30.0. HOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMMON STOCK. THE DEALER MANAGERS FOR THE OFFER ARE: MORGAN STANLEY DEAN WITTER J.P. MORGAN & CO. November 18, 1999 2 IMPORTANT Any shareholder desiring to accept the Offer should either (1) request the holder's broker, dealer, commercial bank, trust company or nominee to effect the transaction for the holder or (2) if the Shares are held in the holder's name, complete and sign the Letter of Transmittal (or a facsimile thereof) and mail or deliver it with the certificate(s) representing tendered Shares and any other required documents to First Chicago Trust Company of New York (the "Depositary") or tender such Shares pursuant to the procedures for book-entry transfer described herein under "The Offer -- Procedure for Tendering Shares." Any shareholder who desires to tender Shares and whose certificates representing such Shares are not immediately available or who cannot comply with the procedures for book-entry transfer on a timely basis may tender such Shares pursuant to the guaranteed delivery procedure described herein under "The Offer -- Procedure for Tendering Shares -- Guaranteed Delivery." NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OR RECOMMENDATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PURCHASER. 3 TABLE OF CONTENTS
PAGE ---- INTRODUCTION................................................ 1 SPECIAL FACTORS............................................. 4 1. Background of the Offer; Recommendation of the Special Committee and the Disinterested Directors; Reasons for the Recommendation; Opinion of Financial Advisor to the Special Committee................... 4 2. The Offer; Amalgamation and Related Transactions; Amalgamation Agreement................................. 14 3. Purpose of the Offer and Amalgamation; Other Transactions........................................... 15 4. Position of Purchaser Regarding Fairness of the Offer.................................................. 16 5. Certain Effects of the Amalgamation.................. 16 6. Interests of Certain Persons......................... 16 7. Appraisal Rights in the Amalgamation................. 17 THE OFFER................................................... 18 1. Number of Shares; Expiration and Extension of Offer.................................................. 18 2. Procedure for Tendering Shares....................... 18 3. Withdrawal Rights.................................... 20 4. Acceptance for Payment of Shares and Payment of Purchase Price......................................... 21 5. Market Information; Dividends and Dividend Policy.... 21 6. Certain Effects of the Offer......................... 23 7. Source and Amount of Funds........................... 24 8. Certain Information Regarding AAP.................... 24 9. Certain Information Regarding Purchaser.............. 28 10. Background of the Offer; Contacts with AAP........... 28 11. Interests of Certain Persons......................... 28 12. Transactions and Agreements Concerning the Shares.... 29 13. Certain Legal Matters; Regulatory Approvals.......... 29 14. U.S. Federal Income Tax Consequences................. 29 15. Extension of Offer; Termination; Amendments.......... 31 16. Fees and Expenses.................................... 31 17. Miscellaneous........................................ 32 SCHEDULE I PURCHASER EXECUTIVE OFFICERS AND DIRECTORS; AAP EXECUTIVE OFFICERS AND DIRECTORS........ S-1 SCHEDULE II FAIRNESS OPINION OF THE FINANCIAL ADVISOR SCHEDULE III AUDITED FINANCIAL STATEMENTS OF AMWAY ASIA PACIFIC LTD. FOR THE FISCAL YEARS ENDED AUGUST 31, 1996, 1997 AND 1998 AND UNAUDITED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED MAY 31, 1998 AND MAY 31, 1999......... F-1
i 4 TO THE HOLDERS OF COMMON STOCK OF AMWAY ASIA PACIFIC LTD.: INTRODUCTION New AAP Limited, a Bermuda corporation ("Purchaser"), hereby offers to purchase all the outstanding shares of the Common Stock of Amway Asia Pacific Ltd., a Bermuda corporation ("AAP"), par value $.01 per share (the "Common Stock" or "Shares"), that are beneficially owned by all shareholders (the "Shareholders") of AAP in accordance with the terms and conditions described or referred to in this Offer to Purchase and the accompanying Letter of Transmittal (the "Offer"). The purchase price for each share of Common Stock will be $18.00 in cash (the "Purchase Price"). There will be deducted from the Purchase Price paid to each holder any U.S. or other applicable backup withholding taxes which may be required to be withheld. The Offer is for all Shares of AAP or any lesser number of Shares tendered and not withdrawn. The Offer will expire, unless extended, at 12:00 midnight, New York City time, on December 17, 1999. The Offer is being made to all holders of Common Stock. The Offer, however, will not be made to a particular holder if (i) the Offer is prohibited by applicable administrative or judicial action pursuant to a statutory provision of the jurisdiction in which such holder resides or (ii) the laws or practices of the jurisdiction in which such holder resides would impose significant costs upon Purchaser or would materially delay the Offer. As of September 30, 1999, the principal shareholders of AAP, along with certain corporations, trusts, foundations and other entities established by or for the benefit of the principal shareholders and their respective families (collectively, the "Principal Shareholders"), beneficially owned 47,943,530 shares of Common Stock, constituting approximately 85% of all shares of Common Stock issued and outstanding on such date. Purchaser has been informed by the Principal Shareholders that they will not tender their Shares in response to the Offer. The Principal Shareholders will contribute their shares ("Non-Tendered Shares") to Hold Co. (as defined below) contemporaneously with the consummation of the Offer. The Offer is being made pursuant to the Tender Offer and Amalgamation Agreement (the "Amalgamation Agreement"), dated November 15, 1999, among AAP, Purchaser and Apple Hold Co., L.P., a limited partnership organized under the laws of Bermuda ("Hold Co."). Hold Co. is the parent of Purchaser and an entity controlled by the Principal Shareholders. The purpose of the Offer is to facilitate Purchaser's acquisition of all Shares for cash, and thereby enable the Principal Shareholders to obtain indirect control of 100% of the capital stock of AAP. The Amalgamation Agreement provides for, among other things, Purchaser to first conduct the Offer and then for AAP and Purchaser to amalgamate (the "Amalgamation"), with AAP continuing as the amalgamated company. Simultaneously with the execution of the Amalgamation Agreement, the Principal Shareholders, Hold Co. and Purchaser entered into a Shareholder and Voting Agreement (the "Shareholder Agreement"). Pursuant to the Shareholder Agreement, the Principal Shareholders have agreed, and Hold Co. agreed, after transfer to it of the Non-Tendered Shares by the Principal Shareholders, not to dispose of or otherwise transfer the Non-Tendered Shares, and Purchaser has agreed not to dispose of or otherwise transfer any Shares purchased by it in the Offer ("Purchased Shares"), in either case prior to consummation of the Amalgamation. The Principal Shareholders also have agreed to cause Hold Co. and Purchaser, as the case may be, to vote, and Hold Co. and Purchaser, as the case may be, have agreed to vote the Non-Tendered Shares and Purchased Shares in favor of the Amalgamation. Because the Principal Shareholders will contribute their shares to Hold Co., the Principal Shareholders, indirectly as limited partners of Hold Co., will beneficially own approximately 85% of the Shares. Under Bermuda law, an amalgamation must be approved by a vote of three-fourths of those shareholders voting at the shareholder meeting to approve such amalgamation provided that a quorum representing at least one-third of the shareholders attend such meeting. Because the Principal Shareholders will own, directly or indirectly, 85% of the AAP Shares and 100% of the capital stock of Purchaser, the Principal Shareholders will be able to effect the Amalgamation even if the Public Shareholders (as defined below) do not tender any Shares. As a result of the Amalgamation, those holders who do not tender their Shares in the Offer will receive cash equal to the Purchase Price upon consummation of the Amalgamation. If Shareholders tender their Shares in connection with the Offer, then they will not have to wait for the Amalgamation to be completed to receive cash for their Shares. The Amalgamation is expected to occur as soon as possible following consummation of the Offer. 5 Alternatively, if at any time after consummation of the Offer, Purchaser and Hold Co. own, in the aggregate, 95 percent or more of the outstanding shares of the Common Stock, then Purchaser may, if it elects to do so in lieu of the Amalgamation, compulsorily purchase at the Purchase Price in cash the remaining Shares from the remaining Shareholders pursuant to Section 103 of the Bermuda Companies Act of 1981, as amended (the "Bermuda Act"). Accordingly, as a result of the consummation of the Offer and the Amalgamation or alternatively, the purchase of the Shares for cash in accordance with Section 103 of the Bermuda Act, the Principal Shareholders will, indirectly as limited partners of Hold Co., beneficially own 100 percent of the outstanding Shares. See, "Special Factors -- The Offer, Amalgamation and Related Transactions; Amalgamation Agreement". Over the last several years, a variety of alternatives have been considered by the Principal Shareholders and AAP management to increase shareholder value, while at the same time enhance operations, results and business prospects of AAP. After consideration of various alternatives and based on the difficult business environment and the limited public float of Shares, the Principal Shareholders and AAP concluded that it was unlikely that any meaningful improvement in liquidity of AAP would occur or that the Public Shareholders would realize the full potential of their investment in the foreseeable future. AAP and the Principal Shareholders concluded that, as a private company, AAP would have greater flexibility to invest in its future, realign the business relationships with Amway Corporation, a privately held Michigan corporation owned and controlled by the Principal Shareholders ("Amway"), and other Amway affiliates and allow senior management of Amway and AAP to focus on the long-term interests of AAP without concern for the impact that any action might have on operating results or share price of AAP. The Principal Shareholders view the Offer as an opportunity to create value for the Public Shareholders through a premium purchase price and to provide flexibility for restructuring and realignment of all Amway entities controlled by the Principal Shareholders. Purchaser will pay for the Shares purchased pursuant to the Offer with funds borrowed from Morgan Guaranty Trust Company of New York, Tokyo Branch, an affiliate of J.P. Morgan & Co. Incorporated ("Morgan Guaranty"), and possibly other commercial banks and lending institutions under a new senior credit facility. The Offer is not contingent upon receiving financing. The Offer will allow those holders desiring to receive cash for their Shares an opportunity to do so at a premium to the pre-Offer market price without the usual transaction costs associated with open market sales. THE BOARD OF DIRECTORS OF AAP (WITH MESSRS. RICHARD M. DEVOS, JR., DOUGLAS L. DEVOS AND STEPHEN A. VAN ANDEL NOT PARTICIPATING) (THE "DISINTERESTED DIRECTORS") HAS UNANIMOUSLY (1) DETERMINED THAT THE OFFER AND THE AMALGAMATION ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES, OTHER THAN NON-TENDERED SHARES (THE "PUBLIC SHAREHOLDERS"), (2) APPROVED THE AMALGAMATION AGREEMENT AND (3) RESOLVED TO RECOMMEND THAT THE PUBLIC SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER. SEE "SPECIAL FACTORS -- BACKGROUND OF THE OFFER; RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE DISINTERESTED DIRECTORS; REASONS FOR THE RECOMMENDATION; OPINION OF FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE" FOR FURTHER INFORMATION REGARDING THE MATTERS CONSIDERED BY THE SPECIAL COMMITTEE AND THE DISINTERESTED DIRECTORS IN REVIEWING THE TERMS OF AND FAIRNESS OF THE OFFER. AAP has advised Purchaser that Goldman, Sachs & Co., an independent investment bank and financial advisory firm (the "Financial Advisor" or "Goldman Sachs"), has delivered to the Special Committee, its written opinion that, as of the date of the Amalgamation Agreement, the Purchase Price in cash to be received by the Public Shareholders in the Offer and the Amalgamation or the compulsory purchase of the remaining Shares pursuant to Section 103 of the Bermuda Act as contemplated by the Amalgamation Agreement is fair from a financial point of view to such holders. See "Special Factors -- Background of the Offer; Recommendation of the Special Committee and the Disinterested Directors; Reasons for the Recommendation; Opinion of the Financial Advisor to the Special Committee" for further information concerning the opinion of Goldman Sachs. AAP has filed with the Securities and Exchange Commission (the "Commission") a Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"), a copy of which is enclosed. 2 6 All Shares validly tendered and not withdrawn on or prior to the Expiration Date (as defined in "The Offer -- Number of Shares; Expiration and Extension of Offer") will be purchased at the Purchase Price on the terms and subject to the conditions of the Offer. Certificates representing Shares not validly tendered and Shares validly withdrawn on or prior to the Expiration Date will be returned without delay to the applicable holder. See "The Offer -- Number of Shares; Expiration and Extension of Offer." Tendering holders will not be obligated to pay brokerage commissions or solicitation fees. Such brokerage commissions and solicitation fees, if applicable, will be paid by Purchaser as expenses of the Offer. Purchaser will pay all fees and certain expenses of the Dealer Managers, the Information Agent and the Depositary incurred in connection with the Offer. See "The Offer -- Fees and Expenses." However, any U.S. backup withholding taxes which may be required to be withheld will be withheld from the Purchase Price to be paid to each holder pursuant to the Offer. See "The Offer -- Acceptance for Payment of Shares and Payment of Purchase Price," and "The Offer -- U.S. Federal Income Tax Consequences." Participants in the Direct Purchase and Sale of Amway Asia Pacific Ltd. Common Stock (the "Dividend Reinvestment Plan") may tender part or all of the shares credited to their accounts in the Dividend Reinvestment Plan by following Instruction 10 of the Letter of Transmittal and submitting the Letter of Transmittal to the Depositary. Participants in the Amway Corporation Profit Sharing and 401(k) Plan ("401(k) Plan") may tender part or all of the shares credited to their accounts in the 401(k) Plan by submitting the letter of transmittal and the election form included in the materials sent by the trustee in the 401(k) Plan. Participants may only use the letter of transmittal sent to participants by the trustee for the 401(k) Plan to tender Shares credited to a 401(k) Plan account. See "The Offer -- Procedures for Tendering Shares -- 401(k) Plan." AAP has advised Purchaser that, as of September 30, 1999, there were approximately 56,441,960 shares of Common Stock (including 40,954.247 shares of Common Stock held in the 401(k) Plan) issued and outstanding. According to AAP's records, there were approximately 2,166 holders of record of the issued and outstanding shares of Common Stock. AAP has advised Purchaser that AAP's Board of Directors has taken action so that option rights to receive shares of Common Stock under the Amway Asia Pacific Ltd. Long-Term Incentive Plan and the Amway Asia Pacific Ltd. Outside Director Long-Term Award Plan (collectively, the "Option Plans") at the time of the Amalgamation or consummation of the compulsory purchaser will be converted into the right to receive cash in accordance with the terms of the Option Plans. The determination of the amount of cash to be paid to participants in the Option Plans will be based on the Black-Scholes Option Pricing Model. THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED OR SUBJECT TO ANY OTHER CONDITIONS. The United States federal income tax consequences of a sale by a holder of Shares pursuant to the Offer depend upon the facts and circumstances of the sale. U.S. backup withholding taxes may, in circumstances described herein, be required to be withheld from the Purchase Price of any sale of Shares. See "The Offer -- U.S. Federal Income Tax Consequences." EACH HOLDER IS URGED TO CONSULT AND RELY ON SUCH HOLDER'S OWN TAX ADVISOR WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO SUCH HOLDER OF A SALE OF SHARES PURSUANT TO THE OFFER. The principal trading market for the Common Stock is the NYSE. On November 12, 1999, the last full NYSE trading day prior to the public announcement of the Offer, the closing sales price of the Common Stock as reported on the NYSE was $11.75 and on November 16, 1999, the last full day of trading prior to the Commencement Date for which quotations could be obtained, the closing sale price was $17.81. The Purchase Price is $18.00 per share. On November 15, 1999, the last full ASX trading day prior to the public announcement of the offer, the closing sales price of the Common Stock as reported on the ASX was AU$17.50 and on November 17, 1999, the last full day of trading prior to the Commencement Date the closing sale price was AU$30.0. See "The Offer -- Market Information; Dividends and Dividend Policy" for historical prices of the Common Stock on the NYSE and the ASX. HOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMMON STOCK. THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH YOU SHOULD READ CAREFULLY BEFORE YOU MAKE ANY DECISION WITH RESPECT TO THE OFFER. 3 7 SPECIAL FACTORS 1. BACKGROUND OF THE OFFER; RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE DISINTERESTED DIRECTORS; REASONS FOR THE RECOMMENDATION; OPINION OF FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE. Background of the Offer. Over the last several years, a variety of alternatives have been considered by the Principal Shareholders and AAP management to increase shareholder value, while at the same time enhance the operations, results and business prospects of AAP. Of particular focus was the relatively illiquid and, at times, volatile market for the Common Stock. For example, during the second half of 1996, AAP considered a possible secondary offering in an effort to improve liquidity and expand ownership of shares of Common Stock by investors. After consideration of this proposal, AAP's Board of Directors, in January 1997, authorized AAP to conduct a secondary offering. After submission of a registration statement to the Commission, AAP's Board of Directors decided to delay this secondary offering due to deterioration in the market conditions. Following the delay of the proposed secondary offering, AAP authorized open market repurchases by AAP of shares of Common Stock valued up to $50 million in the hope that this action would create value for shareholders. Also considered was a realignment of AAP with other Amway affiliates either by means of the combination of AAP and such other markets or the acquisition by AAP of other Amway affiliates in the region. In particular, beginning in April 1997, AAP, representatives of Amway and financial and legal advisors reviewed the possibility of forming a holding company which would own both Amway Japan Limited, a Japanese corporation and a publicly held affiliate of Amway ("AJL"), and AAP. In January 1998, there was a discussion regarding the possible creation of such a holding company to acquire both AAP and AJL at a meeting of AAP's Board of Directors. Following a presentation in April 1998 by financial advisors regarding a proposed holding company structure, this alternative was rejected as not feasible because of certain legal, structural and tax issues and accounting concerns. Starting in June of 1997, the Asian currency crisis impacted a number of AAP's markets, particularly Malaysia, Thailand and Taiwan and to a lesser extent Australia and New Zealand. This crisis exacerbated the concerns regarding share value, market volatility and lack of liquidity for shareholders. In March of 1998, representatives of AAP and Amway, as well as legal, tax and financial advisors, met to discuss alternatives to address share value, market volatility, lack of liquidity and AAP's operating results. In order to address operating results, AAP adopted more stringent cost cutting programs, as well as an expansion of local sourcing opportunities. Further, compounding the market volatility and adversely affecting operating results was the ban in China on direct selling in the spring of 1998. Following the discussions in March of 1998, an alternative that was considered was whether shareholder value might be best served by taking AAP private. As a private company, AAP would have greater flexibility to invest in its future, realign the business relationship with Amway and other Amway affiliates and allow senior management of Amway and AAP to focus on the long-term interests of AAP without concern for the impact that any action might have on operating results or share price in the short-term. In addition, a going private transaction would minimize the impact of the legal, structural and tax issues and accounting concerns associated with the transactions previously considered as well as reduce costs through the elimination of public company status. Throughout 1998, senior executives of AAP and Amway, along with their financial, legal, tax and accounting advisors worked on various aspects of a potential going private transaction focusing, in particular, on legal, structural, tax, accounting and other regulatory issues. During the second calendar quarter of 1998, representatives of Amway and Morgan Stanley & Co. Incorporated ("Morgan Stanley") had discussions regarding the financing of such transaction. These earlier efforts did not result in any specific proposal or range of proposals being made to AAP by or on behalf of the Principal Shareholders, Amway or any other controlled company. From August through October 1998, representatives of Amway on behalf of the Principal Shareholders and its legal and financial advisors began to have discussions with J.P. Morgan Securities Inc. ("J.P. Morgan") regarding various financing options for a going private transaction. A decision was made not to proceed at that time. 4 8 In July and August of 1999, senior executives of Amway and Morgan Stanley prepared a strategic and financial analysis of a proposed going private transaction as a part of a broad based realignment of entities controlled by the Principal Shareholders, including Amway, AJL and AAP. The proposed transaction was presented to the Principal Shareholders on August 11 and August 20. Following these meetings, the Principal Shareholders instructed senior executives of Amway to continue to analyze going private transactions involving AJL and AAP. In addition, Morgan Stanley and J.P. Morgan were retained following these meetings by the Principal Shareholders to advise them on, and to explore opportunities for, a potential transaction and financing alternatives for any such transaction. On behalf of the Principal Shareholders, senior executives of Amway, Morgan Stanley, J.P. Morgan, Jones Day, Reavis & Pogue ("Jones Day"), as legal advisors, and White & Case LLP ("White & Case"), as tax advisors, met in Chicago on September 2, 1999, to discuss various aspects of a potential transaction, including financing, structures, due diligence and other issues. On September 10, 1999, senior executives of Amway met with the independent members of the Board of Directors of AAP to discuss a potential going private transaction. At this meeting, the participants discussed, among other things, the rationale for the transaction, the desirability of establishing a special committee of independent directors of AAP to consider such a transaction, the need for independent legal and financial advisors and other business issues. Senior executives of Amway and their legal and financial advisors, including Morgan Stanley, J.P. Morgan, Jones Day and White & Case, met in Tokyo the week of September 13, 1999 to conduct due diligence, to review a broad range of issues involved in a going private transaction, including legal, tax, accounting, regulatory and financing, and to discuss process issues. In addition, these representatives had telephone conferences with certain other senior executives of AAP. AAP's five-year financial projections were shared with the financial advisors at this time. The Principal Shareholders met on September 21, 1999, in Ada, Michigan to review the status of a potential transaction with their financial advisors. At this meeting, Morgan Stanley and J.P. Morgan reviewed preliminary financial and strategic conclusions. Based on a discounted cash flow analysis, a review of comparable companies and precedent transactions, and a trading analysis, Morgan Stanley and J.P. Morgan discussed with the Principal Shareholders and senior executives of Amway possible financial terms of a going private transaction. Following this meeting, the Principal Shareholders concluded that a going private transaction was the best way to enhance shareholder value and to implement the various changes believed necessary to effect a long term improvement in the operating results of Amway and all of its affiliates, including AAP. As a result, the Principal Shareholders instructed senior executives of Amway and their advisors to continue working towards a potential going private transaction. On September 29, 1999, a representative of Amway and Eoghan McMillan, a director of AAP and proposed chairman of the Special Committee (as defined below), had a telephone conversation regarding the decision of the Principal Shareholders to proceed with the transactions and discussed with Mr. McMillan the retention of independent legal and financial advisers for the Special Committee. Following these discussions, AAP and Purchaser executed a confidentiality agreement related to the going private transaction. On October 2, 1999, the Board of Directors of AAP formed the Special Committee, comprised of Eoghan M. McMillan, Jack C.K. So and John C.C. Chan (the "Special Committee"), each an independent, non-employee member of the Board of Directors of AAP. The Special Committee was formed for the purpose of evaluating the terms of any proposed going private transaction and was empowered to review, evaluate and, if deemed appropriate, negotiate on behalf of the Company the terms of a possible transaction and to report its actions and conclusions to the Board of Directors. The Special Committee further was authorized to retain independent legal and financial advisors in connection with the performance of its mandate. During the week of October 4, 1999, Mr. McMillan contacted Goldman, Sachs and Cleary, Gottlieb, Steen & Hamilton ("Cleary") to discuss retention of these firms by AAP to assist the Special Committee in analyzing the proposed transaction. Goldman Sachs met with the Special Committee, Mr. McMillan and senior executives of AAP during the week of October 11 to conduct financial due diligence. 5 9 In September and October 1999, senior executives of Amway, in consultation with the Principal Shareholder's tax and legal advisors, addressed structural issues and the terms of the proposed loans to Purchaser to fund the Offer. On October 13, 1999, representatives of the Principal Shareholders delivered to Mr. McMillan a written proposal informing AAP that the Principal Shareholders were interested in discussing a transaction to acquire all the publicly traded shares of AAP. This written proposal indicated that the Principal Shareholders would propose to purchase the Shares for $15.50 per share (the "Proposal"). On October 15, 1999, the Special Committee met with representatives of Goldman Sachs, Cleary and Conyers, Dill & Pearman ("Conyers Dill"), Bermuda counsel to AAP, to discuss their duties under applicable law with respect to the Proposal and appropriate procedures for responding to it. On October 20, 1999, the Special Committee met, together with representatives of Goldman Sachs, Cleary and Conyers Dill. At this meeting, representatives of Goldman Sachs summarized the results of their due diligence review and presented certain preliminary analyses they had performed with respect to AAP and the Shares. Later the same day, a representative of Goldman Sachs communicated to a representative of Morgan Stanley that at that time and based on preliminary analysis, the Special Committee was continuing to review the Proposal and were not prepared to provide a response to the Proposal. Goldman Sachs reported to Morgan Stanley that the Special Committee wanted more time to consider the Proposal in order, among other things, to allow AAP to review with the Special Committee projections of AAP's future financial results. Following the discussion with Goldman Sachs, Morgan Stanley consulted with the representatives of the Principal Shareholders and their advisors; and management of AAP had discussions with Mr. McMillan and Goldman Sachs regarding the projections. On October 22, 1999, the Special Committee met by teleconference with representatives of Goldman Sachs and Cleary. Goldman Sachs reported on its conversation with Morgan Stanley and reviewed certain further preliminary analyses they had performed taking into account certain information received during conversations with the Special Committee and representatives of Amway. On October 27, 1999, advisers to the Principal Shareholders, senior executives of Amway, Jones Day and White & Case met in Washington, D.C. to address structural, tax, accounting and regulatory issues relating to the proposed transaction. Among the structural issues discussed during this meeting and in follow-up discussions was the desirability of a voting and shareholder agreement among the Principal Shareholders relating to the Amalgamation. On October 27, 1999, the Special Committee met via teleconference, together with representatives of Goldman Sachs and Cleary. Goldman Sachs reviewed its preliminary valuation and financial analyses. After discussing these analyses, the Special Committee directed Goldman Sachs to inform the Principal Shareholders that the Special Committee would be prepared to consider a revised offer price of $18.00 per Share. On October 28, 1999, representatives of Goldman Sachs delivered to representatives of Morgan Stanley the Special Committee's response to the Proposal, indicating the Special Committee was initially willing to consider the Proposal if the Principal Shareholders would consider a purchase price of $18.00 per share. Morgan Stanley consulted with representatives of the Principal Shareholders and their advisers in order to prepare a response to the Special Committee's reply. While negotiations regarding the offer price continued, the representatives of the Principal Shareholders and the Special Committee and their respective advisors negotiated and finalized the terms of the Amalgamation Agreement. On November 11, 1999, the Principal Shareholders delivered to Mr. McMillan a written offer meeting the $18.00 per share price proposed by the Special Committee on October 28, 1999. The written offer was conditioned upon acceptance by the disinterested directors of the Board of Directors of AJL of an offer proposal made to it by the Principal Shareholders on the same day. On November 12, 1999, the Special Committee met via teleconference to discuss the revised Proposal, together with representatives of Goldman Sachs, Cleary and Conyers Dill. Based upon the financial and 6 10 valuation analyses which Goldman Sachs had performed with respect to the Proposal and previously presented to the Special Committee, Goldman Sachs expressed an oral opinion as of the date of the meeting that the $18.00 in cash proposed to be received by the Public Shareholders in the Offer and the Amalgamation or the compulsory purchase of Shares pursuant to the Amalgamation Agreement, is fair from a financial point of view to such holders. See " -- Opinion of Financial Advisor to the Special Committee." Following discussion, the Special Committee then adopted a resolution stating that the Special Committee has determined that the Offer and the Amalgamation are fair to and in the best interests of the Public Shareholders, and further resolved to recommend to the Board of Directors that it approve the Amalgamation Agreement and recommend that the Public Shareholders accept the Offer and tender their Shares in response to the Offer. Goldman Sachs delivered its written opinion dated November 15, 1999 confirming its oral opinion. Immediately following the November 12, 1999 Special Committee meeting, the Board of Directors of AAP (without the participation of Messrs. Richard M. DeVos, Jr., Douglas L. DeVos and Stephan A. Van Andel), held a meeting via teleconference, together with representatives of Goldman Sachs, Cleary and Conyers Dill. Mr. McMillan described the background of the written offer to the other Disinterested Directors and reported on the Special Committee's recommendation with regard to the written offer. Following this report, representatives of Cleary reviewed the terms of the Amalgamation Agreement submitted with the written offer leading to the Proposal, representatives of Conyers Dill reviewed the legal standards applicable to their deliberations under Bermuda law and representatives of Goldman Sachs presented the financial and valuation analyses which they had performed with respect to the written offer and informed the Disinterested Directors that it had given its oral fairness opinion to the Special Committee. The meeting of the Board of Directors was then adjourned and reconvened on November 15, 1999. At the reconvened meeting, after further discussion, the Disinterested Directors unanimously determined that the Offer and Amalgamation are fair to and, in the best interest, of the Public Shareholders, approved the Amalgamation Agreement and resolved to recommend that the Public Shareholders accept the Offer and tender their Shares in response to the Offer. See "-- Recommendation of the Special Committee and the Disinterested Directors" and "-- Reasons for the Recommendation" for a description of certain of the material factors considered by the Disinterested Directors in connection with their recommendation. Recommendation of the Special Committee and the Disinterested Directors. As described below, the Special Committee unanimously (1) determined that the Offer and the Amalgamation are fair to, and in the best interests of, the Public Shareholders and (2) recommended to the Disinterested Directors that they approve the Amalgamation Agreement and recommend that the Public Shareholders accept the Offer and tender their Shares in response to the Offer. The Disinterested Directors have unanimously (1) determined that the Offer and the Amalgamation are fair to, and in the best interests of, the Public Shareholders; (2) approved the Amalgamation Agreement; and (3) determined to recommend that Public Shareholders accept the Offer and tender their Shares in response to the Offer. Reasons for the Recommendation of the Special Committee and the Disinterested Directors. The Special Committee considered the following material factors, among others, in connection with making its determinations and recommendations: - The opinion of Goldman Sachs, the independent financial advisor to the Special Committee, that, as of the date of such opinion, the Purchase Price in cash to be received by the Public Shareholders in the Offer and the Amalgamation or the compulsory purchase of the remaining Shares pursuant to Section 103 of the Bermuda Act as contemplated by the Amalgamation Agreement is fair from a financial point of view to such holders and the financial and valuation analyses presented by Goldman Sachs to the Special Committee in connection with its opinion. THE PUBLIC SHAREHOLDERS ARE URGED TO READ GOLDMAN SACHS' OPINION IN ITS ENTIRETY, WHICH IS ATTACHED AS SCHEDULE II TO THIS OFFER TO PURCHASE. - The current and historical market prices for the Shares and the fact that the Purchase Price represents a premium of approximately 53.2% over the per share closing price of the Shares on November 12, 1999, the last trading day prior to the public announcement of execution of the Amalgamation 7 11 Agreement and approximately 67.2% over the average price of the Shares over the 52-week period prior to November 12, 1999. The Special Committee also noted that the Purchase Price represents a multiple of 39.2x 1999 EBIT and 81.4x 1999 net income. - The relatively low trading volume of the Shares and the fact that the public float for the Shares consists of only approximately 15% of the outstanding Shares. The Special Committee considered the uncertainty, in the absence of the Offer, that the Public Shareholders would have the opportunity in the foreseeable future to sell their Shares in the open market for prices equal to or in excess of the Purchase Price. - The Principal Shareholders' stated unwillingness to sell their Shares to a third party, as well as the commercial relationships between AAP and Amway, factors effectively precluding a sale of control of AAP or another transaction that might be more favorable to AAP and the Public Shareholders. In view of these factors, the Special Committee and Goldman Sachs were not authorized to, and did not, solicit, nor did AAP receive, third party indications of interest to acquire AAP as a whole or any of its businesses, nor did they give any significant consideration to theoretical prices which a hypothetical third party purchaser might be willing to pay to acquire AAP. - The commercial relationships between AAP and Amway and the value to the Principal Shareholders of consummating the Offer and the Amalgamation, including greater flexibility to invest in AAP, to realign AAP's business relationship with Amway and to allow senior management of Amway and AAP to focus on long-term interests without the short-term influence of the equity markets. - The recent and historical results of operations and financial condition and the business strategy and prospects of AAP and recent and historical economic, political and other developments in the direct distribution industry and in the countries in which AAP conducts its business. In particular, with respect to AAP's business prospects, the Special Committee considered AAP's potential for expansion into new and within existing markets, especially China, and the opportunities and risks associated with those markets. The Special Committee also considered the volatility of AAP's financial results in recent periods related to its dependence on Asian regional markets. - The fact that consummation of the transaction will preclude the Public Shareholders from participating in any future growth of AAP. In the view of the Special Committee, however, this loss of opportunity is adequately reflected in the Purchase Price. - The negotiations between the Special Committee and its representatives and the Principal Shareholders and their representatives, including that the negotiations that resulted in (1) an increase from the initial proposed price of $15.50 per share at which Purchaser was prepared to acquire the Shares, to the $18.00 per share Purchase Price and (2) the Special Committee's belief, confirmed by Goldman Sachs in their discussions with Morgan Stanley, that the Purchase Price was the highest price that could likely be obtained from the Principal Shareholders under the circumstances. - The terms and conditions of the Amalgamation Agreement, the Offer and the structure of the transaction generally, including that (1) the transaction includes a first-step cash tender offer, enabling Public Shareholders who accept the Offer to liquidate their investment in AAP without waiting for the Amalgamation to be consummated, (2) Public Shareholders who do not tender their Shares pursuant to the Offer will receive in the Amalgamation the same cash price per share paid by the Purchaser in the Offer (unless they elect to exercise appraisal rights under Bermuda law), (3) the Offer and the Amalgamation are not subject to any significant conditions and in particular that there is no financing condition attached to either the Offer or the Amalgamation and (4) without the consent of the Special Committee, the Purchaser may not reduce the Purchase Price, impose additional conditions to the Offer or amend or modify any other term of the Offer in a manner adverse to the holders of the Shares. - The availability of appraisal rights under Bermuda law pursuant to which Public Shareholders who do not accept the Offer and properly dissent from the Amalgamation may have the fair value of their Shares judicially determined. 8 12 In reaching their determinations referred to above, the Disinterested Directors considered the following factors, each of which, in the view of the Disinterested Directors, supported such determinations: (1) the recommendations of the Special Committee; (2) the factors referred to above considered by the Special Committee, and (3) the fact that the Purchase Price and the terms and conditions of the Amalgamation Agreement were the result of negotiations among the Special Committee and the Principal Shareholders and their respective advisors. The Disinterested Directors, including the members of the Special Committee, also believe that the Offer and the Amalgamation are procedurally fair because, among other things: (1) the Special Committee consisted of three independent directors who are not employees of AAP or affiliated with the Principal Shareholders and were appointed by the Directors to represent the interests of the Public Shareholders; (2) the Special Committee retained and received advice from independent legal counsel; (3) the Special Committee retained an independent financial advisor, Goldman Sachs, and received financial advice and assistance from Goldman Sachs in evaluating and negotiating a potential transaction with the Purchaser, as well as an opinion from Goldman Sachs. The Disinterested Directors and the Special Committee recognized that neither the Offer nor the Amalgamation was structured to require the approval of a majority of the Shareholders of AAP, excluding the Principal Shareholders and that the Principal Shareholders currently have sufficient voting power to approve the Amalgamation without the affirmative vote of any other Shareholders of AAP. The foregoing discussion of the information and factors considered by the Special Committee and the Disinterested Directors, respectively, is not meant to be exhaustive, but includes the material factors considered by each body in reaching its conclusions and recommendations. In view of the variety of factors considered in reaching their determinations, neither the Special Committee nor the Disinterested Directors found it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching their respective conclusions and recommendations. In addition, individual members of each body may have given different weights to different factors. The opinions, views, beliefs and recommendations of the Disinterested Directors, including members of the Special Committee, and of their advisors and other individuals that made statements to them, do not purport to be the only possible views on the Offer and the Amalgamation and no one view is presented here as objectively correct. Except for the recommendation made by the Disinterested Directors, no person or entity, including the legal or financial advisors to the Special Committee, is making any recommendation to the Public Shareholders as to whether they should tender Shares in response to the Offer. Although the Disinterested Directors have made a recommendation, the adequacy, fairness and acceptability of the Offer is for each Public Shareholder to decide. Consequently, the Disinterested Directors strongly urge the Public Shareholders to consider all available information. Opinion of Financial Advisor to the Special Committee. Goldman Sachs has acted as financial advisor to the Special Committee. On November 12, 1999, Goldman Sachs delivered to the Special Committee its oral opinion, subsequently confirmed in writing as of November 15, 1999, that as of such date the Purchase Price in cash to be received by the Public Shareholders in the Offer and the Amalgamation or compulsory purchase of the remaining Shares under Section 103 of the Bermuda Act as contemplated by the Amalgamation Agreement is fair from a financial point of view to such holders. THE FULL TEXT OF THE GOLDMAN SACHS OPINION, DATED AS OF NOVEMBER 15, 1999, WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED AND MATTERS CONSIDERED IN, AND THE LIMITATIONS ON, THE REVIEW UNDERTAKEN IN CONNECTION WITH ITS OPINION, IS ATTACHED HERETO AS SCHEDULE II. The Goldman Sachs opinion was provided for the information and assistance of the Special Committee in connection with its consideration of the Offer and the transactions contemplated by the Amalgamation Agreement. It is does not constitute a recommendation to any holder of Shares as to whether or not such holder should accept the Offer or should vote in respect of the Amalgamation. The summary of the Goldman Sachs opinion below is qualified by its full text. Shareholders of AAP should read the Goldman Sachs opinion in its entirety. 9 13 In connection with its opinion, Goldman Sachs reviewed, among other things: the Amalgamation Agreement; Annual Reports to Stockholders and Annual Reports on Form 20-F of AAP for the five fiscal years ended August 31, 1998; certain interim reports to shareholders and Quarterly Reports on Form 6-K of AAP; certain other communications from AAP to its shareholders; and certain internal financial analyses and forecasts for AAP prepared by its management. Goldman Sachs also held discussions with members of the senior management of AAP regarding its past and current business operations, financial condition and future prospects. In addition, Goldman Sachs reviewed the reported price and trading activity for the Shares, compared certain financial and stock market information for AAP with similar information for certain other companies the securities of which are publicly traded, reviewed the financial terms of certain recent business combinations and performed such other studies and analyses as it considered appropriate. Goldman Sachs has relied upon the accuracy and completeness of all of the financial and other information reviewed by it and has assumed such accuracy and completeness for purposes of rendering its opinion. In that regard, Goldman Sachs has assumed with the consent of the Special Committee that the internal financial forecasts prepared by the management of AAP have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of AAP. In addition, Goldman Sachs has not made an independent evaluation or appraisal of the assets and liabilities of AAP or any of its subsidiaries and Goldman Sachs has not been furnished with any such evaluation or appraisal. Goldman Sachs notes that the Principal Shareholders own a majority of the Shares, and that the Principal Shareholders have informed Goldman Sachs and the Special Committee that the Principal Shareholders will not sell their Shares to any third party. Accordingly, Goldman Sachs was not requested to solicit, and did not solicit, interest from other parties with respect to an acquisition of or other business combination with AAP. The following is a summary of the material financial analyses used by Goldman Sachs in connection with providing its written opinion to the Special Committee. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the text accompanying each summary. Review of Summary Financial Information. Goldman Sachs reviewed certain historical financial information for AAP for the years ended August 31, 1994 through 1999, and estimates prepared by AAP's management, in conjunction with the SEC Reporting and Investor Relations Group of Amway, of AAP's financial performance for the years ended August 31, 2000 through 2004. Historical Stock Price Performance. Goldman Sachs reviewed the historical closing stock prices and trading volume of the Shares for the period December 15, 1993 (the date of the Company's initial public offering (the "IPO")) through October 29, 1999, and for the three-year, one-year and six-month periods ended October 29, 1999. Goldman Sachs observed that the closing stock prices for Shares have declined gradually from a high of $49.50 on January 21, 1997 to an historic low of $7.125 on April 22, 1999. Over the one-year period ending October 29, 1999 the Shares traded between a high of $14.375 on July 26, 1999 and a low of $7.125 on April 22, 1999. Goldman Sachs also reviewed the indexed stock price of the Shares against a composite of two selected comparable public companies in Asia, a composite of six selected comparable public companies in the U.S., and a composite of five selected comparable public companies in Japan. Future Trading Range Analysis. Assuming a range of forward price to earnings ratios (20-30x) in four years' time and AAP's estimated 2004 earnings per share, Goldman Sachs calculated a range of potential future stock prices for AAP in November 2003. Assuming required annual returns to equity investors of 10 to 14% (assuming 2% in annual dividend yield with the remainder consisting of annual share price appreciation), Goldman Sachs calculated the present value of these potential future stock prices. The analysis indicated a range of $8.40 to $14.57 per share today. Goldman Sachs also observed that, if an investor were to invest in the Shares today at $18.00 per share, and exited the investment in November 2003 at today's forward price to earnings ratio (25x on AAP's estimated 2000 earnings per share) as applied to AAP's current estimated 2004 earnings per share, the annual return to such investor would be approximately (0.1)% over the next four-year period. In addition, Goldman Sachs also observed that if an investor were to invest in the Shares today at $18.00 per share, either AAP's forward price earnings ratio or its estimated 2004 earnings per share at time of 10 14 exit in November 2003 must be greater by approximately 60% than current levels for such investor to obtain an annual return of 12% (assuming 2% annual dividend yield) over the next four-year period. Historical Public Market Valuation Performance. Based on historical prices and reported EBIT and net debt, Goldman Sachs observed the market's valuation of AAP, as defined by enterprise value as a multiple of last fiscal year EBIT, to have a mean of 14.8x over the last 5 years. Similarly, Goldman Sachs observed the historical equity multiple of International Broker Estimate System's projected one-year forward EPS to have a mean of 23.9x over the same period. AAP's historical dividend yield reflected a mean of 3.4% over the same period. Transaction Premiums. Goldman Sachs observed that, based on the proposed price per share of AAP Common Stock of $18.00, the following premiums were applicable as of November 10, 1999:
PERIOD TRANSACTION PREMIUM ------ ------------------- November 10 market price................................. 55.7% 52-Week Average.......................................... 67.2% 52-Week High............................................. 24.7% 52-Week Low.............................................. 152.6% All-Time High............................................ (63.6)%
Goldman Sachs compared the premium over November 10, 1999 closing price with premiums paid in selected tender offers in Japan, Asia and the United States, and selected minority buyouts in the United States (measured as premium over closing price one day prior to announcement). Mean premiums paid in recent Asia tender offers was 23.0% (median 18.2%) for transactions including Australia and New Zealand, which accounted for 75.6% of total Asia deals, and 8.6% (median 6.1%), excluding Australia and New Zealand. Premiums paid in recent Japanese transactions ranged from a high of 95.2% to a low of 3.3%, with a mean of 30.2% and a median of 18.5%. Mean premiums paid in recent U.S. tender offers and selected minority buyout transactions were 29.2% (median 33.5%) and 26.0% (median 21.4%), respectively. Additionally, in the case of minority buyout offers which were increased subsequent to the initial offer, the mean increase was 10.9% (median 8.5%). Discounted Cash Flow Analysis. Based on estimates provided by AAP management, Goldman Sachs performed a discounted cash flow analysis for the years ended August 31, 2000 to 2004. Using a range of discount rates of 10% to 14%, based on an estimated cost of capital for AAP, and a range of terminal multiples of 2004 EBIT of 10x to 20x, Goldman Sachs calculated a range of net present values of estimated future cash flows of AAP as of November 30, 1999. Based on these parameters, Goldman Sachs calculated the enterprise value of AAP to range from $368 million to $806 million and its equity value per share to range from $8.36 to $16.12. Comparison of Selected Companies. Goldman Sachs reviewed and compared certain financial information relating to AAP to corresponding financial information, ratios and public market multiples of the fifteen comparable public companies (eight in the U.S., two in Asia and five in Japan): Amway Japan Limited, Avon Products, Inc., Nu Skin Enterprises, Inc., Tupperware Corporation, Thomas Nelson, Inc., Herbalife International, Inc., Rexall Sundown, Inc., Nature's Sunshine Products, Inc., USANA, Inc., Cosway Corporation Berhad, Amway (Malaysia) Holdings Berhad, Avon Products Co., Ivy Cosmetics Corporation, Noevir and Shaklee Japan. Among other analyses, for each of the comparison companies, Goldman Sachs calculated the ratio of their enterprise value as of November 10, 1999 to their respective revenues, EBITDA and EBIT during the most recent 12-month period and the ratios of their stock prices as of November 10, 11 15 1999 to projected earnings per share for years 2000 and 2001. Results of those analyses are summarized as follows: ENTERPRISE VALUE MULTIPLES
REVENUES EBITDA EBIT -------- ------ ---- AAP......................................................... 1.1x 13.9x 20.7x U.S. Comparables: Low.................................................... 0.2x 1.8x 2.3x High................................................... 1.5 11.3 12.7 Mean................................................... 0.8 5.6 7.1 Median................................................. 0.8 5.6 6.5 Asia Comparables: Low.................................................... 1.1x 14.3x 21.0x High................................................... 2.9 20.7 21.6 Mean................................................... 2.0 17.5 21.3 Median................................................. 2.0 17.5 21.3 Japan Comparables: Low.................................................... 0.5x 3.0x 3.6x High................................................... 1.5 11.5 26.4 Mean................................................... 0.8 8.1 13.0 Median................................................. 0.7 10.1 10.7
P/E MULTIPLES*
2000E 2001E ----- ----- AAP:........................................................ 46.3x 17.8x U.S. Comparables: Low.................................................... 6.5x 1.5x High................................................... 15.5 12.6 Mean................................................... 10.1 7.7 Median................................................. 10.1 8.2 Asia Comparables: Low.................................................... 19.2x 15.9x High................................................... 19.2 15.9 Mean................................................... 19.2 15.9 Median................................................. 19.2 15.9 Japan Comparables: Low.................................................... 8.7x 15.3x High................................................... 32.5 15.3 Mean................................................... 23.4 15.3 Median................................................. 29.1 15.3
- --------------- * Fiscal year-end except for U.S. companies, for which data has been calendarized. Goldman Sachs' comparative analysis also included a comparison of International Broker Estimate System's estimated five-year earnings per share rates, and comparisons of historical annual sales growth, EBIT 12 16 margins for the most recent 12-month period and return on common equity. The results of such analyses are summarized as follows: - The International Broker Estimate System's estimated five-year projected earnings per share growth for the comparison companies ranged from 2.0% to 20.0%, with a median of 13.3% and mean of 11.5%, compared to 17.5% for AAP. - Historical annual sales growth for the comparison companies ranged from (4.8)% to 99.3%, with a mean of 18.3% and median 9.4%, compared to (3.9)% for AAP. - EBIT margins for the comparison companies ranged from 1.8% to 17.5%, with a mean of 11.0% and a median of 11.9%, compared to 5.2% for AAP, down from a peak of 18.8% in 1993. - Return on common equity for the comparison companies ranged from (0.3)% to 55.6%, with a mean of 19.1% and median of 17.8%, compared to 8.5% for AAP. Comparison of Selected Transactions. Goldman Sachs reviewed certain publicly available information relating to three selected transactions in the direct sales industry from 1992 to 1999. The premium over market price (one day prior to announcement) in such transactions were 39%, 28% and 19.1%, respectively, compared to 55.7% for AAP (premium over November 10, 1999 closing price). Ratio of offer price to the 52-week high ranged from (41)% to (0)% and to 52-week low from 127% to 60%, compared to 24.7% and 152.6% for AAP. Enterprise value as a multiple of last 12-month sales, EBIT and net income for each transaction, and comparable figures for AAP, are as follows:
TRANSACTION A TRANSACTION B TRANSACTION C AAP ------------- ------------- ------------- --- EV Multiple of Sales......................... 0.2x 1.2x 1.1x 2.1x EV Multiple of EBIT.......................... 5.0 9.6 12.9 39.2 EV Multiple of Net Income.................... 10.7 15.8 24.7 81.4
The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying the Goldman Sachs opinion. In arriving at its fairness determination, Goldman Sachs considered the results of each of these analyses in their totality and did not attribute any particular weight to any analysis or factor considered by it; rather Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment, after considering the results of all these analyses. No company or transaction used in the above analyses as a comparison is directly comparable to AAP, the Offer or the Amalgamation. The analyses were prepared solely for the purpose of Goldman Sachs' providing its opinion to the Special Committee as to the fairness from a financial point of view of the Purchase Price in cash to be received by the Public Shareholders in the Offer and the Amalgamation or the compulsory purchase of the remaining Shares as contemplated by the Amalgamation Agreement and do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their advisors, none of AAP, the Special Committee, the Disinterested Directors, Goldman Sachs or any other person assumes responsibility if future results are different from those forecast. As described above, Goldman Sachs' opinion to the Special Committee was one of many factors taken into consideration by the Special Committee in making its determination to recommend the approval of the Amalgamation Agreement and by the Disinterested Directors in their determination to approve the Amalgamation Agreement and recommendation to the Public Shareholders to tender their Shares in response to the Offer. This summary is not a complete description of the analysis performed by Goldman Sachs. You should read the entire opinion of Goldman Sachs in Schedule II. 13 17 Goldman Sachs, as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements, and valuations for estate, corporate and other purposes. Goldman Sachs may from time to time effect transactions and hold securities, including derivative securities, of AAP for its own account and for the accounts of its customers in the course of its normal trading activity. As of November 11, 1999, which was the last trading day prior to the rendering of its opinion, Goldman Sachs did not hold any positions in such securities. Pursuant to a letter agreement dated October 8, 1999, the Special Committee engaged Goldman Sachs to act as its financial advisor. Pursuant to the letter agreement, AAP agreed to pay Goldman Sachs a fee totaling $2,000,000 for its opinion and role as financial advisor to the Special Committee, upon delivery of its opinion. In addition, AAP has agreed to reimburse Goldman Sachs for its reasonable out-of-pocket expenses, including the fees and expenses of Goldman Sachs' attorneys, and to indemnify Goldman Sachs and certain related persons against various liabilities, including certain liabilities under the U.S. federal securities laws, arising out of its engagement. 2. THE OFFER, AMALGAMATION AND RELATED TRANSACTIONS; AMALGAMATION AGREEMENT. The Offer is being made pursuant to the Amalgamation Agreement. The purpose of the Offer is to facilitate Purchaser's acquisition of all Shares for cash, and thereby enable the Principal Shareholders to obtain indirect control of 100% of the capital stock of AAP. The Amalgamation Agreement provides for, among other things, Purchaser to first conduct the Offer to be followed by the Amalgamation. Pursuant to the Shareholder Agreement, the Principal Shareholders have agreed, and Hold Co. agreed, after transfer to it of the Non-Tendered Shares by the Principal Shareholders, not to dispose of or otherwise transfer the Non-Tendered Shares, and Purchaser has agreed not to dispose of or otherwise transfer any Purchased Shares, in either case prior to consummation of the Amalgamation. The Principal Shareholders have agreed to cause Hold Co. and Purchaser, as the case may be, to vote, and Hold Co. and Purchaser, as the case may be, have agreed to vote the Non-Tendered Shares and Purchased Shares in favor of the Amalgamation. Because the Principal Shareholders will contribute their shares to Hold Co., the Principal Shareholders, indirectly as limited partners of Hold Co., will beneficially own approximately 85% of all Shares. Under Bermuda law, an amalgamation must be approved by a vote of three-fourths of those shareholders voting at the shareholder meeting to approve such amalgamation provided that a quorum representing at least one-third of the shareholders attend such meeting. Because the Principal Shareholders will own, directly or indirectly, 85% of the AAP Shares and 100% of the capital stock of Purchaser, the Principal Shareholders will be able to effect the Amalgamation even if the Public Shareholders do not tender any Shares. As a result of the Amalgamation, those holders who do not tender their Shares in the Offer will receive cash equal to the Purchase Price upon consummation of the Amalgamation. If Shareholders tender their Shares in connection with the Offer, then they will not have to wait for the Amalgamation to be completed to receive cash for their Shares. The Amalgamation is expected to occur as soon as possible following consummation of the Offer. Alternatively, if at any time after consummation of the Offer, Purchaser and Hold Co. own, in the aggregate, 95 percent or more of the outstanding shares of the Common Stock, then Purchaser may, if it elects to do so in lieu of the Amalgamation, compulsorily purchase the remaining Shares for cash equal to the Purchase Price from the remaining Shareholders pursuant to Section 103 of the Bermuda Act. Accordingly, as a result of the consummation of the Offer and the Amalgamation or alternatively, the purchase of the Shares for cash in accordance with Section 103 of the Bermuda Act, the Principal Shareholders will, indirectly as limited partners of Hold Co., beneficially own 100 percent of the outstanding Shares. The Amalgamation and the transaction in accordance with Section 103 of the Bermuda Act are collectively referred to as the "AAP Transaction." Simultaneously with the Offer and Amalgamation, N.A.J. Co., Ltd., a Japanese corporation (the "AJL Purchaser"), will be offering to purchase (the "AJL Offer") shares of common stock, no par value of AJL (the "AJL Shares") from the shareholders of AJL. The consummation of the AJL Offer and the Offer are 14 18 not contingent upon each other. As of September 30, 1999, the Principal Shareholders owned approximately 76% of the outstanding shares of AJL common stock. The AJL Purchaser has been informed by the Principal Shareholders that they will not tender their AJL Shares in response to the AJL Offer (other than 550,000 AJL Shares owned by one charitable foundation established by certain of the Principal Shareholders). The Principal Shareholders will contribute substantially all of their AJL Shares, including the AJL Shares that are not tendered by the charitable foundation in response to the AJL Offer ("AJL Offer Non-Tendered Shares"), to ALAP Hold Co., Ltd., a limited partnership organized under the laws of Nevada ("ALAP"), or the AJL Purchaser contemporaneously with the consummation of the Offer. ALAP is the parent of the AJL Purchaser and an entity controlled and beneficially owned, directly and indirectly, by the Principal Shareholders. In addition, no later than immediately prior to the effectiveness of the AJL Merger (as defined below), the Principal Shareholders will transfer to ALAP their AJL Shares that were not previously transferred prior to the consummation of the AJL Offer (the "AJL Merger Non-Tendered Shares", and, together with the AJL Offer Non-Tendered Shares, the "AJL Non-Tendered Shares"). The AJL Offer will be made in accordance with the Tender Offer Agreement, dated November 15, 1999 (the "AJL Agreement"), among ALAP, the AJL Purchaser and AJL. Pursuant to the AJL Agreement, the AJL Purchaser will first make the AJL Offer and, after consummation of the AJL Offer, the AJL Purchaser will take all steps required by law or as may be necessary or advisable to effect a merger (the "AJL Merger") of AJL with and into the AJL Purchaser. Simultaneously with the execution of the AJL Agreement, the Principal Shareholders, ALAP and the AJL Purchaser executed a Shareholder and Voting Agreement (the "AJL Shareholder Agreement"). Pursuant to the AJL Shareholder Agreement, the Principal Shareholders have agreed, and ALAP agreed, after transfer to it of the AJL Non-Tendered Shares by the Principal Shareholders, not to dispose of or otherwise transfer the AJL Non-Tendered Shares, and the AJL Purchaser has agreed not to dispose of or otherwise transfer any AJL Non-Tendered Shares transferred to it by the Principal Shareholders (the "AJL Purchaser Non-Tendered Shares") or Shares purchased by it in the AJL Offer (the "AJL Acquired Shares" and, together with the AJL Purchaser Non-Tendered Shares, the "AJL Purchased Shares")), in either case prior to consummation of the AJL Merger. In addition, the Principal Shareholders have agreed to cause ALAP and the AJL Purchaser, as the case may be, to vote, and the Principal Shareholders, ALAP and the AJL Purchaser, as the case may be, have agreed to vote the AJL Merger Non-Tendered Shares, the AJL Offer Non-Tendered Shares and the AJL Purchased Shares, respectively, in favor of the AJL Merger. As a result of the AJL Offer and the AJL Merger, the Principal Shareholders will own, indirectly as limited partners of ALAP, all or substantially all of the AJL Shares. In addition, as a result of the Offer and the AAP Transaction, the Principal Shareholders will own, indirectly as the limited partners of Hold Co., all the outstanding shares of Common Stock. Currently, the Principal Shareholders are the sole beneficial owners of Amway and various affiliates and subsidiaries of Amway (collectively, the "Amway Companies"). The Principal Shareholders may desire at some point in the future to transfer all of their ownership in the Amway Companies to Hold Co., ALAP or an affiliate of each of Hold Co. or ALAP. After consummation of the AAP Transaction and the AJL Merger, the Principal Shareholders may consider, from time to time, restructuring transactions involving one or more Amway Companies in order to improve liquidity and value of their investments. Such transactions could include one or more public offerings by one or more of the Amway Companies over the next several years. 3. PURPOSE OF THE OFFER AND AMALGAMATION; OTHER TRANSACTIONS. Over the last several years, a variety of alternatives have been considered by the Principal Shareholders and AAP management to increase shareholder value, while at the same time enhance operations, results and business prospects of AAP. After considerations of various alternatives and based on the difficult business environment and the limited public float of Shares, the Principal Shareholders and AAP concluded that it was unlikely that any meaningful improvement in liquidity of AAP would occur or that the Public Shareholders would realize the full potential of their investment in the foreseeable future. As a result, AAP and the Principal Shareholders concluded that, as a private company, AAP would have greater flexibility to invest in its future, realign the business relationships with Amway and other markets and allow senior management of 15 19 Amway and AAP to focus on the long-term interests of AAP without concern for the impact that any action might have on operating results or share price of AAP. The Principal Shareholders see the Offer as an opportunity to create value for the Public Shareholders through a premium purchase price and to create value for the Principal Shareholders through a restructuring and realignment of all Amway Companies. 4. POSITION OF PURCHASER REGARDING FAIRNESS OF THE OFFER. Purchaser believes that the consideration to be received by the Public Shareholders pursuant to the Offer is fair. Purchaser bases its belief on the following facts: (i) the fact that the Special Committee concluded that the Offer is fair to, and in the best interests of, the Public Shareholders, (ii) notwithstanding the fact that Goldman Sachs' opinion was provided solely for the information and assistance of the Special Committee and that Purchaser is not entitled to rely on such opinion, the fact that the Special Committee received an opinion from Goldman Sachs the date prior to the announcement of the Offer that the $18.00 per share in cash to be received by the holders of Shares pursuant to the Offer is fair to the Public Shareholders, (iii) the historical and projected financial performance of AAP, (iv) Purchaser's assessment of future economic conditions in the Asia-Pacific region, (v) the consideration to be paid in the Offer represents a premium of 53.2% over the closing price for November 12, 1999, the last full trading day prior to the public announcement of the Offer, and (vi) the Offer will provide consideration to be paid to the holders of Shares entirely in cash. Purchaser did not find it practicable to assign, nor did it assign, relative weights to the individual factors considered in reaching its conclusion as to fairness of the Offer. 5. CERTAIN EFFECTS OF THE AMALGAMATION. Upon consummation of the Offer and the AAP Transaction, the Principal Shareholders will, indirectly as limited partners of Hold Co., own 100 percent of the shares of Common Stock. 6. INTERESTS OF CERTAIN PERSONS. In considering the recommendations of the Disinterested Directors, based upon the recommendation of the Special Committee, with respect to the Offer and the Amalgamation Agreement, the Public Shareholders should be aware that certain officers and directors of AAP have interests in connection with the Offer and the Amalgamation Agreement which may present them with actual or potential conflicts of interest as summarized below. The Disinterested Directors and the Special Committee were aware of these interests and considered them among the other matters described under "Background of the Offer; Recommendation of Special Committee and the Disinterested Directors; Reasons for the Recommendation; Opinion of Financial Advisor to the Special Committee." These interests are described below. The Board of Directors and Officers of AAP Each of Messrs. Richard M. DeVos, Jr., Douglas L. DeVos and Stephen A. Van Andel are Principal Shareholders and did not participate in meetings of the Board of Directors relating to the transaction. In addition, as of November 1, 1999, the following individuals were the beneficial owners of the Shares as follows: 16 20 Stephen A. Van Andel Chairman and a Director 26,666 Shares Richard M. DeVos, Jr. Vice Chairman and Director 17,578,587 Shares Douglas L. DeVos President and Director 2,955,185 Shares Eoghan M. McMillan Director, Chairman of the compensation committee and Special Committee and member of the audit committee 10,000 Shares Jack C.K. So Director, Chairman of the audit committee and a member of the Special Committee and compensation committee 10,000 Shares John C.C. Chan Director, and member of the Special Committee and the compensation and audit committees 7,000 Shares L.H. Choong Director 33,000 Shares Eva Cheng Executive Vice President and Director 62,333 Shares Lawrence M. Call(1) Vice President 23,333 Shares* Craig N. Meurlin(1) Vice President, General Counsel and Assistant Secretary 16,333 Shares* John C. Brockman Vice President of Distributor Relations 200 Shares Percy Chin Vice President and General Manager of Amway (China) Co. Ltd. -- East China 5,333 Shares Patrick Hau Vice President And General Manager of National Operations of Amway (China) Co. Ltd. 7,666 Shares Audie Wong Vice President and General Manager of Amway (China) Co., Ltd. -- North China 6,667 Shares Martin Liou General Manager of Taiwan Company, Limited 2,333 Shares Low Han Kee General Manager of Amway (Malaysia) Sdn. Bhd. 5,666 Shares Preecha Prakobkit General Manager of Amway (Thailand) Ltd. 6,666 Shares Peter Williams General Manager of Amway of Australia 4,000 Shares Betty Yeung General Manager of Amway (China) Co. Ltd. -- South China 2,333 Shares
- --------------- * Amount represents less than 0.01% of the outstanding Shares (1) Includes the following Shares which such persons have, or had the right to acquire, within 60 days after November 1, 1999: Mr. Call, 23,333 Shares and Mr. Meurlin, 13,333 Shares. In addition, under the terms of the Amalgamation Agreement, the directors are indemnified against certain various liabilities and Purchaser has agreed subject to certain exceptions to retain after consummation of the Amalgamation D&O insurance substantially similar to the existing D&O insurance. 7. APPRAISAL RIGHTS IN THE AMALGAMATION. Amalgamations. Under Bermuda law, a company may amalgamate with another Bermuda company. A dissenting shareholder is entitled to be paid the fair value of his or her shares. Any shareholder who does not vote in favor of the amalgamation and who is not satisfied that he has been offered fair value for his shares may within one month of the date of this notice apply to the Supreme Court of Bermuda to appraise the fair value of his shares. There are no statutory rules prescribing the process of appraisal by the court and it is generally considered that the court will apply the general common law with a view to determining the fair market value of such shares. Compulsory Acquisitions Under Section 103 Companies Act of 1981. Bermuda law provides that the shareholders of a company representing in the aggregate at least 95% of the issued and outstanding shares or class of shares in a company (the "majority shareholders") may compulsorily purchase the shares of the minority. In order to compulsorily purchase the Shares pursuant to Section 103 of the Bermuda Act, the majority shareholders must give notice (the "acquisition notice") to the outstanding shareholders of the intention to acquire their shares and the terms thereof. The minority are entitled, within one month of receiving such notice, to apply to the Supreme Court of Bermuda for an appraisal of the value of the shares which the majority propose to purchase. Once the court has appraised the value of the shares, the majority shareholders are entitled to either acquire the shares at the court's price or cancel the acquisition notice. Where shares have already been acquired from certain minority shareholders who did not seek an appraisal from the court, and the price paid for their shares is less than that appraised by the court, then the majority shareholders must either pay the difference to those shareholders or return the shares they had acquired. 17 21 THE OFFER 1. NUMBER OF SHARES; EXPIRATION AND EXTENSION OF OFFER. Upon the terms and subject to the conditions described or referred to herein and in the accompanying Letter of Transmittal, Purchaser will purchase all Shares that are validly tendered and not withdrawn on or prior to the Expiration Date (as defined below) or any lesser number of Shares validly tendered and not so withdrawn. The term "Expiration Date" means 12:00 midnight, New York City time, on December 17, 1999, unless and until Purchaser, in its sole discretion will have extended the period of time during which the Offer will remain open, in which event the term "Expiration Date" will refer to the latest time and date at which the Offer as so extended by the Purchaser will expire. For a description of Purchaser's right to extend the period of time during which the Offer is open or to delay, terminate or amend the Offer, see "-- Extension of Offer; Termination; Amendments." Only Shares validly tendered and not withdrawn on or prior to the applicable Expiration Date will be eligible for purchase. See "-- Description of Shares," "-- Procedure for Tendering Shares" and "-- Withdrawal Rights." All Shares purchased pursuant to the Offer will be purchased at the Purchase Price. There will be deducted from the Purchase Price paid to each holder any U.S. or other applicable backup withholding taxes which may be required to be withheld. See "-- Acceptance for Payment of Shares and Payment of Purchase Price." Certificates representing Shares not purchased pursuant to the Offer because they were not properly tendered will be returned to the tendering holders at Purchaser's expense without delay following the Expiration Date. Certificates for those Shares validly withdrawn on or prior to the Expiration Date will be returned at Purchaser's expense without delay following such withdrawal. See "-- Acceptance for Payment of Shares and Payment of Purchase Price." Purchaser expressly reserves the right, in its sole discretion, but shall not be obligated, at any time or from time to time, to extend the period of time during which the Offer is open by giving appropriate public notice of such extension. See "-- Extension of Offer; Termination; Amendments." There can be no assurance, however, that Purchaser will exercise its right to extend the Offer. 2. PROCEDURE FOR TENDERING SHARES. Proper Tender of Shares. To tender Shares pursuant to the Offer, (a) the Depositary must receive at one of its addresses set forth on the back cover of this Offer to Purchase a properly completed and duly executed Letter of Transmittal (or facsimile thereof), together with any other documents required by the Letter of Transmittal, or an Agent's Message (as defined below) and (b) either (i) certificates for the Shares must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase or (ii) such Shares must be delivered pursuant to the procedures for book-entry transfer described below and a confirmation of such delivery received by the Depositary, in each case on or prior to the Expiration Date. Alternatively, the guaranteed delivery procedure described below must be complied with. The term "Agent's Message" means a message transmitted by the Book-Entry Transfer Facility (as defined below) to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares which are the subject of the Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that such agreement may be enforced against such participant. Book Entry Delivery. The Depositary will cause a book-entry account in respect of the Shares to be established at The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the procedures of the Book-Entry Transfer Facility. However, although delivery of Shares may be effected through book-entry transfer, the Letter of Transmittal (or facsimile thereof) properly completed and duly 18 22 executed together with any required signature guarantees and any other required documents or an Agent's Message must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date, or the guaranteed delivery procedure described below must be complied with. DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES FOR SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. Signature Guarantees. Except as otherwise provided below, all signatures on a Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loans associations and brokerage houses) which is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Guarantee Program or the Stock Exchange Medallion Program (an "Eligible Institution"). Signatures on a Letter of Transmittal need not be guaranteed if (a) the Letter of Transmittal is signed by the registered holder of the Common Stock tendered therewith and such holder has not completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (b) such Shares are tendered for the account of an Eligible Institution. See Instructions 1 and 6 of the Letter of Transmittal. Guaranteed Delivery. If a holder desires to tender Shares pursuant to the Offer and such holder's certificates evidencing such Shares are not immediately available or time will not permit all required documents to reach the Depositary on or prior to the Expiration Date, or such holder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered if all of the following conditions are met: (a) such tender is made by or through an Eligible Institution; (b) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided with this Offer to Purchase is received by the Depositary (as provided below) by the Expiration Date; and (c) the certificates for all Shares tendered in proper form for transfer (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility), together with (i) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantee and any other documents required by the Letter of Transmittal or (ii) an Agent's Message, are received by the Depositary within two NYSE trading days after the Expiration Date. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice. Dividend Reinvestment Plan. If you participate in the Dividend Reinvestment Plan, and you want to tender Shares held under such plan pursuant to the Offer, you should mark the appropriate box on the Letter of Transmittal and follow the relevant instructions set out there. See Instruction 10 of the Letter of Transmittal. 401(k) Plan. Participants in the 401(k) Plan who wish to have the trustee of such plan tender Shares attributable to their accounts should so indicate by completing, executing and returning to such trustee the election form included in the materials sent by the trustee to such participants. The participants in the 401(k) Plan may not use the Letter of Transmittal accompanying this Offer to Purchase to direct the tender of such Shares. Participants may only use the letter of transmittal and the separate election form sent to them by the trustee. Participants are urged to carefully read the separate election form and related materials sent to them by the trustee. See Instruction 11 of the Letter of Transmittal. 19 23 U.S. Federal Income Tax Withholding. Under U.S. federal income tax backup withholding rules, 31% of the gross proceeds payable to a holder of Shares who elects to tender Shares into the Offer or other payee pursuant to the Offer must be withheld and remitted to the United States Treasury if the holder or other payee does not provide its taxpayer identification number ("TIN"), employer identification number ("EIN") or social security number ("SS No.") to the Depositary and certify that such number is correct, or if the Internal Revenue Service ("IRS") notifies the Depository that the TIN, EIN or SS No. is incorrect or that backup withholding shall be imposed with respect to a particular holder. Certain holders (including, among others, all corporations and certain non-resident alien individuals) are not subject to these backup withholding and reporting requirements ("exempt recipients"). All holders of Shares who elect to tender Shares into the Offer, other than exempt recipients, should execute and return to the Depositary the Substitute Form W-9 included as part of the Letter of Transmittal. In order for a foreign individual to qualify as an exempt recipient, that individual must submit a statement, signed under penalties of perjury, attesting to that individual's exempt status. Such statements may be obtained from the Depositary or in Australia from J.P. Morgan & Co. at the address and telephone number set forth on the cover page of this Offer to Purchase. See "-- U.S. Federal Income Tax Consequences" and Instruction 9 of the Letter of Transmittal. ANY TENDERING HOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAID TO SUCH HOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. Tender Constitutes An Agreement. The tender of Shares pursuant to any one of the procedures described above will constitute the tendering holder's acceptance of the terms and conditions of the Offer and an agreement by the tendering holder to be subject to the terms and conditions of the Offer, including the tendering holder's representation and warranty that the tender of such Shares complies with Regulation 14D under the Securities Exchange Act of 1934 (the "Exchange Act"). Purchaser's acceptance for payment of Shares represented by Shares validly tendered and not withdrawn pursuant to the Offer will constitute a binding agreement with the tendering holder of Shares subject to the terms and subject to the conditions of the Offer. See "-- Acceptance for Payment of Shares and Payment of Purchase Price." Determination of Validity; Rejection of Shares; Waiver of Defects; No Obligation to Give Notice of Defects. All questions as to the Purchase Price, the number of Shares accepted, the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by Purchaser, in its sole discretion, which determination shall be final and binding on all parties. Purchaser reserves the absolute right to reject any or all Shares tendered which it determines not to be in proper form, or the acceptance of which or payment for which may, in the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right to waive any defect or irregularity in any tender of particular Shares, and Purchaser's interpretation of the terms of the Offer, including the instructions in the Letter of Transmittal, will be final and binding on all parties. No tender of Shares will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as Purchaser shall determine. NONE OF PURCHASER, THE DEALER MANAGERS, THE INFORMATION AGENT, THE DEPOSITARY OR ANY OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECT OR IRREGULARITY IN TENDERS OR INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION. 3. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 3, tenders of Shares made pursuant to the Offer are irrevocable. The Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless they have been accepted for payment by Purchaser, may also be withdrawn at any time after 60 days from the Commencement Date. See "-- Acceptance for Payment of Shares and Payment of Purchase Price." If Purchaser extends the period of time during which the Offer is open, is delayed in accepting for payment or paying for Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for 20 24 any reason, then, without prejudice to Purchaser's rights under the Offer, the Depositary may, on behalf of Purchaser, retain all Shares tendered, and such Shares may not be withdrawn except as otherwise described under this caption. However, in any event, Purchaser will comply with Rule 14e-1 under the Exchange Act, which provides that settlement for the purchase of securities pursuant to a tender offer must take place promptly after the expiration or termination of such offer. In order to withdraw Shares, a written or facsimile transmission notice of withdrawal must be received by the Depositary on or prior to the Expiration Date at one of its addresses set forth on the back cover of this Offer to Purchase and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with signatures guaranteed by an Eligible Institution (except in the case of Shares tendered by an Eligible Institution) must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of Shares, the name of the registered holder (if different from that of the tendering holder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. Withdrawals may not be rescinded and Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be tendered into the Offer again by following one of the procedures described in "-- Procedure for Tendering Shares" at any time on or prior to the applicable Expiration Date. ALL QUESTIONS AS TO THE FORM AND VALIDITY (INCLUDING TIME OF RECEIPT) OF ANY NOTICE OF WITHDRAWAL WILL BE DETERMINED BY PURCHASER, IN ITS SOLE DISCRETION, WHICH DETERMINATION SHALL BE FINAL AND BINDING. NONE OF PURCHASER, THE DEALER MANAGERS, THE INFORMATION AGENT, THE DEPOSITARY OR ANY OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECT OR IRREGULARITY IN ANY NOTICE OF WITHDRAWAL OR INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION. 4. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE. Upon the terms and subject to the conditions of the Offer, and without delay after the Expiration Date, Purchaser will, subject to withdrawal provisions of the Offer, accept for payment, and thereby purchase, and pay for Shares validly tendered and not withdrawn. For purposes of the Offer, Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares that are validly tendered and not withdrawn as, if and when it gives written notice to the Depositary of its acceptance for payment of the aggregate number of Shares to be purchased pursuant to the Offer. It is presently anticipated that this notification will be made as promptly as practicable after the Expiration Date. Under no circumstances will interest be paid on amounts to be paid to tendering holders by Purchaser by reason of any delay in making any such payment. All Shares purchased pursuant to the Offer will be purchased at the Purchase Price. There will be deducted from the Purchase Price paid to each holder any U.S. backup withholding taxes which may be required to be withheld. See "-- U.S. Federal Income Tax Consequences." Certificates representing Shares not properly tendered will be returned to the tendering holders at Purchaser's expense without delay following the Expiration Date. Certificates representing those Shares validly withdrawn on or prior to the Expiration Date will be returned at Purchaser's expense without delay following such withdrawal. 5. MARKET INFORMATION; DIVIDENDS AND DIVIDEND POLICY. Market Information. The principal market for the shares of Common Stock is the NYSE, such shares having been traded since December 14, 1993. The Common Stock is also listed on the ASX, such shares having been listed on the ASX since December 23, 1993. The high and low sales prices of AAP's shares of 21 25 Common Stock on the NYSE and the ASX during each fiscal quarterly period shown is set forth in the following table. AAP's fiscal year ends August 31 in each year.
NYSE ------------- HIGH LOW ---- --- FY 1997 First Quarter............................................. $42 5/8 $29 5/8 Second Quarter............................................ 49 5/8 40 1/4 Third Quarter............................................. 47 1/4 34 3/4 Fourth Quarter............................................ 48 32 5/16 FY 1998 First Quarter............................................. 34 19 1/2 Second Quarter............................................ 22 15/16 15 3/4 Third Quarter............................................. 21 1/16 12 15/16 Fourth Quarter............................................ 16 1/2 9 3/6 FY 1999 First Quarter............................................. 13 3/16 8 1/4 Second Quarter............................................ 13 1/2 7 Third Quarter............................................. 14 1/2 6 7/8 Fourth Quarter............................................ 14 15/16 9 15/16 FY 2000 First Quarter (through November 12, 1999)................. 13 3/8 10 7/8
ASX -------------------- HIGH LOW -------- -------- FY 1997 First Quarter............................................. AU$49.00 AU$36.10 Second Quarter............................................ 60.60 48.00 Third Quarter............................................. 60.00 47.00 Fourth Quarter............................................ 62.00 47.01 FY 1998 First Quarter............................................. AU$46.50 AU$36.50 Second Quarter............................................ 36.00 26.00 Third Quarter............................................. 32.51 23.00 Fourth Quarter............................................ 28.50 19.50 FY 1999 First Quarter............................................. AU$21.00 AU$14.50 Second Quarter............................................ 21.00 12.00 Third Quarter............................................. 20.80 11.80 Fourth Quarter............................................ 24.00 15.90 FY 2000 First Quarter (through November 12, 1999)................. AU$20.50 AU$17.00
On November 12, 1999, the last full NYSE trading day prior to the public announcement of the Offer, the closing sales price of the Common Stock as reported on the NYSE was $11.75 and on November 16, 1999, the last full day of trading prior to the Commencement Date for which quotations could be obtained, the closing sale price was $17.81. The Purchase Price is $18.00 per share. On November 15, 1999, the last full ASX trading day prior to the public announcement of the Offer, the closing sales price of the Common Stock as reported on the ASX was AU$17.50 and on November 17, 1999, the last full day of trading prior to the Commencement Date for which quotations could be obtained, the closing sale price was AU$30.0. HOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMMON STOCK. 22 26 Dividends and Dividend Policy. AAP's Board of Directors suspended AAP's quarterly dividend on October 14, 1998, because of adverse economic conditions in AAP's markets at that time, declining profitability and uncertainty as to whether either of these two factors would improve. The AAP Board of Directors has regularly reviewed AAP's ability to pay a quarterly dividend and based on the continuation of weak profitability and the need to use cash flow in China has not reinstated the dividend. The Company does not intend to pay any future dividends. 6. CERTAIN EFFECTS OF THE OFFER. As of September 30, 1999, AAP had issued and outstanding (i) 56,441,960 shares of Common Stock (held by approximately 2,166 holders of record). The Principal Shareholders held approximately 85% of the issued and outstanding shares of Common Stock as of that date. Elimination of Public Float. The purchase of Shares pursuant to the Offer will reduce the number of holders of Shares and the number of Shares that might otherwise trade publicly. Consequently, depending upon the number of Shares tendered pursuant to the Offer, the liquidity and market value of the remaining publicly held Shares might also be reduced. In any event, after consummation of the Amalgamation, the Shares will no longer be publicly traded. NYSE and ASX Delisting. Depending on the number of Shares purchased pursuant to the Offer, it is anticipated that the shares of Common Stock will no longer meet the standards for continued inclusion in the NYSE and the ASX. If the shares of Common Stock no longer meet the standards for inclusion in the NYSE and the ASX, then the shares of Common Stock will be delisted after consummation of the Offer. In any event, after consummation of the Amalgamation, the shares of Common Stock will no longer be outstanding and as a result will no longer satisfy the standards for inclusion in the NYSE and the ASX. As a result, the shares of Common Stock will be delisted. Potential Exchange Act Deregistration. The shares of Common Stock are currently registered under the Exchange Act. Such registration may be terminated following application by AAP to the Commission if, following the Offer, the shares of Common Stock are not listed on a national securities exchange and there are fewer than 300 holders of record of the shares of Common Stock. After consummation of the Amalgamation, AAP will apply for deregistration of the shares of Common Stock. See "--NYSE Delisting and ASX Delisting". The termination of the registration of the shares of Common Stock under the Exchange Act will substantially reduce the information required to be furnished by AAP to holders of the shares of Common Stock and to the Commission, and will result in the future inapplicability of certain provisions of the Exchange Act to the shares of Common Stock, including, among other things, the requirements of Rule 13e-3 under the Exchange Act with respect to "going private transactions." When the registration of the shares of Common Stock under the Exchange Act is terminated, certain affiliates of AAP or Purchaser, as the case may be, will be deprived of the ability to dispose of any shares of capital stock held by them pursuant to Rule 144 promulgated under the Exchange Act. Status of Shares as "Margin Securities." The shares of Common Stock are currently "margin securities" under the rules of the Federal Reserve Board. This has the effect, among other things, of allowing brokers to extend credit on the collateral of the shares of Common Stock. After consummation of the Offer and the Amalgamation, the shares of Common Stock will no longer constitute "margin securities" for purposes of the margin regulations of the Federal Reserve Board, and therefore such shares of Common Stock may no longer be used as collateral for loans made by brokers. Concentration of Shares with Affiliates of AAP. The Principal Shareholders will contribute their shares of Common Stock to Hold Co. contemporaneously with the consummation of the Offer and so they will not tender any shares of Common Stock owned by them in the Offer. Following the Offer, assuming that all Shares owned by persons other than the Principal Shareholders are tendered pursuant to the Offer, the Principal Shareholders will own, as a result of the contribution of their shares of Common Stock to Hold Co., beneficially, indirectly as limited partners of Hold Co., 100 percent of the outstanding Shares. 23 27 As discussed above in "Special Factors -- The Offer, Amalgamation, and Related Transactions; Amalgamation Agreement," the Offer is being made in accordance with the terms and conditions of the Amalgamation Agreement. Pursuant to the Amalgamation Agreement, after consummation of the Offer, Purchaser and AAP will amalgamate. As a result of the transfer of their shares of Common Stock, the Principal Shareholders will, indirectly as limited partners of Hold Co., beneficially own 85% of all shares of Common Stock. Hold Co. will be able to effect the Amalgamation even if the Public Shareholders do not tender any Shares. As a result of the Amalgamation, those holders who do not tender their Shares in the Offer will receive cash equal to the Purchase Price after consummation of the Amalgamation. However, if the Public Shareholders tender their Shares in connection with the Offer, then they will not have to wait for the Amalgamation to be completed to receive cash for their Shares. The Amalgamation is expected to occur as soon as possible following consummation of the Offer. Alternatively, if at any time after consummation of the Offer, Purchaser and Hold Co. own, in the aggregate, 95 percent or more of the outstanding shares of Common Stock, then Purchaser may, if it elects to do so in lieu of the Amalgamation, compulsorily purchase the remaining Shares from the remaining Shareholders pursuant to Section 103 of the Bermuda Act. Accordingly, as a result of the consummation of the Offer and the Amalgamation or alternatively, the purchase of the Shares for cash equal to the Purchase Price in accordance with Section 103 of the Bermuda Act, the Principal Shareholders will, beneficially own 100 percent of the outstanding Shares. See "Special Factors-- Interests of Certain Persons" for a discussion of management's and the Principal Shareholders' beneficial ownership of Shares prior to the Offer and the potential effect of their participation in the Offer. ALTHOUGH THE DISINTERESTED DIRECTORS, BASED ON THE RECOMMENDATION OF THE SPECIAL COMMITTEE, HAVE RECOMMENDED THAT HOLDERS OF SHARES ACCEPT THE OFFER, EACH HOLDER MUST MAKE ITS OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. 7. SOURCE AND AMOUNT OF FUNDS. Assuming that Purchaser purchases all outstanding Shares pursuant to the Offer at the Purchase Price, Purchaser estimates that the total amount of funds required to purchase such Shares and pay related fees and expenses will be approximately $150.0 million all of which will be from funds borrowed from Morgan Guaranty and possibly other commercial banks and lending institutions under a new senior credit facility (the "Credit Facility"). It is expected that the Credit Facility will be unsecured and will consist of one or more term loans. Repayments under the Credit Facility will begin in November 2000 and end in November 2005. The interest rate of the facility will be the LIBO Rate plus a margin equal to 6.35% for amounts borrowed in the first eight months of the facility and determined by Morgan Guaranty based on Purchaser's credit worthiness thereafter. The Credit Facility will contain covenants that will restrict each of Purchaser and its subsidiaries from, among other things, selling substantially all of its assets, incurring liens on its assets (subject to dollar limit exceptions) and incurring debt (subject to dollar limit exceptions). In addition, the Credit Facility will require Purchaser to maintain or limit, as the case may be, dividend levels, consolidated net worth, consolidated interest coverage ratios, cash flow ratios and restricted payments to shareholders. Finally, each of Hold Co. and ALAP has, jointly and severally, guaranteed the obligations of Purchaser and the AJL Purchaser under the Credit Facility. Other conditions of the Credit Facility are expected to be those customary for similar debt transactions. The Offer is not contingent upon receipt of the financing. Following the Offer and Amalgamation, Purchaser (together with AJL or the AJL Purchaser) may be required to dedicate a substantial portion of its cash flows from operations to pay principal and interest under the Credit Facility. 8. CERTAIN INFORMATION REGARDING AAP. Except as otherwise set forth herein, the information concerning AAP contained in this Offer to Purchase, including financial information, has been furnished to Purchaser by AAP or has been taken from or based upon publicly available documents and records on file with the Commission and other public sources. 24 28 General. AAP is a Bermuda corporation, whose principal executive office is located at 38/F The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong. AAP is the exclusive distribution vehicle for Amway Corporation in Australia, Brunei, the People's Republic of China, Hong Kong, Macau, Malaysia, New Zealand, Taiwan and Thailand. Financial Information. Provided below is certain selected financial information relating to AAP which has been excerpted or derived from the audited financial statements contained in AAP's Annual Report on Form 20-F for the fiscal year ended August 31, 1998 (the "Form 20-F") and AAP's Form 6-K for the fiscal quarter ended May 31, 1999 (the "Form 6-K"). More comprehensive information is included in the Form 20-F and Form 6-K and other reports and documents filed by AAP with the Commission. The financial information that follows is qualified in its entirety by reference to such reports and other documents as may be examined at the offices of the Commission in the manner set forth below. In addition, Schedule III sets forth AAP's audited financial statements for the fiscal year ended August 31, 1998, including comparative statements as contained in the Form 20-F for the fiscal year ended August 31, 1998, as well as AAP's unaudited financial statements for the nine months ended May 31, 1999, including comparative statements as contained in the Form 6-K for the fiscal quarter ended May 31, 1999. The financial statements and notes thereto contained in the Form 20-F and the Form 6-K for the period ended May 31, 1999 are hereby incorporated by reference herein. 25 29 SELECTED CONSOLIDATED FINANCIAL INFORMATION (U.S. DOLLARS IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
YEARS ENDED AUGUST 31, NINE MONTHS ENDED MAY 31, ---------------------- ------------------------------ 1998 1997 1999 1998 --------- --------- ----------- ----------- (UNAUDITED) (UNAUDITED) INCOME STATEMENT DATA: Net sales................................. $587,579 $845,166 $365,929 $463,403 Cost of sales............................. 257,220 313,287 159,542 201,800 -------- -------- -------- -------- 330,359 531,879 206,387 261,603 -------- -------- -------- -------- Distributor incentives.................... 157,018 219,111 97,063 125,621 Distribution expenses..................... 45,199 49,662 28,315 35,569 Selling and administrative expenses....... 102,849 114,523 70,269 80,163 -------- -------- -------- -------- Total operating expenses.................. 305,066 383,296 195,647 241,353 -------- -------- -------- -------- Operating income.......................... 25,293 148,583 10,740 20,250 Other income -- net....................... 9,683 24,707 1,689 5,851 -------- -------- -------- -------- Income before income taxes and minority interest................................ 34,976 173,290 12,429 26,101 Income taxes.............................. 23,508 54,909 9,798 19,520 -------- -------- -------- -------- Income before minority interest........... 11,468 118,381 2,631 6,581 Minority interest in net income of consolidated subsidiaries............... 10,015 14,350 4,478 7,812 -------- -------- -------- -------- Net income (loss)......................... $ 1,453 $104,031 $ (1,847) $ (1,231) ======== ======== ======== ======== Basic and diluted earnings (loss) per share(1)................................ $ 0.03 $ 1.76 $ (0.03) $ (0.02) ======== ======== ======== ======== Cash dividends per share.................. $ 0.88 $ 0.84 $ -- $ 0.66 ======== ======== ======== ======== Weighted average number of shares outstanding (in thousands).............. 56,442 59,124 56,442 56,442 ======== ======== ======== ======== Ratio of earnings to fixed charges(2)..... 7.5 46.5 4.8 9.1 ======== ======== ======== ========
AUGUST 31, MAY 31, -------------------- -------------------------- 1998 1997 1999 1998 -------- -------- ----------- ----------- (UNAUDITED) (UNAUDITED) BALANCE SHEET DATA: Working capital............................... $102,128 $186,451 $100,289 $105,954 Total assets.................................. 387,073 520,143 361,763 388,729 Non-current liabilities....................... 184 1,079 248 422 Total shareholders' equity.................... 176,098 252,484 180,721 188,885 Book value per share(3)....................... 3.12 4.47 3.20 3.35
- --------------- (1) The computation of earnings per share is based on the weighted average number of shares of Common Stock outstanding during the period. (2) The ratio of earnings to fixed charges was computed by dividing income before income taxes and minority interest plus fixed charges by the fixed charges. Fixed charges consist of interest expense and that portion of operating lease rental expense that is representative of the interest factor. (3) Book value per share was computed by dividing shareholders' equity by the shares of Common Stock outstanding. Shares of Common Stock consist of the number of fully paid shares outstanding at the end of the period. 26 30 1999 Fiscal Year Results and Fiscal 2000 Outlook. In October 1999, AAP reported its results for the fiscal year ended August 31, 1999. Net sales for the fiscal year declined 14.7% compared to the prior year; net income was $12.5 million compared to $1.5 million for fiscal 1998. In contrast, AAP's net sales in the fourth quarter increased 9.2% compared to the prior year period and net income was $14.3 million compared to $2.7 for the fourth quarter of fiscal 1998. These improved fourth quarter results were primarily due to strong sales in China and Malaysia. The performance in China reflected the positive impact of the China Business Revitalization Program in that market, while Malaysia's net sales increase was driven by the very favorable distributor response to a benefits program and various promotions on high ticket items. In October 1999, AAP reported that it expected positive sales growth in fiscal 2000 primarily due to the expected continuation of stronger sales in China as the business there continues to attain a higher level of acceptance and expanded manufacturing capabilities result in an increase in the number of product launches in China. Increased sales in Malaysia and Thailand are also expected to favorably impact AAP's overall net sales. The statements contained herein that are not historical facts, including the statements in the preceding paragraph, are forward looking statements. These forward looking statements involve risks and uncertainties with respect to AAP's markets. With respect to operations in China, these risks and uncertainties include AAP's ability to manage effectively transition issues associated with the modification and refinement of its marketing plan and its distribution system. AAP is still in the process of obtaining the necessary approvals from certain provinces and cities for all aspects of its new mode of operations, including the use of independent sales agents. In addition, AAP is also trying to obtain licenses for new cities and branches. Obtaining these approvals and licenses involves regular discussions with national, provincial and city government officials; AAP believes that it has good relations with governmental officials, but there can be no assurance that the approvals and licenses will be obtained. In addition, operations can always be adversely affected by new or existing government regulations, or interpretations thereof, or by other governmental action. In addition, risks and uncertainties in China include: (i) AAP's ability to source materials necessary to achieve portions of its fiscal 2000 product launch schedule; and (ii) the possibility that because of AAP's relationship with Amway, it can be affected by changes in the US-China relationship. In addition, the forward looking statements, including the statements in this second paragraph under "--1999 Fiscal Year Results and Fiscal 2000 Outlook," contained herein are subject to other risks and uncertainties with respect to AAP's markets, which could cause results to differ materially such as, without limitation, a worsening of economic turmoil in AAP's markets, such as the occurrence of further adverse currency volatility in the markets in which AAP operates, the creation of adverse government regulation or the occurrence of adverse government action in AAP's markets related to either AAP's Sales and Marketing Plan or its products, import or price restrictions in any of AAP's markets, the possibility of adverse publicity directed at AAP in its markets, the difficulty in passing on the full impact of the cost increases to distributors, given the economic situation in AAP's markets and a deterioration of AAP's positive relationship with its distributor leadership. The most significant uncertainty, with respect to currencies that impact AAP, is whether the Chinese yuan will be devalued against the dollar; in addition to its impact on operations in China, that could in turn lead to further weakening of other Asian currencies. These and other risks and uncertainties are further detailed in AAP's Annual Report on Form 20-F for the fiscal year ended August 31, 1998, filed with the U.S. Securities and Exchange Commission, in the sections titled "Description of Business -- Government Regulation" and "Description of Business -- Risks and Uncertainties." Additional Information About AAP. The Schedule 14D-9, Form 20-F and the Form 6-K, together with certain other documents and reports concerning AAP (collectively, the "AAP Filings") have been filed by AAP with the Commission. Copies of the AAP Filings may be obtained from Ms. Holly Clemente, Director of Investor Relations, AAP, at (914) 961-1564 or as described immediately below. AAP is subject to the informational filing requirements of the Exchange Act and, in accordance therewith, is required to file periodic reports and other information with the Commission relating to its business, financial condition and other matters. Information as of particular dates concerning AAP's directors and officers, their remuneration, stock options granted to them, the principal holders of AAP's securities and 27 31 any material interest of such persons in transactions with AAP is required to be disclosed in periodic reports filed with the Commission. Such reports and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's regional offices located at Seven World Trade Center, Suite 1300, New York, New York 10048 and the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Information regarding the public reference facilities may be obtained from the Commission by telephoning 1-800-SEC-0330. Copies of such materials may also be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Certain reports and other information concerning AAP may also be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. 9. CERTAIN INFORMATION REGARDING PURCHASER. General. Purchaser was incorporated under the laws of Bermuda in October 1999 for the principal purpose of acquiring all of the outstanding shares of AAP and has no prior operating history. The principal executive offices of Purchaser are currently located at 7575 Fulton Street, East, Ada, Michigan 49355, telephone number (616) 787-6000. Purchaser does not have any significant assets or liabilities and it has not engaged in activities other than those incidental to its formation and capitalization, its execution of the Amalgamation Agreement and preparation for the Offer. Because Purchaser is acquiring the Shares for cash, financial information regarding it is not meaningful. During the last five years none of Purchaser's officers or directors were (1) convicted in a criminal proceeding, or (2) party to a civil proceeding of a judicial or administrative body and as a result of the proceeding were or are subject to a judgment enjoining future violations of or prohibiting activities subject to, Federal or state securities laws or finding any violation of such laws. Schedule I attached hereto sets forth information regarding Purchaser's officers and directors. The Principal Shareholders are certain corporations, trusts, foundations and other entities established by or for the benefit of Richard M. DeVos and Jay Van Andel, and their respective families. As of the Commencement Date, the Principal Shareholders beneficially own, in the aggregate, 47,943,530 shares of Common Stock, approximately 85% of the outstanding Common Stock of AAP. See "-- Interests of Certain Persons." Additional Information About Purchaser. Purchaser is not subject to the informational filing requirements of the Exchange Act. Purchaser has filed with the Commission a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") and a Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") that contain additional information with respect to the Offer. The Schedule 14D-1 and the Schedule 13E-3, and any amendments thereto, may be examined and copies may be obtained at the same places and in the same manner as set forth above except that the Schedule 14D-1 and the Schedule 13E-3 and such amendments may not be available in the regional offices of the Commission. 10. BACKGROUND OF THE OFFER; CONTACTS WITH AAP. See "Special Factors." 11. INTERESTS OF CERTAIN PERSONS. As noted above, the Principal Shareholders are certain corporations, trusts, foundations and other entities established by or for the benefit of the Principal Shareholders and their respective families. As of the Commencement Date, the Principal Shareholders, beneficially own, in the aggregate, 47,943,530 shares (approximately 85%) of the outstanding shares of Common Stock. As of the Commencement Date, directors and executive officers of AAP, other than those who are Principal Shareholders, own beneficially and of record, in the aggregate, 202,863 Shares, less than 0.01% of the outstanding Common Stock. Based on a review of information provided by directors and executive officers of AAP, it is not anticipated, however, that any material amount of shares will be tendered by the directors and executive officers. In the event such 28 32 individuals do not tender their shares, they will receive cash in the Amalgamation. See "Special Factors -- Certain Effects of the Offer." As a result of the Offer and the Amalgamation, 100 percent of the shares of Common Stock will be owned, indirectly as limited partners of Hold Co., by the Principal Shareholders. 12. TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES. Based upon Purchaser's records and upon information provided to its and AAP's directors, executive officers and affiliates, neither Purchaser nor, to Purchaser's knowledge, any director or executive officer of Purchaser or AAP any person controlling Purchaser or AAP any director or executive officer of any corporation ultimately in control of Purchaser or AAP or any associate or subsidiary of any of the foregoing, including any director or executive officer of any such subsidiary, has effected any transactions in the Common Stock during the 60 business day period prior to the Commencement Date. Except as described in this Offer to Purchase, neither Purchaser or AAP nor, to Purchaser's or AAP's knowledge, any director or executive officer of Purchaser or AAP any person controlling Purchaser or AAP or any director or executive officer of any corporation ultimately in control of Purchaser is a party to any contract, arrangement, understanding or relationship with any other person relating, directly or indirectly, to the Offer with respect to the Common Stock (including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies, consents or authorizations). 13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS. Except with respect to matters in Australia described herein, Purchaser is not aware of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for Purchaser's acquisition or ownership of Shares as contemplated by the Offer or of any license or regulatory permit that appears to be material to its business that might be adversely affected by its acquisition of Shares as contemplated in the Offer. Foreign investment in Australia is regulated by the Foreign Acquisitions and Takeovers Act 1975 ("FTA"). Certain foreign investments and takeovers in Australia require that the Foreign Investment Review Board ("FIRB") be notified. FIRB is the body responsible for reviewing and approving foreign investments under FTA. Generally, FIRB will approve a proposal unless it considers it to be against the national interest. Because the Offer by Purchaser is technically an acquisition under the FTA, a FIRB notice relating to the Offer will be lodged, as the proposed Offer by Purchaser is a foreign to foreign acquisition involving an Australian subsidiary, Amway of Australia, a wholly owned subsidiary of AAP. This notification will be filed with the FIRB contemporaneously with the commencement of the Offer and it is expected that FIRB will have no objection to this transaction. Should any other such approval or other action be required, Purchaser currently contemplates that it will seek such approval or other action. Purchaser cannot predict whether it may determine that it is required to delay the acceptance of, or payment for, Shares tendered pursuant to the Offer pending the outcome of any such matter. There can be no assurance that any such approval or action, if needed, would be obtained or would be obtained without substantial conditions. 14. U.S. FEDERAL INCOME TAX CONSEQUENCES. General. The following discussion addresses the U.S. federal income taxation of a United States person (i.e., a United States citizen or resident, a United States corporation, a United States estate or trust subject to United States tax on all of its income regardless of source (a "U.S. Shareholder")) who has Shares purchased pursuant to the Offer. The following discussion does not address the tax consequences to a person who holds, directly or indirectly, 10% or more of the Shares (a "10% Shareholder"). Non-United States persons and 10% Shareholders are urged to consult their own tax advisors regarding the tax considerations incident to a sale of Shares pursuant to the Offer. In addition, this summary does not address the U.S. tax treatment of certain types of U.S. Shareholders (e.g., individual retirement and other tax-deferred accounts, life insurance companies and tax-exempt 29 33 organizations) or of persons other than U.S. Shareholders, all of whom may be subject to tax rules that differ significantly from those summarized below. The discussion below, as it relates to U.S. federal income tax consequences, is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and regulations, rulings and judicial decisions thereunder as of the date of this Offer to Purchase, and such authorities may be repealed, revoked or modified so as to result in U.S. federal income tax consequences different from those discussed below. Each holder is advised to consult such holder's own tax advisor with respect to federal, state, local and foreign tax law consequences of a sale of Shares pursuant to the Offer. Purchases of Shares by Purchaser pursuant to the Offer will generally be taxable transactions to U.S. Shareholders for federal income tax purposes under the Code, and may also be taxable transactions under applicable state, local and foreign tax laws. Tax Treatment of Proceeds from Sale. The sale of Shares pursuant to the Offer will generally be accorded sale or exchange treatment for federal income tax purposes and gain or loss (rather than dividend income) will be recognized by a tendering U.S. Shareholder if the U.S. Shareholder satisfies one of the following tests: (i) its interest in AAP is completely sold; (ii) its percentage interest in AAP is reduced (as measured before Purchaser's purchase of any Shares pursuant to the Offer) by more than 20% (as measured after Purchaser's purchase of all Shares redeemed pursuant to the Offer); or (iii) it is demonstrated that the disposition of Shares to Purchaser is "not essentially equivalent to a dividend." A U.S. Shareholder's contemporaneous dispositions or acquisitions of Shares deemed for federal income tax purposes to be part of an integrated transaction with the Offer may be taken into account in determining whether the holder satisfied any of these tests. If sale or exchange treatment applies, any gain or loss recognized will be equal to the difference between the amount of cash received in the exchange and the U.S. Shareholder's tax basis in the Shares purchased. Provided that the Shares constitute a capital asset in the hands of the U.S. Shareholder and have a holding period of more than one year, this gain or loss generally will be long-term capital gain or loss. If sale or exchange treatment does not apply, the gross proceeds received from Purchaser for Shares purchased pursuant to the Offer will be treated as a taxable dividend to the extent of AAP's current or accumulated earnings and profits. In that event, the tax basis of Shares purchased by Purchaser pursuant to the Offer will generally be added to the tax basis of the Shares that the tendering U.S. Shareholder continues to own, and such increase in basis may cause any subsequent taxable disposition of retained Shares to give rise to a loss, which would be a capital loss if such Shares were held as a capital asset. A U.S. Shareholder who intends to avoid dividend treatment of the gross proceeds received by demonstrating that such proceeds are "not essentially equivalent to a dividend" is urged to consult its tax advisor because this test will be met only if the reduction in its proportionate interest in AAP is a "meaningful reduction" given the particular facts and circumstances in the context of the Offer. The Internal Revenue Service has indicated in published rulings that any reduction in the percentage interest of a U.S. Shareholder whose relative stock interest is minimal (e.g., less than 1%) in a publicly-held corporation who exercises no control over corporate affairs may constitute such a "meaningful reduction." Backup Withholding. Under U.S. federal income tax backup withholding rules, 31% of the gross proceeds payable to a holder of Shares who elects to tender Underlying Shares into the Offer or other payee pursuant to the Offer must be withheld and remitted to the United States Treasury if the holder or other payee does not provide its taxpayer identification number ("TIN"), employer identification number ("EIN") or social security number ("SS No.") to the Depositary and certify that such number is correct, or if the IRS notifies the Depositary that the TIN, EIN or SS No. is incorrect or that backup withholding should be imposed with respect to a particular holder. Certain holders (including, among others, all corporations and certain non-resident alien individuals) are not subject to these backup withholding and reporting requirements ("exempt recipients"). All holders of Shares who elect to tender Shares pursuant to the Offer, other than exempt recipients, should execute and return to the Depositary the Substitute Form W-9 included as part of the Letter of 30 34 Transmittal. In order for a foreign individual to qualify as an exempt recipient, that individual must submit a statement, signed under penalties of perjury, attesting to that individual's exempt status. Such statements may be obtained from the Depositary. See Instruction 9 of the Letter of Transmittal. THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. EACH HOLDER IS URGED TO CONSULT ITS OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO IT OF THE OFFER, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS. 15. EXTENSION OF OFFER; TERMINATION; AMENDMENTS. Purchaser expressly reserves the right, in its sole discretion, but shall not be obligated, at any time or from time to time, to extend the period of time during which the Offer is open by giving appropriate public notice of such extension. During any such extension, all Shares previously tendered and not purchased or withdrawn will remain subject to the Offer, except to the extent that such Shares may be withdrawn as set forth in "-- Withdrawal Rights." Subject to compliance with applicable law and the terms of the Amalgamation Agreement, Purchaser further reserves the right, in its sole discretion, to amend the Offer. Any amendment to the Offer may be made at any time or from time to time by giving appropriate public notice thereof. Any public announcement made pursuant to the Offer will be disseminated promptly to holders in a manner reasonably designed to inform holders of such change. Without limiting the manner in which Purchaser may choose to make a public announcement, except as required by applicable law, Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement with respect to the Shares other than by making a release to the Dow Jones News Service. If Purchaser materially changes the terms of the Offer or the information concerning the Offer, Purchaser will extend the Offer to the extent required by Rules 14e-1(a) and 14e-1(d) promulgated under the Exchange Act. These rules provide that the minimum period during which an offer must remain open following material changes in the terms of the offer or information concerning the offer (other than a change in price or in the dealer's soliciting fee) will depend on the facts and circumstances, including the relative materiality of such terms or information. Pursuant to the Amalgamation Agreement, Purchaser may not amend the Offer to reduce the number of Shares subject to the Offer, reduce the Offer Price, change the form of consideration payable in the Offer to amend, alter, add or waive any term of the Offer in any manner adverse to the holders of the Shares, in each case without the express written consent of AAP as authorized by the Special Committee. 16. FEES AND EXPENSES. Other than as described below, no fees will be paid to brokers, dealers or others by Purchaser in connection with the Offer. Dealer Managers. Morgan Stanley and J.P. Morgan have been retained by Purchaser to act as dealer managers (each a "Dealer Manager" and collectively, the "Dealer Managers") in connection with the Offer. Morgan Stanley and J.P. Morgan will receive reasonable and customary compensation for their services as Dealer Managers. Morgan Stanley and J.P. Morgan will also be reimbursed by Purchaser for certain out-of-pocket expenses, including attorneys' fees, and will be indemnified by Amway against certain liabilities, including liabilities under the federal securities laws, in connection with the Offer. Morgan Stanley and J.P. Morgan have from time to time provided investment banking services to AAP and other affiliates of Purchaser for which Morgan Stanley and J.P. Morgan have received, or will receive, reasonable and customary compensation. It is expected that Morgan Stanley and J.P. Morgan will continue to provide such services to Purchaser and its affiliates in the future. Morgan Guaranty Trust Company of New York, Tokyo Branch, an affiliate of J.P. Morgan & Co. Incorporated, is providing funds to Purchaser in connection with the Offer. See "-- Source and Amount of Funds." The fees Purchaser will pay to the Dealer Managers consist of advisory fees, an exposure fee and a transaction fee. Morgan Stanley's advisory fees are $62,500 per month for the months of September, October 31 35 and November of 1999 and $37,500 per month thereafter until the transaction is terminated. The exposure fee that will be paid to Morgan Stanley is $750,000 and the transaction fee paid to Morgan Stanley is $2,000,000. J.P. Morgan's exposure fee is $375,000 and its transaction fee is $1,000,000. The total fees estimated to be paid by Purchaser to Morgan Stanley and J.P. Morgan are set forth below. The monthly advisory fees for Morgan Stanley and the exposure fees for Morgan Stanley and J.P. Morgan are creditable against the applicable transaction fees. Depositary. Purchaser has retained First Chicago Trust Company of New York to act as depositary in connection with the Offer (the "Depositary"). The Depositary will receive reasonable and customary compensation for its services as Depositary. The Depositary will be reimbursed by Purchaser for certain out- of-pocket expenses and will be indemnified against certain liabilities, including liabilities under the federal securities laws, in connection with the Offer. Information Agent. Purchaser has retained Georgeson Shareholder Communications Inc. to act as the Information Agent in connection with the Offer. The Information Agent will receive reasonable and customary compensation for its services as Information Agent. The Information Agent will be reimbursed by Purchaser for certain out-of-pocket expenses in connection with the Offer. Expenses. Purchaser will pay all expenses of the Offer, including, without limitation, brokerage commissions and solicitation fees. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by Purchaser for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. Holders of Shares will have withheld from the Purchase Price payable to them with respect to Shares accepted for purchase pursuant to the Offer any applicable U.S. backup withholding taxes, if any. See "-- U.S. Federal Income Tax Consequences." It is estimated that expenses incurred by Purchaser and AAP in connection with the Offer will be approximately as set forth below. Filing Fees................................................. $ 30,595 Financial Advisory Fees and Expenses of Purchaser Morgan Stanley............................................ $2,000,000 J.P. Morgan............................................... $1,000,000 Financial Advisory Fees and Expenses of AAP................. $2,050,000 Financial and Commitment Fees............................... $ 875,000 Accounting and Legal Fees and Expenses...................... $ 444,243 Printing and Mailing........................................ $ 479,782 Miscellaneous............................................... $ 444,280 ---------- Total.................................................. $7,323,900 ==========
17. MISCELLANEOUS. The Offer is not being made to, nor will Purchaser accept tenders from, holders of Shares in any state of the United States or any foreign jurisdiction in which the Offer or the acceptance thereof would not be in compliance with the laws of such state or foreign jurisdiction. Purchaser is not aware of any state or foreign jurisdiction the laws of which would prohibit the Offer or such acceptance. In those jurisdictions whose laws require the Offer to be made by a licensed broker or dealer, the Offer is being made on behalf of Purchaser by the Dealer Managers or one or more registered brokers or dealers licensed under the laws of such jurisdictions. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OR RECOMMENDATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN, IN THE LETTER OF TRANSMITTAL OR IN THE EXPLANATORY STATEMENT. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PURCHASER. NEW AAP LIMITED 32 36 SCHEDULE I PURCHASER EXECUTIVE OFFICERS AND DIRECTORS; AAP EXECUTIVE OFFICERS AND DIRECTORS PURCHASER DIRECTORS Lawrence M. Call Craig N. Meurlin PURCHASER EXECUTIVE OFFICERS Lawrence M. Call -- President Craig N. Meurlin -- Vice President, Assistant Secretary E.J. Thompson -- Secretary May Coye -- Assistant Secretary Messrs. Call and Meurlin are U.S. citizens. The business address of the directors and executive officers of Purchaser is 7575 Fulton Street, East, Ada, Michigan 45355. AAP DIRECTORS AND OFFICERS
DIRECTOR/EXECUTIVE NAME AGE POSITION OFFICER SINCE - ---- --- -------- ------------------ Stephen A. Van Andel............. 43 Chairman, Director 1994 Richard M. DeVos, Jr. ........... 43 Vice Chairman, Director 1994 Douglas L. DeVos................. 34 President and Director 1999 Eoghan M. McMillan............... 64 Director 1994 Jack C.K. So..................... 54 Director 1994 John C.C. Chan................... 56 Director 1996 L.H. Choong...................... 52 Director 1993 Eva Cheng........................ 46 Executive Vice President; Director 1993 Lynn Lyall....................... 46 Chief Financial Officer, Vice President and Treasurer 1999 Lawrence M. Call................. 57 Vice President 1993 Craig N. Meurlin................. 47 Vice President, General Counsel and Assistant Secretary 1993 John C. Brockman................. 55 Vice President, Distributor Relations 1997 Percy Chin....................... 44 Vice President, General Manager -- East China 1996 Patrick Hau...................... 47 Vice President, General Manager -- National Operations 1996 Audie Wong....................... 47 Vice President, General Manager -- North China 1995 Martin Liou...................... 41 General Manager -- Taiwan 1997 Low Han Kee...................... 40 Regional Manager -- Malaysia 1997 Preecha Prakobkit................ 51 General Manager -- Thailand 1997 Peter Williams................... 45 General Manager -- Australia 1997 Betty Yeung...................... 50 General Manager -- South China 1997 John C.R. Collis................. 41 Secretary 1993
Stephen A. Van Andel, age 43, has been Chairman of AAP since January 1995 and a Director since 1994. Since January 1995, Mr. Van Andel has been Vice Chairman of Amway Japan Limited. Mr. Van Andel has been Chairman of Amway since 1995 and was a member of the Policy Board of Amway from 1992 through August 31, 1999. He has been on the Board of Directors of Amway since September 1, 1999. Mr. Van Andel S-1 37 was Chairman of the Executive Committee of Amway and Vice President -- Corporate Affairs of Amway from 1993 to 1995. He was appointed Vice President -- Marketing of Amway in 1988 and in 1991, became Vice President -- Americas. Prior to 1988, Mr. Van Andel held various administrative and management positions with Amway. He holds a Bachelor's Degree from Hillsdale College and a Master's of Business Administration from Miami University. Mr. Van Andel is also a director of Michigan National Bank Corp. and Amway Japan Limited. Richard M. DeVos, Jr., age 43, has been a Director of AAP since 1994 and Vice Chairman since October 15, 1999. He served as President from January 1995 through October 15, 1999. Since January 1995, Mr. DeVos has been Chairman of Amway Japan Limited. He has been President of Amway since 1993 and was a member of the Policy Board of Amway from 1992 through August 31, 1999. He has been on the Board of Directors of Amway since September 1, 1999. Mr. DeVos was President and Chief Executive Officer of the Orlando Magic Ltd. from 1991 to 1993. He is Chairman of the Windquest Group, a multi-company management group which he founded in 1989. Prior to that, Mr. DeVos was Vice President -- International of Amway since 1984. Previously, he held various research and development, manufacturing, distribution, marketing, finance, public relations and government affairs positions with Amway. Mr. DeVos holds a Bachelor of Business Administration Degree from Northwood University and has attended the Executive Study Program at the Wharton School of the University of Pennsylvania. He is also a director of Old Kent Financial Corporation and Amway Japan Limited. Douglas L. DeVos, age 34, has been a director of AAP since April 14, 1999 and President since October 15, 1999. Since June 1998, Mr. DeVos has been Senior Vice President -- Asia Pacific Region, Global Distributor Relations of Amway and a member of the Policy Board of Amway since 1989. Mr. DeVos has been on the Board of Directors of Amway since September 1, 1999. He was appointed Vice President, North American Sales, of Amway in 1993 and became Senior Vice President, Managing Director -- Americas of Amway from 1996 to 1998. Prior to 1993, Mr. DeVos held various administrative and management positions with Amway. He holds a Bachelor of Science Degree from Purdue University Krannert School of Management. Mr. DeVos is also a director of National City Bank. Eoghan M. McMillan, age 64, has been a director of AAP and the Chairman of the Compensation Committee and a member of the Audit Committee since 1994. Mr. McMillan has also been chairman of AAP's Special Committee since October 1999. Mr. McMillan is the Chairman of Rodamco Asia N.V. incorporated in the Netherlands, and Chairman of Rodamco Asia Management Pte Ltd. Prior thereto, he practiced with Arthur Andersen & Co. since 1959 and served as Country Managing Partner for its practices in Hong Kong and China from 1979 until September 1993 and as Regional Managing Partner for Southeast Asia for most of this period. From 1989 to 1992, Mr. McMillan was Chairman of the Hong Kong Futures Exchange and a director of its wholly-owned subsidiary, Hong Kong Futures Exchange Clearing Corporation. He is a Certified Public Accountant, a Fellow of the Chartered Association of Certified Accountants in the United Kingdom and a Fellow of the Hong Kong Society of Accountants. Mr. McMillan was appointed by the Hong Kong government as a Director of the Board of Hong Kong Securities Clearing Company Limited. He is also a director of Vitasoy International Holdings Ltd., Sun Hung Kai Development (China) Ltd., Shangri-la Asia Ltd., Land Development Corporation, Pengursan Danaharta Nasional Berhad, Huan He Pacific Limited, RoProperty Investment Management Pacific Limited, Hong Kong Securities Clearing Company Ltd., Port Moresby Investments and several other entities in which Rodamco holds investments, principally in countries in the Asia Pacific region. Jack C.K. So, age 54, has been a director of AAP and the Chairman of the Audit Committee and a member of the Compensation Committee since 1994. Mr. So has also been a member of AAP's Special Committee since October 1999. Mr. So is Chairman of the Hong Kong Mass Transit Railway Corporation and has held such position since 1995. From 1992 to 1995, he served as Managing Director of Sun Hung Kai Development (China) Ltd. Previously, Mr. So served as Executive Director of the Hong Kong Trade Development Council since 1985. Prior to that, he spent seven years in the private sector and held various senior posts in stockbrokering, trade and banking. Before joining the private sector, Mr. So served as Administrative Officer and held significant positions in various departments of the Hong Kong government. Mr. So holds a Bachelor's Degree from the University of Hong Kong. S-2 38 John C.C. Chan, age 56, has been a director of AAP and a member of the Compensation and Audit Committees since 1996. Mr. Chan has also been a member of AAPs Special Committee since October 1999. Since 1993, Mr. Chan has been Managing Director of The Kowloon Motor Bus Company, one of the largest privately owned and operated bus companies in the world. He served in many governmental positions in Hong Kong from 1967 to 1993. Mr. Chan is a director of Hang Seng Bank Limited and of Guangdong Investment Limited, Hong Kong, a member of the Council of the Stock Exchange of Hong Kong, Director of Hong Kong Exchanges and Clearing Limited and a Chairman of the Hong Kong Securities Clearing Company Limited. He holds degrees in English literature and management studies from the University of Hong Kong. L.H. Choong, age 52, has been a Director of AAP since its formation in 1993. Mr. Choong was an Executive Vice President of AAP from 1993 to 1998 and held the positions of Managing Director of Amway (Malaysia) Sdn. Bhd. from 1981 to 1998 and Amway (Thailand) Limited from 1987 through August 31, 1997. He joined Amway (Malaysia) Sdn. Bhd. in 1978. Before joining Amway (Malaysia) Sdn. Bhd., Mr. Choong held various marketing, sales and product management positions with ESSO Malaysia Berhad, Diethelm (Malaysia) Sdn. Bhd. and Colgate-Palmolive (Malaysia) Sdn. Bhd. He holds a Bachelor's Degree from the University of Malaya. Eva Cheng, age 46, has been Executive Vice President and a Director of AAP since its formation in 1993. Ms. Cheng serves as Managing Director of the Greater China Region. She joined Amway International, Inc. in 1977 and was named General Manager of the Hong Kong operation in 1980, serving as Managing Director of its Hong Kong and Taiwan operations from 1987 to 1993. Prior to joining Amway, Ms. Cheng worked in various executive officer positions in the Hong Kong government. She has a Bachelor's Degree and a Master's of Business Administration from the University of Hong Kong. Lynn Lyall, age 46, has been Chief Financial Officer, Vice President and Treasurer of AAP since July 1, 1999. Mr. Lyall has also served as Vice President of Finance of Amway since July 1, 1999. Prior to joining Amway, he had been Executive Vice President and Chief Financial Officer of Blockbuster Entertainment, Inc. since 1997. Before becoming Chief Financial Officer of Blockbuster, Mr. Lyall held various financial positions with Cadbury Schweppes, PLC from 1990 until 1997. He also held financial positions with Bordo Citrus Products, Inc., Kraft, Inc. and Coca-Cola Company. Prior to that, Mr. Lyall spent six years in public accounting with Arthur Anderson & Co. He is a certified Public Accountant and holds a Bachelor's Degree from Northwestern University. Lawrence M. Call, age 57, has been Vice President of AAP since its formation in 1993. Mr. Call served as Chief Financial Officer and Treasurer of AAP until July 1, 1999. He has also served as Chief Financial Officer of Amway since 1991. Prior to joining Amway, Mr. Call had been Treasurer of PPG Industries, a manufacturer of flat glass, fiberglass, coatings, resins industrial and special chemicals, since 1984. Before becoming Treasurer of PPG Industries, he had held various other financial control positions with PPG Industries. Prior to that, Mr. Call spent 15 years in public accounting with Deloitte, Haskins and Sells (the predecessor to Deloitte and Touche). He is a Certified Public Accountant and holds a Bachelor's Degree from Loyola University. Craig N. Meurlin, age 47, has been Vice President, General Counsel and Assistant Secretary of AAP since 1993. Mr. Meurlin is Senior Vice President, General Counsel and Secretary of Amway and has held such positions since 1993. Prior to that, Mr. Meurlin was a partner in the law firm of Jones, Day, Reavis & Pogue. Mr. Meurlin holds a Bachelors of Arts Degree from the University of Vermont and a Juris Doctor from the University of Virginia. John C. Brockman, age 55, is Vice President -- Distributor Relations of AAP and has held such position since October 29, 1997. Mr. Brockman is also Director of Worldwide Sale Plan Administration for Amway Corporation. He joined Amway in 1973 as a coordinator in the Meeting and Travel Department and was promoted to Manager of that department in 1975. Mr. Brockman was named Regional Manager for Amway's Western Sales Region in 1977. In November 1981, Mr. Brockman was promoted to the position of Director -- International Sales, holding such position until his promotion to his current position. He holds a Bachelor's Degree in Business Administration from the University of Southern California. S-3 39 Percy Chin, age 44, is Vice President and General Manager of Amway (China) Co. Ltd. C East China and has held such position since January 1996. Mr. Chin joined Amway China in 1992 as financial controller and was promoted to Regional Director of Finance and Administration in 1995. Prior to joining Amway, he held the position as Director of Finance at Heinz China, China Dyeing Holding Ltd., and with the Canadian Government -- Department of Education. Mr. Chin is a member of Canadian Certified Management Accountants and holds Bachelor's Degrees in Science and Communication from the University of Saskatchewan, Canada. Patrick Hau, age 47, is Vice President and General Manager -- National Operations of Amway (China) Co. Ltd. Mr. Hau joined Amway Hong Kong in 1987 as Financial Controller, serving as General Manager from 1991 to 1996. Prior to joining AAP, he was employed as financial controller at Pearl & Dean Ltd. in Hong Kong and Australia and was a tax consultant with Price Waterhouse and a tax officer of the Inland Revenue Department. Mr. Hau holds a diploma in Business Studies from Hong Kong Polytechnic, a post-graduate diploma in Accounting & Finance from the New South Wales Institute of Technology, and a Master's of Business Administration Degree from Oklahoma City University. He is a member of the Hong Kong Society of Accountants, the Chartered Association of Certified Accountants, the Australia Society of Accountants and the Chartered Institute of Secretaries & Administrators. Audie Wong, age 47, is Vice President and General Manager of Amway (China) Co. Ltd. -- North China and has held such position since May 1997. Mr. Wong joined Amway Hong Kong in 1981 as Marketing Coordinator and was promoted to Marketing Manager in 1986. From 1991 to 1994, Mr. Wong was General Manager of Amway Taiwan and served as General Manager of South China from 1994 until April 1997. He holds a Bachelor of Arts Degree from State University of New York at Buffalo, a Master's Degree from the University of Oregon and a Master's of Business Administration from the University of Oklahoma City. Martin Liou, age 41, is General Manager of Amway Taiwan Company, Limited and has held such position since May 1997. Mr. Liou joined Amway Taiwan in 1985 as Distribution Manager, becoming Distribution Director of the Greater China Region in 1994. In 1995, he assumed dual roles, Operations Director for Amway Taiwan and Director of Planning and Development for Greater China, which he held until March 1997 when he assumed the responsibilities as Deputy General Manager of Amway Taiwan. Prior to joining Amway Taiwan, he was Production Supervisor for ISI Company. Mr. Liou is a member of the Taiwan Direct Selling Association and holds a Bachelor's Degree in Chemical Engineering from National Taiwan University. Low Han Kee, age 40, is General Manager of Amway (Malaysia) Sdn. Bhd, and has held such position since 1993. Mr. Low joined Amway Malaysia in 1990 as Divisional Manager, Finance & Administration. Prior to joining Amway Malaysia, he worked for five years in various financial positions for companies listed on the Kuala Lumpur Stock Exchange. From 1984 to 1985, Mr. Low worked for First Allied Corporation Berhad and as Group Chief Accountant for Mulpha International Trading Corporation Berhad from 1985 to 1990. Mr. Low is a Certified Public Accountant and a member of The Malaysian Association of Certified Public Accountants. Preecha Prakobkit, age 51, is General Manager of Amway (Thailand) Ltd. and has held such position since 1990. Mr. Prakobkit joined Amway Thailand in 1988 as Sales and Marketing Manager and was promoted to Sales Manager in 1990. Prior to joining Amway Thailand, he worked as Marketing Manager for the Mall Department Store and Product Manager for Philips Electrical Company. Mr. Prakobkit is the Secretary General of the Thai Direct Selling Association and holds a Bachelor's Degree in Marketing from Walter E. Heller School of Business. Peter Williams, age 45, is General Manager of Amway of Australia and has held such position since June 1997. Mr. Williams joined Amway of New Zealand in March 1988 as the Northern Region Sales Manager and was promoted to National Sales Manager in November 1988. He became General Manager in 1996, serving until his promotion to his current assignment at Amway of Australia. Prior to joining Amway of New Zealand, Mr. Williams worked for Enzed Fluid Connectors as Export Sales Manager in the Middle East and as London Branch Manager for Extraman/OPS. He has been an Executive Member of the New Zealand S-4 40 Direct Selling Association. Mr. Williams attended Northcote College and holds a Diploma in Business (Marketing) from the University of Auckland. Betty Yeung, age 50, is General Manager of Amway (China) Co. Ltd. C South China and has held such position since May 1997. Mrs. Yeung joined Amway Hong Kong as Marketing Coordinator in 1979, and was promoted to Sales/Marketing Manager in 1980 and Sales/Public Relations Manager in 1985. She joined Amway Canada as Distributor Relation Manager in 1991. Mrs. Yeung rejoined Amway China in 1994 as Director of External Affairs and was appointed Director of Sales, South China in 1996, General Manager, South China in 1996 and General Manager National Sales in 1999. Prior to joining Amway Hong Kong, Mrs. Yeung worked at Rediffusion Co. in customer service related positions. She holds a Bachelor's Degree from the Chinese University of Hong Kong and a Diploma in Management Studies from Hong Kong Polytechnic. John C.R. Collis, age 41, is an attorney at Conyers, Dill & Pearman, Hamilton, Bermuda. S-5 41 Goldman, Sachs & Co. | 85 Broad Street | New York, New York 10004 Tel: 212-902-1000 [GOLDMAN SACHS LOGO] SCHEDULE II FAIRNESS OPINION OF THE AAP FINANCIAL ADVISOR PERSONAL AND CONFIDENTIAL November 15, 1999 Special Committee of the Board of Directors Amway Asia Pacific, Ltd. 38/F, The Lee Gardens 33 Hysan Avenue Causeway Bay, Hong Kong Gentlemen: You have requested our opinion as to the fairness from a financial point of view to the holders (other than the Controlling Shareholders (as defined below)) of the outstanding shares of Common Stock, par value US$.01 per share (the "Shares"), of Amway Asia Pacific, Ltd. (the "Company") of the US$18.00 per Share in cash (the "Acquisition Price") to be received by such holders in the Tender Offer and the Amalgamation or the Compulsory Acquisition (each as defined below) pursuant to the Tender Offer and Amalgamation Agreement, dated as of November 15, 1999, among Apple Hold Co., L.P. ("Hold Co."), New AAP Limited ("Buyer") and the Company (the "Agreement"). The Agreement provides for a tender offer (the "Tender Offer") for all of the Shares, other than Shares owned by the DeVos and Van Andel families and their affiliates (the "Controlling Shareholders"), pursuant to which Buyer will pay the Acquisition Price for each Share accepted. Buyer is an entity controlled and beneficially owned directly and indirectly by the Controlling Shareholders of the Company, who currently beneficially own 84.9% of the Shares in the aggregate. The Agreement further provides that following completion of the Tender Offer, the Company will be amalgamated with Buyer, with the Company continuing as the amalgamated company (the "Amalgamation"), and each outstanding Share (other than Shares already owned by Hold Co. or the Controlling Shareholders) will be converted into the right to receive the Acquisition Price. The Agreement also provides, however, that if following Buyer's purchase of Shares pursuant to the Tender Offer Buyer has purchased in the Tender Offer and/or owns a sufficient number of Shares compulsorily to acquire the remaining outstanding Shares from the remaining public holders of Shares pursuant to the Bermuda Companies Act of 1981, as amended (the "Act"), the Company and Buyer may not consummate the Amalgamation and instead Buyer will purchase the remaining outstanding Shares from the remaining public holders of Shares pursuant to the Act for the Acquisition Price (the "Compulsory Acquisition"). Goldman, Sachs & Co., as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. We are familiar with the Company having acted as financial advisor to the Special Committee of the Board of Directors in connection with, and having participated in certain of the negotiations leading to, the Agreement. Goldman, Sachs & Co. also provides a full range of financial advisory and securities services and, in the course of its normal trading activities, may from time to time effect transactions and hold securities, including derivative securities, of the Company for its own account and for the accounts of customers. In connection with this opinion, we have reviewed, among other things, the Agreement; Annual Reports to Stockholders and Annual Reports on Form 20-F of the Company for the five fiscal years ended August 31, 1998; certain interim reports to stockholders and Quarterly Reports on Form 6-K of the Company; certain 42 Special Committee of the Board of Directors Amway Asia Pacific, Ltd. November 15, 1999 Page Two other communications from the Company to its stockholders; and certain internal financial analyses and forecasts for the Company prepared by its management. We also have held discussions with members of the senior management of the Company regarding its past and current business operations, financial condition and future prospects. In addition, we have reviewed the reported price and trading activity for the Shares, compared certain financial and stock market information for the Company with similar information for certain other companies the securities of which are publicly traded, reviewed the financial terms of certain recent business combinations and performed such other studies and analyses as we considered appropriate. We have relied upon the accuracy and completeness of all of the financial and other information reviewed by us and have assumed such accuracy and completeness for purposes of rendering this opinion. In that regard, we have assumed with your consent that the internal financial forecasts prepared by the management of the Company have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the Company. In addition, we have not made an independent evaluation or appraisal of the assets and liabilities of the Company or any of its subsidiaries and we have not been furnished with any such evaluation or appraisal. We note that the Controlling Shareholders own a majority of the Shares, and that the Controlling Shareholders have represented to Goldman Sachs and the Special Committee of the Board of Directors of the Company that the Controlling Shareholders will not sell their Shares to any third party. Accordingly, we were not requested to solicit, and did not solicit, interest from other parties with respect to an acquisition of or other business combination with the Company. Our advisory services and the opinion expressed herein are provided for the information and assistance of the Special Committee of the Board of Directors of the Company in connection with its consideration of the transactions contemplated by the Agreement and such opinion does not constitute a recommendation as to whether or not any holder of Shares should tender such Shares in connection with such transaction or should vote in respect of the Amalgamation. Based upon and subject to the foregoing and based upon such other matters as we consider relevant, it is our opinion that as of the date hereof the US$18.00 per Share in cash to be received by the holders of Shares (other than the Controlling Shareholders) in the Tender Offer and the Amalgamation or the Compulsory Acquisition is fair from a financial point of view to such holders. Very truly yours, /s/ Goldman, Sachs & Co. GOLDMAN, SACHS & CO. 43 SCHEDULE III AUDITED FINANCIAL STATEMENTS OF AMWAY ASIA PACIFIC LTD. FOR THE FISCAL YEARS ENDED AUGUST 31, 1996, 1997 AND 1998 AND UNAUDITED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED MAY 31, 1999 AMWAY ASIA PACIFIC LTD. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ANNUAL CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT AUDITORS: Report of independent auditors.............................. F-2 Consolidated balance sheets at August 31, 1998 and 1997..... F-3 Consolidated statements of income for the years ended August 31, 1998, 1997 and 1996................................... F-4 Consolidated statements of shareholders' equity for the years ended August 31, 1998, 1997 and 1996................ F-5 Consolidated statements of cash flows for the years ended August 31, 1998, 1997 and 1996............................ F-6 Notes to consolidated financial statements.................. F-7 UNAUDITED INTERIM FINANCIAL STATEMENTS: Consolidated statements of income for the nine months ended May 31, 1999 and 1998..................................... F-21 Consolidated balance sheets at May 31, 1999 and August 31, 1998...................................................... F-22 Consolidated statements of cash flows for the nine months ended May 31, 1999 and 1998............................... F-23 Notes to consolidated financial statements.................. F-24
F-1 44 INDEPENDENT AUDITORS REPORT The Board of Directors and Shareholders Amway Asia Pacific Ltd.: We have audited the accompanying consolidated balance sheets of Amway Asia Pacific Ltd. and subsidiaries as of August 31, 1998 and 1997, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the three-year period ended August 31, 1998. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Amway Asia Pacific Ltd. and subsidiaries as of August 31, 1998 and 1997, and the results of their operations and their cash flows for each of the years in the three-year period ended August 31, 1998, in conformity with generally accepted accounting principles. /s/ KPMG LLP -------------------------------------- KPMG LLP Detroit, Michigan October 2, 1998 F-2 45 AMWAY ASIA PACIFIC LTD. CONSOLIDATED BALANCE SHEETS AUGUST 31, 1998 AND 1997 (U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1998 1997 -------- -------- ASSETS Current assets: Cash and cash equivalents................................. $157,157 $207,915 Short-term investments (note 4)........................... 143 48,613 Accounts receivable, net of allowance for doubtful accounts of $2,144 and $2,093, respectively............ 21,264 17,995 Inventories (note 5)...................................... 75,104 106,227 Prepaid expenses and other current assets (notes 9 and 11).................................................... 23,234 28,913 -------- -------- Total current assets.............................. 276,902 409,663 Property, plant and equipment, net (note 6)................. 104,346 94,590 Other assets................................................ 5,825 15,890 -------- -------- Total assets...................................... $387,073 $520,143 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable (note 9)................................. $ 59,799 $ 85,628 Short-term borrowings (note 17)........................... 18,573 -- Accrued expenses and income taxes (notes 7 and 11)........ 92,150 128,023 Distributor deposits...................................... 4,252 9,561 -------- -------- Total current liabilities......................... 174,774 223,212 Deferred income taxes (note 11)............................. 184 1,079 -------- -------- Total liabilities................................. 174,958 224,291 -------- -------- Minority interests (note 14)................................ 36,017 43,368 -------- -------- Shareholders' equity (note 15): Preferred stock, $0.01 par value -- authorized 20,000,000 shares, none issued.................................... -- -- Common stock, $0.01 par value -- authorized 110,000,000 shares; issued and outstanding: 56,441,960 shares...... 564 564 Additional paid-in capital................................ 79,246 79,605 Unrealized gain on marketable equity securities........... -- 582 Cumulative foreign currency translation adjustments....... (44,182) (16,955) Retained earnings......................................... 140,470 188,688 -------- -------- Total shareholders' equity........................ 176,098 252,484 -------- -------- Commitments and contingencies (notes 8, 13 and 15) Total liabilities and shareholders' equity........ $387,073 $520,143 ======== ========
See accompanying notes to the consolidated financial statements. F-3 46 AMWAY ASIA PACIFIC LTD. CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED AUGUST 31, 1998, 1997 AND 1996 (U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1998 1997 1996 -------- -------- -------- Net sales.................................................. $587,579 $845,166 $716,757 Cost of sales (note 9)..................................... 257,220 313,287 269,377 -------- -------- -------- 330,359 531,879 447,380 -------- -------- -------- Operating expenses (note 9): Distributor incentives................................... 157,018 219,111 186,092 Distribution expenses.................................... 45,199 49,662 40,777 Selling and administrative expenses...................... 102,849 114,523 93,367 -------- -------- -------- Total operating expenses......................... 305,066 383,296 320,236 -------- -------- -------- Operating income...................................... 25,293 148,583 127,144 Other income -- net (note 10).............................. 9,683 24,707 19,781 -------- -------- -------- Income before income taxes and minority interest...... 34,976 173,290 146,925 Income taxes (note 11)..................................... 23,508 54,909 55,709 -------- -------- -------- Income before minority interest....................... 11,468 118,381 91,216 Minority interest in income of consolidated subsidiaries (note 14)................................................ 10,015 14,350 8,983 -------- -------- -------- Net income............................................ $ 1,453 $104,031 $ 82,233 ======== ======== ======== Basic and diluted earnings per share (note 16)............. $ 0.03 $ 1.76 $ 1.37 ======== ======== ======== Dividends per share paid to Company shareholders........... $ 0.88 $ 0.84 $ 1.02 ======== ======== ======== Weighted average number of shares outstanding (000s)....... 56,442 59,124 60,039 ======== ======== ======== Weighted average number of shares outstanding including the effect of dilutive securities (000s) (note 16)........... 56,446 59,176 60,097 ======== ======== ========
See accompanying notes to the consolidated financial statements. F-4 47 AMWAY ASIA PACIFIC LTD. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY YEARS ENDED AUGUST 31, 1998, 1997 AND 1996 (U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
UNREALIZED CUMULATIVE GAIN ON FOREIGN ADDITIONAL MARKETABLE CURRENCY TOTAL COMMON PAID-IN EQUITY TRANSLATION RETAINED SHAREHOLDERS' STOCK CAPITAL SECURITIES ADJUSTMENTS EARNINGS EQUITY ------ ---------- ---------- ----------- -------- ------------- Balances at August 31, 1995.......... $600 $213,443 $ -- $ (875) $116,448 $ 329,616 Net income........................... -- -- -- -- 82,233 82,233 Dividends of $1.02 per share......... -- -- -- -- (61,163) (61,163) Net change in fair value of marketable equity securities....... -- -- 134 -- -- 134 Net change in cumulative foreign currency translation adjustments... -- -- -- 1,700 -- 1,700 Stock options exercised for 10,000 common shares...................... -- 180 -- -- -- 180 Issuance of 9,000 restricted common shares............................. -- 315 -- -- -- 315 Unearned portion of restricted common stock.............................. -- (182) -- -- -- (182) Distribution to majority shareholders for purchase of Amway (B) Sdn. Bhd. in excess of book value............ -- -- -- -- (3,196) (3,196) Amount resulting from issuance of Amway (Malaysia) common stock...... -- 14,579 -- -- -- 14,579 ---- -------- ----- -------- -------- --------- Balances at August 31, 1996.......... 600 228,335 134 825 134,322 364,216 Net income........................... -- -- -- -- 104,031 104,031 Dividends of $0.84 per share......... -- -- -- -- (49,665) (49,665) Stock options exercised for 84,217 common shares...................... 1 1,863 -- -- -- 1,864 Purchase of common stock for retirement......................... (37) (150,736) -- -- -- (150,773) Net change in cumulative foreign currency translation adjustments... -- -- -- (17,780) -- (17,780) Net change in fair value of marketable equity securities....... -- -- 448 -- -- 448 Amortization of unearned portion of restricted common stock............ -- 143 -- -- -- 143 ---- -------- ----- -------- -------- --------- Balances at August 31, 1997.......... 564 79,605 582 (16,955) 188,688 252,484 Net income........................... -- -- -- -- 1,453 1,453 Dividends of $0.88 per share......... -- -- -- -- (49,671) (49,671) Amway (Malaysia) repurchase of common stock held by minority shareholders (note 14).......................... -- (397) -- -- -- (397) Amortization of unearned portion of restricted common stock............ -- 38 -- -- -- 38 Realization of gain upon sale of securities......................... -- -- (582) -- -- (582) Net change in cumulative foreign currency translation adjustments... -- -- -- (27,227) -- (27,227) ---- -------- ----- -------- -------- --------- Balances at August 31, 1998.......... $564 $ 79,246 $ -- $(44,182) $140,470 $ 176,098 ==== ======== ===== ======== ======== =========
See accompanying notes to the consolidated financial statements. F-5 48 AMWAY ASIA PACIFIC LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED AUGUST 31, 1998, 1997 AND 1996 (U.S. DOLLARS IN THOUSANDS)
1998 1997 1996 -------- --------- -------- Cash flows from operating activities: Net income................................................ $ 1,453 $ 104,031 $ 82,233 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization........................ 13,516 13,009 10,896 Deferred income taxes................................ (2,662) (4,934) 4,518 Loss (gain) on sale or disposal of property and equipment.......................................... 1,582 (44) 22 Loss (gain) on sales of investments.................. (637) 5 -- Changes in assets and liabilities: Accounts receivable................................ (7,932) (7,522) (2,385) Inventories........................................ 18,162 (31,984) 17,293 Prepaid expenses and other current assets.......... 2,964 (5,658) 10,138 Accounts payable................................... (18,894) 46,838 4,798 Accrued expenses and income taxes.................. (15,106) 10,611 17,105 Distributor deposits............................... (4,033) (1,617) 4,281 Other.............................................. 21,361 23,248 7,966 -------- --------- -------- Net cash provided by operating activities....... 9,774 145,983 156,865 -------- --------- -------- Cash flows from investing activities: Capital expenditures.................................... (33,155) (28,546) (9,956) Proceeds from sale of equipment......................... 375 701 415 Purchases of short-term investments..................... (80,851) (98,612) (35,376) Proceeds from maturity of investments................... 117,548 78,284 85,353 Issuance of note receivable............................. -- (1,126) -- Payments received on notes receivable................... 273 -- -- -------- --------- -------- Net cash provided by (used in) investing activities.................................... 4,190 (49,299) 40,436 -------- --------- -------- Cash flows from financing activities: Net short-term borrowings............................... 18,529 -- -- Principal payments on notes payable and capital lease obligations.......................................... -- (27,564) (8,953) Dividends paid to shareholders.......................... (49,671) (49,665) (61,163) Dividends paid by subsidiaries to minority shareholders......................................... (5,976) (3,112) (3,648) Proceeds from issuance of common stock.................. -- 1,864 180 Purchase of common stock for retirement................. -- (150,773) -- Amway (Malaysia) purchase for retirement of common stock held by minority shareholders........................ (2,129) -- -- Net cash received from acquisition of Amway (B) Sdn. Bhd. ................................................ -- -- 1,818 Proceeds from issuance of Amway (Malaysia) common stock................................................ -- -- 33,265 -------- --------- -------- Net cash used in financing activities................ (39,247) (229,250) (38,501) -------- --------- -------- Effect of exchange rate changes on cash................... (25,475) (20,201) 1,028 -------- --------- -------- Net increase (decrease) in cash and cash equivalents...... (50,758) (152,767) 159,828 Cash and cash equivalents at beginning of year............ 207,915 360,682 200,854 -------- --------- -------- Cash and cash equivalents at end of year.................. $157,157 $ 207,915 $360,682 ======== ========= ======== Supplemental disclosures of cash flow information: Interest paid........................................... $ 118 $ 51 $ 273 ======== ========= ======== Income taxes paid....................................... $ 35,768 $ 60,772 $ 54,486 ======== ========= ======== Non-cash investing activities: Purchase of Amway (B) Sdn. Bhd. ..................... $ -- $ -- $ 4,809 ======== ========= ========
See accompanying notes to the consolidated financial statements. F-6 49 AMWAY ASIA PACIFIC LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 1998, 1997 AND 1996 (U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (1) BASIS OF PRESENTATION Amway Asia Pacific Ltd. ("AAP"), a Bermuda corporation, was incorporated on September 7, 1993. On December 21, 1993, AAP completed its initial public offering of common stock. AAP has subsidiaries in Australia, Brunei, China (the Mainland, the Hong Kong Special Administrative Time Region, Macau and Taiwan), Malaysia, New Zealand, and Thailand. Each subsidiary is wholly owned, except Malaysia, in which AAP has a 51.7% ownership equity position (see note 14), and Thailand, a partnership in which AAP is a general partner with a 99.0% economic interest. On April 30, 1996, all outstanding shares in Amway (B) Sdn. Bhd., the exclusive distribution vehicle for Amway in Brunei, were acquired by Amway (Malaysia) Sdn. Bhd. from Amway International Development, Inc. for a purchase price of $4.8 million which was paid from the proceeds of the initial public offering of the Malaysian subsidiary (see note 14). Both Amway (Malaysia) Sdn. Bhd. and Amway International Development are considered entities under common control as the ultimate controlling shareholders for both entities are the same parties. As a result, the difference between the purchase price and the net asset value of Amway (B) Sdn. Bhd. at April 30, 1996 of $3.2 million was recorded as a distribution to these common shareholders. The results of operations for Amway (B) Sdn. Bhd. subsequent to the date of acquisition are included in the consolidated statements of income. The consolidated financial statements include AAP and its subsidiaries. All significant intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform to the current year presentation. (2) DESCRIPTION OF BUSINESS AAP is the exclusive distribution vehicle for Amway in Australia, Brunei, China, Malaysia, New Zealand, and Thailand. (3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Cash Equivalents For purposes of the consolidated balance sheets and statements of cash flows, AAP considers all highly liquid debt instruments with maturities of three months or less at the time of purchase to be cash equivalents. (b) Short-term Investments Management determines the proper classifications of investments in obligations with fixed maturities and marketable equity securities at the time of purchase and reevaluates such designations as of each balance sheet date. All securities covered by Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities," are designated as either held to maturity or available for sale. Securities designated as held to maturity are stated at amortized cost, and securities designated as available for sale are stated at fair value, with unrealized gains and losses reported in a separate component of shareholders' equity. The remaining investments at August 31, 1998 and 1997 consist of time deposits with varied maturity dates within one year. These investments, which are not subject to the provisions of SFAS No. 115, are carried at cost, which approximates market value. Realized gains and losses on sales of investments, as determined on a specific identification basis, are included in the consolidated statements of income. F-7 50 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (c) Inventories Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. (d) Property, Plant and Equipment Property, plant and equipment are stated at cost. Equipment held under capital lease is stated at the present value of minimum lease payments at the inception of the lease. Depreciation is calculated primarily on the straight-line method over the estimated useful lives. Equipment held under capital lease and leasehold improvements are amortized straight-line over the shorter of the lease term or estimated useful life of the asset. (e) Long-Lived Assets AAP adopted the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", on September 1, 1996. This Statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Adoption of this Statement did not have an impact on AAP's financial position, results of operations or liquidity. (f) Other Assets Other assets at August 31, 1998 and 1997 are stated at cost, net of amortization, if any. At August 31, 1998, other assets primarily consist of deposits, land use rights, and employee loans. At August 31, 1997, other assets primarily consisted of deposits, land use rights, and employee loans as well as prepaid royalties totaling $9,165. (g) Minority Interests Minority interest represents the minority shareholders' share of the equity and net income in the Malaysia subsidiary and the minority partners' share of the equity and net income in the Thailand subsidiary. (h) Accounting for Sales or Repurchase of Stock by a Subsidiary Gains or losses arising from the issuance or repurchase of stock by a subsidiary is accounted for as a capital transaction in the consolidated financial statements. (i) Stock Based Compensation Prior to September 1, 1996, AAP accounted for its stock option awards in accordance with the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations. As such, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. On September 1, 1996, AAP adopted SFAS No. 123, "Accounting for Stock-Based Compensation", which permits entities to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the provisions of APB Opinion No. 25 and provide pro forma net income and pro forma earnings per share disclosures for employee stock option grants made in fiscal years beginning after December 15, 1994 as if the fair-value-based method defined in SFAS No. 123 had been applied. AAP has elected to continue to apply the provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123. F-8 51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (j) Revenue Recognition AAP recognizes sales when products are shipped to or through distributors. A reserve for sales returns is accrued based on historical experience. (k) Earnings Per Share On September 1, 1997, AAP adopted SFAS No. 128 "Earnings per Share". This Statement, which supersedes APB Opinion No. 15, requires the presentation of basic and diluted earnings per share. Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted earnings per share is calculated similarly to basic earnings per share except that the denominator is increased to include the effect of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. (l) Foreign Currency Translation All operations of AAP occur outside of the United States. Each operation's local currency is considered its functional currency. No currency is dominant within the group and transactions in Bermuda are minimal. Therefore, the U.S. dollar is used for translation purposes since most merchandise purchase transactions, as discussed below, are conducted in U.S. dollars. All assets and liabilities are translated into U.S. dollars at the current exchange rate as of the balance sheet date. Revenues and expenses are translated at average currency exchange rates. Shareholders' equity is recorded at historical exchange rates. The resulting translation adjustment is recorded as a separate component of shareholders' equity. Transaction gains and losses are included in other income. All of AAP's subsidiaries, except Australia and New Zealand, pay for their purchases of products from Amway in U. S. dollars and bear the risk of foreign currency exchange fluctuations. Australia and New Zealand pay for their purchases of products from Amway in local currencies, thereby transferring the immediate risk of foreign currency exchange rate fluctuations to Amway. Amway has the right to modify its prices at any time on at least 30 days advance notice to its affiliates. (m) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make reasonable estimates and assumptions in certain circumstances that affect the amounts reported in the accompanying consolidated financial statements and notes. Ultimate resolution of uncertainties could cause actual results to differ from those estimates. (n) New Accounting Pronouncements The Financial Accounting Standards Board ("FASB") issued SFAS No. 130, "Reporting Comprehensive Income" in 1997. This Statement requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. This statement is effective for periods beginning after December 15, 1997. AAP will adopt this statement in the first quarter of fiscal 1999. The FASB also issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" in 1997. This Statement requires that public companies report certain information about operating segments. It also requires the reporting of certain information about AAP's products and services, the geographic areas in which AAP operates and AAP's major customers. This statement is effective for fiscal years beginning after December 15, 1997 and will affect the disclosure requirements for the fiscal 1999 annual financial statements. AAP is currently evaluating the impact of this statement. F-9 52 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The FASB also issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" in 1998. This Statement establishes comprehensive accounting and reporting standards for derivative instruments and hedging activities and is effective for fiscal years beginning after June 15, 1999. AAP is currently evaluating the impact of this statement. (4) INVESTMENTS Securities subject to the provisions of SFAS No. 115 at August 31, 1998 and 1997 are summarized as follows:
GROSS GROSS UNREALIZED UNREALIZED HOLDING HOLDING MARKET COST GAINS LOSSES VALUE ------- ---------- ---------- ------- AUGUST 31, 1998: Held to maturity: Banker's acceptances.................... $15,154 $ -- $-- $15,154 Commercial paper........................ 255 -- -- 255 ------- ---- -- ------- Total held to maturity.................. $15,409 $ -- $-- $15,409 ======= ==== == ======= AUGUST 31, 1997: Available for sale: Common stock............................ $ 1,007 $582 $-- $ 1,589 ======= ==== == ======= Held to maturity: Banker's acceptances.................... $39,444 -- -- $39,444 Commercial paper........................ 1,368 -- -- 1,368 ------- ---- -- ------- Total held to maturity.................. $40,812 $ -- $-- $40,812 ======= ==== == =======
All securities displayed in the above table at August 31, 1998 have original maturities of 3 months or less and, accordingly, are classified on the balance sheet as cash equivalents. All debt securities held at August 31, 1997 have original maturities between 3 months and 1 year and are classified on the balance sheet as short-term investments. The common stock available for sale investments at August 31, 1997 are also classified as short-term investments. Short-term investments at August 31, 1998 and 1997 also include time deposits of $143 and $6,212, respectively, and are stated at cost, which approximates market value. (5) INVENTORIES Inventories consist of the following at August 31:
1998 1997 ------- -------- Raw materials............................................... $ 6,996 $ 15,263 Manufactured finished goods and finished goods purchased for resale...................................................... 68,108 90,964 ------- -------- Total..................................................... $75,104 $106,227 ======= ========
F-10 53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (6) PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following at August 31:
1998 1997 -------- -------- Land and improvements....................................... $ 7,633 $ 9,654 Buildings and improvements.................................. 46,151 28,630 Machinery and equipment..................................... 70,111 72,720 Leasehold improvements...................................... 15,760 16,585 Construction in progress.................................... 14,144 11,846 -------- -------- 153,799 139,435 Less accumulated depreciation and amortization.............. (49,453) (44,845) -------- -------- Net property, plant and equipment......................... $104,346 $ 94,590 ======== ========
(7) ACCRUED EXPENSES AND INCOME TAXES Accrued expenses and income taxes consist of the following at August 31:
1998 1997 ------- -------- Distributor incentives...................................... $29,837 $ 35,028 Distributor seminars........................................ 13,581 20,527 Income taxes................................................ 16,329 27,884 Deferred taxes.............................................. 3,029 4,900 Other taxes................................................. 2,362 2,766 Employee compensation and retirement........................ 7,565 6,998 Sales returns............................................... 6,491 15,861 Other....................................................... 12,956 14,059 ------- -------- Total..................................................... $92,150 $128,023 ======= ========
(8) LEASES AAP leases real estate under noncancelable operating leases which expire at various dates through 2004. Future minimum annual rentals under these noncancelable operating leases as of August 31, 1998, are as follows: Year ending August 31: 1999........................................................ $ 9,579 2000...................................................... 7,650 2001...................................................... 4,019 2002...................................................... 3,462 2003...................................................... 1,724 Thereafter................................................ 233 ------- Total minimum lease payments................................ $26,667 =======
Rental expense charged to operations for the years ended August 31, 1998, 1997 and 1996, approximated $11,801, $10,953 and $9,775 respectively, including amounts paid under short-term cancelable leases. F-11 54 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (9) RELATED PARTY TRANSACTIONS AAP, as the distribution vehicle for Amway in the Asia Pacific markets in which AAP operates, has a number of contractual relationships with Amway (1) for the right to purchase Amway products which Amway makes available to its international affiliates (the "Product Purchase Agreements"), (2) for the right to manufacture and sell Amway licensed products in the PRC (the "PRC Technical Agreement"), (3) for the right to use Amway's trade name and trademark along with certain other intellectual property rights (the "Trademark License Agreements"), (4) for receiving various executive management, administrative support and information services (the "Amended and Restated Support Service Agreements") and (5) for the right to use the Hong Kong and Taiwan distributor lists (the "Distributor List and Certain Other Intangibles License Agreements"). Purchases from and other transactions with Amway for the years ended August 31 are as follows:
1998 1997 1996 -------- -------- -------- Product purchases.................................. $151,560 $190,031 $141,001 PRC Technical royalty.............................. 885 3,725 1,960 Trademark license royalty.......................... 275 390 367 Support service and license fees................... 5,294 650 538 Distributor list royalty........................... 9,165 9,111 9,326
Prices for products are governed by a price schedule which Amway establishes periodically based upon a U.S. dollar "cost plus" base price calculation. At August 31, 1998 and 1997, AAP owed Amway $31,337 and $30,061, respectively, for the purchase of inventory. These amounts are included in accounts payable. On August 31, 1994, AAP entered into two non-interest bearing notes aggregating $18,365 payable to Amway over two years for the prepayment of royalties on the Hong Kong and Taiwan distributor lists. The notes were recorded at their discounted present value of $17,368. The notes were paid in full in fiscal 1996. On July 31, 1995, AAP entered into seven non-interest bearing negotiable promissory notes aggregating $27,946 payable to Amway over three years beginning in fiscal 1997 for the prepayment of fiscal 1997, 1998 and 1999 royalties on the Hong Kong and Taiwan distributor lists. One note totaling $4,480 was payable in six equal semiannual installments commencing February 28, 1997; while the other six notes, each totaling $3,911, were to become payable in six-month intervals, with the first note payable on February 28, 1997. Each of the notes is denominated in the local currency of the country to which they relate, thereby transferring the risk of foreign currency exchange rate fluctuations to Amway. AAP prepaid these notes in full on February 27, 1997. Prepaid royalties totaling $9,165 are included as a component of prepaid expenses at August 31, 1998 and 1997. Prepaid royalties totaling $9,165 are also included as a component of other assets at August 31, 1997. Under Amended and Restated Support Services Agreements between Amway, AAP and its affiliates, Amway provides information systems, executive management, investor relations services and certain administrative support services including legal, accounting, tax, treasury, marketing, insurance, inventory control and human resources services to AAP. AAP pays Amway software license fees and maintenance charges with respect to information systems provided by Amway; AAP pays Amway for other services based on the internal labor and other direct and indirect costs incurred by Amway in providing such services. These charges were instituted by Amway effective September 1, 1997. Prior to September 1, 1997, AAP paid Amway for providing executive management and investor relations services; other administrative support services were provided by Amway at no charge to AAP. F-12 55 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (10) OTHER INCOME -- NET Other income -- net consists of the following for the years ended August 31:
1998 1997 1996 ------- ------- ------- Interest income....................................... $11,792 $18,800 $17,979 Dividend income....................................... 411 3,661 2,212 Gain (loss) on foreign exchange....................... (3,914) (2,554) 82 Interest expense...................................... (1,329) (155) (273) Other, net............................................ 2,723 4,955 (219) ------- ------- ------- Other income -- net................................. $ 9,683 $24,707 $19,781 ======= ======= =======
(11) INCOME TAXES Income is subject to taxation in each country where AAP operates and it files separate income tax returns in each country. Income taxes consist of the following for the years ended August 31:
1998 1997 1996 ------- ------- ------- Current............................................... $25,403 $59,532 $51,191 Deferred.............................................. (1,895) (4,623) 4,518 ------- ------- ------- Total............................................... $23,508 $54,909 $55,709 ======= ======= =======
The significant components of deferred income tax expense attributable to income before income taxes for the years ended August 31 are as follows:
1998 1997 1996 ------- ------- ------ Deferred taxes on undistributed earnings............... $(1,937) $(4,798) $7,345 Valuation reserves..................................... 168 (257) (956) Other.................................................. (126) 432 (1,871) ------- ------- ------ Total................................................ $(1,895) $(4,623) $4,518 ======= ======= ======
The statutory tax rates by country are as follows:
1998 1997 1996 ---- ---- ---- Australia................................................... 36.0% 36.0% 36.0% Brunei...................................................... 30.0% 30.0% 30.0% Mainland China(1)........................................... 0.0% 0.0% 0.0% Hong Kong................................................... 16.0% 16.5% 16.5% Macau....................................................... 16.5% 16.5% 16.5% Malaysia.................................................... 28.0% 30.0% 30.0% New Zealand................................................. 33.0% 33.0% 33.0% Taiwan...................................................... 25.0% 25.0% 25.0% Thailand.................................................... 30.0% 30.0% 30.0%
- --------------- (1) In Mainland China the current tax laws allow AAP's subsidiary to carry forward losses up to five years and provide for no tax on profits for two years once an accumulated profit is realized. After that point, AAP's subsidiary pays a tax on profits at a rate of 7.5% for the first three years, 10% for the subsequent three years and 15% thereafter. During the 1997 tax year, AAP's Mainland China subsidiary attained such an accumulated profit for the first time. In order for AAP to continue to qualify for this tax holiday, F-13 56 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Amway China must derive a specified percentage of its revenue from the products manufactured by it in Mainland China. As described above, AAP's subsidiary in Mainland China was not subject to income tax in fiscal 1998. This subsidiary recorded a net operating loss in fiscal 1998, causing AAP's weighted-average statutory tax rate to be above the statutory rate of any one of AAP's markets. A reconciliation of the weighted-average statutory tax rate to the weighted-average effective tax rate is as follows:
1998 1997 1996 ---- ---- ---- Weighted average statutory tax rate......................... 51.9% 25.3% 29.1% Add tax effect of non-deductible meals and entertainment.... 4.0% 1.0% 0.9% Add dividend withholding tax................................ 11.8% 5.1% 8.6% All other................................................... (0.5)% 0.3% (0.7)% ---- ---- ---- Weighted average effective tax rate......................... 67.2% 31.7% 37.9% ==== ==== ====
Taiwan and Thailand require a withholding tax of 20% and 10%, respectively, on dividends paid to the Bermuda parent. The tax effects of temporary differences which give rise to significant portions of the deferred tax assets and deferred tax liabilities at August 31, 1998 and 1997, are presented below.
1998 1997 ------- ------- Deferred tax assets: Inventories................................................. $ 1,420 $ 1,325 Sales returns............................................. 1,212 1,475 Accrued expenses.......................................... 1,675 1,346 Other.................................................. (126) 906 ------- ------- Total deferred tax assets.............................. 4,181 5,052 ------- ------- Deferred tax liabilities: Withholding taxes......................................... (2,965) (4,902) Other..................................................... (248) (1,077) ------- ------- Total deferred tax liabilities......................... (3,213) (5,979) ------- ------- Net deferred tax asset (liability)..................... $ 968 $ (927) ======= ======= The net deferred tax asset (liability) is included in the consolidated balance sheet as follows: Prepaid expenses and other current assets................. $ 3,960 $ 4,736 Other assets.............................................. 221 316 Accrued expenses and income taxes......................... (3,029) (4,900) Deferred income taxes..................................... (184) (1,079) ------- ------- Net deferred tax asset (liability)..................... $ 968 $ (927) ======= =======
AAP had no valuation allowance for deferred tax assets as of, or for, the years ended August 31, 1998 and 1997. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based upon the level of historical taxable income and projections of future taxable income, management believes it is more likely than not that AAP will realize the benefit of these deferred tax assets. F-14 57 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (12) EMPLOYEE BENEFIT PENSION PLANS For all periods presented, AAP's China (Mainland, Macau, Taiwan and the Hong Kong Special Administrative Region) subsidiaries each sponsored a pension plan that covers substantially all employees, primarily under defined benefit pension plans. Net periodic pension expense for the defined benefit plans included the following components:
1998 1997 1996 ---- ---- ---- Components of net periodic pension costs: Service cost................................................ $751 $702 $732 Interest cost............................................. 461 342 303 Actual return on plan assets.............................. 513 (422) (400) Net amortization and deferral............................. (950) (26) 53 ---- ---- ---- Net periodic pension cost................................... $775 $596 $688 ==== ==== ====
The following information details the funded status of the defined pension plans:
1998 1997 ------- ------- Status of obligations: Actuarial present value of benefit obligation: Vested benefit obligation.............................. $ 4,064 $ 3,070 ======= ======= Accumulated benefit obligation............................ $ 4,545 $ 3,590 ======= ======= Projected benefit obligation for service rendered to date... $(5,960) $(5,255) Plan assets at fair value................................... 4,836 5,630 ------- ------- Plan assets in excess of (less than) projected benefit obligation................................................ (1,124) 375 Unrecognized net loss....................................... 886 139 Unrecognized prior service costs............................ 465 32 Unrecognized net assets at date of initial application...... 41 (35) Adjustment required to recognize minimum liability.......... (605) -- ------- ------- Prepaid pension costs (liability)........................... $ (337) $ 511 ======= =======
The weighted average discount rate used in determining the actuarial present value of projected benefit obligation for defined benefit pension plans ranged from 7% to 8% and from 7% to 10% for the fiscal years ended August 31, 1998 and 1997, respectively. The rate of increase in compensation levels ranged from 5% to 7% and 7% to 9% for the fiscal years ended August 31, 1998 and 1997, respectively. The expected long-term rate of return on assets ranged from 7% to 8% and 7% to 10% for the fiscal years ended August 31, 1998 and 1997, respectively. (13) CONTINGENCIES AAP is a party to certain routine litigation incidental to its business, none of which is currently expected to have a material adverse effect on AAP's financial condition and results of operations. (14) SALE OF STOCK BY A SUBSIDIARY The government of Malaysia has policies that set forth certain local ownership requirements for foreign companies which required Amway Malaysia Sdn. Bhd. ("Amway Malaysia") to reduce its foreign equity to 51%. F-15 58 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In accordance with the directive given by the Foreign Investment Committee ("FIC"), Amway Malaysia, AAP and Amway entered into a Sale of Shares and Restructuring Agreement ("Agreement") for the sale of the 30% interest of Amway Malaysia that Amway had retained as part of a previous reorganization of AAP. Pursuant to the terms of the Agreement, Amway sold its retained 30% interest in Amway Malaysia to Bumiputras (the indigenous people of Malaysia) on September 28, 1994. In July 1995, Amway Malaysia issued additional shares for consideration to Bumiputra investors increasing the Bumiputras ownership level to 40.8%. In May 1996, the shareholders of Amway Malaysia exchanged their stock in Amway Malaysia for stock in a newly formed company, Amway (Malaysia) Holdings Berhad ("AMHB"). In August 1996, AMHB issued additional shares for consideration to Malaysian citizens, as part of an initial public offering on the Kuala Lumpur Stock Exchange, increasing the local ownership level (minority interest) to 49.0%. In fiscal 1998, the Malaysia affiliate obtained regulatory and shareholder approval to repurchase up to 10% of the outstanding shares of its own common stock, subject to certain regulatory limitations. During fiscal 1998, the Malaysia affiliate repurchased and cancelled 1,365,000 of its shares on the open market at an aggregate price of Malaysian ringgit 8.6 million, decreasing the local ownership level (minority interest) to 48.3%. (15) STOCK OPTION/INCENTIVE AWARD PLANS During fiscal 1994, AAP adopted the Long-term Incentive Plan which authorizes the granting of stock-based awards of up to an aggregate of 500,000 shares of AAP's common stock to officers and key employees of or consultants to AAP who demonstrate superior performance or achieve management objectives. The plan is administered by the Compensation Committee of the Board of Directors who determine the terms and conditions of each award within the guidelines established by the plan. During fiscal 1996 and 1997, non-qualified stock options for 24,000 and 149,500 shares, respectively, were granted at a price equal to the market value on the date the options were granted. The weighted average fair value of these options at the date of grant was $11 and $17 per share, respectively. These options become exercisable over a period of three years and expire no later than 10 years after the date of grant. No such options were granted during fiscal 1998. During fiscal 1995, AAP adopted an Outside Director Long-term Award Plan which authorizes the granting of stock-based awards of up to an aggregate of 50,000 shares of AAP's common stock. During fiscal 1996 and 1997, AAP granted non-qualified stock options for 11,000 and 9,000 shares, respectively, at a price equal to the market value on the date the options were granted. The weighted average fair value of these options at the date of grant was $12 and $16 per share, respectively. No such options were granted during fiscal 1998. F-16 59 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The options issued under the Long-term Incentive Plan and the Outside Director Long-term Award Plan are summarized in the table below.
OPTIONS OPTIONS OPTIONS OUTSTANDING OUTSTANDING EXERCISABLE AT BEGINNING FORFEITED OR AT END AT END OF YEAR GRANTED EXERCISED EXPIRED OF YEAR OF YEAR ------------ ------- --------- ------------ ----------- ----------- FISCAL 1996 Number of options............ 216,000 35,000 10,000 -- 241,000 95,333 Weighted average exercise price...................... $ 24 $ 31 $ 18 $ -- $ 25 $ 21 FISCAL 1997 Number of options............ 241,000 158,500 84,217 3,278 312,005 101,672 Weighted average exercise price...................... $ 25 $ 42 $ 22 $ 20 $ 35 $ 22 FISCAL 1998 Number of options............ 312,005 -- -- -- 312,005 194,672 Weighted average exercise price...................... $ 35 $ -- $ -- $ -- $ 35 $ 31
The exercise prices for options outstanding at August 31, 1998 range from $18 to $46 per share. The weighted average remaining contractual life for options outstanding at August 31, 1998 is 6.6 years. AAP during fiscal 1995 also granted stock appreciation rights for 5,000 shares at a price equal to the market value on the date the rights were granted of $33 per share. The fair value of these stock appreciation rights at the date granted was $11 per share. These stock appreciation rights for all 5,000 shares expired during fiscal 1997. During fiscal 1995 and 1996, pursuant to the Long-term Incentive Plan, AAP granted 3,000 and 6,000 shares, respectively, of restricted common stock to an officer at a cost of $0.01 per share. Of this restricted common stock, 2,000, 3,000 and 4,000 shares vested and became nonforfeitable on June 1, 1997, June 30, 1997 and June 1, 1998, respectively. The fair value of the restricted stock awards at the date of grant, based on the stock's market value at the grant date, was $36 and $34 per share, respectively. The cost of these restricted stock awards, based on the stock's fair market value at the award date was charged to shareholders' equity and amortized against earnings over the vesting period. As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation", AAP has elected not to adopt the fair value based method to measure compensation cost related to stock-based awards in determining net income in the basic financial statements. If AAP had elected to adopt the fair value based method, AAP's net income for the years ended August 31, 1998, 1997 and 1996 would have been $403, $103,697 and $82,201, respectively, and earnings per share would have been $0.01, $1.75 and $1.37 per share, respectively. The options pricing model used to estimate the fair value of the stock-based awards for purposes of this disclosure included the following assumptions: Expected life of 7.5 years; 8.5% risk-free interest rate; 2% annual rate of dividends; and expected volatility of 7% in fiscal 1994 and fiscal 1995, 17% in fiscal 1996 and 24% to 31% in fiscal 1997. F-17 60 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (16) EARNINGS PER SHARE AAP's stock options represent potential dilutive common shares for the purposes of computing diluted earnings per share in accordance with SFAS No. 128. The effect of these stock options on AAP's earnings per share computations is summarized in the following table.
W.A. SHARES OUTSTANDING NET INCOME (000S) PER-SHARE (NUMERATOR) (DENOMINATOR) AMOUNT ----------- ------------- --------- FISCAL 1998 Basic earnings per share............................... $ 1,453 56,442 $0.03 Effect of dilutive securities -- stock options....... 4 ------ Diluted earnings per share............................. $ 1,453 56,446 $0.03 ======== ====== ===== FISCAL 1997 Basic earnings per share............................... $104,031 59,124 $1.76 Effect of dilutive securities -- stock options....... 52 ------ Diluted earnings per share............................. $104,031 59,176 $1.76 ======== ====== ===== FISCAL 1996 Basic earnings per share............................... $ 82,233 60,039 $1.37 Effect of dilutive securities -- stock options....... 58 ------ Diluted earnings per share............................. $ 82,233 60,097 $1.37 ======== ====== =====
Options to purchase 255,000 shares of common stock at a weighted-average exercise price of $38 per share were outstanding during fiscal 1998 but were not included in the computation of fiscal 1998 diluted earnings per share because the options' exercise price was greater than the average market price of the common shares. Such options expire at various dates during fiscal 2005, 2006 and 2007. (17) SHORT-TERM BORROWINGS AAP's subsidiary in Mainland China had short-term borrowings of $11,473 at August 31, 1998 under unsecured revolving line of credit agreements with two local banks. The agreements are guaranteed by Standard Chartered Bank and Societe Generale of China in the form of standby letters of credit which in turn are guaranteed by AAP. The interest rates on loans under these agreements are based on the published rates determined by the Central Bank in China for short or medium-term loans. The weighted-average interest rate on these borrowings was approximately 6.8% at August 31, 1998. There are no commitment fees on these credit facilities. Unused credit available under these agreements at August 31, 1998 was $6,643. AAP also had borrowings of $7,100 at August 31, 1998 under an unsecured revolving line of credit agreement in the United States with Standard Chartered Bank. The interest rates on loans under this credit facility are based on LIBOR plus 0.25% at the time of loan. The weighted-average interest rate on these borrowings was approximately 5.9% at August 31, 1998. There are no commitment fees on these credit facilities. Unused credit available under these agreements at August 31, 1998 was $17,900. F-18 61 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (18) UNAUDITED QUARTERLY FINANCIAL DATA
FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER TOTAL -------- -------- -------- -------- -------- 1998 Net sales........................... $169,124 $160,678 $133,601 $124,176 $587,579 Gross profit........................ 103,227 93,907 64,469 68,756 330,359 Operating income.................... 16,590 13,185 (9,525) 5,043 25,293 Income before income taxes and minority interest................. 19,684 13,866 (7,449) 8,875 34,976 Net income.......................... $ 8,525 $ 5,539 $(15,295) $ 2,684 $ 1,453 ======== ======== ======== ======== ======== Basic and diluted earnings per share............................. $ 0.15 $ 0.10 $ (0.27) $ 0.05 $ 0.03 ======== ======== ======== ======== ======== Weighted average number of shares outstanding (000s): For basic EPS..................... 56,442 56,442 56,442 56,442 56,442 ======== ======== ======== ======== ======== For diluted EPS................... 56,461 56,449 56,442 56,442 56,446 ======== ======== ======== ======== ======== 1997 Net sales........................... $225,200 $205,201 $230,925 $183,840 $845,166 Gross profit........................ 143,303 129,002 146,663 112,911 531,879 Operating income.................... 44,724 34,815 43,200 25,844 148,583 Income before income taxes and minority interest................. 51,387 40,817 49,226 31,860 173,290 Net income.......................... $ 29,890 $ 24,714 $ 31,018 $ 18,409 $104,031 ======== ======== ======== ======== ======== Basic and diluted earnings per share............................. $ 0.50 $ 0.41 $ 0.52 $ 0.33 $ 1.76 ======== ======== ======== ======== ======== Weighted average number of shares outstanding (000s): For basic EPS..................... 60,047 60,055 59,985 56,438 59,124 ======== ======== ======== ======== ======== For diluted EPS................... 60,120 60,156 60,060 56,497 59,176 ======== ======== ======== ======== ========
(19) INDUSTRY AND GEOGRAPHIC SEGMENTS AAP operates in a single industry which is the direct selling of cleaning and other household products, personal care products and vitamins and dietary supplements. Information related to AAP's geographic segments for each of the years in the three-year period ended August 31, 1998 is presented below. F-19 62 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED AUGUST 31, -------------------------------- 1998 1997 1996 -------- -------- -------- GEOGRAPHIC AREAS Net Sales: China (Mainland, the Hong Kong Special Administrative Region, Macau and Taiwan)............................. $241,636 $377,226 $295,850 Brunei, Malaysia and Thailand............................ 199,032 316,818 279,157 Australia and New Zealand................................ 146,911 151,122 141,750 -------- -------- -------- $587,579 $845,166 $716,757 ======== ======== ======== Operating Income: China (Mainland, the Hong Kong Special Administrative Region, Macau and Taiwan)............................. $(16,152) $ 50,538 $ 35,373 Brunei, Malaysia and Thailand............................ 31,947 83,683 72,451 Australia and New Zealand................................ 11,381 16,706 19,688 Corporate expenses and miscellaneous, net................ (1,883) (2,344) (368) -------- -------- -------- $ 25,293 $148,583 $127,144 ======== ======== ========
AUGUST 31, -------------------- 1998 1997 -------- -------- Identifiable assets: China (Mainland, the Hong Kong Special Administrative Region, Macau and Taiwan)................................... $192,411 $261,418 Brunei, Malaysia and Thailand............................. 137,360 174,421 Australia and New Zealand................................. 48,808 61,216 Corporate(1).............................................. 22,250 30,039 Eliminations.............................................. (13,756) (6,951) -------- -------- $387,073 $520,143 ======== ========
- --------------- (1) Corporate identifiable assets are principally receivables from AAP's subsidiaries (which are deducted from total assets through eliminations) and cash and cash equivalents. F-20 63 AMWAY ASIA PACIFIC LTD. CONSOLIDATED STATEMENTS OF INCOME (U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THIRD QUARTER ENDED NINE MONTHS ENDED MAY 31, MAY 31, -------------------- -------------------- 1999 1998 1999 1998 -------- -------- -------- -------- (UNAUDITED) Net sales....................................... $131,648 $133,601 $365,929 $463,403 Cost of sales................................... 57,554 69,132 159,542 201,800 -------- -------- -------- -------- 74,094 64,469 206,387 261,603 -------- -------- -------- -------- Operating expenses: Distributor incentives........................ 34,772 37,511 97,063 125,621 Distribution expenses......................... 9,372 11,038 28,315 35,569 Selling and administrative expenses........... 23,487 25,445 70,269 80,163 -------- -------- -------- -------- Total operating expenses................... 67,631 73,994 195,647 241,353 -------- -------- -------- -------- Operating income (loss).................... 6,463 (9,525) 10,740 20,250 Other income -- net............................. 1,366 2,076 1,689 5,851 -------- -------- -------- -------- Income (loss) before income taxes and minority interest........................ 7,829 (7,449) 12,429 26,101 Income taxes.................................... 4,091 5,347 9,798 19,520 -------- -------- -------- -------- Income (loss) before minority interest..... 3,738 (12,796) 2,631 6,581 Minority interest in net income of consolidated subsidiaries.................................. 1,627 2,499 4,478 7,812 -------- -------- -------- -------- Net income (loss).......................... $ 2,111 $(15,295) $ (1,847) $ (1,231) ======== ======== ======== ======== Basic earnings (loss) per share................. $ 0.04 $ (0.27) $ (0.03) $ (0.02) ======== ======== ======== ======== Earnings (loss) per share assuming dilution..... $ 0.04 $ (0.27) $ (0.03) $ (0.02) ======== ======== ======== ======== Dividends per share............................. $ -- $ 0.22 $ -- $ 0.66 ======== ======== ======== ======== Weighted average number of shares outstanding (000s)........................................ 56,442 56,442 56,442 56,442 ======== ======== ======== ======== Weighted average number of shares outstanding including dilutive potential shares (000s).... 56,442 56,442 56,452 56,452 ======== ======== ======== ========
See accompanying notes to consolidated financial statements. F-21 64 AMWAY ASIA PACIFIC LTD. CONSOLIDATED BALANCE SHEETS (U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
MAY 31, AUGUST 31, 1999 1998 ----------- ---------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents................................. $146,680 $157,157 Short-term investments.................................... 6,471 143 Accounts receivable, net.................................. 19,929 21,264 Inventories (note 2)...................................... 57,921 75,104 Prepaid expenses and other current assets................. 16,023 23,234 -------- -------- Total current assets................................... 247,024 276,902 Property, plant and equipment, net.......................... 105,421 104,346 Other assets................................................ 9,318 5,825 -------- -------- Total assets........................................... $361,763 $387,073 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $ 46,128 $ 59,799 Short-term borrowings..................................... 15,341 18,573 Accrued expenses and income taxes......................... 80,952 92,150 Distributor deposits...................................... 4,314 4,252 -------- -------- Total current liabilities.............................. 146,735 174,774 Deferred income taxes....................................... 248 184 -------- -------- Total liabilities...................................... 146,983 174,958 -------- -------- Minority interests.......................................... 34,059 36,017 -------- -------- Shareholders' equity: Preferred stock, $0.01 par value -- authorized: 20,000,000 shares, none issued.................................... -- -- Common stock, $0.01 par value -- authorized: 110,000,000 shares; issued and outstanding: 56,441,960 shares...... 564 564 Additional paid-in capital................................ 79,246 79,246 Accumulated other comprehensive income.................... (37,759) (44,182) Retained earnings......................................... 138,670 140,470 -------- -------- Total shareholders' equity............................. 180,721 176,098 -------- -------- Total liabilities and shareholders' equity............. $361,763 $387,073 ======== ========
See accompanying notes to consolidated financial statements. F-22 65 AMWAY ASIA PACIFIC LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. DOLLARS IN THOUSANDS)
NINE MONTHS ENDED MAY 31, --------------------- 1999 1998 -------- --------- (UNAUDITED) Cash flows from operating activities: Net loss.................................................... $ (1,847) $ (1,231) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization.......................... 9,637 9,857 Deferred income taxes.................................. (1,044) (3,043) Loss on sale of equipment.............................. 1,234 367 Gain on sale of investments............................ -- (510) Changes in assets and liabilities...................... 5,775 (19,611) -------- --------- Net cash provided by (used in) operating activities.......................................... 13,755 (14,171) -------- --------- Cash flows from investing activities: Capital expenditures...................................... (9,782) (29,443) Proceeds from sale of equipment........................... 344 218 Purchase of held-to-maturity investments.................. (29,605) (79,288) Proceeds from maturity of investments..................... 20,408 82,349 Net decrease (increase) in notes receivable............... (38) 128 -------- --------- Net cash used in investing activities................ (18,673) (26,036) -------- --------- Cash flows from financing activities: Principal payments on notes payable and capital lease obligations............................................ -- (30) Dividends paid to shareholders............................ -- (37,252) Dividends paid by subsidiaries to minority shareholders... (8,626) (5,977) Net increase (decrease) in short term borrowings.......... (3,257) 4,826 Subsidiary's purchase for retirement of common stock held by minority shareholders............................... -- (426) Investment in subsidiary by minority shareholder.......... 2,219 -- -------- --------- Net cash used in financing activities................ (9,664) (38,859) -------- --------- Effect of exchange rate changes on cash..................... 4,105 (28,266) -------- --------- Net decrease in cash and cash equivalents................... (10,477) (107,332) Cash and cash equivalents at beginning of year.............. 157,157 207,915 -------- --------- Cash and cash equivalents at end of period.................. $146,680 $ 100,583 ======== ========= Supplemental disclosures of cash flow information: Interest paid............................................. $ 732 $ 34 ======== ========= Income taxes paid......................................... $ 17,192 $ 26,564 ======== =========
See accompanying notes to consolidated financial statements. F-23 66 AMWAY ASIA PACIFIC LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (1) BASIS OF PRESENTATION The accompanying consolidated financial statements of Amway Asia Pacific Ltd. and subsidiaries ("AAP") have not been audited by independent accountants, except for the balance sheet at August 31, 1998. In the opinion of AAP's management, the consolidated financial statements reflect all adjustments, including the use of management's estimates, necessary to present fairly, in accordance with U.S. generally accepted accounting principles, AAP's results of operations for the third quarter and nine months ended May 31, 1999 and 1998, the financial position at May 31, 1999 and August 31, 1998, and cash flows for the nine months ended May 31, 1999 and 1998. All such adjustments are of a normal recurring nature. The results of operations for the nine months ended May 31, 1999 are not necessarily indicative of the results for the entire fiscal year ending August 31, 1999. These consolidated financial statements should be read in conjunction with the consolidated financial statements (including Notes thereto) contained in AAP's Form 20-F for the fiscal year ended August 31, 1998. (2) INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. Inventories consist of:
MAY 31, AUGUST 31, 1999 1998 ----------- ---------- (UNAUDITED) Raw materials............................................... $ 6,306 $ 6,996 Work in process............................................. 51 -- Manufactured finished goods and finished goods purchased for resale.................................................... 51,564 68,108 ------- ------- $57,921 $75,104 ======= =======
(3) COMPREHENSIVE INCOME In June 1997, the Financial Accounting Standards Board issued SFAS No. 130 Reporting Comprehensive Income which, for interim reporting purposes, requires that an enterprise report a total for comprehensive income. AAP adopted this statement effective September 1, 1998. Comprehensive income includes all changes in equity during a period except those resulting from investments by and distributions to AAP's shareholders. For AAP, this primarily represents net income plus or minus the change in cumulative foreign currency translation adjustments. Cumulative foreign currency translation adjustments, which were previously identified separately in the equity section of AAP's balance sheets, are now included in "Accumulated other comprehensive income" in the equity section of AAP's balance sheets in accordance with SFAS No. 130. Total comprehensive income (loss), net of related tax effects, was $4,576 and $(26,065) for the nine months ended May 31, 1999 and 1998, respectively. F-24 67 Facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal, certificates representing the Shares and any other required documents should be sent or delivered by each holder of Shares or such holder's broker, dealer, commercial bank or trust company to the Depositary at one of its addresses set forth below. THE DEPOSITARY FOR THE OFFER IS: FIRST CHICAGO TRUST COMPANY OF NEW YORK BY MAIL: BY HAND: FIRST CHICAGO TRUST COMPANY OF NEW YORK FIRST CHICAGO TRUST COMPANY OF NEW YORK CORPORATE ACTIONS C/O SECURITIES TRANSFER AND REPORTING SERVICES SUITE 4660 INC. P.O. BOX 2569 ATTN: CORPORATE ACTIONS JERSEY CITY, NJ 07303-2569 100 WILLIAM STREET, GALLERIA NEW YORK, NY 10038 BY OVERNIGHT COURIER: BY FACSIMILE TRANSMISSION: FIRST CHICAGO TRUST COMPANY OF NEW YORK (201) 324-3402 OR (201) 324-3403 CORPORATE ACTIONS, SUITE 4660 525 WASHINGTON BLVD CONFIRM BY TELEPHONE: JERSEY CITY, NJ 07310 (201) 222-4707
Questions and requests for assistance may be directed to the Information Agent or the Dealer Managers at their respective addresses and telephone numbers set forth below. Additional copies of this Offer to Purchase, the Letter of Transmittal and other related materials may be obtained from the Information Agent or brokers, dealers, commercial banks and trust companies. THE INFORMATION AGENT FOR THE OFFER IS: GEORGESON SHAREHOLDER COMMUNICATIONS INC. 17 STATE STREET NEW YORK, NY 10004 BANKS AND BROKERS CALL COLLECT: (212) 440-9800 OR ALL OTHERS CALL TOLL-FREE: (800) 223-2064 THE DEALER MANAGERS FOR THE OFFER ARE: MORGAN STANLEY DEAN WITTER J.P. MORGAN & CO. Morgan Stanley & Co. Incorporated 60 Wall Street One Financial Place New York, NY 10260 440 South LaSalle Street (877) 576-0606 (call toll free) Chicago, IL 60605 (322) 706-4411 (call collect)
FOR INFORMATION IN AUSTRALIA: Morgan Stanley Dean Witter Australia Limited J.P. Morgan & Co. Level 33, the Chifley Tower Level 20, One O'Connel Street 22 Chifley Square Sydney, New South Wales, Australia 2061 Sydney, New South Wales, Australia 2000 (800) 872-2881 -- 877-576-4529 (612) 9770-1590 (call toll free)
EX-99.A.2 3 EXHIBIT (A)(2) 1 Exhibit (a)(2) LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF AMWAY ASIA PACIFIC LTD. PURSUANT TO THE OFFER TO PURCHASE, DATED NOVEMBER 18, 1999 BY NEW AAP LIMITED THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED. TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK BY MAIL: BY HAND: First Chicago Trust Company of New York First Chicago Trust Company of New York Corporate Actions c/o Securities Transfer and Reporting Services Suite 4660 Inc. P.O. Box 2569 Attn: Corporate Actions Jersey City, NJ 07303-2569 100 William Street, Galleria BY OVERNIGHT COURIER: New York, NY 10038 First Chicago Trust Company of New York BY FACSIMILE TRANSMISSION: Corporate Actions, Suite 4660 (201) 324-3402 or (201) 324-3403 525 Washington Blvd. Jersey City, NJ 07310 CONFIRM BY TELEPHONE: (201) 222-4707
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN THOSE AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. This Letter of Transmittal is to be used only if certificates representing shares of Common Stock, par value $0.01 per share, of Amway Asia Pacific Ltd. (the "Common Stock"), are to be forwarded herewith unless an Agent's Message (as defined in the Offer to Purchase) is utilized or if delivery of shares of Common Stock is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase. See Instruction 2. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary. Participants in the Amway Corporation Profit-Sharing and 401(k) Plan who wish to have the trustee of such Plan tender Shares attributable to their accounts may not use this Letter of Transmittal to direct the tender of such Shares. Participants may only use the separate election form sent to them by the trustee. See Instruction 11. Shareholders who cannot deliver their shares and all other documents required hereby to the Depository by the Expiration Date (as defined in the Offer to Purchase), or who are unable to comply with the procedures for book-entry transfer on a timely basis, and who wish to tender their Shares must do so pursuant to the guaranteed delivery procedure set forth in "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase. See Instruction 2. No alternative, conditional or contingent tenders will be accepted, and no fractional shares will be purchased. 2
- ------------------------------------------------------------------------------------------------------------------------ DESCRIPTION OF SHARES TENDERED - ------------------------------------------------------------------------------------------------------------------------ NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED APPEAR(S) ON CERTIFICATE(S), IF ANY) (ATTACHED ADDITIONAL LIST IF NECESSARY) - ------------------------------------------------------------------------------------------------------------------------ TOTAL NUMBER OF SHARES NUMBER CERTIFICATE REPRESENTED BY OF SHARES NUMBER(S)* CERTIFICATE(S)* TENDERED** ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ TOTAL - ------------------------------------------------------------------------------------------------------------------------ * Need not be completed by holders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all shares evidenced by any certificates delivered to the Depositary are being tendered. See Instruction 4. - ------------------------------------------------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN SHARES (SEE INSTRUCTION 10) To be completed ONLY if shares held in the Direct Purchase and Sale Plan for Amway Asia Pacific Ltd. Common Stock (the "Dividend Reinvestment Plan") are to be tendered. [ ] By checking this box, the undersigned represents that the undersigned is a participant in the Dividend Reinvestment Plan and hereby instructs the Depositary to tender on behalf of the undersigned the following number of Shares credited to the Dividend Reinvestment Plan account of the undersigned: ------------ Shares* * The undersigned understands and agrees that all Shares held in the Dividend Reinvestment Plan account(s) of the undersigned will be tendered if the above box is checked and the space above is left blank. [ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution DTC Account No. Transaction Code No. [ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Tendering Shareholder(s) Date of Execution of Notice of Guaranteed Delivery Name of Institution that Guaranteed Delivery If delivery is by book-entry transfer: Name of Tendering Institution DTC Account No. Transaction Code No. NOTE: SIGNATURES MUST BE PROVIDED BELOW AND MAY BE REQUIRED TO BE GUARANTEED. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. 3 Ladies and Gentlemen: The undersigned hereby tenders to the Depositary, on behalf of New AAP Limited, a Bermuda corporation (the "Company") and an entity controlled, directly or indirectly, by the DeVos and Van Andel families and certain corporations, trusts, foundations and other entities established by or for the benefit of such families, the number of shares of Common Stock indicated above, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated November 18, 1999 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with the Offer to Purchase, constitutes the "Offer"). Subject to and effective upon the Company's acceptance for payment of and payment for the shares of Common Stock tendered herewith in accordance with the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the undersigned hereby sells, assigns and transfers to or upon the order of the Company all right, title and interest in and to all the shares of Common Stock that are being tendered hereby and irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such shares of Common Stock, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates evidencing such shares, or transfer ownership of such shares on the account books maintained by the Book-Entry Transfer Facility, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Company and (b) receive all benefits and otherwise exercise all rights of beneficial ownership of such shares, all in accordance with the terms and subject to the conditions of the Offer. The Depositary will act as agent for tendering holders for the purpose of receiving payment from the Company and transmitting payment to the tendering holders. The undersigned hereby represents and warrants that the undersigned will, upon request, execute and deliver all additional documents deemed by the Depositary or the Company to be necessary or desirable to complete the sale, assignment and transfer of the shares tendered hereby and has read, understands and agrees to be bound by, all terms and conditions of the Offer. The undersigned understands that under certain circumstances set forth in the Offer to Purchase, the Company may amend the Offer or may postpone the acceptance for payment of, or payment for, shares of Common Stock tendered or may accept for payment fewer than all of the shares of Common Stock tendered hereby. The undersigned understands that tenders of shares of Common Stock pursuant to any one of the procedures described in "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase and in the instructions hereto will constitute an agreement by the undersigned to be subject to the terms and conditions of the Offer. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please issue the check for the Purchase Price (as defined in the Offer to Purchase) of any shares of Common Stock purchased (less the amount of any U.S. backup or other applicable withholding tax which may be required to be withheld) and return any shares not validly tendered and not purchased, in the name(s) of the undersigned, and in the case of shares tendered by book-entry transfer, by credit to the account at the Book-Entry Transfer Facility through which the shares were originally tendered. Similarly, unless otherwise indicated herein in the box entitled "Special Delivery Instructions," please mail the check for the Purchase Price of any shares of Common Stock purchased (less the amount of any U.S. backup or other applicable withholding tax which may be required to be withheld) and return any shares not validly tendered and not purchased (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that both "Special Payment Instructions" and "Special Delivery Instructions" are completed, please issue the check for the Purchase Price of any shares of Common Stock purchased (less the amount of any U.S. backup or other applicable withholding tax which may be required to be withheld), and return any shares not validly tendered and not purchased in the name(s) of, and deliver said check and any shares to, the person(s) so indicated. The undersigned recognizes that the Company has no obligation, pursuant to the "Special Payment Instructions," to transfer any shares from the name(s) of the registered holder(s) thereof, or to order the registration or transfer of such shares tendered by book-entry transfer, if the Company does not accept for payment any of the shares of Common Stock represented by shares so tendered. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, trustees in bankruptcy, personal and legal representatives, successors and assigns of the undersigned. Except as stated in the Offer, this tender is irrevocable. 4 --------------------------------------------------------------- SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 4, 6, 7 AND 8) To be completed ONLY if the check for the Purchase Price of shares purchased (less the amount of any U.S. backup or other applicable withholding tax which may be required to be withheld) or certificates evidencing shares not validly tendered and not purchased are to be issued in the name of someone other than the undersigned, or if shares delivered by book-entry transfer that are not validly tendered and not purchased are to be returned by credit to an account maintained by the Book-Entry Transfer Facility. Issue [ ] Check [ ] Certificate(s) to: Name -------------------------------------------------------- (PLEASE PRINT) Address ------------------------------------------------------ --------------------------------------------------------------- (INCLUDE ZIP CODE) --------------------------------------------------------------- (TAXPAYER IDENTIFICATION NO. OR SOCIAL SECURITY NO.) [ ] Credit unpurchased shares tendered by book-entry transfer and not purchased to the account set forth below: DTC Account Number: ------------------------------------ --------------------------------------------------------------- --------------------------------------------------------------- SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 4, 6, 7 AND 8) To be completed ONLY if the check for the Purchase Price of shares purchased (less the amount of any U.S. backup or other applicable withholding tax which may be required to be withheld) or certificates evidencing shares not validly tendered and not purchased are to be mailed to someone other than the undersigned or to the undersigned at an address other than that shown in the box entitled "Description of Shares Tendered." Mail [ ] Check [ ] Certificate(s) to: Name -------------------------------------------------------- (PLEASE PRINT) Address ------------------------------------------------------ --------------------------------------------------------------- (INCLUDE ZIP CODE) --------------------------------------------------------------- 5 --------------------------------------------------------------- SIGN HERE (COMPLETE SUBSTITUTE FORM W-9) --------------------------------------------------------------- --------------------------------------------------------------- SIGNATURE(S) OF OWNER(S) Name(s) ----------------------------------------------------- --------------------------------------------------------------- (PLEASE PRINT) --------------------------------------------------------------- Capacity (full title) Address ------------------------------------------------------ --------------------------------------------------------------- --------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone Number: ---------------------------- Dated , 1999 Taxpayer ID No. or Social Security No. ----------------------- (Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 6.) --------------------------------------------------------------- --------------------------------------------------------------- GUARANTEE OF SIGNATURE(S) (IF REQUIRED; SEE INSTRUCTIONS 1 AND 6) FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE BELOW. Authorized Signature: ----------------------------------------- Name: -------------------------------------------------------- Title: --------------------------------------------------------- Name of Firm: ----------------------------------------------- Address: ------------------------------------------------------ Area Code and Telephone Number: --------------------------------------------------------------- Dated -------------------------------------------------- , 1999 --------------------------------------------------------------- 6 - -------------------------------------------------------------------------------- SUBSTITUTE Enter your identification number in the appropriate box. Social Security Number OR FORM W-9 For most individuals, this is your Social Security Number. Employer Identification Number DEPARTMENT OF THE If you do not have a number, see How to Obtain a TIN in -------------------------------- TREASURY, INTERNAL the enclosed GUIDELINES. REVENUE SERVICE PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NO. --------------------------------------------------------------------------------------------- NOTE: If the account is in more than one name, see the chart on page 2 of enclosed Guidelines for guidelines on which number to give the payer. --------------------------------------------------------------------------------------------- Certificate: Under penalties of perjury, I certify that: For Payees Exempt From Backup (1) The number shown on this form is my correct Taxpayer Withholding (see enclosed Identification Number (or I am waiting for a number to Guidelines) be issued to me), and (2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or the IRS has notified me that I am no longer subject to backup withholding. SIGNATURE DATED , 1999 - ---------------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. 7 INSTRUCTIONS TO LETTER OF TRANSMITTAL FORMING A PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. Guarantee of Signatures. No signature guarantee on this Letter of Transmittal is required if (a) this Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this document, shall include any participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of shares) of the shares tendered herewith unless such holder(s) have completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on this Letter of Transmittal or (b) if such shares are tendered for the account of a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Guarantee Program or the Stock Exchange Medallion Program (an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) which is an Eligible Institution. See Instruction 6. 2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal is to be used only if shares are to be tendered herewith unless an Agent's Message is utilized or if delivery of shares is to be made by book-entry transfer pursuant to the procedures set forth in "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase. For a holder to validly tender shares, certificates for all physically delivered shares, or a timely confirmation of a book-entry transfer of all shares delivered electronically into the Depositary's account at the Book-Entry Transfer Facility, as well as a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal on or prior to the Expiration Date (as defined in the Offer to Purchase). Shareholders who cannot deliver their shares and all other documents required hereby to the Depository by the Expiration Date, or who are unable to comply with the procedures for book-entry transfer on a timely basis, and who wish to tender their shares must do so pursuant to the guaranteed delivery procedure set forth in "The Offer -- Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to Purchase. Pursuant to such procedure (i) such tender must be made by or through an Eligible Institution, (ii) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Company (with any required signature guarantees) must be received by the Depositary prior to the Expiration Date and (iii) the certificates for all physically delivered shares in proper form for transfer by delivery, or a confirmation of a book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility of all shares delivered electronically, in each case together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by this Letter of Transmittal or an Agent's Message must be received by the Depositary within two New York Stock Exchange trading days after execution of the Notice of Guaranteed Delivery. See "The Offer -- Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to Purchase. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED FOR SUCH DOCUMENTS TO REACH THE DEPOSITARY. DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. No alternative, conditional or contingent tenders will be accepted, and no fractional shares will be purchased. By executing this Letter of Transmittal (or a manually signed facsimile thereof), the tendering holder waives any right to receive any notice of the acceptance for payment of their shares. 3. Inadequate Space. If the space provided in the box captioned "Description of Shares Tendered" is inadequate, the certificates and/or the number of shares evidenced by such certificates and the number of shares tendered should be listed on a separate signed schedule and attached hereto. 4. Partial Tenders (not applicable to holders who tender by book-entry transfer). If fewer than all shares evidenced by any certificates delivered to the Depositary are to be tendered, fill in the number of shares that are to be tendered in the box entitled "Number of Shares Tendered." In such case, a new certificate for the remainder of the shares evidenced by the old certificate will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the appropriate box on this Letter of Transmittal, without delay after the Expiration Date or the termination of the Offer as described in "The Offer -- Acceptance for Payment of Shares and Payment of Purchase Price" in the Offer to Purchase. All shares evidenced by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. Lost, Destroyed or Stolen Shares. If any certificate(s) evidencing shares has been lost, destroyed or stolen, the holder should promptly notify the Depositary. The holder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen certificates have been followed. 8 6. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the certificates evidencing the shares of Common Stock tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificates without any change whatsoever. If any of the certificates representing shares tendered hereby are held of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the certificates representing shares tendered hereby are registered in different names of different holders, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of shares. If this Letter of Transmittal is signed by the registered holder(s) of the certificates evidencing the shares tendered hereby, no endorsement of certificates or separate stock powers are required unless payment of the Purchase Price (less the amount of any U.S. backup withholding tax or other applicable withholding which may be required to be withheld) is to be made, or shares not validly tendered and not purchased are to be returned, in the name of any person other than the registered holder(s). Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the shares of Common Stock tendered hereby, certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates evidencing such shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If this Letter of Transmittal or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Company of the authority of such person so to act must be submitted. 7. Stock Transfer Taxes. Except as provided in this Instruction, the Company will pay any stock transfer taxes with respect to the sale and transfer of any shares of Common Stock to it or its order pursuant to the Offer. If, however, payment of the Purchase Price (less the amount of any U.S. backup or other applicable withholding tax which may be required to be withheld) is to be made to, or shares not validly tendered and not purchased are to be returned, in the name of any person other than the registered holder(s), or tendered shares of Common Stock are registered in the name of a person other than the name of the person(s) signing this Letter of Transmittal, then the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such person will be deducted from the Purchase Price unless satisfactory evidence of the payment of such taxes, or exemption therefrom is submitted. 8. Special Payment and Delivery Instructions. If the check for the Purchase Price of shares purchased (less the amount of any U.S. backup or other applicable withholding tax which may be required to be withheld) is to be issued, or any shares not validly tendered and not purchased are to be returned, in the name of a person other than the person(s) signing this Letter of Transmittal or if the check for any shares not validly tendered and not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Holders tendering shares by book-entry transfer may request that shares not purchased be credited to such account at the Book-Entry Transfer Facility as such shareholder may designate under "Special Payment Instructions." 9. United States Federal Income Tax Withholding. Under U.S. federal income tax laws, the Depositary is required to withhold 31% of the amount of any payments made pursuant to the Offer unless certain requirements are satisfied. In order to avoid such withholding, a tendering holder of shares must complete the Substitute Form W-9 set forth above and return it to the Depositary, unless the holder is an "exempt recipient" (including, among others, all corporations and certain foreign individuals). In order to satisfy the Depositary that a foreign individual qualifies as an exempt recipient, such holder of shares must submit a statement, signed under penalties of perjury, attesting to that individual's exempt status. Such statements can be obtained from the Depositary. For further information concerning backup withholding and instructions for completing the Substitute Form W-9 (including how to obtain a taxpayer identification number if you do not have one and how to complete the Substitute Form W-9 if shares are held in more than one name), consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. If the Depositary is not provided with the correct taxpayer identification number and the tendering holder is not an exempt recipient, the holder may be subject to both civil and criminal penalties, and payments that are made to such holder pursuant to the Offer may be subject to backup withholding. Failure to complete the Substitute Form W-9 will not, by itself, cause shares to be deemed invalidly tendered, but may require the Depositary to withhold 31% of the amount of any payments made pursuant to the Offer. Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of a person subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. See "The Offer -- U.S. Federal Income Tax Consequences" in the Offer to Purchase. 9 10. Dividend Reinvestment Plan. If a tendering holder desires to have the Depositary tender pursuant to the Offer shares credited to such holder's account under the Dividend Reinvestment Plan, the box captioned "Dividend Reinvestment Plan Shares" should be completed. If a holder authorizes the tender of shares held in the Dividend Reinvestment Plan, all such shares credited to such holder's account(s), including fractional shares, will be tendered, unless otherwise specified in the appropriate space in the box captioned "Dividend Reinvestment Plan Shares." In the event that the box captioned "Dividend Reinvestment Plan Shares" is not completed, no shares held in the tendering holder's account(s) will be tendered. See "The Offer -- Procedure for Tendering Shares -- Dividend Reinvestment Plan." 11. 401(k) Plan. Participants in the Amway Corporation Profit-Sharing and 401(k) Plan (the "401(k) Plan") who wish to have the 401(k) Plan trustee tender shares attributable to their accounts should so indicate by completing, executing and returning the election form included in the materials sent to such participants by the trustee. A participant in the 401(k) Plan may direct the tender of all or a portion of shares allocated to the participant's 401(k) Plan account. If a participant's 401(k) Plan shares are purchased pursuant to the Offer, the number of shares allocated to the participant's 401(k) Plan account will be reduced by the number of such participant's shares so purchased. Participants in the 401(k) Plan may not use this Letter of Transmittal to direct the tender of the shares attributable to the participant's 401(k) Plan account, but must use the separate election form sent to them by the trustee. Participants in the 401(k) Plan are urged to read the separate election form and related materials carefully. See "The Offer -- Procedure for Tendering Shares -- 401(k) Plan." 12. Irregularities. All questions as to the Purchase Price, the deductions to be made from the Purchase Price, the number of shares of Common Stock tendered and accepted, the form of documents, and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of shares will be determined by the Company in its sole discretion, which determination shall be final and binding on all parties. The Company reserves the absolute right to reject any or all tenders of shares it determines not to be in proper form or the acceptance of which or payment for which may, in the opinion of the Company's counsel, be unlawful. The Company also reserves the absolute right to waive any defect or irregularity in the tender of any particular shares, and the Company's interpretations of the terms of the Offer (including these instructions) will be final and binding on all parties. No tender of shares will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the Company shall determine. None of the Company, the Dealer Managers, the Depositary, the Information Agent or any other person is or will be obligated to give notice of any defects or irregularities in tenders and none of them will incur any liability for failure to give any such notice. 13. Requests for Assistance or Additional Copies. Questions and requests for assistance may be directed to the Information Agent or the Dealer Managers at their respective addresses and telephone numbers set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal and other related materials may be obtained from the Information Agent or brokers, dealers, commercial banks and trust companies. The Information Agent for the Offer is: GEORGESON SHAREHOLDER COMMUNICATIONS INC. 17 State Street New York, NY 10004 Banks and Brokers Call Collect: (212) 440-9800 or All Others Call Toll Free: (800) 223-2064 The Dealer Managers for the Offer are: MORGAN STANLEY DEAN WITTER J.P. MORGAN & CO. Morgan Stanley & Co. Incorporated 60 Wall Street One Financial Place New York, NY 10260 440 South LaSalle Street (877) 576-0606 (call toll free) Chicago, IL 60605 (212) 706-4411 (call collect) For information in Australia: Morgan Stanley Dean Witter Australia Limited J.P. Morgan & Co. Level 33, The Chifley Tower Level 20, One O'Connell Street 22 Chifley Square Sydney, New South Wales, Australia 2061 Sydney, New South Wales, Australia 2000 (800) 872-2881 (612) 9770-1590 (call collect) (877) 576-4529 (call toll-free)
EX-99.A.3 4 EXHIBIT (A)(3) 1 Exhibit (a)(3) NOTICE OF GUARANTEED DELIVERY (NOT TO BE USED FOR SIGNATURE GUARANTEE) TO TENDER SHARES OF COMMON STOCK OF AMWAY ASIA PACIFIC LTD. PURSUANT TO THE OFFER TO PURCHASE, DATED NOVEMBER 18, 1999 OF NEW AAP LIMITED This Notice of Guaranteed Delivery, or a form substantially equivalent hereto, must be used to accept the Offer (as defined below) if certificates for shares of Common Stock, par value $.01 per share, of Amway Asia Pacific Ltd., and all other documents required by the Letter of Transmittal cannot be delivered to the Depositary by the expiration of the Offer or if the procedure for book-entry transfer cannot be completed by the expiration of the Offer. Such form may be delivered by hand, facsimile transmission, or mailed to the Depositary. See "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase. The Depositary for the Offer is: FIRST CHICAGO TRUST COMPANY OF NEW YORK By Mail: By Hand: FIRST CHICAGO TRUST COMPANY OF NEW YORK FIRST CHICAGO TRUST COMPANY OF NEW YORK C/O SECURITIES TRANSFER AND REPORTING SERVICES CORPORATE ACTIONS INC. SUITE 4660 ATTN: CORPORATE ACTIONS P.O. BOX 2569 100 WILLIAM STREET, GALLERIA JERSEY CITY, NJ 07303-2569 NEW YORK, NY 10038 By Overnight Courier: By Facsimile Transmission: FIRST CHICAGO TRUST COMPANY OF NEW YORK (201) 324-3402 OR (201) 324-3403 CORPORATE ACTIONS, SUITE 4660 Confirm by Telephone: 525 WASHINGTON BLVD. (201) 222-4707 JERSEY CITY, NJ 07310
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. FOR THIS NOTICE OF GUARANTEED DELIVERY TO BE EFFECTIVE, IT MUST BE SIGNED BY BOTH THE TENDERING HOLDER AND THE GUARANTOR. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED. 2 THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THAT SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. ------------------------------ Ladies and Gentlemen: The undersigned hereby tenders to the Depositary, on behalf of New AAP Limited, a Bermuda corporation (the "Purchaser") and an entity controlled, directly or indirectly, by the DeVos and Van Andel families and certain corporations, trusts, foundations and other entities established by or for the benefit of such families, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated November 18, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with the Offer to Purchase, constitutes the "Offer"), receipt of which is hereby acknowledged, the number of shares indicated below of Common Stock, par value $.01 per share (the "Common Stock"), of Amway Asia Pacific., Ltd., pursuant to the guaranteed delivery procedure set forth in "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase. (SEE INSTRUCTION 2 OF THE LETTER OF TRANSMITTAL) NUMBER OF SHARES TO BE TENDERED: ------------------------ ------------------------------------------------------------- NUMBER OF SHARES ----------------------------------------- CERTIFICATE NOS. (IF AVAILABLE): ------------------------------------------------------------- ------------------------------------------------------------- IF SHARES WILL BE TENDERED BY BOOK-ENTRY TRANSFER: NAME OF TENDERING INSTITUTIONS: ------------------------------------------------ ------------------------------------------------------------- ACCOUNT NO. ----------------------------------------------- [ ] The Depository Trust Company ------------------------------------------------------------- ------------------------------------------------------------- SIGN HERE ------------------------------------------------------------- ------------------------------------------------------------- SIGNATURE(S) Dated: -----------------------------------------------, 1999 Name(s) of Shareholders: ------------------------------------------------------------- ------------------------------------------------------------- PLEASE TYPE OR PRINT ------------------------------------------------------------- ADDRESS ------------------------------------------------------------- ZIP CODE ------------------------------------------------------------- AREA CODE AND TELEPHONE NO. ------------------------------------------------------------- TAXPAYER ID NO. OR SOCIAL SECURITY NO. ------------------------------------------------------------- 3 GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Guarantee Program or the Stock Exchange Medallion Program, guarantees to deliver to the Depositary the shares tendered hereby, together with a properly completed and duly executed Letter of Transmittal (or copy thereof) or an Agent's Message (as defined in the Offer to Purchase) and any other required documents, all within two New York Stock Exchange, Inc. trading days of the date hereof. ----------------------------------------- Name of Firm ----------------------------------------- Authorized Signature ----------------------------------------- Name ----------------------------------------- Address ----------------------------------------- Zip Code Dated: ----------------------------------------- - ------------------------------, 1999 Area Code and Telephone No. DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE SENT WITH THE LETTER OF TRANSMITTAL TO THE DEPOSITARY. 4 INSTRUCTION FORM WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH BY NEW AAP LIMITED FOR ALL OUTSTANDING SHARES OF COMMON STOCK OF AMWAY ASIA PACIFIC LTD. AT $18.00 PER SHARE OF COMMON STOCK THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated November 18, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (the "Letter of Transmittal," which, together with the Offer to Purchase, constitutes the "Offer"), in connection with the offer to purchase by New AAP Limited, a Bermuda corporation (the "Company") and an entity controlled, directly or indirectly, by the DeVos and Van Andel families and certain corporations, trusts, foundations and other entities established by or for the benefit of such families, all the outstanding shares of Common Stock, par value $.01 per share (the "Common Stock"), of Amway Asia Pacific Ltd., a Bermuda corporation ("AAP"). The purchase price for each share of Common Stock will be $18.00 in cash (the "Purchase Price"). There will be deducted from the Purchase Price paid to each holder any U.S. backup or other applicable withholding taxes which may be required to be withheld. The undersigned hereby instruct(s) you to tender the number of shares indicated below or, if no number is indicated, all shares you hold for the account of the undersigned pursuant to the terms and subject to the conditions of the Offer. AGGREGATE NUMBER OF SHARES TO BE TENDERED BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED: ____________________ SHARES* - ---------------- * Unless otherwise indicated, all of the shares held for the account of the undersigned will be tendered. SIGNATURE BOX Signature(s) - -------------------------------------------------------------------------------- Dated - -------------------------------------------------------------------------------- 1999 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (PLEASE PRINT) Area Code and Telephone Number - -------------------------------------------------------------------------------- Taxpayer Identification or Social Security Number - -------------------------------------------------------------------------------- EX-99.A.4 5 EXHIBIT (A)(4) 1 Exhibit (a)(4) OFFER TO PURCHASE FOR CASH BY NEW AAP LIMITED FOR ALL OUTSTANDING SHARES OF THE COMMON STOCK OF AMWAY ASIA PACIFIC LTD. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER 17, 1999 UNLESS THE OFFER IS EXTENDED. November 18, 1999 To: Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by New AAP Limited, a Bermuda corporation (the "Company") and an entity controlled, directly or indirectly, by the DeVos and Van Andel families and certain corporations, trusts, foundations and other entities established by or for the benefit of such families (the "Principal Shareholders"), to act as Dealer Managers in connection with its offer (the "Offer") to purchase all the outstanding shares of the Common Stock, par value $.01 per share (the "Common Stock"), of Amway Asia Pacific Ltd., a Bermuda corporation ("AAP"), that are beneficially owned by the shareholders of AAP. The Company has been informed by the Principal Shareholders that they will not tender their shares of Common Stock (the "Non-Tendered Shares") in response to the Offer. The purchase price for each share of Common Stock will be $18.00 in cash (the "Purchase Price"). There will be deducted from the Purchase Price paid to each holder any U.S. backup or other applicable withholding taxes which may be required to be withheld. The Offer is for all Shares of AAP or any lesser number of Shares tendered and not withdrawn. The Offer will expire, unless extended, at 12:00 midnight, New York City time, on December 17, 1999. The Company is making the Offer pursuant to the Tender Offer and Amalgamation Agreement, dated November 15, 1999, among the Company, AAP and Apple Hold Co., L.P., a limited partnership organized under the laws of Bermuda, in accordance with the terms and conditions described in the Offer to Purchase, dated November 18, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (the "Letter of Transmittal"). THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED OR SUBJECT TO ANY OTHER CONDITIONS. THE BOARD OF DIRECTORS OF AAP (WITH MESSRS. RICHARD M. DEVOS, JR., DOUGLAS L. DEVOS AND STEPHEN A. VAN ANDEL NOT PARTICIPATING) RECOMMENDS THAT THE HOLDERS OF SHARES OF COMMON STOCK OTHER THAN THE NON-TENDERED SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER. EACH HOLDER MUST MAKE ITS OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. For your information and for forwarding to your clients for whom you hold shares registered in your name or in the name of your nominee, we are enclosing the following documents: 1. Offer to Purchase, dated November 18, 1999; 2. Letter to Clients that may be sent to your clients for whose accounts you hold shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 3. Letter dated November 18, 1999 from Stephen A. Van Andel to holders of the Common Stock; 4. Letter of Transmittal for your use and for the information of your clients; 5. Notice of Guaranteed Delivery; and 6. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 2 WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED. No fees or commissions will be payable to brokers, dealers or any person for soliciting tenders of shares pursuant to the Offer other than fees paid to the Information Agent and the Depositary as described in "The Offer -- Fees and Expenses" in the Offer to Purchase. The Company will, however, upon written request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to the beneficial owners of shares held by you as a nominee or in a fiduciary capacity. However, U.S. backup withholding tax, may, in certain circumstances described in the Offer to Purchase, be required to be withheld from the Purchase Price payable to certain holders or other payees pursuant to the Offer. See "The Offer -- U.S. Federal Income Tax Consequences -- Backup Withholding" in the Offer to Purchase and Instruction 9 of the Letter of Transmittal. In order to accept the Offer, a duly executed and properly completed Letter of Transmittal and any other required documents should be sent to the Depositary with either certificates evidencing the tendered shares or confirmation of their book-entry transfer all in accordance with the instructions set forth in the Letter of Transmittal and in "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase. As described in "The Offer -- Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to Purchase, tenders of shares may be made without the concurrent deposit of stock certificates or concurrent compliance with the procedure for book-entry transfer, if such tenders are made by or through an Eligible Institution (as defined in the Offer to Purchase). Certificates for shares so tendered (or confirmation of a book-entry transfer of such shares into the Depositary's account at the Book-Entry Transfer Facility described in the Offer to Purchase), together with a properly completed and duly executed Letter of Transmittal and any other documents required by the Letter of Transmittal, must be received by the Depositary within two New York Stock Exchange trading days after receipt by the Depositary of a properly completed and duly executed Notice of Guaranteed Delivery. See "The Offer -- Procedure for Tendering Shares -- Guaranteed Delivery" in the Offer to Purchase. Any inquiries you may have with respect to the Offer should be addressed to Georgeson Shareholder Communications Inc., Morgan Stanley & Co. Incorporated or J.P. Morgan & Co. at their respective addresses and telephone numbers set forth on the back cover page of the Offer to Purchase. Additional copies of the enclosed materials may be obtained from Georgeson Shareholder Communications Inc., the Information Agent, telephone: (212) 440-9800 (call collect). Very truly yours, Morgan Stanley & Co. Incorporated J.P. Morgan & Co. Enclosures NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, THE DEALER MANAGERS, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. EX-99.A.5 6 EXHIBIT (A)(5) 1 Exhibit (a)(5) OFFER TO PURCHASE FOR CASH BY NEW AAP LIMITED FOR ALL OUTSTANDING SHARES OF COMMON STOCK OF AMWAY ASIA PACIFIC LTD. AT $18.00 PER SHARE OF COMMON STOCK THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated November 18, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (the "Letter of Transmittal," which, together with the Offer to Purchase, constitutes the "Offer") and other materials relating to the offer to purchase by New AAP Limited, a Bermuda corporation (the "Company") and an entity controlled, directly or indirectly, by the DeVos and Van Andel families and certain corporations, trusts, foundations and other entities established by or for the benefit of such families, of all outstanding shares of Common Stock, par value $.0l per share (the "Common Stock"), of Amway Asia Pacific Ltd., a Bermuda corporation ("AAP"), that are beneficially owned by the shareholders of AAP. The purchase price for each share of Common Stock will be $18.00 in cash (the "Purchase Price"). There will be deducted from the Purchase Price paid to each holder any U.S. backup or other applicable withholding taxes which may be required to be withheld. WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. AS SUCH, WE ARE THE ONLY ONES WHO CAN TENDER YOUR SHARES, AND THEN ONLY PURSUANT TO YOUR INSTRUCTIONS. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION ONLY. IT CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. SEE "THE OFFER -- PROCEDURE FOR TENDERING SHARES" IN THE OFFER TO PURCHASE. Please instruct us on the attached instruction form as to whether you wish us to tender any or all of the shares we hold for your account on the terms and subject to the conditions of the Offer. We call your attention to the following: 1. The Offer is not conditioned upon any minimum number of shares being tendered or subject to any other conditions. 2. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on December 17, 1999, unless the Company extends the Offer. 3. The Offer is for all outstanding shares, unless a lesser number of shares are tendered and not withdrawn. 4. Tendering holders will not be obligated to pay any brokerage commissions or solicitation fees on the Company's purchase of shares pursuant to the Offer. However, U.S. backup withholding tax may, in certain circumstances described in the Offer to Purchase, be required to be withheld from the Purchase Price payable to certain holders or other payees pursuant to the Offer. See "The Offer -- U.S. Federal Income Tax Consequences -- Backup Withholding" in the Offer to Purchase and Instruction 9 of the Letter of Transmittal. If you wish to have us tender any or all of your shares, please so instruct us by completing, executing and returning to us the attached instruction form. An envelope to return your instructions to us is enclosed. If you authorize us to tender your shares, we will tender all such shares unless you specify otherwise on the attached instruction form. YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT THE LETTER OF TRANSMITTAL ON YOUR BEHALF ON OR PRIOR TO THE EXPIRATION DATE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE COMPANY EXTENDS THE OFFER. The Company is not making the Offer to, nor will it accept tenders from or on behalf of, holders of shares in any jurisdiction in which the Offer or its acceptance would violate the securities, blue sky or other laws of such jurisdiction. In any jurisdiction in which the securities or blue sky laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on the Company's behalf by Morgan Stanley & Co. Incorporated and J.P. Morgan & Co. or one or more registered brokers or dealers licensed under the laws of such jurisdiction. EX-99.A.6 7 EXHIBIT (A)(6) 1 Exhibit (a)(6) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Guidelines for Determining the Proper Identification Number to Give the Payer. Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-000. Employer Identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the Payer.
GIVE THE SOCIAL SECURITY OR EMPLOYER FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF- - ----------------------------------------------------------------------------------------------------------------- 1. Individual The individual 2. Two or more The actual owner of the account or, if combined funds, any one of the individuals(1) 3. Custodian account of a minor The minor(2) (Uniform Gift to Minors Act) 4. a. The usual revocable savings trust The grantor-trustee(1) (grantor is also trustee) b. So-called trust account that is not a legal The actual owner(1) or valid trust under state law 5. Sole proprietorship The owner(3) 6. Sole proprietorship The owner(3) 7. A valid trust, estate, or pension trust The legal entity (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(4) 8. Corporate The corporation 9. Association, club, religious, charitable, The organization educational or other tax-exempt organization 10. Partnership The partnership 11. A broker or registered nominee The broker or nominee 12. Account with the Department of Agriculture in The public entity the name of a public entity (such as a state or local government, school district, or prison) that receives agriculture program payments
- -------------------------------------------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Show the name of the owner. (4) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 Section references are to the Internal Revenue Code. OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service (the "IRS") and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING The following is a list of payees exempt from backup withholding and for which no information reporting is required. For interest and dividends, all listed payees are exempt except item (9). For broker transactions, payees listed in (1) through (13) and a person registered under the Investment Advisers Act of 1940 who regularly acts as a broker are exempt. Payments subject to reporting under sections 6041 and 6041A are generally exempt from backup withholding only if made to payees described in items (1) through (7), except that a corporation that provides medical and health care services or bills and collects payments for such services is not exempt from backup withholding or information reporting. Only payees described in items (2) through (6) are exempt from backup withholding for barter exchange transactions, patronage dividends, and payments by certain fishing boat operators. (1) A corporation. (2) An organization exempt from tax under section 501(a), or an individual retirement plan ("IRA"), or a custodial account under 403(b)(7). (3) The United States or any of its agencies or instrumentalities. (4) A State, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities. (5) A foreign government or any of its political subdivisions, agencies or instrumentalities. (6) An international organization or any of its agencies or instrumentalities. (7) A foreign central bank of issue. (8) A dealer in securities or commodities required to register in the United States or a possession of the United States. (9) A futures commission merchant registered with the Commodity Futures Trading Commission. (10) A real estate investment trust. (11) An entity registered at all times during the tax year under the Investment Company Act of 1940. (12) A common trust fund operated by a bank under section 584(a). (13) A financial institution. (14) A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. (15) A trust exempt from tax under section 664 or described in section 4947. Payments of dividends and patronage dividends generally not subject to backup withholding also include the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in a trade or business in the United States and that have at least one nonresident partner. - Payments of patronage dividends not paid in money. - Payments made by certain foreign organizations. Payments of interest generally not subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt interest dividends under section 852). - Payments described in section 6049(b)(5) to nonresident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Mortgage interest paid by you. Payments that are not subject to information reporting are also not subject to backup withholding. For details see sections 6041, 6041(A)(a), 6042, 6044, 6045, 6049, 6050A and 6050N, and the regulations under such sections. PRIVACY ACT NOTICE Section 6109 requires you to give your correct taxpayer identification number to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. You must provide your taxpayer identification number whether or not you are qualified to file a tax return. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE EX-99.A.7 8 EXHIBIT (A)(7) 1 Exhibit (a)(7) NEW AAP LIMITED 7575 EAST FULTON ROAD ADA, MICHIGAN 49355 November 18, 1999 To Holders of Common Stock of Amway Asia Pacific Ltd.: We are pleased to submit for your consideration an offer by New AAP Limited, a Bermuda corporation (the "Company") and an entity controlled, directly or indirectly, by the DeVos and Van Andel families and certain corporations, trusts, foundations and other entities established by or for the benefit of such families (the "Principal Shareholders"), to purchase (the "Offer") all the outstanding shares of Common Stock, par value $.01 per share (the "Common Stock"), of Amway Asia Pacific Ltd., a Bermuda corporation ("AAP"), that are beneficially owned by the shareholders of AAP. The Company has been informed by the Principal Shareholders that they will not tender their shares of Common Stock ("Non-Tendered Shares") in response to the Offer. The purchase price for each share of Common Stock will be $18.00 in cash (the "Purchase Price"). There will be deducted from the Purchase Price paid to each holder any U.S. backup or other applicable withholding taxes which may be required to be withheld. The Offer is for all shares of AAP or any lesser number of shares tendered and not withdrawn. The Offer is explained in detail in the enclosed Offer to Purchase and Letter of Transmittal. If you wish to tender your shares, the instructions for tendering are set forth in the enclosed materials. I encourage you to read these materials carefully before making any decision with respect to the Offer. THE BOARD OF DIRECTORS OF AAP (WITH MESSRS. RICHARD M. DEVOS, JR., DOUGLAS L. DEVOS AND STEPHEN A. VAN ANDEL NOT PARTICIPATING) RECOMMENDS THAT THE HOLDERS OF SHARES OF COMMON STOCK, OTHER THAN THE NON-TENDERED SHARES, ACCEPT THE OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER. EACH HOLDER MUST MAKE ITS OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. Please note that the Offer will expire at 12:00 midnight, New York City time, on December 17, 1999, unless it is extended. Should you have questions regarding this Offer, please call the Information Agent or the Dealer Managers at their respective telephone numbers set forth on the back cover page of the Offer to Purchase. Very truly yours, New AAP Limited By: /s/ Stephan A. Van Andel Name: Stephen A. Van Andel EX-99.A.8 9 EXHIBIT (A)(8) 1 Exhibit (a)(8) AMWAY ASIA PACIFIC'S PRINCIPAL SHAREHOLDERS TO COMMENCE TENDER OFFER FOR OUTSTANDING PUBLIC SHARES HONG KONG - Monday, November 15, 1999 - Amway Asia Pacific (NYSE: AAP; ASX: AMW) and its principal shareholders announced that the principal shareholders intend to commence a cash tender offer to purchase the approximately 15% of Amway Asia Pacific common stock that they do not currently own or control for US$18.00 per share, in cash. The transaction has a total value of approximately US$150 million. The tender offer will commence within the next five business days. Amway Asia Pacific and its principal shareholders have entered into a definitive agreement providing for the tender offer and a second-step merger following the completion of the tender offer, in which all remaining Amway Asia Pacific shareholders will receive the same cash consideration paid in the tender offer. Amway Asia Pacific's board of directors (with three directors who are principal shareholders recusing themselves) determined that the tender offer is fair to and in the best interests of the public shareholders and recommended that they accept the offer and tender their shares. The company's board of directors acted upon the recommendation of a special committee of the board, which was comprised of three independent, non-employee directors of Amway Asia Pacific. Goldman, Sachs & Co. acted as financial advisor to the special committee. Eoghan M. McMillan, chairman of the special committee, said, "After careful review by the special committee and the board of directors, with the assistance of our financial advisor, our board concluded that this transaction is in the best interests of our public shareholders, as well as our distributors and employees. Our public shareholders are receiving a substantial premium of 53% - in cash." Steve Van Andel, representing the principal shareholders, said, "The acquisition of Amway Asia Pacific's shares will give us the flexibility we need to streamline operations and to integrate certain functions of all Amway companies under a single global corporate structure. Our objective is to organize in the most efficient manner to best address our rapidly changing marketplace worldwide. These realignments will better position us to make necessary investments to build a stronger foundation for resumed growth in Asia and to encourage the continued loyalty and motivation of Amway Asia Pacific distributors. With this action, we are deepening and strengthening our commitment to our customers, distributors and employees in Asia." -more- 2 The tender offer will be made to all holders of common stock. The offer is not conditioned on obtaining financing or upon any minimum number of shares being tendered. The full terms and conditions of the offer will be set forth in the tender offer materials to be filed with the Securities and Exchange Commission and mailed to Amway Asia Pacific shareholders. The principal shareholders of Amway Asia Pacific are certain corporations, trusts, foundations and other entities formed by or for the benefit of the Van Andel and DeVos families. They formed a new Bermuda corporation, New AAP Limited, for the purpose of conducting the tender offer. Morgan Stanley Dean Witter and J.P. Morgan are acting as dealer managers for this transaction and are global co-financial advisors to the principal shareholders. Georgeson Shareholder Communications Inc. is acting as information agent for the offer and may be contacted (via collect call) at (212)-440-9800 or toll-free at (800)-223-2064. Headquartered in Hong Kong, Amway Asia Pacific Ltd. is the exclusive distribution vehicle for Amway Corporation in Australia, Brunei, People's Republic of China, Macau, Malaysia, New Zealand, Taiwan and Thailand. Amway Asia Pacific Ltd. is one of the largest direct selling companies in the region, based on sales of Amway consumer products offered through a core distributor force of approximately 601,000 independent distributors at August 31, 1999. Amway Asia Pacific Ltd. is listed on the New York Stock Exchange (AAP) and the Australian Stock Exchange (AMW). Current press releases and SEC earnings filings are available through the Internet at http://www.aap-amway.com. CONTACTS: MEDIA AND INVESTORS: MEDIA AND INVESTORS IN AUSTRALIA: Holly A. Clemente Kate Kerrison AAP Director of Investor Relations, U.S. Gavin Anderson & Kortlang, Sydney (616) 787-8688 (612) 9552-4499 EX-99.A.9 10 EXHIBIT (A)(9) 1 Exhibit (a)(9) AMWAY COMMUNICATIONS TO DISTRIBUTORS - ------------------------------------------------------------------------------- VEHICLE: E-MAIL: MESSAGE (BELOW) AND 2 NEWS RELEASES (TO BE ATTACHED) Audience: Pin Emeralds & above Date: Monday, Nov. 15, 1999 - -------------------------------------------------------------------------------- [subject box:] ANNOUNCEMENT FROM S. VAN ANDEL & D. DEVOS [text:] We wanted to communicate with you about this important announcement. The Van Andel and DeVos families are publicly announcing their intention to make a cash tender offer for the shares of common stock of Amway Japan Limited and Amway Asia Pacific, Ltd. that are not currently owned by the families. For more information about this offer, please see the accompanying official news releases. We recognize that this decision probably came as a surprise to you, and for some investors a disappointment. It is important everyone understands that this offer is the result of a strategic business decision. While this announcement might seem to be relevant only to the shareholders of Amway Japan Limited and Amway Asia Pacific, Ltd., this strategic decision and the bigger picture of where Amway is headed in the 21st century are of vital importance to all Independent Business Owners. THE OFFER Let's focus first on the tender offer itself. This is a fully financed offer at a full and fair price. The shareholders will be offered a substantial premium, in cash, to the current share price. In fact, the offer price is higher than the 52-week high prices of either company. These offers have been approved by the independent members of the AJL Board and the AAP Board. The Boards retained Goldman, Sachs & Co. as independent financial advisor and Cleary Gottlieb as independent legal counsel. Morgan Stanley Dean Witter and J.P. Morgan are acting as global advisors to the families, and Jones Day provided legal counsel to the families with respect to the tender offer. THE FUTURE Let's now focus on what this means to the Amway business in Asia and worldwide. With this offer, the DeVos and Van Andel families are increasing their commitment to Amway's Asian businesses. In fact, this commitment follows several other major 1 2 commitments in recent years, which include $300 million for a new headquarters building in Tokyo, Japan, $200 million for a new distribution center in Hachioji, Japan, and $20 million to upgrade the manufacturing plant in Guangzhou, China. From a broader perspective, this strategic decision was made to give Amway the flexibility it needs to succeed in the rapidly changing global marketplace. Amway has a new, clear, powerful Vision statement for its future: helping people live better lives. Whether one is an IBO building a business, an Amway employee building a career, or a consumer using our products, it is our Vision to help people live better lives. This statement reflects a more encompassing Vision than we had before it truly reflects the diverse nature of what Amway means to all our various audiences. This offer will allow Amway to take major steps toward achieving that Vision. Specifically, it will allow us to accelerate realignments in the financial and operational areas of our business under a single, global corporate structure - realignments that would be difficult to do under the current structure of public and private Amway companies. The realignment enabled by this transaction will also help Amway customize its support for individual markets, allowing the company to better meet the needs and priorities of each unique market, especially North America. THE COMMUNICATIONS Amway is informing IBOs about this offer in a number of ways. In addition to this e-mail, Emeralds and above will receive information via an Amvox and fax. A mailing is being sent to Platinums and above. ABN will provide information online, as will the Web site for Amway Japan (www.ajl-amway.com) and the Web site for Amway Asia Pacific (www.aap-amway.com). Shareholders, of course, will also receive detailed information. As Amway celebrates its 40th anniversary, we believe this business is poised for incredible growth in the 21st century. With the recent launch of Quixtar and IMC, and the continued launch of outstanding, new products such as MAGNA BLOC(TM) anD OCeaN ESSENTIals(TM), this business has only scratched the surface of what can be achieved around the world. We're confident that this offer will enable us to make the kinds of changes and commitments which will play an essential part in strengthening the foundation for success already in place. Steve Van Andel Dick DeVos - -------------------------------------------------------------------------------- 2 EX-99.A.10 11 EXHIBIT (A)(10) 1 Exhibit (a)(10) - ------------------- To: All Amway Management and Employees Subject: Tender Offer Announcement Today, we announced the decision by the Van Andel and DeVos families to make a cash tender offer for the shares of common stock of Amway Japan Limited and Amway Asia Pacific, Ltd., that are not currently owned by the families. Details about this offer are provided in the accompanying official news releases. We recognize that this decision may come as a surprise to many of you and for some investors this may be a disappointment. We believe it is important that everyone understands that this offer represents a strategic business decision intended to strengthen and grow our business in the long run. While the announcement might seem to be relevant only to the shareholders of Amway Japan Limited and Amway Asia Pacific, Ltd., this strategic decision and the bigger picture of where Amway is headed into the 21st century are of vital importance to all employees of Amway and its sister corporations. The Offer First, let us explain the tender offer itself. This is a fully financed offer at a full and fair price. The shareholders will be offered a substantial premium, in cash, to the current share price. And in fact, the offer price is higher than the 52-week high of either company. These offers have been approved by the independent members of the AJL Board and the AAP Board. The Boards retained Goldman, Sachs & Co. and Cleary Gottlieb as independent legal counsel, respectively, to the boards of Amway Asia Pacific and Amway Japan. Morgan Stanley Dean Witter and J.P. Morgan are acting as global advisors to the families, and Jones Day provided legal counsel to the families, with respect to the tender offer. 2 The Future Let's now focus on what this means to the Amway business in Asia and worldwide. With this offer we, are increasing our commitment to Amway's Asian businesses. In fact, this commitment follows several other major investments in recent years, including $300 million for a new headquarters building in Tokyo, Japan, $200 million for a new distribution center in Hachioji, Japan, and $20 million to upgrade the manufacturing plant in Guangzhou, China. From a broader perspective, this is a strategic decision to give Amway the flexibility it needs to succeed in the rapidly changing global marketplace. Amway has a new, clear, powerful vision statement for its future: helping people live better lives. Whether you are an IBO building a business, an employee building a career, or a consumer using our products, it is our vision to help people live better lives. This statement reflects a broader, more encompassing vision than we have had before, it truly reflects the diverse nature of what Amway means to all our various audiences. This offer will allow Amway to take major steps toward achieving that vision. Specifically, it will allow us to accelerate realignments in the financial and operational areas of our business under a single, global corporate structure - realignments that would be difficult to do under the current structure of public and private Amway companies. The transaction will also help Amway customize its support for individual markets, allowing the company to better meet the differing needs and priorities of each unique market. The Communications Amway is informing employees, distributors/IBOs, shareholders, the investment community and the media about this offer in a number of ways. ABN will provide information online, as will the website for Amway Japan (www.ajl-amway.com) and the website for Amway Asia Pacific (www.aap-amway.com). Shareholders, of course, will also receive detailed information. There will be memos, such as this one, for employees, and we will be providing more information in employee meetings and through other communications channels. A variety of messages will also go out to Amway distributors/IBOs worldwide. Last week we celebrated Amway's 40th anniversary - an outstanding accomplishment. Today's announcement is an important step towards positioning this business for growth in the 21st century. With the recent launch of Quixtar and IMC, and the continued launch of outstanding, new products such as Magna B loc Therapeutic Magnets and Ocean Essentials, this business has only scratched the surface of what can be achieved around the world. We're confident that this offer will enable us to make changes and commitments that will play an essential part in strengthening the foundation for success already in place. Steve Van Andel Dick DeVos EX-99.A.11 12 EXHIBIT (A)(11) 1 Exhibit (a)(11) AMWAY ASIA PACIFIC'S PRINCIPAL SHAREHOLDERS COMMENCE TENDER OFFER FOR OUTSTANDING PUBLIC SHARES ADA, Michigan - Thursday, November 18, 1999 - As announced on November 15, 1999, Amway Asia Pacific's principal sharehrolders today commenced a cash tender offer to purchase the approximately 15% of Amway Asia Pacific (NYSE: AAP; ASX: AMW) common stock that they do not currently own or control for US$18.00 per share, in cash. This transaction has a total value of approximately US$150 million. The offer price represents a premium of 53% to the closing price on the last trading day prior to the announcement of the offer. Following completion of the tender offer, a second-step merger will occur in the first half of 2000, in which all remaining Amway Asia Pacific shareholders will receive the same cash consideration paid in the tender offer. The tender offer is to all holders of common stock. The offer and withdrawal rights will expire, unless extended, at 12:00 midnight New York City time on December 17,1999. The offer is not conditioned on obtaining financing or upon any minimum number of shares being tendered. The full terms and conditions of the offer are set forth in the tender offer materials filed with the Securities and Exchange Commission and being mailed to Amway Asia Pacific shareholders. The principal shareholders of Amway Asia Pacific are certain corporations, trusts, foundations and other entities formed by or for the benefit of the Van Andel and DeVos families. Morgan Stanley Dean Witter and J.P. Morgan are acting as dealer managers for this transaction and are global co-financial advisors to the principal shareholders. Georgeson Shareholder Communications Inc. is acting as information agent for the offer and may be contacted (via collect call) at (212)-440-9800 or toll-free at (800)-223-2064. Headquartered in Hong Kong, Amway Asia Pacific Ltd. is the exclusive distribution vehicle for Amway Corporation in Australia, Brunei, People's Republic of China, Macau, Malaysia, New Zealand, Taiwan and Thailand. Amway Asia Pacific Ltd. is one of the largest direct selling companies in the region, based on sales of Amway consumer products offered through a core distributor force of approximately 601,000 independent distributors at August 31, 1999. Amway Asia Pacific Ltd. is listed on the New York Stock Exchange (AAP) and the Australian Stock Exchange (AMW). Current press releases and SEC earnings filings are available through the Internet at http://www.aap-amway.com. CONTACT: MEDIA AND INVESTORS: Holly A. Clemente Director of Investor Relations (616) 787-8688 EX-99.A.12 13 EXHIBIT (A)(12) 1 Exhibit (a)(12) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is being made solely by the Offer to Purchase, dated November 18, 1999, and the related Letter of Transmittal. The Offer is being made to all holders of Shares; provided that the Offer is not being made to, nor will tenders be accepted from, or on behalf of holders of Shares in any jurisdiction in which making the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction the securities laws of which require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed made on behalf of the Company by Morgan Stanley & Co. Incorporated or J.P. Morgan Securities Inc. or one or more brokers or dealers licensed under the laws of such jurisdiction. NOTICE OF OFFER TO PURCHASE FOR CASH BY NEW AAP LIMITED FOR ALL OUTSTANDING SHARES OF COMMON STOCK OF AMWAY ASIA PACIFIC LTD. AT $18.00 PER SHARE New AAP Limited, a Bermuda corporation ("Purchaser"), offers to purchase all the outstanding shares of the Common Stock of Amway Asia Pacific Ltd., a Bermuda corporation ("AAP"), par value $.01 per share (the "Common Stock" or "Shares"), that are beneficially owned by all shareholders of AAP, in accordance with the terms and conditions described or referred to in the Offer to Purchase and the related Letter of Transmittal (the "Offer"). The Offer is being made pursuant to the Tender Offer and Amalgamation Agreement (the "Amalgamation Agreement"), dated November 15, 1999, among AAP, Purchaser and Apple Hold Co., L.P., a limited partnership organized under the laws of Bermuda ("Hold Co."). Hold Co. is the parent of Purchaser and an entity controlled and beneficially owned, directly and indirectly, by the principal shareholders of AAP, along with certain corporations, trusts, foundations and other entities established by or for the benefit of the principal shareholders and their respective families (collectively, the "Principal Shareholders"). The Amalgamation Agreement provides for, among other things, Purchaser to first conduct the Offer and then for AAP and Purchaser to amalgamate (the "Amalgamation"), with AAP continuing as the surviving company, in a cash transaction. In certain circumstances, a compulsory purchase of Shares for cash may occur in lieu of the Amalgamation. The purchase price for each share of Common Stock purchased in the Offer will be $18.00 in cash (the "Purchase Price"). There will be deducted from the Purchase Price paid to each holder any U.S. backup or other applicable withholding taxes which may be required to be withheld. The Offer is for all Shares of AAP or any lesser number of Shares tendered and not withdrawn. Purchaser has been informed by the Principal Shareholders that they will not tender their Shares in response to the Offer. The Principal Shareholders will contribute their Shares ("Non-Tendered Shares") to Hold Co. contemporaneously with the consummation of the Offer. - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED OR SUBJECT TO ANY OTHER CONDITIONS. THE BOARD OF DIRECTORS OF AAP (WITH MESSRS. RICHARD M. DEVOS, JR., DOUGLAS L. DEVOS AND STEPHEN A. VAN ANDEL NOT PARTICIPATING) (THE "DISINTERESTED DIRECTORS") HAS UNANIMOUSLY (1) DETERMINED THAT THE OFFER AND THE AMALGAMATION ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES, OTHER THAN NON-TENDERED SHARES (THE "PUBLIC SHAREHOLDERS"), (2) APPROVED, AUTHORIZED AND ADOPTED THE AMALGAMATION AGREEMENT AND (3) RESOLVED TO RECOMMEND THAT THE PUBLIC SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER. EACH HOLDER MUST MAKE ITS OWN DECISION WHETHER TO TENDER SHARES, AND, IF SO, HOW MANY SHARES TO TENDER. THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE MAKING A DECISION TO TENDER. All Shares validly tendered and not withdrawn on or prior to the Expiration Date (as defined below) will be purchased at the Purchase Price, subject to the terms and conditions of the Offer. The term "Expiration Date" means 12:00 midnight, New York City time, on December 17, 1999, unless and until Purchaser, in its sole discretion has extended the period of time during which the Offer will remain open, in which event the term "Expiration Date" will refer to the latest time and date at which the Offer as so extended by Purchaser will expire. Only Shares validly tendered and not withdrawn on or prior to the Expiration Date will be eligible for purchase. Shares not validly tendered will be returned without delay following the Expiration Date. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless they have been accepted for payment by Purchaser, may also be withdrawn at any time after 60 days from the Commencement Date of November 18, 1999. In order to withdraw Shares, a written or facsimile transmission notice of withdrawal must be received by the Depositary (as defined in the Offer to Purchase) on or prior to the Expiration Date at one of its addresses set forth on the back cover of the Offer to Purchase and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with signatures guaranteed by an Eligible Institution (as defined in the Offer to Purchase) (except in the case of Shares tendered by an Eligible Institution) must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of Shares, the name of the registered holder (if different from that of the tendering holder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY TENDERS ARE MADE. The information required to be disclosed by Rule 14d-6 under the Securities Exchange Act of 1934 is contained in the Offer to Purchase and is incorporated herein by reference. The Offer to Purchase and the related Letter of Transmittal are being mailed to all record holders of Shares as of November 17, 1999, and are being furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on AAP's stockholder list as of such date or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. Additional copies of the Offer to Purchase and the Letter of Transmittal may be obtained from the Information Agent or the Dealer Managers and will be furnished promptly at Purchaser's expense. The Information Agent for the Offer is: GEORGESON SHAREHOLDER COMMUNICATIONS INC. 17 State Street New York, New York 10004 Banks and Brokers Call Collect: (212) 440-9800 or All Others Call Toll-Free: (800) 223-2064 The Dealer Managers for the Offer are: MORGAN STANLEY DEAN WITTER J.P. MORGAN & CO. Morgan Stanley & Co. Incorporated 60 Wall Street One Financial Place New York, New York 10260 440 South LaSalle Street (877) 576-0606 (call toll-free) Chicago, IL 60605 (312) 706-4411 (call collect) November 18, 1999 EX-99.A.13 14 EXHIBIT (A)(13) 1 Exhibit (a)(13) --- Please fold and detach card at perforation before mailing --- AMWAY ASIA PACIFIC LTD. TENDER OFFER TRUSTEE DIRECTION FORM BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY THE ENCLOSED LETTER AND ALL PREVIOUSLY DISTRIBUTED MATERIALS In connection with the Offer to Purchase made by New AAP Limited, dated November 18, 1999, as it may be amended (the "Offer"), I hereby instruct Fidelity Management Trust Company ("Fidelity"), as trustee of the Amway Corporation Profit-Sharing and 401(k) Plan (the "Plan"), to tender the shares of Amway Asia Pacific Ltd. (the "Shares") credited to my account under the Plan as of December XX, 1999, unless a later deadline is announced, as follows (check only ONE box and complete): Box 1 [ ] I direct Fidelity to tender ALL of the Shares credited to my account in the Plan, in accordance with the terms of the Offer. Box 2 [ ] I direct Fidelity to tender ______ percent (insert a percentage in whole numbers less than 100%) of the Shares credited to my account in the Plan, in accordance with the terms of the Offer. Box 3 [ ] I direct Fidelity NOT to tender any of the Shares credited to my account in the Plan, in accordance with the terms of the Offer. --- Please fold and detach card at perforation before mailing --- As of November 12, 1999, the number of Shares credited to your account in the Plan is shown to the right of your address. PLEASE NOTE THAT IF YOU DO NOT SEND IN A PROPERLY COMPLETED, SIGNED FORM, OR IF IT IS NOT RECEIVED BY 12:00 MIDNIGHT EASTERN TIME AT P.O. BOX 9142, HINGHAM, MA 02043 ON DECEMBER XX, 1999, FIDELITY WILL NOT TENDER ANY OF THE SHARES CREDITED TO YOUR ACCOUNT IN THE PLAN, IN ACCORDANCE WITH THE OFFER, UNLESS OTHERWISE REQUIRED BY LAW. Fidelity makes no recommendation to any Plan participant as to whether to tender or not. Your instructions to Fidelity will be kept confidential. This Trustee Direction Form, if properly signed, completed and received by Fidelity in a timely manner will supersede any previous Trustee Direction Form. EX-99.A.14 15 EXHIBIT (A)(14) 1 Exhibit (a)(14) IMMEDIATE ATTENTION REQUIRED November 10, 1999 RE: AMWAY CORPORATION PROFIT-SHARING AND 401(K) PLAN Dear Plan Participant: Our records reflect that, as a participant in the plan above (the "Plan"), a portion of your individual account is invested in Amway Asia Pacific Ltd. stock. It has come to our attention that New AAP Limited has initiated an offer to purchase all outstanding shares of common stock of Amway Asia Pacific Ltd. As described below, you have the right to instruct Fidelity Management Trust Company ("Fidelity"), as trustee of the Plan, concerning whether to tender the shares of Amway Asia Pacific Ltd. credited to your individual account under the Plan. Enclosed are tender offer materials and a Direction Form that require your immediate attention. These materials describe an offer to purchase any and all shares of common stock of Amway Asia Pacific Ltd. For $18.00 per share. YOU WILL NEED TO COMPLETE THE ENCLOSED DIRECTION FORM AND RETURN IT TO FIDELITY INSTITUTIONAL RETIREMENT SERVICES COMPANY IN THE ENCLOSED RETURN ENVELOPE SO THAT IT IS RECEIVED BY 12:00 MIDNIGHT, EASTERN TIME, ON DECEMBER XX, 1999, UNLESS THE OFFER IS EXTENDED. PLEASE COMPLETE AND RETURN THE ENCLOSED DIRECTION FORM EVEN IF YOU DECIDE NOT TO PARTICIPATE IN THE TENDER OFFER DESCRIBED BELOW. The remainder of this letter summarizes the transaction, your rights under the Plan and the procedures for completing the Direction Form. You should also review the more detailed explanation provided in the other materials enclosed with this letter, including the Offer to Purchase and the related blue Letter of Transmittal. BACKGROUND New AAP Limited (the "Purchaser"), a subsidiary of Apple Hold Co., L.P., itself an entity controlled and beneficially owned by the principal shareholders of the Company, has made a tender offer to purchase all outstanding shares of common stock, par value $.01 per share, of Amway Asia Pacific Ltd. (the "Shares"), at a price of $18.00 per Share. The enclosed Offer to Purchase dated November 18, 1999 (the "Offer to Purchase") and the enclosed Letter of Transmittal, set forth the objectives, terms and conditions of the tender offer (the "Offer") and are being provided to all of the Company's shareholders. The Purchaser's Offer to Purchase extends to the Shares held by the Plan. As of November 12, 1999, the Plan held approximately 41,642 Shares. Only Fidelity, as trustee of the Plan, can tender these Shares in the Offer. Nonetheless, as a participant under the Plan, you have the right to direct Fidelity whether or not to tender some or all of the Shares credited to your 2 individual account in the Plan. Unless otherwise required by applicable law, Fidelity will tender Shares credited to participant accounts in accordance with participant instructions and Fidelity will not tender Shares credited to participant accounts for which it does not receive timely instructions. IF YOU DO NOT COMPLETE THE ENCLOSED DIRECTION FORM AND RETURN IT TO FIDELITY ON A TIMELY BASIS, YOU WILL BE DEEMED TO HAVE ELECTED NOT TO PARTICIPATE IN THE OFFER AND NO SHARES CREDITED TO YOUR PLAN ACCOUNT WILL BE TENDERED IN THE OFFER. Please note that the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the trust agreement between Amway Corporation and Fidelity, prohibit the sale of Shares to the Company for less than "adequate consideration," which Fidelity will determine based on the prevailing or closing market price of the Shares on or about the date the Shares are tendered by Fidelity pursuant to the Offer (the "prevailing or closing market price"). Accordingly, depending on the prevailing or closing market price of the Shares on or about such date, Fidelity may be unable to tender Shares in accordance with participant directions. A tender of Shares credited to your individual account under the Plan can be made only by Fidelity as the holder of record. DO NOT COMPLETE THE BLUE LETTER OF TRANSMITTAL; IT IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER DIRECTLY SHARES CREDITED TO YOUR INDIVIDUAL ACCOUNT UNDER THE PLAN. IF YOU WISH TO DIRECT FIDELITY CONCERNING THE TENDER OF YOUR SHARES IN THE PLAN, YOU MUST COMPLETE AND RETURN THE ENCLOSED DIRECTION FORM. FIDELITY MAKES NO RECOMMENDATION AS TO WHETHER TO DIRECT THE TENDER OF SHARES OR WHETHER TO REFRAIN FROM DIRECTING THE TENDER OF SHARES. EACH PARTICIPANT MUST MAKE HIS OR HER OWN DECISION ON THESE MATTERS. CONFIDENTIALITY TO ASSURE THE CONFIDENTIALITY OF YOUR DECISION, FIDELITY AND ITS AFFILIATES OR AGENTS WILL TABULATE THE DIRECTION FORMS. NEITHER FIDELITY NOR ITS AFFILIATES OR AGENTS WILL MAKE THE RESULTS OF YOUR INDIVIDUAL DIRECTION AVAILABLE TO THE PURCHASER OR THE COMPANY. PROCEDURE FOR DIRECTING TRUSTEE A Direction Form for making your direction is enclosed. Please note that on the reverse side of the Direction Form the number of Shares credited to your individual account as of November 12, 1999 is indicated to the right of your address. For purposes of the final tabulation, Fidelity will apply your instructions to the number of Shares credited to your account as of December XX, 1999 or as of a later date if the Offer is extended. If you do not properly complete the Direction Form or do not return it by the deadline specified, unless the Offer is extended such Shares will be considered NOT TENDERED. To properly complete your Direction Form, you must do the following: (1) On the face of the Direction Form, check Box 1, 2 or 3. CHECK ONLY ONE BOX: 2 3 - CHECK BOX 1 if you want ALL of the Shares credited to your individual account tendered for sale in accordance with the terms of the Offer. - CHECK BOX 2 if you want to TENDER A PORTION of the Shares credited to your individual account. SPECIFY THE PERCENTAGE (in whole numbers) of Shares credited to your individual account that you want to tender for sale in accordance with the terms of this Offer. IF THIS AMOUNT IS LESS THAN 100%, YOU WILL BE DEEMED TO HAVE INSTRUCTED FIDELITY NOT TO TENDER THE BALANCE OF THE ShareS CREDITED TO YOUR INDIVIDUAL ACCOUNT UNDER THE PLAN. - CHECK BOX 3 if you do not want the Shares credited to your individual account tendered for sale in accordance with the terms of the Offer and simply want the Plan to continue holding such Shares. (2) Date and sign the Direction Form in the space provided. (3) Return the Direction Form in the enclosed return envelope so that it is received by Fidelity at the address on the return envelope (P.O. Box 9142, Hingham, MA 02043) not later than 12:00 Midnight, Eastern time, on XXXXday, December XX, 1999, unless the Offer is extended. If you wish to return the form by overnight mail, please send it to Fidelity's tabulation agent, Management Information Services, at 61 Accord Park Drive, Norwell, MA 02061. Your direction will be deemed irrevocable unless withdrawn by 12:00 Midnight, Eastern time, on XXXXday, December XX, 1999, unless the Offer is extended. In order to make an effective withdrawal, you must submit a new Direction Form which may be obtained by calling Fidelity at 1-800-xxx-xxxx. Your new Direction Form must include your name, address and Social Security number. Upon receipt of a new, completed and signed Direction Form, your previous direction will be deemed canceled. You may direct the re-tendering of any Shares credited to your individual account by obtaining an additional Direction Form from Fidelity and repeating the previous instructions for directing tenders as set forth in this letter. After the deadline above for returning the Direction Form to Fidelity, Fidelity and its affiliates or agents will complete the tabulation of all directions and Fidelity, as trustee, will tender the appropriate number of Shares. Unless the Offer is terminated or amended in accordance with its terms, the Purchaser will then buy all outstanding Shares that were tendered. EFFECT OF TENDER ON YOUR ACCOUNT Regardless of whether you elect to tender your Shares, as of 4:00 p.m., Eastern Time, on XXXXday, December XX, you will NOT be able to make exchanges out of the Shares of Amway Asia Pacific Ltd. within your individual account until all tender offer processing has been completed. Further, all distributions, loans and withdrawals from balances in Shares will be frozen after that time. However, balances in Shares will be utilized to calculate amounts eligible for distributions, loans and withdrawals throughout the freeze. Contributions to and exchanges from other investment options into Shares may continue throughout the tender offer and will be unaffected by the freeze. Fidelity will complete processing as soon as administratively possible. Fidelity anticipates that the processing will be completed five to seven business days after receipt of proceeds from the Purchaser. 3 4 For any Shares in the Plan that are tendered and purchased by the Purchaser, the Purchaser will pay cash to the Plan. INDIVIDUAL PARTICIPANTS IN THE PLAN WILL NOT, HOWEVER, RECEIVE ANY CASH TENDER PROCEEDS DIRECTLY. ALL SUCH PROCEEDS WILL REMAIN IN THE PLAN AND MAY BE WITHDRAWN ONLY IN ACCORDANCE WITH THE TERMS OF THE PLAN. Fidelity will invest proceeds with respect to Shares credited to your account in the Fidelity Asset Manager as soon as administratively possible after receipt of proceeds. You may call Fidelity at 1-800-xxx-xxxx after the reinvestment is complete to learn the effect of the tender on your account or to exchange the proceeds of the sale of Shares from Fidelity Asset Manager into other investment options offered under the Plan. PLEASE NOTE THAT IF ALL CONDITIONS OF THE OFFER ARE MET, AND THE SHARES OF AMWAY ASIA PACIFIC LTD. ARE DE-LISTED (AS DESCRIBED IN THE OFFER), FUTURE CONTRIBUTIONS INTO SHARES OF AMWAY ASIA PACIFIC LTD. WILL BE INSTEAD INVESTED IN FIDELITY ASSET MANAGER. IN ORDER TO CHANGE THE INVESTMENT FUND INTO WHICH FUTURE CONTRIBUTIONS ARE TO BE INVESTED, PLEASE CALL FIDELITY AT 1-800-XXX-XXXX. As described in Section 2 of the Offer, upon the consummation of the Amalgamation following the tender offer, all remaining Shares of the Company will be canceled and converted to the right to receive $18.00 per Share. At that time, Shares for which Fidelity received directions not to tender or for which Fidelity did not receive directions by December XX, 1999, will be canceled, Fidelity will receive $18.00 for each Share, and these proceeds will be invested in Fidelity Asset Manager, pending participant investment decisions. SHARES OUTSIDE THE PLAN If you hold Shares directly, you will receive, under separate cover, tender offer materials directly from the Purchaser which can be used to tender such Shares directly to the Purchaser. THOSE TENDER OFFER MATERIALS MAY NOT BE USED TO DIRECT FIDELITY TO TENDER OR NOT TENDER THE SHARES CREDITED TO YOUR INDIVIDUAL ACCOUNT UNDER THE PLAN. The direction to tender or not tender Shares credited to your individual account under the Plan may only be made in accordance with the procedures in this letter. Similarly, the enclosed Direction Form may not be used to tender non-Plan Shares. FURTHER INFORMATION If you require additional information concerning the procedure to tender Shares credited to your individual account under the Plan, please contact Fidelity at 1-800-xxx-xxxx. If you require additional information concerning the terms and conditions of the Offer, please call Georgeson Shareholder Communications Inc., the Information Agent, at 1-800-223-2064. Sincerely, Fidelity Management Trust Company 4 EX-99.B.1 16 EXHIBIT (B)(1) 1 Exhibit (b)(1) MORGAN GUARANTY TRUST COMPANY OF NEW YORK, TOKYO BRANCH AKASAKA PARK BUILDING 2-20, AKASAKA 5-CHOME MINATO-KU, TOKYO 107, JAPAN November 15, 1999 ALAP Hold Co., Ltd. N.A.J. Co., Ltd. 7575 Fulton Street, East 7-1 Udagawa-cho, Shibuya-ku Ada, Michigan 49355 U.S.A. Tokyo 105-0042 Japan Apple Hold Co., L.P. New AAP Limited 7575 Fulton Street, East Clarendon House Ada, Michigan 49355 U.S.A. 2 Church Street Hamilton HM 11 Bermuda Amway Corporation 7575 Fulton Street, East Ada, Michigan 49355 U.S.A. RE: SENIOR BANK FINANCING COMMITMENT LETTER Ladies and Gentlemen: Morgan Guaranty Trust Company of New York, Tokyo Branch (" MORGAN "), understands that (i) N.A.J. Co., Ltd. (" NAJ "), a wholly-owned subsidiary of ALAP Hold Co., Ltd. ("ALAP"), is proposing to acquire up to all the shares of Amway Japan Limited ("AJL") and (ii) New AAP Limited ("NAAP"), a wholly-owned subsidiary of Apple Hold Co., L.P. ("APPLE"), is proposing to acquire up to all the shares of Amway Asia Pacific, Ltd. ("AAP") (the " ACQUISITIONS"). All of NAJ, ALAP, NAAP and Apple are affiliates of Amway Corporation ("AMWAY"). You have asked Morgan to commit to provide up to $700 million of the financing required for the Acquisitions pursuant to a senior secured credit facility (the "FACILITY "). Morgan is pleased to confirm to you that it is willing to provide the $700 million Facility upon the terms and conditions specified herein. Morgan's commitment shall become effective when all of you sign counterparts of this Commitment Letter and the accompanying Fee Letter dated the date hereof among the parties hereto (the " FEE LETTER ") and return them to Morgan. Morgan proposes that the Facility be a six-year amortizing term loan. THE FINANCING You have advised us that at least 104,500,000 shares of common stock of AJL will be contributed to ALAP and at least 46,500,000 shares of common stock of AAP will be contributed to Apple, in each case by the present owners of such shares. We understand that NAJ and NAAP will require up to approximately $700 million of new funds to consummate the Acquisitions and 2 to pay related fees and expenses, all of which will be obtained under the Facility. You have advised us that, other than the Facility, immediately after giving effect to the Acquisitions, none of NAJ, ALAP, NAAP or Apple will have any debt outstanding. RATINGS AND SYNDICATION To the extent that Morgan seeks at any time during the life of the Facility to obtain ratings of the loans from Standard & Poor's, Moody's or other internationally recognized rating agencies or to organize a syndicate of commercial banks and/or other financial institutions to become lenders ("Other Lenders") under the Facility, NAJ, ALAP, NAAP and Apple agree (i) to assist Morgan in obtaining such rating or organizing such syndication and to provide the rating agencies, Morgan and the Other Lenders, if any, promptly upon request, with all information reasonably deemed necessary by the rating agencies to complete the rating process or by Morgan to complete successfully the syndication, including, but not limited to, (a) an information package for delivery to potential syndicate members and participants and (b) all information and projections prepared by NAJ, ALAP, NAAP and Apple or their advisers relating to the transactions described herein and (ii) to make their officers and representatives, and to cause officers and representatives of AJL and AAP to be, available to participate in information meetings with the rating agencies or for potential syndicate members at such times and places as Morgan may reasonably request. NAJ, ALAP, NAAP and Apple further agree to refrain, and to cause their subsidiaries (including AJL and AAP and their respective subsidiaries) and Amway Affiliates to refrain, from conducting or arranging, or initiating or engaging in preparations with financial institutions with respect to, any other debt financings (whether through a capital markets transaction, bank loan or otherwise) during the period beginning on the date of this Commitment Letter and ending upon the termination of the Facility unless otherwise agreed by Morgan; provided that the foregoing shall not prohibit an Amway Affiliate from seeking financing (i) other than through public offerings and syndicated loan transactions so long as such affiliate gives Morgan prompt notice of its intent to seek such financing or (ii) through a public offering with the consent of Morgan (which consent shall not be unreasonably withheld). As used in the preceding sentence, "AMWAY AFFILIATE" means Amway Corporation or any of its subsidiaries or affiliates that is engaged in a business related or similar to the business of Amway Corporation. OTHER ENGAGEMENTS You understand that Morgan and its affiliates provide a wide variety of financial services and as such may from time to time effect transactions for their own account or the account of customers, and hold positions in loans and options on loans of companies that may be the subject of this arrangement. In addition, Morgan and/or any of its affiliates may provide debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which you may have conflicting interests. None of Morgan and its affiliates will use confidential information obtained from you by virtue of the Financing or the engagement under this Commitment Letter in connection with the performance by Morgan and its affiliates of services for other companies, or furnish any such information to other companies, except as permitted in its confidentiality undertakings to you. In addition, none of Morgan and its affiliates will make available to you any confidential information that it has obtained or may obtain from any other company. You acknowledge that Morgan and the Other Lenders may share with each other and with any of their affiliates, for use in connection with the transactions contemplated by 2 3 this Commitment Letter, any information supplied by you relating to the yourselves, the Acquisitions, AJL, AAP or the Financing. FULL DISCLOSURE NAJ, ALAP, NAAP and Apple represent, warrant and covenant that (i) no written information which has been or is hereafter furnished by either of them or on either of their behalf in connection with the transactions contemplated hereby and (ii) no other information given at information meetings for potential syndicate members and supplied or approved by you (such written information and other information being referred to herein collectively as the "INFORMATION") contained (or, in the case of Information furnished after the date hereof, will contain), as of the time it was (or hereafter is) furnished, any material misstatement of fact or omitted (or will omit) as of such time to state any material fact necessary to make the statements therein taken as a whole not misleading, in the light of the circumstances under which they were (or hereafter are) made; provided that, with respect to Information consisting of statements, estimates and projections regarding the future performance of NAJ, ALAP, NAAP, Apple and their subsidiaries (collectively, the "PROJECTIONS"), no representation, warranty or covenant is made other than that the Projections have been (and, in the case of Projections furnished after the date hereof, will be) prepared in good faith based on assumptions believed to be reasonable at the time of preparation thereof. NAJ, ALAP, NAAP and Apple agree to supplement the Information and the Projections from time to time until the date of the first borrowing under the Facility, as appropriate so that the representations and warranties in the preceding sentence remain correct. In syndicating the Facility, Morgan will use and rely on the Information and the Projections without independent verification thereof. CERTAIN CONDITIONS Certain of the terms of the Facility are set forth in the Summary of Terms and Conditions attached hereto and incorporated by reference herein (the "TERM SHEET"). The Term Sheet is intended as an outline only and does not purport to summarize all of the terms, conditions, covenants, representations, warranties and other provisions which will be contained in definitive financing agreements for the Facility. Morgan's commitment is subject to the satisfaction of the conditions set forth in the Term Sheet and customary conditions for transactions of this type, including without limitation: (i) the negotiation, execution and delivery of a credit agreement (the "CREDIT AGREEMENT") and other definitive financing agreements, prepared by Davis Polk & Wardwell, special counsel to Morgan, satisfactory in form and substance to Morgan and containing terms and conditions consistent with the Term Sheet and otherwise satisfactory to Morgan, by not later than December 10, 1999 and (ii) the other conditions set forth in the November 13, 1999 draft of the Credit Agreement for the Facility. COSTS AND EXPENSES By your acceptance of this Commitment Letter, you agree that all costs and expenses (including the reasonable fees and expenses of Davis Polk & Wardwell, counsel for Morgan) incurred by Morgan in connection with the negotiation, preparation, execution, delivery, collection and enforcement of this Commitment Letter and definitive financing agreements and any primary or secondary syndication of the Facility shall be for your account, and agree to pay 3 4 such costs and expenses when the Credit Agreement is signed or upon any earlier termination of the proposed financing. INDEMNIFICATION By your acceptance of this Commitment Letter, each of you (each an "INDEMNIFYING PERSON") agrees, jointly and severally, to indemnify and hold harmless Morgan and its affiliates (including, without limitation, any controlling person) and the directors, officers, employees and agents of each of the foregoing parties (each, an "INDEMNIFIED PERSON") in accordance with the provisions of Schedule 1 hereto, which is incorporated herein and made a part of this Commitment Letter. CONFIDENTIALITY Morgan agrees to keep any information supplied by you relating to NAJ, ALAP, NAAP, Apple, the Acquisitions or the Facility confidential from anyone other than its affiliates for use in connection with the transactions contemplated by this Commitment Letter; provided that nothing herein shall prevent Morgan from disclosing such information (a) upon the order of any court or administrative agency, (b) upon the request or demand of any regulatory agency or authority, (c) which had been publicly disclosed other than as a result of a disclosure by Morgan prohibited by the terms of this paragraph, (d) already in its possession prior to its disclosure by you, (e) in connection with any litigation to which Morgan or any of its affiliates may be a party, (f) to the extent necessary in connection with the exercise of any remedy hereunder, (g) to Morgan's legal counsel and independent auditors and (h) subject to provisions substantially similar to those contained in this paragraph, to any prospective syndicate member or participant. You acknowledge that Morgan and the Other Lenders may share with each other and with any of their affiliates, for use in connection with the transactions contemplated by this Commitment Letter, any information supplied by you relating to NAJ, ALAP, NAAP, Apple, AJL, AAP, the Acquisitions or the Facility. You agree that you will not furnish copies of this Commitment Letter or the Fee Letter or disclose in whole or in part the contents of either thereof to any Person other than your advisors or as required by applicable law or compulsory legal process, without the prior written consent of Morgan. Morgan hereby consents to your disclosure of this Commitment Letter to in the documents publicly filed or otherwise made public with respect to the Acquisitions so long as each of you has accepted it as indicated below. Any disclosure by you not permitted by the foregoing shall constitute your agreement to pay the fee contemplated by the third paragraph of the Fee Letter, whether or not you have accepted this Commitment Letter or the Fee Letter. MISCELLANEOUS This Commitment Letter is intended to be solely for the benefit of the parties hereto and is not intended to confer, and shall not be deemed to confer, any benefits upon, or create any rights in or in favor of, any Person other than the parties hereto, except as provided above with respect to Indemnified Persons. By signing this letter, you indicate your awareness that Morgan may be providing financing or other services to parties whose interests may conflict with yours. 4 5 The offer by Morgan set forth in this Commitment Letter will terminate at 5:00 p.m., New York time, on November 16, 1999, unless on or before that date and time they have received a copy of this Commitment Letter and the Fee Letter signed by each of you. The provisions set forth above under "Fees and Expenses" and "Indemnification" shall survive any such termination of the offers under this Commitment Letter, and shall be binding regardless of whether a Credit Agreement or other definitive documentation is signed. This Commitment Letter shall be governed by and construed in accordance with the laws of the State of New York. Each of you and Morgan hereby submits to the jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Commitment Letter or the transactions contemplated hereby. Each of NAJ, ALAP, NAAP, Apple, Amway and Morgan hereby irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum and to the right to have a trial by jury. All payments under this Commitment Letter and the Fee Letter shall be paid in U.S. Dollars to the relevant payee in Tokyo, Japan without set-off or counterclaim and free and clear of any withholding or other taxes. 5 6 Your respective obligations under this Commitment Letter shall be joint and several, provided that upon the effectiveness of the contribution to ALAP and Apple of the shares of AJL and AAP, respectively, referred to in the first sentence under "The Financing" above (other than up to 3% of the outstanding shares of AJL), Amway shall be released from any further obligations hereunder except those set forth in the second paragraph under "Confidentiality" above. Morgan looks forward to working with you on this transaction.
Very truly yours, Morgan Guaranty Trust Company of New York, Tokyo Branch By: /s/ Thomas R.F. Dunn ------------------------------ Name: Thomas R.F. Dunn Title: Managing Director Agreed and accepted as to the date first above written: NEW AAP LIMITED ALAP HOLD CO., LTD. By AP New Co., LLC, general partner By: /s/ Lawrence M. Call ----------------------------- Name: Lawrence M. Call Title: President By: /s/ Craig N. Meurlin ------------------------------------- Name: Craig N. Meurlin Title: Manager AMWAY CORPORATION N.A.J. CO., LTD. By: /s/ Lawrence M. Call ----------------------------- Name: Lawrence M. Call By: /s/ Lawrence M. Call Title: Senior Vice President, ------------------------------------- Chief Financial Officer and Name: Lawrence M. Call Treasurer Title: Attorney-in-Fact APPLE HOLD CO., L.P. By AP New Co., LLC, general partner By: /s/ Craig N. Meurlin ------------------------------------ Name: Craig N. Meurlin Title: Manager
6 7 SCHEDULE 1 Capitalized terms used but not defined in this Schedule are used as defined in the Commitment Letter (the "COMMITMENT LETTER") to which this Schedule is attached and into which it is incorporated. Each Indemnifying Person agrees to indemnify, defend and hold harmless each Indemnified Person from and against any and all losses, claims, demands, damages, liabilities and other expenses of any kind (collectively, "LOSSES") to which any Indemnified Person may become subject, insofar as such Losses (or actions or other proceedings commenced or threatened in relation thereto) arise out of or in any way relate to or result from the Transaction or other transactions contemplated by the Commitment Letter (including without limitation the syndication of the Facility) or relate to or in any way arise from any proposed or actual use of the proceeds of the Facility, and to reimburse each Indemnified Person for any legal or other expenses incurred in connection with investigating, preparing to defend or defending against any such Loss or action or other proceeding (whether or not such Indemnified Person is a party to any action or proceeding out of which any such Loss arises). No Indemnifying Person will be responsible, however, for any such Losses of any Indemnified Person that are determined by final and nonappealable judgment of a court of competent jurisdiction to have resulted primarily from actions taken or omitted to be taken by such Indemnified Person in bad faith or from such Indemnified Person's gross negligence or willful misconduct. No Indemnified Person shall be liable to any other person, firm, corporation or other legal entity for consequential damages which may be alleged as a result of the Commitment Letter or the transactions contemplated thereby. No Indemnifying Person shall be liable for any settlement of any proceeding effected without its prior written consent (which shall not be unreasonably withheld), but if settled with such consent or if there is a final judgment for the plaintiff, each Indemnifying Person agrees to indemnify each Indemnified Person from and against any Loss by reason of such settlement or judgment. No Indemnifying Person shall, without the prior written consent of each Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which such Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability or claims that are the subject matter of such proceeding. 1 EX-99.B.2 17 EXHIBIT (B)(2) 1 Exhibit (b)(2) SUMMARY OF TERMS AND CONDITIONS Borrowers: N.A.J. Co., Ltd., a Japanese corporation ("NAJ"). New AAP Limited, a Bermuda corporation ("NAAP"). Guarantors: ALAP Hold Co., Ltd., a Nevada limited partnership ("ALAP"). The subsidiaries of ALAP Hold Co., Ltd. will include Amway Japan and its subsidiaries. Apple Hold Co., L.P., a Bermuda limited partnership ("APPLE"). The subsidiaries of Apple Hold Co., L.P. will include Amway Asia Pacific and its subsidiaries. The Borrowers and the Guarantors are sometimes referred to herein as the "AMWAY PARTIES." Amount: US$700,000,000 Signing Date: To be determined (assume November 1999) Availability Period: Until termination of the facility. Maturity Date: Approximately 6 years and 1 month after signing date (assume December 2005) Principal Amortization: The principal amount of the loan facility will reduce on each anniversary according to the following schedule (assuming the entire $700mm is borrowed): Date Amortization Remaining Loan ---- ------------ -------------- Dec 00 US$116mm US$584mm Dec 01 US$116mm US$468mm Dec 02 US$116mm US$352mm Dec 03 US$116mm US$236mm Dec 04 US$116mm US$120mm Dec 05 US$120mm 0 If less than $700mm is borrowed, each amortization payment will be reduced by one-sixth of the difference between $700mm and the aggregate principal amount borrowed. Loans made after the first amortization date 2 will be added to the balance to be amortized on future amortization dates. Optional Prepayment: A Borrower may, subject to 3 business days' notice, elect to repay all or part of the non-amortized portion of the facility. Such prepayments would be made according to the following schedule of premium amounts: Prepayments Percentage Before of Principal ------ ------------ Dec 00 107.50% Dec 01 106.00% Dec 02 104.50% Dec 03 103.00% Dec 04 102.00% Dec 05 101.00% Up-front Fee: 1.50% of the facility amount. To be paid at the signing of the facility. Interest Payments: Interest will be calculated on the outstanding principal amount of the facility at a rate of 6-month LIBOR + a margin of 6.35%, except that the margin applicable to Loans borrowed more than 8 months after the date of the facility will reflect the relevant borrower's creditworthiness as determined by the Agent in its discretion at the time of the borrowing. NAJ will enter into hedging agreements with the Agent on such terms as shall result in effectively fixing the interest cost to NAJ and translating the payments of principal and interest on NAJ's loans to Japanese Yen. Commitment Fee: A commitment fee will be payable until 8 months after the signing date of the facility on any undrawn amounts at a rate of 6.35%. Withholding Tax: All payments of principal and interest will be made free of any Withholding Tax or other deductions (Note: Amway and J.P. Morgan will work in the preparation of this facility to minimize the extent of 2 3 any such additional costs to the Borrowers). Documentation: The facility will be governed by documentation standard to this type of financing including: negative pledge, cross default, pari passu, reps & warranties. Additional covenants: It will be an event of default if any of the following events occur: Maintenance of ownership: i) The Guarantors cease to own, directly or indirectly through the Borrowers, 100% of Amway Japan and Amway Asia Pacific or, if less, the amount owned after completion of the offers ii) "The owners" (see below) cease to own directly or indirectly 67% of the Guarantors (The owners are to be defined for this purpose as the Van Andel and DeVos families and corporations, trusts, and other entities formed by or for the benefit of such families) iii) The Guarantors cease to own, directly or indirectly, 100% of the Borrowers or, after the consummation of the merger of Amway Japan with and into NAJ, all of the stock of NAJ not owned by any remaining public shareholders. Maintenance of franchise: The subsidiaries cease to be the sole operation of the Amway businesses in each of their respective territories. Maintenance of Supply: There is any change in the terms of the goods supply contract or other contracts between the individual subsidiaries and Amway Corp, that (i) is inconsistent with arms' length negotiations between unaffiliated parties in the relevant territories and (ii) would, in a material respect, viewing the transaction as a whole, commercially disadvantage the subsidiaries in respect of the supply or cost of goods. Maintenance of Dividends: Any subsidiary enters an agreement that would have the 3 4 effect of restricting that, or any other subsidiary's, ability to pay dividends to the Borrowers or the Guarantors. Maintenance of Net Worth: (a) The Borrowers and the Guarantors fail to maintain their combined consolidated net worth at the following levels: Record date Amount ----------- ------ Aug 31 '00 US$450 mm Aug 31 '01 US$475 mm Aug 31 '02 US$500 mm Aug 31 '03 US$525 mm Aug 31 '04 US$550 mm Aug 31 '05 US$550 mm (b) Apple shall fail to maintain its consolidated net worth at the following levels: Record date Amount ----------- ------ Aug 31 '00 US$160 mm Aug 31 '01 US$165 mm Aug 31 '02 US$170 mm Aug 31 '03 US$180 mm Aug 31 '04 US$190 mm Aug 31 '05 US$200 mm Maintenance of Interest cover: (a) The Borrowers and the Guarantors fail to maintain their combined consolidated interest (excluding interest accrued on subordinated intercompany debt borrowed by an Amway Party that is not paid or required to be paid in cash during the relevant period) cover (EBIT/interest) at the following levels: Year ending Coverage ----------- -------- Aug 31 '00 2.50 times Aug 31 '01 2.50 times Aug 31 '02 3.00 times 4 5 Aug 31 '03 3.50 times Aug 31 '04 5.00 times Aug 31 '05 7.00 times (b) Apple shall fail to maintain its consolidated interest (excluding interest accrued on subordinated intercompany debt borrowed by Apple or NAAP that is not paid or required to be paid in cash during the relevant period) cover (EBIT/interest) at the following levels: Year ending Coverage ----------- -------- Aug 31 '00 1.80 times Aug 31 '01 1.80 times Aug 31 '02 2.50 times Aug 31 '03 3.00 times Aug 31 '04 4.00 times Aug 31 '05 5.00 times Maintenance of Cashflow coverage: (a) The Borrowers and the Guarantors fail to maintain their combined consolidated cash flow coverage (EBITDA/Total Debt (excluding subordinated intercompany debt borrowed by an Amway Party)) at the following levels: Year ending Coverage ----------- -------- Aug 31 '00 25% Aug 31 '01 30% Aug 31 '02 35% Aug 31 '03 40% Aug 31 '04 50% Aug 31 '05 50% (b) Apple shall fail to maintain its consolidated cash flow coverage (EBITDA/Total Debt (excluding subordinated intercompany debt borrowed by Apple or NAAP)) at the following levels: 5 6 Year ending Coverage ----------- -------- Aug 31 '00 20% Aug 31 '01 25% Aug 31 '02 30% Aug 31 '03 35% Aug 31 '04 40% Aug 31 '05 50% Limitation on Dividends: There will be a limit of the maximum amount that may be paid by the Guarantors, on a combined basis, as dividends (or payments of principal of intercompany subordinated debt) each year until the facility has been fully repaid. This will be set as follows: Year ending Max Payment ----------- ----------- Aug 31 '00 US$0 mm Aug 31 '01 US$40 mm Aug 31 '02 US$45 mm Aug 31 '03 US$50 mm Aug 31 '04 US$50 mm Aug 31 '05 US$50 mm Limitation on Subsidiary There will be a strict limitation on the ability of Indebtedness: the Guarantors' subsidiaries to raise debt except through NAAP or the Guarantors as the holding companies. Such limitation is to be determined but will likely be restricted to working capital facilities raised by local operations in an aggregate amount not exceeding the following amounts: Year ending Max Amount ----------- ---------- Aug 31 '00 US$100 mm Aug 31 '01 US$150 mm Aug 31 '02 US$175 mm Aug 31 '03 US$250 mm Aug 31 '04 US$300 mm Aug 31 '05 US$350 mm Aug 31 '06 US$350 mm This limitation will not apply to debt borrowed by an 6 7 Amway Party from an affiliate having terms, including subordination, maturity and payment suspension, satisfactory to the Agent in its discretion and, if NAJ is the borrower, the intercompany debt is effectively pledged to the Agent for the benefit of the Banks on terms satisfactory to the Agent in its discretion. Except as set forth above, NAJ and its subsidiaries will not be permitted to incur any obligations with respect to derivatives (except the hedging of the facility and bona fide hedging transactions entered into in the ordinary course of business which limit the effect of currency fluctuations on the value of assets acquired or liabilities incurred in the ordinary course of business) or other off-balance sheet financing arrangements with third parties; any such obligations will be required to be done with and through ALAP. In addition, ALAP will use commercially reasonable efforts, in light of legal, tax and operational considerations, to arrange for purchasing of goods and services used by, and leases of facilities to be used by, NAJ and its subsidiaries to be effected by ALAP and then provided by ALAP to NAJ on similar terms. Sale and leaseback Amway Japan will, at any time, be permitted to of Amway Japan HQ: engage in a sale and leaseback of its headquarters building, but only to the extent that either (i) such transactions (A) do not cause a violation of any covenant and (B) would not have caused a violation of any such covenant if they had occurred 12 months earlier or (ii) the Borrowers, at their option, either (x) prepay an amount of Loans or other debt (excluding intercompany subordinated debt) such that the tests set forth in (i) are met and would have been met had such Loans been so prepaid 12 months earlier or (y) place such amount on deposit with the Agent in an escrow account on terms satisfactory to the Agent. The sale and leaseback will be treated as debt of Amway Japan and will be considered as debt for purposes of the financial covenants, whether or not it is a capitalized lease under GAAP. 7 8 Guarantees: The Guarantors will unconditionally guaranty the obligations of the Borrowers under the Facility, and NAAP will unconditionally guaranty the monetary obligations of NAJ under the facility. Such guarantees will be on a joint and several basis. The non-monetary obligations of the Borrowers and the Guarantors under the Agreement will be joint and several. However, any obligation to be performed by the Borrowers and the Guarantors may be performed by any one of them on behalf of all of them, and performance by one of them shall be deemed to constitute performance by all of them. 8 EX-99.C.1 18 EXHIBIT (C)(1) 1 Exhibit(c)(1) TENDER OFFER AND AMALGAMATION AGREEMENT DATED NOVEMBER 15, 1999 AMONG AMWAY ASIA PACIFIC, LTD., APPLE HOLD CO., L.P. AND NEW AAP LIMITED 2 TABLE OF CONTENTS
ARTICLE PAGE ARTICLE I INTERPRETATION...................................................................................2 ARTICLE II THE OFFER AND AMALGAMATION.......................................................................3 2.1 The Offer...............................................................................3 2.2 Company Actions.........................................................................4 ARTICLE III THE AMALGAMATION; CONVERSION OF SHARES...........................................................5 3.1 The Amalgamation........................................................................5 3.2 Conversion of Capital Stock.............................................................5 3.3 Exchange of Certificates................................................................6 3.4 Effective Time..........................................................................7 3.5 Closing.................................................................................7 3.6 Directors and Officers of the Amalgamated Company.......................................7 3.7 Further Assurances......................................................................9 ARTICLE IV SECTION 103 TRANSACTION..........................................................................9 4.1 Section 103 Transaction.................................................................9 4.2 Option of Purchaser.....................................................................9 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY ...................................................9 5.1 Organization and Qualification..........................................................9 5.2 Capitalization of the Company..........................................................10 5.3 Power and Authority....................................................................10 5.4 Recommendations........................................................................10 5.5 Consents and Approvals; No Violation...................................................11 5.6 Information Supplied...................................................................11 5.7 Brokers and Finders....................................................................11 ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................................................12 6.1 Organization...........................................................................12 6.2 Power and Authority....................................................................12 6.3 Consent and Approvals; No Violation....................................................12 6.4 Information Supplied...................................................................12 6.5 Purchaser's Operations.................................................................12 6.6 Capitalization.........................................................................12 6.7 Financing..............................................................................13
3 ARTICLE VII REPRESENTATIONS AND WARRANTIES OF HOLD CO.......................................................13 7.1 Organization...........................................................................13 7.2 Authority Relative to this Agreement...................................................13 7.3 Consent and Approvals; No Violation....................................................13 7.4 Hold Co.'s Operations..................................................................13 7.5 Capitalization.........................................................................13 7.6 Financing..............................................................................13 ARTICLE VIII ADDITIONAL COVENANTS............................................................................14 8.1 Consents and Approvals.................................................................14 8.2 Additional Actions.....................................................................14 8.3 Shareholders Approval..................................................................14 8.4 Indemnification, Exculpation And Insurance.............................................14 ARTICLE IX CONDITIONS .....................................................................................15 9.1 Conditions to each Party's Obligations.................................................15 ARTICLE X TERMINATION.....................................................................................16 10.1 Termination............................................................................16 10.2 Effect of Termination..................................................................16 ARTICLE XI GENERAL PROVISIONS..............................................................................17 11.1 Amendment and Modification.............................................................17 11.2 Nonsurvival of Representations and Warranties..........................................17 11.3 Notices................................................................................17 11.4 Definitions; Interpretation............................................................19 11.5 Specific Performance...................................................................19 11.6 Counterparts...........................................................................19 11.7 Entire Agreement; No Third Party Beneficiaries.........................................19 11.8 Severability...........................................................................19 11.9 Governing Law..........................................................................19 11.10 Assignment.............................................................................20 11.11 Extension; Waiver......................................................................20 11.12 Procedure For Termination, Amendment, Extension Or Waiver..............................20 11.13 Announcements..........................................................................20
4 TENDER OFFER AND AMALGAMATION AGREEMENT This Tender Offer and Amalgamation Agreement (this "Agreement") is made the 15th day of November 1999, by and among Amway Asia Pacific Ltd., a company incorporated under the laws of Bermuda having its registered office at Clarendon House, Church Street, Hamilton, Bermuda (the "Company"), Apple Hold Co., L.P., a Bermuda limited partnership ("Hold Co.") controlled by the Principal Shareholders (as defined herein), and New AAP Limited, a company incorporated under the laws of Bermuda having its registered office at Clarendon House, Church Street, Hamilton, Bermuda ("Purchaser"). RECITALS WHEREAS, the special committee formed by the Board of Directors of the Company (the "Special Committee") comprised exclusively of directors of the Board of Directors not affiliated with the Principal Shareholders (as defined below) has considered and acted upon a proposal received from Purchaser, which is a wholly owned subsidiary of Hold Co. and an entity controlled and beneficially owned, directly and indirectly, by the principal shareholders of the Company (the "Principal Shareholders"), to acquire from all shareholders of the Company (the "Shareholders"), all the outstanding shares of Common Stock, $.01 par value per share (the "Company Common Stock" or the "Shares"), of the Company (the "Acquisition"); WHEREAS, the Principal Shareholders have advised the Special Committee that Purchaser intends to commence the Acquisition by first conducting a tender offer (the "Offer") for all of the outstanding Shares; WHEREAS, the Principal Shareholders have informed Purchaser that they will not tender their Shares in response to the Offer, but such Principal Shareholders will transfer their Shares ("Non-Tendered Shares") to Hold Co. contemporaneously with the consummation of the Offer; WHEREAS, in furtherance of the Acquisition, after the consummation of the Offer and subject to Section 4.1, the Company and Purchaser will amalgamate (the "Amalgamation"), and the Company will continue as the amalgamated company (the "Amalgamated Company"); WHEREAS, if at any time after consummation of the Offer, Purchaser and Hold Co. own, in the aggregate, 95 percent or more of the outstanding shares of the Company Common Stock, then in such event Purchaser may, if it elects to do so in lieu of the Amalgamation, compulsorily purchase the remaining Shares from the remaining Shareholders pursuant to Section 103 of the Bermuda Companies Act of 1981, as amended (the "Act") at a price equal to the Amalgamation Consideration (as defined below); WHEREAS, having received the advice of financial and legal advisors, and following negotiation of the terms of the Offer and this Agreement, the Special Committee has unanimously determined that the Offer and the Amalgamation are fair to, and in the best interests of, the holders of Shares, other than Non-Tendered Shares (the "Public Shareholders"), and has advised the Board of Directors of the Company that it has made such determination; 5 WHEREAS, the Board of Directors of the Company other than those who have any interest in any proceedings of the Board of Directors with respect to the transactions contemplated by this Agreement, who currently are Messrs. Richard M. DeVos, Douglas L. DeVos, Jr., and Stephen A. Van Andel (the "Disinterested Directors") (based upon the recommendation of the Special Committee) has unanimously approved the Acquisition, upon the terms and subject to the conditions set forth in this Agreement, and has unanimously adopted resolutions approving this Agreement and recommending that the Public Shareholders accept the Offer and tender their Shares in response to the Offer; WHEREAS, the Board of Directors of Purchaser has approved the Offer and the Amalgamation, upon the terms and subject to the conditions set forth in this Agreement and has adopted resolutions approving this Agreement; WHEREAS, the general partner of Hold Co., the sole shareholder of Purchaser, has approved this Agreement and the Acquisition, upon the terms and subject to the conditions hereinafter described; and WHEREAS, except as otherwise contemplated by this Agreement, the Principal Shareholders have agreed, and Hold Co. has agreed that after transfer to it of the Non-Tendered Shares by the Principal Shareholders, not to dispose of or otherwise transfer the Non-Tendered Shares, and Purchaser has agreed not to dispose of or otherwise transfer any Shares purchased by it in the Offer ("Purchased Shares"), in either case prior to consummation of the Amalgamation or the transaction described in Article IV, as the case may be, and the Principal Shareholders have agreed, and the Principal Shareholders have agreed to cause Hold Co. and Purchaser, as the case may be, to vote, and Hold Co. and Purchaser, as the case may be, have agreed to vote the Non-Tendered Shares and Purchased Shares in favor of the Amalgamation or the transaction described in Article IV, as the case may be, on the terms and subject to the conditions set forth in the Shareholder and Voting Agreement (the "Shareholder Agreement") in the form of Exhibit A attached hereto, which Shareholder Agreement is being executed and delivered simultaneously with the execution and delivery of this Agreement; NOW, THEREFORE, in consideration of the premises and the representations, warranties and agreements contained herein, the parties hereto agree as follows: ARTICLE I INTERPRETATION In this Agreement unless the context otherwise acquires: (a) references to statutory provisions shall be construed as references to those provisions as amended or re-enacted or as their application is modified by other provisions from time to time and shall include references to any provisions of which they are re-enactments (whether with or without modification); (b) references to the singular shall include the plural and vice versa and references to the masculine shall include the feminine and/or neuter and vice versa; and 6 (c) references to persons shall include companies, partnerships, associations and bodies of persons, whether incorporated or unincorporated. ARTICLE II THE OFFER AND AMALGAMATION 2.1 THE OFFER. (a) Provided that this Agreement shall not have been terminated in accordance with Article X, then (i) on or after the date of execution of this Agreement, but in any event not later than November 15, 1999, Purchaser and the Company shall publicly announce the Offer and (ii) Purchaser shall, as promptly as possible, but in no event later than five Business Days (for purposes of this Agreement, such term having the meaning given the Rule 14d-1 under the Securities Exchange Act of 1934 (the "Exchange Act")) after the date of such public announcement, commence (within the meaning of Rule 14d-2 under the Exchange Act), the Offer to purchase all of the issued and outstanding Shares at a price per share of U.S. $18.00, in cash (the "Offer Price"). Purchaser may withhold and deduct amounts from such payments in accordance with Section 2.1(c). The Offer shall be made pursuant to an Offer to Purchase (the "Offer to Purchase") and related Letter of Transmittal (the "Letter of Transmittal") containing terms and conditions consistent with this Agreement. The obligation of Purchaser to commence the Offer, conduct and consummate the Offer and accept for payment, and pay for, any Shares properly tendered and not withdrawn pursuant to the Offer shall not be subject to any conditions other than changes in applicable laws that have the effect of making the Offer unlawful. Purchaser expressly reserves the right, subject to compliance with the Exchange Act, to modify the terms of the Offer except that, without the express written consent of the Company, as authorized by the Special Committee, Purchaser shall not (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) change the form of consideration payable in the Offer or (iv) amend, alter, add or waive any term of the Offer in any manner adverse to the holders of the Shares. Purchaser shall as soon as practicable after the expiration date of the Offer, accept for payment, and pay for all Shares validly tendered and not properly withdrawn pursuant to the Offer. (b) On the date of commencement of the Offer, Purchaser shall file with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1, as supplemented or amended from time to time (the "Schedule 14D-1"), and Schedule 13E-3, as supplemented or amended from time to time (the "Schedule 13E-3"), with respect to the Offer, which shall contain the Offer to Purchase and the Letter of Transmittal, summary advertisement and any other ancillary documents and instruments pursuant to which the Offer will be made (such Schedule 14D-1, the Schedule 13E-3 and the documents included therein pursuant to which the Offer will be made, together with any supplements or amendments thereto, the "Offer Documents"). Purchaser agrees to take all necessary steps to cause the Schedule 14D-1 and Schedule 13E-3 to be filed with the SEC and the Offer Documents to be disseminated to holders of Shares, in each case, as and to the extent required by applicable U.S. Federal securities laws. 7 Purchaser shall make all filings necessary in accordance with the laws of Australia. The Company and its counsel, as well as the Special Committee and their counsel, shall be given reasonable opportunity to review and comment upon the Offer Documents prior to their filing with the SEC and prior to dissemination to the Shareholders. Purchaser shall consider all comments in good faith. Purchaser agrees to provide the Company, the Special Committee and their counsel any comments Purchaser may receive from the SEC or its staff with respect to the Offer Documents promptly after the receipt of such comments. (c) Purchaser shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to the Offer such amounts as may be required to be deducted and withheld with respect to the payment of such consideration under the Internal Revenue Code of 1986, as amended, or any other tax under any provision of state, local or foreign tax law; provided, however, that Purchaser shall promptly pay any amounts deducted and withheld hereunder to the applicable governmental authority, shall promptly file all tax returns and reports required to be filed in respect of such deductions and withholding, and shall promptly provide to the Company proof of such payment and a copy of all such tax returns and reports. 2.2 COMPANY ACTIONS. (a) The Company hereby consents to the Offer. (b) On the date the Offer Documents are filed with the SEC, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer, as supplemented or amended from time to time (the "Schedule 14D-9"), containing the recommendation of the Board of Directors consisting of the Disinterested Directors described in Section 5.4(b) and shall mail the Schedule 14D-9 to the Shareholders. The Company agrees to take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC and disseminated to the Shareholders simultaneously with the Offer Documents, in each case, as and to the extent required by applicable U.S. Federal securities laws. Purchaser shall be given reasonable opportunity to review and comment upon the Schedule 14D-9 prior to its filing with the SEC or dissemination to the Shareholders, and the Company shall consider such comments in good faith. The Company agrees to provide Purchaser any comments the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt of such comments. (c) In connection with the Offer and the Amalgamation, the Company shall cause its transfer agent and its depositary to furnish Purchaser promptly with mailing labels containing the names and addresses of the record holders of Shares as of a recent date and of those persons becoming record holders subsequent to such date, together with copies of all lists of Shareholders, security position listings and computer files and all other information in the Company's possession or control regarding the beneficial owners of Shares, and shall furnish to Purchaser such information and assistance, including updated lists of shareholders, security position listings and computer files, as Purchaser may reasonably request in communicating the Offer to the Shareholders. Purchaser shall use such labels and other information solely to effect the Amalgamation and the Acquisition. 8 ARTICLE III THE AMALGAMATION; CONVERSION OF SHARES 3.1 THE AMALGAMATION. (a) At the time the Amalgamation becomes effective pursuant to the Act (the "Effective Time") Purchaser and the Company shall amalgamate on the terms and subject to the conditions hereof and in accordance with Part VII of the Act. The Company and Purchaser shall consummate the Amalgamation pursuant to which (i) Purchaser and the Company shall amalgamate with the Company continuing as the Amalgamated Company and (ii) all the rights, privileges, immunities, powers and franchises of Purchaser and the Company shall be those of the Amalgamated Company. (b) Following the consummation of the Amalgamation, (i) the name of the Amalgamated Company shall be "Amway Asia Pacific Ltd.", (ii) the Memorandum of Association of the Amalgamated Company shall be that of the Company and (iii) the Bye-laws of the Amalgamated Company shall be those of the Company. 3.2 CONVERSION OF CAPITAL STOCK. At the Effective Time, by virtue of the Amalgamation and without any action on the part of Purchaser, the Company or the holders of any shares of Company Common Stock or Purchaser's common stock, U.S. $.01 par value per share ("Purchaser Common Stock"): (a) Purchaser Common Stock. Each issued and outstanding share of Purchaser Common Stock shall be converted into and become one (1) fully paid and nonassessable share of common stock of the Amalgamated Company. (b) Conversion of Shares. Each issued and outstanding share of Company Common Stock (excluding shares of Company Common Stock owned by Hold Co. or the Principal Shareholders, which shall remain outstanding) shall be canceled in consideration for a payment in cash to the holder thereof of an amount equal to the Offer Price, or if the Offer Price is increased, such increased price, without interest (the "Amalgamation Consideration"), upon surrender of the certificate formerly representing such shares of Company Common Stock in the manner provided in Section 3.3 provided, that shares of Company Common Stock owned by Purchaser shall not receive the Amalgamation Consideration. There will be deducted from the Amalgamation Consideration paid to each holder any U.S. backup or other applicable withholding taxes which may be required to be withheld. Except for shares of Company Common Stock owned by Hold Co., all shares of Company Common Stock (excluding shares issued pursuant to subsection (a) of this Section 3.2), at the Effective Time, shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate representing any such shares shall cease to have any rights with respect thereto, except the right to receive the Amalgamation Consideration therefor upon the surrender of such certificate in the manner prescribed in Section 3.3, without interest. 9 (c) Stock Options. At the Effective Time and pursuant to the terms governing warrants, options and other rights to acquire Company Securities (as defined in Section 5.2(a)), all issued and outstanding warrants, options and other rights to acquire Company Securities (as defined in Section 5.2(a)) shall be converted into rights to receive cash in accordance with the Black-Scholes Option Pricing Model and will require in connection therewith the surrender of all awards to acquire Company Securities as of the Effective Time. No holder of any such warrant, option or other right shall be entitled to receive consideration in the form of Company Securities from the Company by virtue of the Acquisition. (d) Shares of Dissenting Shareholders. Notwithstanding anything in this Agreement to the contrary, in connection with the Amalgamation (if it becomes effective), holders of shares of Company Common Stock shall have rights pursuant to Section 106 of the Act, provided such holders comply with the provisions of such Section. For purposes of applying the foregoing provisions of the Act, the date of the corporate action triggering the obligation to provide notice of dissenters rights to the holders of shares of Company Common Stock shall be the date on which notice of the shareholder's meeting to approve the Amalgamation is deemed to be received by such holders. 3.3 EXCHANGE OF CERTIFICATES. (a) Paying Agent. Purchaser shall designate a bank or trust company to act as agent for the holders of shares of Company Common Stock in connection with the Amalgamation (the "Paying Agent") to receive the funds to which holders of shares of Company Common Stock shall become entitled pursuant to Section 3.2(b). Purchaser shall deposit with the Paying Agent cash in an amount equal to the product of (i) the number of shares of Company Common Stock required to be converted pursuant to Section 3.2(b), multiplied by (ii) the Amalgamation Consideration. The deposit made by Purchaser pursuant to the preceding sentence is hereinafter referred to as the "Payment Fund." The Paying Agent shall cause the Payment Fund to be (i) held for the benefit of the holders of shares of Company Common Stock, and (ii) promptly applied to making the payments provided for in Section 3.2(b). The Payment Fund shall not be used for any purpose that is not provided for herein. Such funds shall be invested by the Paying Agent as directed by Purchaser. (b) Exchange Procedures. As soon as reasonably practicable after the Effective Time, the Paying Agent shall mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding shares of Company Common Stock (the "Certificates"), whose shares of Company Common Stock will have been converted pursuant to Section 3.2 into the right to receive the Amalgamation Consideration (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent and shall be in such form and have such other provisions as Purchaser and the Company may reasonably specify) and related materials, including, without limitation, a Substitute Form W-9 and (ii) instructions for use in effecting the surrender of the Certificates in exchange for payment of the Amalgamation Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Purchaser, together with such letter of transmittal and related materials, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor the Amalgamation Consideration for each share of 10 Company Common Stock formerly represented by such Certificate and the Certificate so surrendered shall forthwith be canceled. If payment of the Amalgamation Consideration is to be made to a person other than the person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the person requesting such payment shall have paid any transfer and other taxes required by reason of the payment of the Amalgamation Consideration to a person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of Amalgamated Company that such tax either has been paid or is not applicable. Until surrendered as contemplated by this Section 3.3, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive the Amalgamation Consideration in cash, without interest, as contemplated by this Section 3.3. (c) Termination of Fund; No Liability. At any time following twelve months after the Effective Time, the Amalgamated Company shall be entitled to require the Paying Agent to deliver to it any funds, including any interest received with respect thereto, which had been made available to the Paying Agent and which have not been disbursed to holders of Certificates, and thereafter such holders shall be entitled to look to the Amalgamated Company, subject to abandoned property, escheat or other similar laws, only as general creditors thereof with respect to the Amalgamation Consideration payable upon due surrender of their Certificates, without any interest thereon. Notwithstanding the foregoing, neither the Amalgamated Company nor the Paying Agent shall be liable to any holder of a Certificate for Amalgamation Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. (d) Lost Certificates. In the event any Certificates shall have been lost, stolen or destroyed, the Paying Agent shall pay in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, the Amalgamation Consideration, if any, as may be required pursuant to Section 3.2(b); provided, however, that Purchaser may, in its discretion and as a condition precedent to the payment thereof, require the owner of such lost, stolen or destroyed Certificates to deliver a bond in such sum as it may reasonably direct against any claim that may be made against Purchaser, the Amalgamated Company or the Paying Agent with respect to the Certificates alleged to have been lost, stolen or destroyed. (e) Investment of Payment Fund. The Paying Agent will invest the cash in the Payment Fund, as directed by Purchaser, on a daily basis. Any interest and other income resulting from investments will be paid to Purchaser. 3.4 EFFECTIVE TIME. On the date of Closing (as defined in Section 3.5), the parties will cause appropriate documents as required under the Act to be filed with the Registrar of Companies (the "Registrar of Companies"). The Amalgamation will become effective when the certificate of amalgamation is issued by the Registrar of Companies. The time the Amalgamation becomes effective shall be referred to as the "Effective Time". 3.5 CLOSING. The Closing of the Amalgamation (the "Closing") will take place at 9:00 a.m., Cleveland time, on a date to be specified by the parties, which shall be as soon as practicable following the satisfaction or waiver of the conditions set forth in Article IX (or on such other date as Purchaser and the Company may agree), but in any event no later than the 11 second Business Day after satisfaction or waiver of all of the conditions set forth in Article IX hereof (the "Closing Date"), at the offices of Jones, Day, Reavis & Pogue, North Point, 901 Lakeside Avenue, Cleveland, Ohio 44114-1190, unless another date or place is agreed to in writing by the parties hereto. 3.6 DIRECTORS AND OFFICERS OF THE AMALGAMATED COMPANY. The names and addresses of the persons proposed to be directors and officers of the Amalgamated Company are as follows:
NAME POSITION ADDRESS CITY, STATE - ---- -------- ------- ----------- Stephen A. Van Andel Chairman, Director 7685 Leonard, N.E. Ada, Michigan 49301 Richard M. DeVos, Jr. President, Director 2003 Hillsboro, S.E. Grand Rapids, Michigan 49546 Douglas L. DeVos Director 2020 Devonwood, SE Grand Rapids, Michigan 49546 Eoghan M. McMillan Director C-58 Repulse Bay Repulse Bay, Hong Kong Apartments, 101 Repulse Bay Road Jack C.K. So Director 402A Villa Verde, 16 Hong Kong Guildford Road John C.C. Chan Director Flat A, 7th Floor, Glory Hong Kong Heights, 52 Lyttelton Road Lai-Huat Choong Director 7, Jalan Turi, Bukit 59100 Kuala Lumpur, Malaysia Bandaraya Eva Cheng Executive Vice Block 1-A, 33rd Floor, Hong Kong President; Director Clovelly Court; 12 May Road, Mid-levels Lynn Lyall Chief Financial 1755 Park Trail, NE Grand Rapids, MI 49525 Officer, Vice President and Treasurer Lawrence M. Call Vice President 38 Campau Circle, NW Grand Rapids, Michigan 49503 Craig N. Meurlin Vice President, 6525 Donnegal Lane, SE Grand Rapids, Michigan 49546 General Counsel and Assistant Secretary John C. Brockman Vice President, 7425 Kenrob, SE Grand Rapids, Michigan 49546 Distributor Relations Percy Chin Vice President, Suite 1103, Chun Lan Shangai, PRC; 200030 General Manager - Apartment, Magnolia East China Garden, 50 Pu Hui Tang Road Patrick Hau Vice President, Flat 7B, Dynasty Court, Hong Kong General Manager - Tower 5, 23 Old Peak National Operations Road Audie Wong Vice President, Villa 418, Beijing Beijing, PRC 100103 General Manager - Riviera, No. 1, Xiang North China Jiang Bei Road, Chaoyang District Martin Liou General Manager - No. 5, Lane 3, Chun-Pou Taoyuan, Taipei R.O.C. Taiwan 5th St.
12 Low Han-Kee Regional Manger - 16, Jalan SS26/3; 47301, Selangor, Malaysia Malaysia Petaling Jaya Preecha Prakobkit General Manager - 335 Lad Prao 101 Bangkapi, Bangkok 10240 Thailand Thailand Peter Williams General Manager - 25 Cadwells Road, Sydney, Australia 2156 Australia Kenthurst Betty Yeung General Manager - 923 King's Road, 9/Floor, Quarry Bay, Hong Kong South China Ritz Mansion John C.R. Collis Secretary "Saltcoats," 10 Keith Hall Warwick WK06, Bermuda Road
3.7 FURTHER ASSURANCES. If, at any time after the Effective Time, any further action is necessary or desirable to consummate the Amalgamation, to carry out the purposes of this Agreement or to vest the Amalgamated Company with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company and Purchaser, the officers and directors of the Company and Purchaser are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action. ARTICLE IV SECTION 103 TRANSACTION 4.1 SECTION 103 TRANSACTION. Notwithstanding anything stated or contemplated in this Agreement to the contrary and in particular notwithstanding Article III, the Company and Purchaser need not amalgamate if at any time after consummation of the Offer, Purchaser and Hold Co. own, in the aggregate, 95 percent or more of the outstanding shares of the Company Common Stock. In such event, Purchaser may, if it elects to do so in lieu of the Amalgamation, compulsorily purchase the remaining outstanding Shares from the remaining Public Shareholders pursuant to Section 103 of the Act for a per share consideration equal to the Amalgamation Consideration. In the event the Shares of the remaining Shareholders are purchased pursuant to Section 103 of the Act, such remaining Public Shareholders will have the rights granted to them in accordance with Section 103 of the Act, including dissenters' rights. 4.2 OPTION OF PURCHASER. If, as a result of or following the Offer, Purchaser is able to effect the transaction set forth in Sections 4.1, Purchaser shall elect, in its sole discretion, whether to implement such transaction or to effect the Amalgamation. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Purchaser and Hold Co. as follows: 5.1 ORGANIZATION AND QUALIFICATION. The Company has been duly incorporated and is validly existing as a corporation under the laws of Bermuda. 5.2 CAPITALIZATION OF THE COMPANY. (a) As of the date hereof, the authorized capital stock of the Company consists of 13 110,000,000 shares of Common Stock. All outstanding shares of capital stock of the Company have been validly issued, and are fully paid and nonassessable. As of the date hereof, there are 448,500 shares of Common Stock subject to issuance upon exercise of outstanding options, warrants, or other rights to purchase capital stock of the Company from the Company. Except as set forth above, there are outstanding (A) no shares of capital stock or other securities of the Company, (B) no securities of the Company convertible into or exchangeable for shares of capital stock or securities of the Company, (C) no options, subscriptions, warrants, convertible securities, calls or other rights to acquire from the Company, and no obligation of the Company to issue, deliver or sell, any capital stock, securities or securities convertible into or exchangeable for capital stock or securities of the Company, and (D) no equity equivalents, performance shares, interests in the ownership or earnings of the Company or other similar rights issued by the Company (the items referred to in clauses (A)(D) are referred to herein as "Company Securities"). As of the date hereof, (i) there are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any Company Securities, (ii) no agreement, other document or other obligation that grants or imposes on any Company Securities any right, preference, privilege or restriction with respect to the transactions contemplated hereby, including, without limitation, any rights of first refusal, (iii) there are no bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights) of the Company issued and outstanding and (iv) the Company is not a party or bound to, and to the Company's knowledge there are no other, voting agreements, lock-up agreements or similar agreements or arrangements restricting or affecting outstanding Company Securities. (b) All issued and outstanding warrants, options and other rights to acquire Company Securities will, as of or prior to the Effective Time, be substituted for such alternative consideration as the Board of Directors of the Company may in good faith determine to be equitable under the circumstances surrounding the Acquisition and will require in connection therewith the surrender of all awards to acquire Company Securities as of the Effective Time. No holder of any such warrant, option or other right shall be entitled to receive consideration in the form of Company Securities from the Company by virtue of the Acquisition. 5.3 POWER AND AUTHORITY. The Company has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company. 5.4 RECOMMENDATIONS. (a) On November 15, 1999, the Special Committee received an opinion from its financial advisor, Goldman, Sachs & Co. ("Goldman") to the effect that the Offer Price to be received by the Public Shareholders in the Offer and the Amalgamation Consideration or the consideration to be received in the compulsory acquisition pursuant to Section 103 of the Act pursuant to this Agreement is fair from a financial point of view to the Public Shareholders. A complete and correct signed copy of such opinion will be delivered to Purchaser for purposes of inclusion in the Offer Documents. At a meeting duly called and held on November 15, 1999, the Special Committee duly, validly and unanimously (i) determined that the Offer and the Amalgamation are fair to, and in the best interests of, the Public Shareholders, (ii) recommended 14 to the Board of Directors that the Board of Directors approve, authorize and adopt this Agreement, the Amalgamation and the other transactions contemplated hereby, and (iii) resolved to recommend that the Public Shareholders accept the Offer and tender their Shares in response to the Offer. (b) The Board of Directors consisting of the Disinterested Directors, at a meeting duly called and held on November 15, 1999, based, among other things, on the recommendation of the Special Committee, unanimously (i) determined that the Offer and the Amalgamation are fair to, and in the best interests of, the Public Shareholders, (ii) approved, authorized and adopted this Agreement, the Amalgamation and the other transactions contemplated hereby, (iii) resolved to recommend that the Public Shareholders accept the Offer and tender their Shares in response to the Offer, and (iv) took the action required to cause all issued and outstanding warrants, options and other rights to acquire Company Securities to be substituted for rights to acquire consideration other than Company Securities, as of or prior to the Effective Time. 5.5 CONSENTS AND APPROVALS; NO VIOLATION. The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby and the performance by the Company of its obligations hereunder will not: (a) conflict with or violate any provision of the Company's Memorandum of Association or Bye-laws; or (b) require on the part of the Company any consent, approval, order, authorization or permit of, or registration, filing or notification to, any Governmental Authority (as hereinafter defined), except for (i) the filing with the SEC of such reports under the Exchange Act as may be required in connection with this Agreement (including, without limitation, the Schedule 14D-9), and the transactions contemplated hereby, (ii) the filing of the Articles of Amalgamation with the Registrar of Companies, and (iii) such additional actions or filings which, if not taken or made, would not, singly or in the aggregate, have a material adverse effect on the condition, financial or otherwise, the earnings, business affairs or business prospects of the Company or the consummation of the transactions contemplated by this Agreement. 5.6 INFORMATION SUPPLIED. None of the information supplied or to be supplied by the Company specifically for use in the Offer Documents will, at the time filed with the SEC or as of the date mailed to the Shareholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. 5.7 BROKERS AND FINDERS. Except for payments required to be made to Goldman, the Company will not or has not, directly or indirectly, become obligated to pay any person or entity any brokerage fee, finder's fee, investment banking fee or agent's fee as a result of the entering into of this Agreement or any of the transactions contemplated hereby. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to the Company and Hold Co. as follows: 15 6.1 ORGANIZATION. Purchaser is a company duly incorporated and is validly existing as a corporation under the laws of Bermuda. Purchaser is a wholly owned subsidiary of Hold Co. 6.2 POWER AND AUTHORITY. Purchaser has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby on the part of Purchaser have been duly and validly authorized by its board of directors and its sole shareholder and no other corporate proceedings on the part of Purchaser are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Purchaser. 6.3 CONSENT AND APPROVALS; NO VIOLATION. The execution and delivery by Purchaser of this Agreement do not, and the consummation of the transactions contemplated hereby and the performance by Purchaser of its obligations hereunder will not: (a) conflict with or violate any provision of Purchaser's Memorandum of Association or Bye-laws; or (b) require on the part of Purchaser any consent, approval, order, authorization or permit of, or registration, filing or notification to, any Governmental Authority (as hereinafter defined), except for (i) the filing by Purchaser with the SEC of such reports under the Exchange Act as may be required in connection with this Agreement (including, without limitation, the Schedule 14D-1 and the Schedule 13E-3), and the transactions contemplated hereby and (ii) such additional actions or filings which, if not taken or made, would not, singly or in the aggregate, have a material adverse effect on the condition, financial or otherwise, the earnings, business affairs or business prospects of Purchaser or the consummation of the transactions contemplated by this Agreement. 6.4 INFORMATION SUPPLIED. None of the information supplied or to be supplied by Purchaser or the Principal Shareholders specifically for use in the Schedule 14D-9 will, at the time filed with the SEC or as of the date mailed to the Shareholders, contain any untrue statement of a material fact or will omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances in which they are made, not misleading. 6.5 PURCHASER'S OPERATIONS. Purchaser was incorporated solely for the purpose of engaging in the transactions contemplated hereby and has not engaged in any business activities or conducted any operations other than to facilitate the transactions contemplated hereby. 6.6 CAPITALIZATION. All of the capital stock of Purchaser has been duly and validly issued and is held of record and owned beneficially solely by Hold Co. 6.7 FINANCING. Purchaser has, or will have as of the date of consummation of the Offer, all funds necessary to purchase all Shares accepted for payment in the Offer. Purchaser has, or will have as of the date of consummation of the Amalgamation or the transaction contemplated by Section 4.1, all funds necessary to consummate the applicable transaction. 16 ARTICLE VII REPRESENTATIONS AND WARRANTIES OF HOLD CO. Hold Co. represents and warrants to the Company and Purchaser as follows: 7.1 ORGANIZATION. Hold Co. is a limited partnership duly organized, validly existing and in good standing under the laws of Bermuda. 7.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Hold Co. has all requisite limited partnership power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby on the part of Hold Co. have been duly and validly authorized by the general partner of Hold Co. and no other limited partnership proceedings on the part of Hold Co. are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Hold Co. 7.3 CONSENT AND APPROVALS; NO VIOLATION. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby and the performance by Hold Co. of its obligations hereunder will not: (a) conflict with any provision of the certificate of formation of Hold Co.; or (b) require on the part of Hold Co. any consent, approval, order, authorization or permit of, or registration, filing or notification to, any Governmental Authority (as hereinafter defined) or any third party. 7.4 HOLD CO.'S OPERATIONS. Hold Co. was formed solely for the purpose of engaging in the transactions contemplated hereby and has not engaged in any business activities or conducted any operations other than to facilitate the transactions contemplated hereby. 7.5 CAPITALIZATION. All of the partnership interests of Hold Co. have been duly and validly issued and are held of record and owned beneficially solely by the Principal Shareholders. 7.6 FINANCING. Purchaser has, or will have as of the date of consummation of the Offer, all funds necessary to purchase all Shares accepted for payment in the Offer. Purchaser has, or will have as of the date of consummation of the Amalgamation or the transaction contemplated by Section 4.1, all funds necessary to consummate the applicable transaction. ARTICLE VIII ADDITIONAL COVENANTS 17 The parties hereto further agree as follows: 8.1 CONSENTS AND APPROVALS. The parties hereto shall cooperate with each other and use commercially reasonable efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties ("Third Party Approvals") and Bermuda, U.S. Federal, state and local governmental and any foreign governmental agencies and authorities ("Governmental Authority") which are necessary or advisable to consummate the transactions contemplated by this Agreement ("Governmental Approvals" and, together with Third Party Approvals, "Approvals"), and to comply with the terms and conditions of all such Approvals. 8.2 ADDITIONAL ACTIONS. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations, or to remove any injunctions or other impediments or delays, to consummate and make effective the Offer, the Amalgamation and the other transactions contemplated by this Agreement. 8.3 SHAREHOLDERS APPROVAL. The Company shall, as soon as practicable after the consummation of the Offer, take all steps necessary (a) to duly call, give notice of, convene and hold a meeting of the Shareholders (the "Shareholder Meeting") for the purpose of securing the approval by the Shareholders ("Shareholder Approval") of the Amalgamation or (b) to the extent Purchaser elects under Section 4.2 to pursue the transaction described in Sections 4.1, to effect such transaction as has been so elected. 8.4 INDEMNIFICATION, EXCULPATION AND INSURANCE. (a) The Company agrees that all rights to indemnification and exculpation (including the advancement of expenses) from liabilities for acts or omissions occurring at or prior to the Effective Time (including with respect to the transactions contemplated by this Agreement) existing now or at the Effective Time in favor of the current or former directors or officers of the Company (the "Indemnified Parties") as provided in the Company Memorandum of Association, the Company Bye-Laws and any indemnification agreements (each as in effect on the date hereof) shall be assumed by the Amalgamated Company in the Amalgamation, without further action, as of the Effective Time and shall survive the Amalgamation and shall continue in full force and effect without amendment, modification or repeal for a period not less than the statute of limitations applicable to such matters; provided, however, that if any claims are asserted or made during the continuance of such period, all rights to indemnification (and to advancement of expenses) hereunder in respect of any such claims shall continue, without diminution, until disposition of any and all such claims. (b) To the extent paragraph (a) shall not serve to indemnify and hold harmless an Indemnified Party, for a period of six years from and after the Effective Time, the Amalgamated Company shall indemnify, defend and hold harmless the Indemnified Parties against all losses, claims, damages, costs, expenses (including reasonable attorneys' fees and expenses), liabilities or judgments of or in connection with any threatened or actual claim, action, suit, proceeding or investigation (an "ACTION") arising out of or pertaining to such individuals' services, prior to the 18 Effective Time, as directors, officers or employees of the Company, including, without limitation, matters based in whole or in part on, or arising in whole or in part out of, or pertaining to this Agreement or the transactions contemplated hereby, in each case to the full extent permitted by applicable law. (c) The Amalgamated Company shall (i) maintain for a period of not less than six years from the Effective Time the Company's current directors' and officers' insurance and indemnification policy to the extent that it provides coverage for events occurring prior to the Effective Time (the "D&O Insurance"), for all persons who are directors or officers of the Company on the date of this Agreement (the "Insured Parties") or (ii) cause to be provided coverage no less advantageous to the Insured Parties than the D&O Insurance, in each case so long as the annual premium therefor would not be in excess of 150% of the last annual premium paid for the D&O Insurance prior to the date of this Agreement (such 150% amount, the "Maximum Premium"). If the existing D&O Insurance expires, is terminated or canceled during such six-year period, the Amalgamated Company will use all reasonable efforts to cause to be obtained as much D&O Insurance as can be obtained for the remainder of such period for an annualized premium not in excess of the Maximum Premium. (d) The provisions of this Section 8.4 shall survive the consummation of the Acquisition and are intended to be for the benefit of, and will be enforceable by, each indemnified or insured party, his or her heirs and his or her representatives and (ii) are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such person may have by contract or otherwise. The Company or the Amalgamated Company, as applicable, shall pay the reasonable expenses, including reasonable attorneys' fees, that may be incurred by any Indemnified Parties in enforcing rights to which such Indemnified Parties are entitled under the provisions of this Section 8.4. ARTICLE IX CONDITIONS 9.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations of the parties to effect the Amalgamation or the transaction contemplated by Article IV, as the case may be, shall be subject to the satisfaction or waiver, on or prior to the Closing Date, of the following conditions: (a) Shareholder Approval. Unless the transaction contemplated by Article IV is consummated in lieu of the Amalgamation, prior to consummation of the Amalgamation, this Agreement and the Amalgamation shall have been approved by the Shareholders required by and in accordance with applicable law. (b) Governmental Approvals. Other than the filing of the Articles of Amalgamation in accordance with the Act, all Governmental Approvals required to be obtained and all material filings, notices or declarations with or to Governmental Authorities required to be made by the parties and their Subsidiaries, officers, directors and affiliates in order to consummate the Amalgamation or the transaction contemplated by Article IV, as the case may be, shall have been obtained or made, and no such approval shall contain any conditions, limitations or restrictions, other than any deviation from the foregoing that does not have and may not reasonably be 19 expected to have a material adverse effect on the ability of each of the Company or Purchaser, as the case may be, to perform its obligations under this Agreement or to consummate the Amalgamation or the transaction contemplated by Article IV, as the case may be. (c) Legal Action; Statutes. No governmental entity shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, injunction or other order which is in effect and has the effect of making the Amalgamation or the transaction contemplated by Article IV, as the case may be, illegal or prohibits the Company or Purchaser from consummating the Amalgamation or the transaction contemplated by Article IV. (d) Closing of Tender Offer. Purchaser shall have (i) commenced the Offer pursuant to Article II hereof and (ii) purchased, pursuant to the terms and conditions of such Offer, all Shares duly tendered and not withdrawn; provided, however, that Purchaser shall not be entitled to rely on the condition in this Section 9.1(d) if Purchaser shall have failed to commence the Offer or purchase Shares pursuant to the Offer in breach of its obligations under this Agreement. ARTICLE X TERMINATION 10.1 TERMINATION. Anything herein or elsewhere to the contrary notwithstanding, this Agreement and the Offer may be terminated and the Amalgamation or transaction contemplated by Article IV may be abandoned at any time prior to the Effective Time, whether before or after Shareholder Approval thereof: (a) By Mutual Consent. By mutual consent of Purchaser or Hold Co. on the one hand and the Company acting through the Board of Directors consisting of the Disinterested Directors on the other. (b) By Purchaser or the Company. By Purchaser or the Company, if any governmental entity enacts, issues, promulgates, enforces or enters any statute, rule, regulation, injunction or other order which is in effect and has the effect of making the Offer, the Amalgamation or the transaction contemplated by Article IV, as the case may be, illegal or prohibits Purchaser from buying Shares in the Offer or prohibits the Company or Purchaser from consummating the Amalgamation or otherwise prohibits, directly or indirectly, consummation of the transactions contemplated by this Agreement, including the transaction contemplated by Article IV or if the conditions to consummation of the Offer or the Amalgamation cannot be satisfied; provided, however, that the right to terminate this Agreement under this Section 10.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of , or resulted directly or indirectly in, the failure of such condition to occur on or before the Effective Time. (c) By the Company: By the Company (acting through the Board of Directors consisting of the Disinterested Directors), if Purchaser (A) fails to commence the Offer within five Business Days of the public announcement by Purchaser and the Company of the Offer, or 20 (B) fails to pay for Shares pursuant to the Offer in accordance with Section 2.1(a) hereof. 10.2 EFFECT OF TERMINATION. In the event of termination of this Agreement as provided in Section 10.1 above, written notice thereof shall forthwith be given to the other parties specifying the provision hereof pursuant to which such termination is made, and this Agreement (except as to those portions of the Acquisition which, at the date of termination, have been consummated) shall forthwith become null and void and there shall be no liability or obligation on the part of the parties hereto or their respective officers, directors or employees, except to the extent arising under applicable law and for willful breach hereof. ARTICLE XI GENERAL PROVISIONS 11.1 AMENDMENT AND MODIFICATION. Subject to applicable law and subject to Section 11.12, this Agreement may be amended, modified and supplemented in any and all respects by written agreement of the parties hereto; provided, however, that after approval of this Agreement by the Shareholders, no such amendment, modification or supplement shall reduce or change the form of the Amalgamation Consideration. 11.2 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the representations and warranties in this Agreement shall survive, in the case of the Offer, the date upon which the Offer is consummated, in the case of the Amalgamation, the Effective Time, and, in the case of the transaction described in Article IV, the date upon which such transaction is consummated. This Section 11.2 shall not limit any covenant or agreement of the parties hereto which by its terms contemplates performance after (a) the date of consummation of the Offer, (b) the Effective Time or (c) the date of consummation of the transaction described in Article IV. 11.3 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given upon personal delivery, facsimile transmission (which is confirmed), telex or delivery by an overnight express courier service (delivery, postage or freight charges prepaid), or on the fourth day following deposit in the mail (if sent by registered or certified mail, return receipt requested, delivery, postage or freight charges prepaid), addressed to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) If to the Company: Special Committee c/o Amway Asia Pacific, Ltd. 38/F The Lee Gardens 33 Hysan Avenue Causeway Bay Hong Kong Attention: Eoghan McMillan Telephone: 852/2506-1806 Facsimile: 852/2524-9902 E-mail: Eoghan.McMillan@RoProperty.com 21 with a copy to: Cleary, Gottlieb, Steen & Hamilton One Liberty Plaza New York, New York 10006-1470 Attention: Daniel S. Sternberg, Esq. Telephone: 212/225-2630 Facsimile: 212/225-3999 E-mail: dsternberg@cgsh.com (b) If to Hold Co.: Apple Hold Co., L.P. 7575 Fulton Street East Ada, Michigan 49355 Attention: Craig N. Meurlin, Esq. Telephone: 616/787-8305 Facsimile: 616/787-5623 E-mail: craig_meurlin@amway.com with a copy to: Jones, Day, Reavis & Pogue North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Attention: Thomas C. Daniels, Esq. Telephone: 216/586-3939 Facsimile: 216/579-0212 E-mail: tcdaniels@jonesday.com (c) If to Purchaser: New AAP Limited 7575 Fulton Street East Ada, Michigan 49355 Attention: Craig N. Meurlin, Esq. Telephone: 616/787-8305 Facsimile: 616/787-5623 E-mail: craig_meurlin@amway.com with a copy to: Jones, Day, Reavis & Pogue North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Attention: Thomas C. Daniels, Esq. 22 Telephone: 216/586-3939 Facsimile: 216/579-0212 E-mail: tcdaniels@jonesday.com 11.4 DEFINITIONS; INTERPRETATION. When a reference is made in this Agreement to an Article or Section, such reference shall be to an Article or Section in this Agreement unless otherwise indicated. The words "include," "includes" and "including" when used herein shall be deemed in each case to be followed by the words "without limitation." The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 11.5 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of Bermuda having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. 11.6 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. 11.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. Except for that certain Confidentiality Agreement, dated as of September 29, 1999, between the Company and ALAP Hold Co., Ltd., a Nevada limited partnership, which shall apply to the Purchaser as if it were a party thereto, this Agreement (including the documents and the instruments referred to herein and therein) (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and (b) with the exception of Section 8.4(d) is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. 11.8 SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 11.9 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of Bermuda and with respect to the transactions contemplated hereby the parties hereby irrevocably submit to the non-exclusive jurisdiction of the courts of Bermuda. 11.10 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. Subject to the preceding 23 sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by, the parties and their respective successors and assigns. 11.11 EXTENSION; WAIVER. Subject to Section 11.12, at any time prior to the Effective Time, the parties hereto, by action taken or authorized by, in the case of the Company, the Board of Directors consisting of its Disinterested Directors, in the case of Purchaser, its board of directors or, in the case of Hold Co., a partner, member or authorized officer, may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties of the other parties hereto contained herein or in any document delivered pursuant hereto or (iii) subject to Section 11.1, waive compliance with any of the agreements or conditions of the other parties hereto contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. 11.12 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A termination of this Agreement pursuant to Section 10.1, an amendment of this Agreement pursuant to Section 11.1 or an extension or waiver pursuant to Section 11.11 or other action required or permitted to be taken pursuant to this Agreement shall, in order to be effective, require in the case of Purchaser, action by its board of directors or a duly authorized designee thereof, require in the case of the Company, action by its Board of Directors consisting of its Disinterested Directors or a duly authorized designee thereof, or require in the case of Hold Co., action by a partner, member or authorized officer; provided, however, the affirmative vote of a majority of the Board of Directors consisting of the Disinterested Directors shall be required in order for the Company or the Board of Directors to act to (i) amend or terminate this Agreement, (ii) exercise or waive any of Company's rights or remedies under this Agreement, (iii) extend the time for performance of Hold Co.'s or Purchaser's respective obligations under this Agreement or (iv) take any action to amend or otherwise modify the Company's Articles of Association or Bye-Laws (each as in effect on the date hereof). 11.13 ANNOUNCEMENTS. None of the Company, Hold Co. or Purchaser shall make any public announcement of the terms or existence of this Agreement without the consent of the other parties hereto, unless required by law. [SIGNATURE PAGE FOLLOWS] 24 IN WITNESS WHEREOF, Hold Co., Purchaser, and the Company have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above. AMWAY ASIA PACIFIC, LTD.: APPLE HOLD CO., L.P.: By: AP New Co., LLC, as general partner By: /s/ Eva Cheng By: /s/ Craig N. Meurlin -------------------------- ----------------------------- Name: Eva Cheng Name: Craig N. Meurlin Title: Director and Executive Title: Manager Vice President NEW AAP LIMITED By: /s/ Lawrence M. Call ----------------------------- Name: Lawrence M. Call Title: President 25 Exhibit to (c)(1) EXHIBIT A --------- SHAREHOLDER AND VOTING AGREEMENT by and among APPLE HOLD CO., L.P., NEW AAP LIMITED and CERTAIN SHAREHOLDERS OF AMWAY ASIA PACIFIC LTD. dated as of November 15, 1999 26 TABLE OF CONTENTS
PAGE I. VOTING OF COMPANY SHARES...............................................................-2- 1.1 Agreement to Vote Company Shares.................................-2- II. REPRESENTATIONS AND WARRANTIES.........................................................-2- 2.1 Representations and Warranties of the Principal Shareholders.....-2- 2.2 Representations and Warranties of Parent.........................-2- 2.3 Representations and Warranties of Purchaser......................-3- III. CERTAIN COVENANTS OF PRINCIPAL SHAREHOLDERS...........................................-4- 3.1 Restriction on Transfer of Principal Shares; Proxies and Noninterference......................................-4- IV. CERTAIN COVENANTS OF PARENT............................................................-4- 4.1 Restriction on Transfer of Non-Tendered Shares, Proxies and Noninterference......................................-4- 4.2 Cooperation......................................................-4- V. MISCELLANEOUS...........................................................................-5- 5.1 Amendment; Termination...........................................-5- 5.2 Extension; Waiver................................................-5- 5.3 Governing Law....................................................-5- 5.4 Notices..........................................................-5- 5.5 Assignment.......................................................-6- 5.6 Further Assurances...............................................-6- 5.7 Enforcement......................................................-6- 5.8 Severability.....................................................-6- 5.9 Counterparts.....................................................-6- 5.10 Headings.........................................................-6- 5.11 Third Party Beneficiary..........................................-7-
27 SHAREHOLDER AND VOTING AGREEMENT This SHAREHOLDER AND VOTING AGREEMENT, dated as of November 15, 1999 (this "Agreement"), is made and entered into among Apple Hold Co., L.P., a Bermuda limited partnership ("Parent"), New AAP Limited, a Bermuda corporation and wholly owned subsidiary of Parent ("Purchaser") and each of the shareholders whose name is set forth on Schedule A hereto (each, a "Principal Shareholder" and, collectively, the "Principal Shareholders"). Except as otherwise defined herein, terms used herein with initial capital letters have the respective meanings ascribed thereto in the Amalgamation Agreement (as defined below). RECITALS: WHEREAS, Parent, Purchaser and Amway Asia Pacific Ltd., a Bermuda corporation (the "Company") propose to enter into a Tender Offer and Amalgamation Agreement, dated as of November 15, 1999 (the "Amalgamation Agreement"), pursuant to which Purchaser will conduct a tender offer (the "Offer") for all of the Company's Common Stock, and following the Offer, Purchaser will amalgamate with and into the Company (the "Amalgamation") or, if so elected by Purchaser, Purchaser will compulsorily purchase all outstanding Company Common Stock, all on the terms and subject to the conditions set forth in the Amalgamation Agreement; WHEREAS, as of the date hereof, each Principal Shareholder beneficially owns and is entitled to dispose of (or to direct the disposition of) and to vote (or to direct the voting of) the number of shares, no par value, of the Company, set forth opposite such Principal Shareholder's name on Schedule A hereto (collectively, the "Principal Shares"); WHEREAS, the Principal Shareholders have informed Purchaser that they will not tender their Principal Shares in response to the Offer, but such Principal Shareholders will transfer their Principal Shares ("Non-Tendered Shares") to Parent contemporaneously with the consummation of the Offer; WHEREAS, following the Offer and the transfer of the Non-Tendered Shares to Parent, Parent will beneficially own and be entitled to dispose of (or to direct the disposition of) and to vote Shares, representing in excess of two-thirds of the outstanding Shares of the Company; WHEREAS, all or a portion of the funds required to pay the Offer Price will be borrowed by Purchaser pursuant to a Credit Agreement among Purchaser, Parent, ALAP Hold Co., Ltd. and N.A.J. Co., Ltd., the lenders parties thereto (the "Lender Parties") and Morgan Guaranty Trust Company of New York, Tokyo Branch, as agent (the "Agent", and together with the Lender Parties, the "Banks"); WHEREAS, as a condition and inducement to their willingness to enter into the Amalgamation Agreement, the Company and Purchaser have requested, and as a condition to the agreement of the Banks to fund the Offer Price and the consideration to be paid in the 28 Amalgamation or the compulsory purchase, the Banks have requested, that Parent agree, and Parent has agreed, to enter into this Agreement; and WHEREAS, as a condition and inducement to their willingness to enter into the Amalgamation Agreement, the Parent and Purchaser have requested, and as a condition to the agreement of the Banks to fund the Offer Price and the consideration to be paid in the Amalgamation or the compulsory purchase, the Banks have requested, that each Principal Shareholder agree, and each Principal Shareholder has agreed, to enter into this Agreement; NOW, THEREFORE, in consideration of the foregoing and the representations, warranties and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: I. VOTING OF COMPANY SHARES 1.1 AGREEMENT TO VOTE COMPANY SHARES. At any meeting of the shareholders of the Company called to consider and vote upon the adoption or approval of the Amalgamation Agreement or the Amalgamation (and at any and all postponements and adjournments thereof), each Principal Shareholder will cause Parent to vote, and Parent hereby agrees to vote, all of the Non-Tendered Shares, in favor of the adoption or approval of the Amalgamation Agreement and the Amalgamation and in favor of any other matter necessary or appropriate for the consummation of the transactions contemplated by the Amalgamation Agreement that is considered and voted upon at any such shareholders' meeting. II. REPRESENTATIONS AND WARRANTIES 2.1 REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDERS. Each Principal Shareholder, severally and not jointly, represents and warrants to Parent, the Banks and Purchaser, as of the date hereof and as of the Closing Date, as follows: (a) EXECUTION AND DELIVERY. Such Principal Shareholder has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. In the case of each Principal Shareholder that is not a natural person, the execution and delivery of this Agreement by such Principal Shareholder and the consummation by such Principal Shareholder of the transactions contemplated hereby have been duly authorized by all necessary action, if any, on the part of such Principal Shareholder. This Agreement has been duly and validly executed and delivered by such Principal Shareholder. (b) OWNERSHIP OF SHARES. Such Principal Shareholder is the sole holder of record and beneficial owner of such number of Principal Shares set forth opposite its, his or her name on SCHEDULE A and holds good, valid and marketable title to such Principal Shares and will hold such title at the date or dates such Principal Shareholders transfer their Principal Shares to Parent. 2.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent represents and warrants to 29 Purchaser and the Principal Shareholders, as of the date hereof and as of the Closing Date, as follows: (a) ORGANIZATION. Parent is a limited partnership duly organized, validly existing and in good standing under the laws of Bermuda. (b) AUTHORITY RELATIVE TO THIS AGREEMENT. Parent has all requisite limited partnership power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby on the part of Parent have been duly and validly authorized by the general partner of Parent and no other limited partnership proceedings on the part of Parent are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Parent. (c) CONSENT AND APPROVALS; NO VIOLATION. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby and the performance by Parent of its obligations hereunder will not: (i) conflict with any provision of the certificate of formation of Parent; or (ii) require on the part of Parent any consent, approval, order, authorization or permit of, or registration, filing or notification to, any Governmental Authority or any third party. 2.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and warrants to Parent and the Principal Shareholders, as of the date hereof and as of the Closing Date, as follows: (a) ORGANIZATION. Purchaser is a company duly incorporated and is validly existing as a corporation under the laws of Bermuda. (b) POWER AND AUTHORITY. Purchaser has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby on the part of Purchaser have been duly and validly authorized by its board of directors and its sole shareholder and no other corporate proceedings on the part of Purchaser are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Purchaser. (c) CONSENT AND APPROVALS; NO VIOLATION. The execution and delivery by Purchaser of this Agreement does not, and the consummation of the transactions contemplated hereby and the performance by Purchaser of its obligations hereunder will not: (i) conflict with or violate any provision of Purchaser's Memorandum of Association or Bye-laws; or (ii) require on the part of Purchaser any consent, approval, order, 30 authorization or permit of, or registration, filing or notification to, any Governmental Authority, except for (i) the filing by Purchaser with the SEC of such reports under the Exchange Act as may be required in connection with the Amalgamation Agreement (including, without limitation, the Schedule 14D-1 and the Schedule 13E-3), and the transactions contemplated thereby and (iii) such additional actions or filings which, if not taken or made, would not, singly or in the aggregate, have a material adverse effect on the condition, financial or otherwise, the earnings, business affairs or business prospects of Purchaser or the transactions contemplated by this Agreement. III. CERTAIN COVENANTS OF PRINCIPAL SHAREHOLDERS 3.1 RESTRICTION ON TRANSFER OF PRINCIPAL SHARES; PROXIES AND NONINTERFERENCE. Each Principal Shareholder hereby agrees that it will not, directly or indirectly: (A) except as otherwise contemplated by this Agreement or the Amalgamation Agreement, offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any or all of the Principal Shares or any other Shares it may at anytime own (collectively, "Company Shares"); (B) except pursuant to the terms of this Agreement, grant any proxies or powers of attorney, deposit any Company Shares into a voting trust or enter into a voting agreement with respect to any Company Shares; or (C) take any action that would reasonably be expected to make any representation or warranty contained herein untrue or incorrect or have the effect of impairing the ability of such Principal Shareholder to perform its obligations under this Agreement or preventing or delaying the consummation of any of the transactions contemplated hereby. IV. CERTAIN COVENANTS OF PARENT 4.1 RESTRICTION ON TRANSFER OF NON-TENDERED SHARES, PROXIES AND NONINTERFERENCE. Parent hereby agrees that it will not, directly or indirectly: (A) except as otherwise contemplated by this Agreement or the Amalgamation Agreement, offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any or all of the Non-Tendered Shares or any other Shares it may at anytime own (collectively, "Parent Shares"); (B) except pursuant to the terms of this Agreement, grant any proxies or powers of attorney, deposit any Parent Shares into a voting trust or enter into a voting agreement with respect to any Parent Shares; or (C) take any action that would reasonably be expected to make any representation or warranty contained herein untrue or incorrect or have the effect of impairing the ability of Parent to perform its obligations under this Agreement or preventing or delaying the consummation of any of the transactions contemplated hereby. 4.2 COOPERATION. Parent will cooperate fully with the Company and Purchaser in connection with their respective reasonable best efforts to fulfill the conditions to (a) the Offer set forth in Article II to the Amalgamation Agreement and (b) the Amalgamation set forth in Article III of the Amalgamation Agreement or, if so elected by Purchaser, the compulsory purchase set forth in Article IV of the Amalgamation Agreement. 31 V. MISCELLANEOUS 5.1 AMENDMENT; TERMINATION. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. This Agreement will terminate upon the date the Amalgamation Agreement is terminated in accordance with its terms, or by the mutual consent of the Board of Directors of the Company consisting of the Disinterested Directors, and the general partner of Parent. In the event of termination of this Agreement pursuant to this Section 5.1, this Agreement, except as to those transactions already consummated, will become null and void and of no effect with no liability on the part of any party hereto; provided, however, that no such termination will relieve any party hereto from any liability for any breach of this Agreement arising under applicable law. 5.2 EXTENSION; WAIVER. Any agreement on the part of a party to waive any provision of this Agreement, or to extend the time for any performance hereunder, will be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise will not constitute a waiver of such rights. 5.3 GOVERNING LAW. This Agreement will be governed by, and construed in accordance with, the laws of Bermuda and the parties hereby irrevocably submit to the non-exclusive jurisdiction of the courts of Bermuda. 5.4 NOTICES. All notices and other communications hereunder shall comply with the notice provisions of the Amalgamation Agreement. In addition all notices to the Principal Shareholders shall be sent to the following parties: Amway Corporation 7575 Fulton Street East Ada, Michigan 49355 Attention: Craig N. Meurlin, Esq. Telephone: (616) 787-8305 Facsimile: (616) 787-5623 E-mail: craig_meurlin@amway.com with copies to (for those Principal Shareholders listed on SCHEDULE A as the "DeVos Family"): Cravath Swaine & Moore Worldwide Plaza 825 8th Avenue New York, New York 10015 Attention: Daniel Mosley, Esq. Telephone: (212) 474-1696 Facsimile: (212) 765-0977 E-mail: dmosley@cravath.com 32 with copies to (for those Principal Shareholders listed on SCHEDULE A as the "Van Andel Family"): Hogan & Hartson Columbia Square 555 Thirteenth Street, NW Washington, D.C. 20004 Attention: Sara-Ann Determan, Esq. Telephone: (202) 637-6588 Facsimile: (202) 637-5910 E-mail: sdeterman@hhlaw.com 5.5 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any party hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by, the parties and their respective successors and assigns. 5.6 FURTHER ASSURANCES. Each of the Principal Shareholders and Parent will execute and deliver such other documents and instruments and take such further actions as may be necessary or appropriate or as may be reasonably requested by Purchaser in order to ensure that Purchaser receives the full benefit of this Agreement. 5.7 ENFORCEMENT. Irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the parties will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they are entitled at law or in equity. 5.8 SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 5.9 COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which will be considered one and the same instrument and will become effective when one or more counterparts have been signed by any party and delivered to the other parties. 5.10 HEADINGS. The descriptive headings contained herein are for convenience and reference only and will not affect in any way the meaning or interpretation of this Agreement. 33 5.11 THIRD PARTY BENEFICIARY. Except for the Banks and, to the extent provided in the second sentence of Section 5.1 hereof, the Company, this Agreement is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. The Banks shall have the same rights and remedies available to the parties to this Agreement as if the Banks were a party hereto. [Remainder of page intentionally left blank] 34 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be signed as of the day and year first written above. APPLE HOLD CO., L.P. By: AP New Co., LLC, as general partner By:_____________________________ Name: Title: NEW AAP LIMITED By:_____________________________ Name: Title: PRINCIPAL SHAREHOLDERS: JAY VAN ANDEL TRUST By:_____________________________ Name: Title: SUBTRUST UNDER PARAGRAPH 3 OF JVA TRUST By:_____________________________ Name: Title: JAY AND BETTY VAN ANDEL FOUNDATION By:_____________________________ Name: Title: RICHARD M. DEVOS 1998 TRUST By:_____________________________ Name: 35 Title: By:_____________________________ Name: Title: RICHARD & HELEN DEVOS FOUNDATION By:_____________________________ Name: Title: HELEN J. DEVOS ARTICLE I TRUST By:_____________________________ Name: Title: By:_____________________________ Name: Title: RICHARD M. DEVOS, JR. ARTICLE II TRUST By:_____________________________ Name: Title: By:_____________________________ Name: Title: 36 DANIEL G. DEVOS ARTICLE II TRUST By:_____________________________ Name: Title: By:_____________________________ Name: Title: SUZANNE DEVOS-VANDERWEIDE ARTICLE II TRUST By:_____________________________ Name: Title: By:_____________________________ Name: Title: DOUGLAS L. DEVOS ARTICLE II TRUST By:_____________________________ Name: Title: By:_____________________________ Name: Title: RDV CAPITAL MANAGEMENT L.P. III By: RDV Corporation, as general partner By:_____________________________ Name: Title: 37 RICHARD M. DEVOS, JR. 1995 CHRISTMAS TRUST By:_____________________________ Name: Title: By:_____________________________ Name: Title: DANIEL G. DEVOS 1995 CHRISTMAS TRUST By:_____________________________ Name: Title: By:_____________________________ Name: Title: SUZANNE DEVOS-VANDERWEIDE 1995 CHRISTMAS TRUST By:_____________________________ Name: Title: By:_____________________________ Name: Title: 38 DOUGLAS L. DEVOS 1995 CHRISTMAS TRUST By:_____________________________ Name: Title: By:_____________________________ Name: Title: 39 SCHEDULE A - ---------------------------------------------------------------------- NUMBER OF PRINCIPAL SHAREHOLDER SHARES OWNED - ---------------------------------------------------------------------- I. VAN ANDEL FAMILY Jay Van Andel Trust 12,315,145 Subtrust Under Paragraph 3 of JVA Trust 11,092,330 Jay and Betty Van Andel Foundation 564,290 II. DEVOS FAMILY - ---------------------------------------------------------------------- Richard M. DeVos 1998 Trust 9,948,743 Richard & Helen DeVos Foundation 564,290 Helen J. DeVos Article I Trust 3,835,882 Richard M. DeVos, Jr. Article II Trust 200,528 Daniel G. DeVos Article II Trust 200,528 Suzanne DeVos-VanderWeide Article II Trust 200,528 Douglas L. DeVos Article II Trust 200,528 RDV Capital Management L.P. III 1,000,000 Richard M. DeVos, Jr. 1995 Christmas Trust 1,955,184 Daniel G. DeVos 1995 Christmas Trust 1,955,184 Suzanne DeVos-VanderWeide 1995 Christmas Trust 1,955,185 Douglas L. DeVos 1995 Christmas Trust 1,955,185 TOTAL 47,943,530 - ---------------------------------------------------------------------- EX-99.C.2 19 EXHIBIT (C)(2) 1 Exhibit (c)(2) SHAREHOLDER AND VOTING AGREEMENT by and among APPLE HOLD CO., L.P., NEW AAP LIMITED and CERTAIN SHAREHOLDERS OF AMWAY ASIA PACIFIC LTD. dated as of November 15, 1999 2 TABLE OF CONTENTS
PAGE I. VOTING OF COMPANY SHARES....................................................................................-2- 1.1 Agreement to Vote Company Shares......................................................-2- II. REPRESENTATIONS AND WARRANTIES..............................................................................-2- 2.1 Representations and Warranties of the Principal Shareholders..........................-2- 2.2 Representations and Warranties of Parent..............................................-2- 2.3 Representations and Warranties of Purchaser...........................................-3- III. CERTAIN COVENANTS OF PRINCIPAL SHAREHOLDERS................................................................-4- 3.1 Restriction on Transfer of Principal Shares; Proxies and Noninterference...........................................................-4- IV. CERTAIN COVENANTS OF PARENT.................................................................................-4- 4.1 Restriction on Transfer of Non-Tendered Shares, Proxies and Noninterference...........................................................-4- 4.2 Cooperation...........................................................................-4- V. MISCELLANEOUS................................................................................................-5- 5.1 Amendment; Termination................................................................-5- 5.2 Extension; Waiver.....................................................................-5- 5.3 Governing Law.........................................................................-5- 5.4 Notices...............................................................................-5- 5.5 Assignment............................................................................-6- 5.6 Further Assurances....................................................................-6- 5.7 Enforcement...........................................................................-6- 5.8 Severability..........................................................................-6- 5.9 Counterparts..........................................................................-6- 5.10 Headings..............................................................................-6- 5.11 Third Party Beneficiary...............................................................-7-
-i- 3 SHAREHOLDER AND VOTING AGREEMENT This SHAREHOLDER AND VOTING AGREEMENT, dated as of November 15, 1999 (this "Agreement"), is made and entered into among Apple Hold Co., L.P., a Bermuda limited partnership ("Parent"), New AAP Limited, a Bermuda corporation and wholly owned subsidiary of Parent ("Purchaser") and each of the shareholders whose name is set forth on Schedule A hereto (each, a "Principal Shareholder" and, collectively, the "Principal Shareholders"). Except as otherwise defined herein, terms used herein with initial capital letters have the respective meanings ascribed thereto in the Amalgamation Agreement (as defined below). RECITALS: WHEREAS, Parent, Purchaser and Amway Asia Pacific Ltd., a Bermuda corporation (the "Company") propose to enter into a Tender Offer and Amalgamation Agreement, dated as of November 15, 1999 (the "Amalgamation Agreement"), pursuant to which Purchaser will conduct a tender offer (the "Offer") for all of the Company's Common Stock, and following the Offer, Purchaser will amalgamate with and into the Company (the "Amalgamation") or, if so elected by Purchaser, Purchaser will compulsorily purchase all outstanding Company Common Stock, all on the terms and subject to the conditions set forth in the Amalgamation Agreement; WHEREAS, as of the date hereof, each Principal Shareholder beneficially owns and is entitled to dispose of (or to direct the disposition of) and to vote (or to direct the voting of) the number of shares, no par value, of the Company, set forth opposite such Principal Shareholder's name on Schedule A hereto (collectively, the "Principal Shares"); WHEREAS, the Principal Shareholders have informed Purchaser that they will not tender their Principal Shares in response to the Offer, but such Principal Shareholders will transfer their Principal Shares ("Non-Tendered Shares") to Parent contemporaneously with the consummation of the Offer; WHEREAS, following the Offer and the transfer of the Non-Tendered Shares to Parent, Parent will beneficially own and be entitled to dispose of (or to direct the disposition of) and to vote Shares, representing in excess of two-thirds of the outstanding Shares of the Company; WHEREAS, all or a portion of the funds required to pay the Offer Price will be borrowed by Purchaser pursuant to a Credit Agreement among Purchaser, Parent, ALAP Hold Co., Ltd. and N.A.J. Co., Ltd., the lenders parties thereto (the "Lender Parties") and Morgan Guaranty Trust Company of New York, Tokyo Branch, as agent (the "Agent", and together with the Lender Parties, the "Banks"); WHEREAS, as a condition and inducement to their willingness to enter into the Amalgamation Agreement, the Company and Purchaser have requested, and as a condition to the agreement of the Banks to fund the Offer Price and the consideration to be paid in the -1- 4 Amalgamation or the compulsory purchase, the Banks have requested, that Parent agree, and Parent has agreed, to enter into this Agreement; and WHEREAS, as a condition and inducement to their willingness to enter into the Amalgamation Agreement, the Parent and Purchaser have requested, and as a condition to the agreement of the Banks to fund the Offer Price and the consideration to be paid in the Amalgamation or the compulsory purchase, the Banks have requested, that each Principal Shareholder agree, and each Principal Shareholder has agreed, to enter into this Agreement; NOW, THEREFORE, in consideration of the foregoing and the representations, warranties and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: I. VOTING OF COMPANY SHARES 1.1 AGREEMENT TO VOTE COMPANY SHARES. At any meeting of the shareholders of the Company called to consider and vote upon the adoption or approval of the Amalgamation Agreement or the Amalgamation (and at any and all postponements and adjournments thereof), each Principal Shareholder will cause Parent to vote, and Parent hereby agrees to vote, all of the Non-Tendered Shares, in favor of the adoption or approval of the Amalgamation Agreement and the Amalgamation and in favor of any other matter necessary or appropriate for the consummation of the transactions contemplated by the Amalgamation Agreement that is considered and voted upon at any such shareholders' meeting. II. REPRESENTATIONS AND WARRANTIES 2.1 REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDERS. Each Principal Shareholder, severally and not jointly, represents and warrants to Parent, the Banks and Purchaser, as of the date hereof and as of the Closing Date, as follows: (a) EXECUTION AND DELIVERY. Such Principal Shareholder has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. In the case of each Principal Shareholder that is not a natural person, the execution and delivery of this Agreement by such Principal Shareholder and the consummation by such Principal Shareholder of the transactions contemplated hereby have been duly authorized by all necessary action, if any, on the part of such Principal Shareholder. This Agreement has been duly and validly executed and delivered by such Principal Shareholder. (b) OWNERSHIP OF SHARES. Such Principal Shareholder is the sole holder of record and beneficial owner of such number of Principal Shares set forth opposite its, his or her name on SCHEDULE A and holds good, valid and marketable title to such Principal Shares and will hold such title at the date or dates such Principal Shareholders transfer their Principal Shares to Parent. 2.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent represents and warrants to 5 Purchaser and the Principal Shareholders, as of the date hereof and as of the Closing Date, as follows: (a) ORGANIZATION. Parent is a limited partnership duly organized, validly existing and in good standing under the laws of Bermuda. (b) AUTHORITY RELATIVE TO THIS AGREEMENT. Parent has all requisite limited partnership power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby on the part of Parent have been duly and validly authorized by the general partner of Parent and no other limited partnership proceedings on the part of Parent are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Parent. (c) CONSENT AND APPROVALS; NO VIOLATION. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby and the performance by Parent of its obligations hereunder will not: (i) conflict with any provision of the certificate of formation of Parent; or (ii) require on the part of Parent any consent, approval, order, authorization or permit of, or registration, filing or notification to, any Governmental Authority or any third party. 2.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and warrants to Parent and the Principal Shareholders, as of the date hereof and as of the Closing Date, as follows: (a) ORGANIZATION. Purchaser is a company duly incorporated and is validly existing as a corporation under the laws of Bermuda. (b) POWER AND AUTHORITY. Purchaser has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby on the part of Purchaser have been duly and validly authorized by its board of directors and its sole shareholder and no other corporate proceedings on the part of Purchaser are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Purchaser. (c) CONSENT AND APPROVALS; NO VIOLATION. The execution and delivery by Purchaser of this Agreement does not, and the consummation of the transactions contemplated hereby and the performance by Purchaser of its obligations hereunder will not: (i) conflict with or violate any provision of Purchaser's Memorandum of Association or Bye-laws; or (ii) require on the part of Purchaser any consent, approval, order, 6 authorization or permit of, or registration, filing or notification to, any Governmental Authority, except for (i) the filing by Purchaser with the SEC of such reports under the Exchange Act as may be required in connection with the Amalgamation Agreement (including, without limitation, the Schedule 14D-1 and the Schedule 13E-3), and the transactions contemplated thereby and (iii) such additional actions or filings which, if not taken or made, would not, singly or in the aggregate, have a material adverse effect on the condition, financial or otherwise, the earnings, business affairs or business prospects of Purchaser or the transactions contemplated by this Agreement. III. CERTAIN COVENANTS OF PRINCIPAL SHAREHOLDERS 3.1 RESTRICTION ON TRANSFER OF PRINCIPAL SHARES; PROXIES AND NONINTERFERENCE. Each Principal Shareholder hereby agrees that it will not, directly or indirectly: (A) except as otherwise contemplated by this Agreement or the Amalgamation Agreement, offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any or all of the Principal Shares or any other Shares it may at anytime own (collectively, "Company Shares"); (B) except pursuant to the terms of this Agreement, grant any proxies or powers of attorney, deposit any Company Shares into a voting trust or enter into a voting agreement with respect to any Company Shares; or (C) take any action that would reasonably be expected to make any representation or warranty contained herein untrue or incorrect or have the effect of impairing the ability of such Principal Shareholder to perform its obligations under this Agreement or preventing or delaying the consummation of any of the transactions contemplated hereby. IV. CERTAIN COVENANTS OF PARENT 4.1 RESTRICTION ON TRANSFER OF NON-TENDERED SHARES, PROXIES AND NONINTERFERENCE. Parent hereby agrees that it will not, directly or indirectly: (A) except as otherwise contemplated by this Agreement or the Amalgamation Agreement, offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any or all of the Non-Tendered Shares or any other Shares it may at anytime own (collectively, "Parent Shares"); (B) except pursuant to the terms of this Agreement, grant any proxies or powers of attorney, deposit any Parent Shares into a voting trust or enter into a voting agreement with respect to any Parent Shares; or (C) take any action that would reasonably be expected to make any representation or warranty contained herein untrue or incorrect or have the effect of impairing the ability of Parent to perform its obligations under this Agreement or preventing or delaying the consummation of any of the transactions contemplated hereby. 4.2 COOPERATION. Parent will cooperate fully with the Company and Purchaser in connection with their respective reasonable best efforts to fulfill the conditions to (a) the Offer set forth in Article II to the Amalgamation Agreement and (b) the Amalgamation set forth in Article III of the Amalgamation Agreement or, if so elected by Purchaser, the compulsory purchase set forth in Article IV of the Amalgamation Agreement. 7 V. MISCELLANEOUS 5.1 AMENDMENT; TERMINATION. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. This Agreement will terminate upon the date the Amalgamation Agreement is terminated in accordance with its terms, or by the mutual consent of the Board of Directors of the Company consisting of the Disinterested Directors, and the general partner of Parent. In the event of termination of this Agreement pursuant to this Section 5.1, this Agreement, except as to those transactions already consummated, will become null and void and of no effect with no liability on the part of any party hereto; provided, however, that no such termination will relieve any party hereto from any liability for any breach of this Agreement arising under applicable law. 5.2 EXTENSION; WAIVER. Any agreement on the part of a party to waive any provision of this Agreement, or to extend the time for any performance hereunder, will be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise will not constitute a waiver of such rights. 5.3 GOVERNING LAW. This Agreement will be governed by, and construed in accordance with, the laws of Bermuda and the parties hereby irrevocably submit to the non-exclusive jurisdiction of the courts of Bermuda. 5.4 NOTICES. All notices and other communications hereunder shall comply with the notice provisions of the Amalgamation Agreement. In addition all notices to the Principal Shareholders shall be sent to the following parties: Amway Corporation 7575 Fulton Street East Ada, Michigan 49355 Attention: Craig N. Meurlin, Esq. Telephone: (616) 787-8305 Facsimile: (616) 787-5623 E-mail: craig_meurlin@amway.com with copies to (for those Principal Shareholders listed on SCHEDULE A as the "DeVos Family"): Cravath Swaine & Moore Worldwide Plaza 825 8th Avenue New York, New York 10015 Attention: Daniel Mosley, Esq. Telephone: (212) 474-1696 Facsimile: (212) 765-0977 E-mail: dmosley@cravath.com 8 with copies to (for those Principal Shareholders listed on SCHEDULE A as the "Van Andel Family"): Hogan & Hartson Columbia Square 555 Thirteenth Street, NW Washington, D.C. 20004 Attention: Sara-Ann Determan, Esq. Telephone: (202) 637-6588 Facsimile: (202) 637-5910 E-mail: sdeterman@hhlaw.com 5.5 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any party hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by, the parties and their respective successors and assigns. 5.6 FURTHER ASSURANCES. Each of the Principal Shareholders and Parent will execute and deliver such other documents and instruments and take such further actions as may be necessary or appropriate or as may be reasonably requested by Purchaser in order to ensure that Purchaser receives the full benefit of this Agreement. 5.7 ENFORCEMENT. Irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the parties will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they are entitled at law or in equity. 5.8 SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 5.9 COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which will be considered one and the same instrument and will become effective when one or more counterparts have been signed by any party and delivered to the other parties. 5.10 HEADINGS. The descriptive headings contained herein are for convenience and reference only and will not affect in any way the meaning or interpretation of this Agreement. 5.11 THIRD PARTY BENEFICIARY. Except for the Banks and, to the extent provided in the second sentence of Section 5.1 hereof, the Company, this Agreement is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. The Banks shall 9 have the same rights and remedies available to the parties to this Agreement as if the Banks were a party hereto. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be signed as of the day and year first written above. APPLE HOLD CO., L.P. By: AP New Co., LLC, as general partner By: /s/ Craig N. Meurlin ----------------------------------------------- Name: Craig N. Meurlin Title: Manager for General Partner NEW AAP LIMITED By: /s/ Lawrence M. Call ----------------------------------------------- Name: Lawrence M. Call Title: Attorney-in-Fact PRINCIPAL SHAREHOLDERS: JAY VAN ANDEL TRUST By: /s/ Jay Van Andel ----------------------------------------------- Name: Jay Van Andel Title: Trustee SUBTRUST UNDER PARAGRAPH 3 OF JVA TRUST By: /s/ Jay Van Andel ----------------------------------------------- Name: Jay Van Andel Title: Trustee JAY AND BETTY VAN ANDEL FOUNDATION By: /s/ Jay Van Andel ----------------------------------------------- Name: Jay Van Andel Title: President 10 RICHARD M. DEVOS 1998 TRUST By: /s/ Jerry Tubergen ----------------------------------------------- Name: Jerry Tubergen Title: Trustee By: /s/ Richard M. DeVos, Jr. ----------------------------------------------- Name: Richard M. DeVos, Jr. Title: President RICHARD & HELEN DEVOS FOUNDATION By: /s/ Jerry Tubergen ----------------------------------------------- Name: Jerry Tubergen Title: Vice President, Secretary HELEN J. DEVOS ARTICLE I TRUST By: /s/ Jerry Tubergen ----------------------------------------------- Name: Jerry Tubergen Title: Trustee By: /s/ Richard M. DeVos, Jr. ----------------------------------------------- Name: Richard M. DeVos, Jr. Title: President RICHARD M. DEVOS, JR. ARTICLE II TRUST By: /s/ Richard M. DeVos, Jr. ----------------------------------------------- Name: Richard M. DeVos, Jr. Title: President By: /s/ Jerry Tubergen ----------------------------------------------- Name: Jerry Tubergen Title: Trustee 11 DANIEL G. DEVOS ARTICLE II TRUST By: /s/ Jerry Tubergen ----------------------------------------------- Name: Jerry Tubergen Title: Trustee By: /s/ Richard M. DeVos, Jr. ----------------------------------------------- Name: Richard M. DeVos, Jr. Title: President SUZANNE DEVOS-VANDERWEIDE ARTICLE II TRUST By: /s/ Jerry Tubergen ----------------------------------------------- Name: Jerry Tubergen Title: Trustee By: /s/ Richard M. DeVos, Jr. ----------------------------------------------- Name: Richard M. DeVos, Jr. Title: President DOUGLAS L. DEVOS ARTICLE II TRUST By: /s/ Richard M. DeVos, Jr. ----------------------------------------------- Name: Richard M. DeVos, Jr. Title: President By: /s/ Jerry Tubergen ----------------------------------------------- Name: Jerry Tubergen Title: Trustee RDV CAPITAL MANAGEMENT L.P. III By: RDV Corporation, as general partner By: /s/ Jerry Tubergen ----------------------------------------------- Name: Jerry Tubergen Title: President 12 RICHARD M. DEVOS, JR. 1995 CHRISTMAS TRUST By: /s/ Richard M. DeVos, Jr. ----------------------------------------------- Name: Richard M. DeVos, Jr. Title: President By: /s/ Daniel L. Mosley ----------------------------------------------- Name: Daniel L. Mosley Title: Trustee DANIEL G. DEVOS 1995 CHRISTMAS TRUST By: /s/ Richard M. DeVos, Jr. ----------------------------------------------- Name: Richard M. DeVos, Jr. Title: President By: /s/ Daniel L. Mosley ----------------------------------------------- Name: Daniel L. Mosley Title: Trustee SUZANNE DEVOS-VANDERWEIDE 1995 CHRISTMAS TRUST By: /s/ Jerry Tubergen ----------------------------------------------- Name: Jerry Tubergen Title: Trustee By: /s/ Richard M. DeVos, Jr. ----------------------------------------------- Name: Richard M. DeVos, Jr. Title: President 13 DOUGLAS L. DEVOS 1995 CHRISTMAS TRUST By: /s/ Jerry Tubergen ----------------------------------------------- Name: Jerry Tubergen Title: Trustee By: /s/ Richard M. DeVos, Jr. ----------------------------------------------- Name: Richard M. DeVos, Jr. Title: President 14 SCHEDULE A
NUMBER OF PRINCIPAL SHAREHOLDER SHARES OWNED I. VAN ANDEL FAMILY Jay Van Andel Trust 12,315,145 Subtrust Under Paragraph 3 of JVA Trust 11,092,330 Jay and Betty Van Andel Foundation 564,290 II. DEVOS FAMILY Richard M. DeVos 1998 Trust 9,948,743 Richard & Helen DeVos Foundation 564,290 Helen J. DeVos Article I Trust 3,835,882 Richard M. DeVos, Jr. Article II Trust 200,528 Daniel G. DeVos Article II Trust 200,528 Suzanne DeVos-VanderWeide Article II Trust 200,528 Douglas L. DeVos Article II Trust 200,528 RDV Capital Management L.P. III 1,000,000 Richard M. DeVos, Jr. 1995 Christmas Trust 1,955,184 Daniel G. DeVos 1995 Christmas Trust 1,955,184 Suzanne DeVos-VanderWeide 1995 Christmas Trust 1,955,185 Douglas L. DeVos 1995 Christmas Trust 1,955,185 TOTAL 47,943,530
EX-99.G 20 EXHIBIT (G) 1 Exhibit (g) INDEPENDENT AUDITORS' CONSENT The Board of Directors and Shareholders Amway Asia Pacific Ltd.: We consent to the use of our reports included herein and incorporated herein by reference. /s/KPMG LLP KPMG LLP Detroit, Michigan November 16, 1999 EX-99.H 21 EXHIBIT (H) 1 Exhibit (h) NEW AAP LIMITED POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that New AAP Limited, a Bermuda corporation (the "Company"), hereby appoints Lawrence M. Call, Craig N. Meurlin, Robert A. Yolles and Thomas C. Daniels and each of them, as attorneys-in-fact for the Company with full power of substitution and resubstitution, for and in the name, place and stead of the Company to sign and file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1934 a Rule 13E-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") and a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") in connection with the Company's offer to purchase all the outstanding shares of the Common Stock of Amway Asia Pacific Ltd., a Bermuda corporation ("AAP"), par value $0.01 per share (the "Common Stock"), of AAP and to sign and file any and all amendments, supplements and exhibits (including the Offer to Purchase) to the Schedule 13E-3 and Schedule 14D-1, and any and all applications and other documents to be filed with the Commission, and any and all applicable applications and other documents to be filed with the New York Stock Exchange or any other U.S. or non-U.S. national securities exchange in connection with the Offer, the Offer to Purchase, the Schedule 13E-3, the Schedule 14D-1 or the Common Stock, any and all documents required to be filed with any U.S. or non-U.S. governmental or regulatory body in connection with the Offer, the Offer to Purchase, the Schedule 13E-3, the Schedule 14D-1 or Common Stock, an all other agreements and documents in connection the Offer, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in order to effectuate the same as fully and to all intents and purposes as the Company might or could do itself, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or any of the substitutes, may do or cause to be done by virtue hereof. EXECUTED as of the 17th day of November 1999. NEW AAP LIMITED By: /s/ Craig N. Meurlin ----------------------------------- Craig N. Meurlin Vice President, Assistant Secretary -----END PRIVACY-ENHANCED MESSAGE-----