<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
MORTON INTERNATIONAL, INC.
(NAME OF SUBJECT COMPANY)
MORTON ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
(BIDDERS)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
ROBERT P. VOGEL
ROHM AND HAAS COMPANY
100 INDEPENDENCE MALL WEST
PHILADELPHIA, PENNSYLVANIA 19106
(215) 592-3000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
With a Copy to:
WILLIAM E. CURBOW
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NY 10017
(212) 455-2000
------------------------
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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$3,004,034,938 $600,807
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</TABLE>
* ESTIMATED FOR PURPOSES OF CALCULATING THE AMOUNT OF THE FILING FEE ONLY. THE
FILING FEE CALCULATION ASSUMES THE PURCHASE OF 80,916,766 SHARES OF COMMON
STOCK, PAR VALUE $1.00 PER SHARE (THE "SHARES"), OF MORTON INTERNATIONAL,
INC. AT A PRICE OF $37.125 PER SHARE IN CASH, WITHOUT INTEREST.
** THE AMOUNT OF THE FILING FEE CALCULATED IN ACCORDANCE WITH REGULATION
240.0-11 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EQUALS 1/50TH OF
ONE PERCENT OF THE VALUE OF THE TRANSACTION.
[ ] 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.
<TABLE>
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AMOUNT PREVIOUSLY PAID: FILING PARTY:
FORM OR REGISTRATION NO.: DATE FILED:
</TABLE>
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<PAGE> 2
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Morton Acquisition Corp. (formerly known as Gershwin Acquisition
Corp.), an Indiana corporation ("Purchaser") and a wholly owned subsidiary of
Rohm and Haas Company, a Delaware corporation ("Parent"), to purchase up to of
80,916,766 shares (representing 67% of the issued and outstanding shares as of
January 29, 1999) of common stock, par value $1.00 per share (the "Shares"), of
Morton International, Inc., an Indiana corporation (the "Company"), and the
associated preferred share purchase rights ("Rights") at a purchase price of
$37.125 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated February
5, 1999 (the "Offer to Purchase"), a copy of which is attached hereto as Exhibit
(a)(1), and in the related Letter of Transmittal, a copy of which is attached
hereto as Exhibit (a)(2) (which, as amended or supplemented from time to time,
together constitute the "Offer"). The Rights will expire immediately prior to
the consummation of the Offer. Unless the context otherwise requires references
herein to "Shares" shall be deemed to include the associates Rights.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Morton International, Inc., and the
address of its principal executive offices is 100 North Riverside Plaza,
Chicago, Illinois 60606-1596. The telephone number of the Company at such
location is (312) 807-2000.
(b) The exact title of the class of equity securities being sought in the
Offer is common stock, par value $1.00 per share, of the Company. The
information set forth in the Introduction of the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g): This Statement is being filed by Purchaser and Parent. The
information set forth in the Introduction and Section 9 ("Certain Information
Concerning Parent and Purchaser") of the Offer to Purchase is incorporated
herein by reference. The name, business address, present principal occupation or
employment, the material occupations, positions, offices or employments for the
past five years and citizenship of each director and executive officer of Parent
and Purchaser and the name, principal business and address of any corporation or
other organization in which such occupations, positions, offices and employments
are or were carried on are set forth in Schedule I to the Offer to Purchase and
incorporated herein by reference.
(e)-(f): During the last five years, neither Purchaser nor Parent nor, to
the best knowledge of Purchaser and Parent, any of the persons referred to in
the preceding paragraph (i) have been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
as a result of which any such person was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)(1) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons referred to in Item 2 above have entered into any transaction with
the Company, or any of the Company's affiliates which are corporations, since
the commencement of the Company's third full fiscal year preceding the date of
this Statement, the aggregate amount of which was equal to or greater than one
percent of the consolidated revenues of the Company for
2
<PAGE> 3
(i) the fiscal year in which such transaction occurred or (ii) the portion of
the current fiscal year which has occurred if the transaction occurred in such
year.
(a)(2) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons referred to in Item 2 above have entered into any transaction since
the commencement of the Company's third full fiscal year preceding the date of
this Statement with the executive officers, directors or affiliates of the
Company which are not corporations, in which the aggregate amount involved in
such transaction or in a series of similar transactions, including all periodic
installments in the case of any lease or other agreement providing for periodic
payments or installments, exceeded $40,000.
(b) The information set forth in the Introduction, Section 9 ("Certain
Information Concerning Parent and Purchaser") Section 11 ("Background of the
Offer; Contacts with the Company") and Section 12 ("The Merger Agreement and
Certain Other Agreements") of the Offer to Purchase is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b): The information set forth in the Introduction and Section 10
("Sources and Amount of Funds") of the Offer to Purchase is incorporated herein
by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a)-(e): The information set forth in the Introduction, Section 12 ("The
Merger Agreement and Certain Other Agreements"), Section 13 ("Purpose of the
Offer and the Merger; Plans for the Company; Other Matters") and Section 14
("Dividends and Distributions") of the Offer to Purchase is incorporated herein
by reference.
(f) and (g): The information set forth in the Introduction and Section 7
("Effect of the Offer on the Market for the Shares; Stock Listing; Exchange Act
Registration; Margin Regulations") of the Offer to Purchase is incorporated
herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b): The information set forth in the Introduction, Section 9
("Certain Information Concerning Parent and Purchaser") of the Offer to Purchase
is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 11 ("Background of
the Offer; Contacts with the Company"), Section 12 ("The Merger Agreement and
Certain Other Agreements") and Section 13 ("Purpose of the Offer and the Merger;
Plans for the Company; Other Matters") of the Offer to Purchase is incorporated
herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 17 ("Fees and Expenses") of the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning
Parent and Purchaser") of the Offer to Purchase is incorporated herein by
reference.
3
<PAGE> 4
ITEM 10. ADDITIONAL INFORMATION.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between Purchaser or Parent, or to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I to the Offer to Purchase, and the
Company or any of its executive officers, directors, controlling persons or
subsidiaries.
(b) and (c): The information set forth in the Introduction, Section 15
("Certain Conditions of the Offer") and Section 16 ("Certain Legal Matters and
Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Listing; Exchange Act Registration; Margin
Regulations") and Section 16 ("Certain Legal Matters and Regulatory Approvals")
of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated February 5, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Press Release dated February 5, 1999.
(a)(8) Summary Advertisement.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of January 31, 1999, by and
among Rohm and Haas Company, Gershwin Acquisition Corp. (now known
as Morton Acquisition Corp.) and Morton International, Inc.
(c)(2) Confidentiality Agreement, dated as of November 24, 1998, by and
between Rohm and Haas Company and Morton International, Inc.
(c)(3) Employment Agreement, dated as of January 31, 1999, by and among
Rohm and Haas Company, Morton International, Inc. and S. Jay
Stewart.
(c)(4) Amendment to the Employment Agreement, dated as of March 22, 1990,
by and between the Company and the Executive dated as of January 31,
1999 by and among Morton International, Inc. (the "Company"), Rohm
and Haas Company and William E. Johnston (the "Executive").
(d) None.
(e) Not applicable.
(f) None.
4
<PAGE> 5
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this Statement is true,
complete and correct.
MORTON ACQUISITION CORP.
BY: /s/ GAIL P. GRANOFF
------------------------------------
NAME: Gail P. Granoff
TITLE: Secretary and Assistant
Treasurer
ROHM AND HAAS COMPANY
BY: /s/ BRADLEY J. BELL
------------------------------------
NAME: Bradley J. Bell
TITLE: Chief Financial Officer and
Vice President
Dated: February 5, 1999
5
<PAGE> 6
INDEX TO EXHIBITS
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EXHIBIT PAGE
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(a)(1) Offer to Purchase, dated February 5, 1999. .................
(a)(2) Letter of Transmittal. .....................................
(a)(3) Notice of Guaranteed Delivery. .............................
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees. ..............................
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees. .................
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9. .............................
(a)(7) Press Release dated February 5, 1999. ......................
(a)(8) Summary Advertisement. .....................................
(b) None. ......................................................
(c)(1) Agreement and Plan of Merger, dated as of January 31, 1999,
Rohm and Haas Company, Gershwin Acquisition Corp. (now known
as Morton Acquisition Corp.) and Morton International,
Inc. .......................................................
(c)(2) Confidentiality Agreement, dated as of November 24, 1998, by
and between Rohm Haas Company and Morton International,
Inc.........................................................
(c)(3) Employment Agreement, dated as of January 31, 1999, by and
among Rohm and Haas Company, Morton International, Inc. and
S. Jay Stewart..............................................
(c)(4) Amendment to the Employment Agreement, dated as of January
31, 1999 by and among Morton International, Inc. (the
"Company"), Rohm and Haas Company and William E. Johnston
(the "Executive"), dated as of March 22, 1990, by and
between the Company and the Executive.......................
(d) None. ......................................................
(e) Not applicable. ............................................
(f) None. ......................................................
</TABLE>
6
<PAGE> 1
OFFER TO PURCHASE FOR CASH
UP TO 80,916,766 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MORTON INTERNATIONAL, INC.
AT
$37.125 NET PER SHARE
BY
MORTON ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, MARCH 5, 1999, UNLESS THE OFFER IS EXTENDED.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF SHARES (AS DEFINED HEREIN) WHICH, TOGETHER WITH ANY SHARES OWNED BY
ROHM AND HAAS COMPANY ("PARENT") OR MORTON ACQUISITION CORP. (FORMERLY KNOWN AS
GERSHWIN ACQUISITION CORP.) ("PURCHASER"), CONSTITUTES AT LEAST A MAJORITY OF
THE VOTING POWER (DETERMINED ON A FULLY-DILUTED BASIS) OF ALL THE SECURITIES OF
MORTON INTERNATIONAL, INC. (THE "COMPANY") ENTITLED TO VOTE GENERALLY IN THE
ELECTION OF DIRECTORS OR ON A MERGER, (2) ANY APPLICABLE WAITING PERIOD UNDER
THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, HAVING
EXPIRED OR BEEN TERMINATED AND (3) NOTIFICATION OF AND APPROVAL BY THE EUROPEAN
COMMISSION UNDER EU COUNCIL REGULATION 4064/89, AS AMENDED, HAVING BEEN
OBTAINED. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS
OFFER TO PURCHASE. SEE SECTIONS 1 AND 15.
------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER (AS DEFINED HEREIN) ARE FAIR TO, AND IN THE BEST INTERESTS
OF, THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES (AS DEFINED HEREIN) PURSUANT TO THE OFFER.
------------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares (and the associated preferred share purchase rights of the Company)
should either (i) complete and sign the enclosed Letter of Transmittal (or a
facsimile thereof) in accordance with the Instructions in the Letter of
Transmittal, have such shareholder's signature thereon guaranteed (if required
by Instruction 1 to the Letter of Transmittal), mail or deliver the Letter of
Transmittal (or a facsimile thereof) and any other required documents to the
Depositary (as defined herein) and, unless Shares are held in book-entry form
through the Company's Shareholder Services Program, either deliver the
certificates for such Shares to the Depositary along with the Letter of
Transmittal (or such facsimile (the "SSP")) or, in the case of a book-entry
transfer effected pursuant to the procedures described in Section 3 of this
Offer to Purchase, deliver an Agent's Message (as defined herein) and deliver
such Shares pursuant to the procedure for book-entry transfer set forth in
Section 3 of this Offer to Purchase or (ii) request such shareholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for such shareholder. Any shareholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee to tender such Shares.
Any shareholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available (other than Shares held in
book-entry form through the SSP), or who cannot comply with the procedures for
book-entry transfer on a timely basis, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedures for guaranteed delivery set forth in
Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent (as defined herein) or the Dealer Manager (as defined herein) at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase, the
Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer
materials may be directed to the Information Agent or the Dealer Manager, or to
brokers, dealers, commercial banks or trust companies.
------------------------
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
February 5, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
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INTRODUCTION..................................................... 1
THE OFFER........................................................ 4
1. Terms of the Offer; Proration............................... 4
2. Acceptance for Payment and Payment.......................... 6
3. Procedures for Tendering Shares............................. 7
4. Withdrawal Rights........................................... 10
5. Certain U.S. Federal Income Tax Consequences................ 10
6. Price Range of the Shares; Dividends on the Shares.......... 12
7. Effect of the Offer on the Market for the Shares; Stock
Listing; Exchange Act Registration; Margin Regulations.... 12
8. Certain Information Concerning the Company.................. 13
9. Certain Information Concerning Parent and Purchaser......... 16
10. Sources and Amount of Funds................................. 18
11. Background of the Offer; Contacts with the Company.......... 18
12. The Merger Agreement and Certain Other Agreements........... 21
13. Purpose of the Offer and the Merger; Plans for the Company;
Other Matters............................................. 36
14. Dividends and Distributions................................. 38
15. Certain Conditions of the Offer............................. 39
16. Certain Legal Matters and Regulatory Approvals.............. 40
17. Fees and Expenses........................................... 44
18. Miscellaneous............................................... 44
SCHEDULE I INFORMATION CONCERNING DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND PURCHASER AND CERTAIN OTHER
PERSONS.............................................. I-1
</TABLE>
i
<PAGE> 3
To the Holders of Common Stock of Morton International, Inc.:
INTRODUCTION
Morton Acquisition Corp. (formerly known as Gershwin Acquisition Corp.), an
Indiana corporation ("Purchaser") and a wholly owned subsidiary of Rohm and Haas
Company, a Delaware corporation ("Parent"), hereby offers to purchase up to
80,916,766 shares (representing 67% of the issued and outstanding shares as of
January 29, 1999) of Common Stock, par value $1.00 per share (the "Common Stock"
or the "Shares"), and the associated preferred share purchase rights (the
"Rights"), of Morton International, Inc., an Indiana corporation (the
"Company"), at a purchase price of $37.125 per Share, net to the seller in cash,
without interest (the "Offer Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, as amended or supplemented from time to time, collectively
constitute the "Offer"). The Rights, which were issued pursuant to a Rights
Agreement, dated as of April 24, 1997, as amended by Amendment No. 1 dated as of
January 31, 1999 (the "Rights Agreement"), between the Company and First Chicago
Trust Company of New York, will expire immediately prior to the consummation of
the Offer. See Section 12. Unless the context requires otherwise, all references
to the "Common Stock" or "Shares" in this Offer to Purchase shall be deemed to
refer also to the associated Rights.
Tendering shareholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase
of Shares by Purchaser pursuant to the Offer. However, any tendering shareholder
or other payee who fails to complete and sign the Substitute Form W-9 included
in the Letter of Transmittal may be subject to backup federal income tax
withholding of 31% of the gross proceeds payable to such shareholder or other
payee pursuant to the Offer. See Section 3. Shareholders who hold their Shares
through a bank or broker should check with such institution as to whether they
charge any service fees. Purchaser will pay all fees and expenses of Wasserstein
Perella & Co., Inc. ("Wasserstein Perella"), which is acting as Dealer Manager
(in such capacity, the "Dealer Manager"), EquiServe, which is acting as the
Depositary (in such capacity, the "Depositary") and D.F. King & Co., Inc., which
is acting as the Information Agent (in such capacity, the "Information Agent"),
incurred in connection with the Offer and in accordance with the terms of the
agreements entered into between Purchaser and/or Parent and each such person.
See Section 17.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER (AS DEFINED BELOW), AND DETERMINED
THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Goldman, Sachs & Co. ("Goldman Sachs"), financial advisor to the Company,
has delivered to the Company Board its written opinion, dated January 31, 1999
(the "Financial Advisor Opinion"), to the effect that, as of such date and based
upon and subject to certain matters and assumptions, the Offer consideration and
Merger Consideration (as defined in Section 12) to be received by the holders of
Shares in the Offer and the Merger, taken as a unitary transaction, is fair from
a financial point of view to such holders. A copy of the Financial Advisor
Opinion is attached as an exhibit to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9"), which has been filed by the
Company with the Securities and Exchange Commission (the "Commission") in
connection with the Offer and which is being mailed to holders of Shares
herewith. Holders of Shares are encouraged to read the Financial Advisor Opinion
in its entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF SHARES WHICH, TOGETHER WITH ANY SHARES OWNED BY PARENT OR PURCHASER,
CONSTITUTES AT LEAST A MAJORITY OF THE VOTING POWER (DETERMINED ON A FULLY
DILUTED BASIS) OF ALL THE SECURITIES OF THE COMPANY ENTITLED TO VOTE GENERALLY
IN THE ELECTION OF DIRECTORS OR ON A MERGER (THE "MINIMUM CONDITION"), (ii) ANY
APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVE-
<PAGE> 4
MENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), HAVING EXPIRED OR BEEN TERMINATED
(THE "HSR CONDITION") AND (iii) NOTIFICATION OF AND APPROVAL BY THE COMMISSION
OF THE EUROPEAN COMMUNITIES (THE "EUROPEAN COMMISSION") UNDER EU COUNCIL
REGULATION 4064/89, AS AMENDED (THE "EU REGULATION"), HAVING BEEN OBTAINED (THE
"EU APPROVAL"). THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN
THIS OFFER TO PURCHASE, COLLECTIVELY THE "OFFER CONDITIONS." SEE SECTIONS 1 AND
15.
Purchaser reserves the right, in its sole discretion, subject only to the
applicable rules and regulations of the Commission, to waive each of the
conditions (other than the Minimum Condition) to the obligations of Purchaser to
consummate the Offer.
The Company has advised Parent and Purchaser that, as of January 31, 1999,
(i) 120,774,431 Shares were issued and outstanding and (ii) 7,621,228 Shares
were issuable pursuant to the exercise of the Company Stock Options (as defined
in Section 12). Under the terms of the Merger Agreement, the Company has
reserved the right to issue up to an additional 50,000 options to purchase
Shares and, as a result, all of such additional Shares (whether or not such
options are issued or if issued, exercised) will be assumed to be outstanding
for purposes of determining whether the Minimum Condition is satisfied. Parent
owns 100 Shares as of the date of this Offer to Purchase. Based on the
foregoing, Purchaser believes that approximately 64,222,730 Shares are required
to be validly tendered and not withdrawn to satisfy the Minimum Condition.
The purpose of the Offer is for Parent, through Purchaser, to acquire a
majority equity interest in the Company as the first step in a business
combination. The Offer is being made pursuant to the terms of the Agreement and
Plan of Merger, dated as of January 31, 1999 (the "Merger Agreement"), among
Parent, Purchaser and the Company. The Merger Agreement provides that, among
other things, subject to the satisfaction or waiver of certain conditions,
following completion of the Offer, and in accordance with the Indiana Business
Corporation Law ("IBCL"), Purchaser will be merged with and into the Company
(the "Merger"). Following consummation of the Merger, the Company will continue
as the surviving corporation and will become a wholly owned subsidiary of
Parent. Except as described in Section 12, at the effective time of the Merger
(the "Effective Time"), (i) if Purchaser shall have purchased, pursuant to the
Offer, an aggregate of 80,916,766 Shares (the "Maximum Offer Number of Shares"),
each Share issued and outstanding immediately prior to the Effective Time (other
than Shares held in the treasury of the Company and each Share owned by Parent
or Purchaser) shall be cancelled, extinguished and converted into the right to
receive a number (rounded to the nearest one-millionth of a share) of fully paid
and nonassessable shares of Common Stock, par value $2.50 per share (the "Parent
Common Stock"), of Parent equal to the Exchange Ratio (as defined in Section 12)
and (ii) if Purchaser shall have purchased, pursuant to the Offer, less than the
Maximum Offer Number of Shares, each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held in the treasury of the
Company and Shares owned by Parent or Purchaser) shall be cancelled,
extinguished and converted into the right to receive (i) cash, in an amount
equal to the product of Cash Proration Factor One (as defined in Section 12)
multiplied by $37.125 and (ii) a number (rounded to the nearest one-millionth of
a share) of fully paid and nonassessable shares of Parent Common Stock equal to
the product of (a) one minus Cash Proration Factor One multiplied by (b) the
Exchange Ratio.
THE OFFER DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OF PARENT. SUCH AN OFFER MAY BE MADE ONLY PURSUANT
TO A PROSPECTUS.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of shareholders of the Company of
the Merger Agreement. See Section 12. Under the IBCL and the Restated Articles
of Incorporation of the Company (the "Articles of Incorporation"), the
affirmative vote of the holders of a majority of all votes entitled to be cast
by the Common Stock is the only vote of any class or series of the Company's
capital stock that would be necessary to approve the Merger Agreement at a
meeting of the Company's shareholders. A proxy or information statement (which
will also constitute a prospectus for the shares of Parent Common Stock issuable
in the Merger) containing detailed information concerning the Merger will be
furnished to holders of Shares in connection with a special meeting of
shareholders to be called by the Company to vote on the Merger Agreement. If the
Minimum Condition is satisfied and Purchaser purchases at least a majority of
the outstanding Shares in the Offer, Purchaser will be able to effect the Merger
without the affirmative vote of any other shareholder. Pursuant to the Merger
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Agreement, Parent and Purchaser have agreed to vote the Shares acquired by them
pursuant to the Offer in favor of approval of the Merger Agreement. See Section
13. The Merger Agreement is more fully described in Section 12.
Consummation of the Merger is also conditioned upon Parent stockholder
approval of (i) an amendment to Parent's Restated Certificate of Incorporation
(the "Certificate of Incorporation") to increase the authorized Parent Common
Stock from 200,000,000 shares to 400,000,000 shares and (ii) the issuance of the
shares of Parent Common Stock in the Merger. See Section 12. Under the Delaware
General Corporation Law (the "DGCL") and the Certificate of Incorporation, the
affirmative vote of the holders of a majority of the outstanding shares of
Parent Common Stock, voting as a class, and Parent Common Stock and $2.75
Cumulative Convertible Preferred Stock ("Convertible Preferred Stock"), voting
together and not as separate classes, would be necessary to approve the
amendment to the Certificate of Incorporation at a meeting of Parent's
stockholders. Under the rules of the New York Stock Exchange, Inc. ("NYSE"), the
issuance of shares of Parent Common Stock in the Merger requires the approval of
a majority of the votes cast at a meeting at which there is a quorum by the
holders of Parent Common Stock and Convertible Preferred Stock, voting together
and not as separate classes. Parent has been advised by members of the Haas
family ("Haas Family Stockholders"), who beneficially own shares of Parent
Common Stock constituting approximately 39% of the outstanding voting power of
Parent as of January 29, 1999, that they support the transactions contemplated
by the Merger Agreement. In the event that, following completion of the Offer,
Parent does not receive the approvals of the stockholders of Parent necessary to
issue such number of shares of Parent Common Stock in the Merger (or as
otherwise provided in the Merger Agreement), the Merger will be consummated
notwithstanding the absence of such Parent stockholder approvals, with the
consideration to be received by holders of Shares in the Merger adjusted to
reduce the stock portion of the consideration to provide that such holders will
receive, in the aggregate, the maximum number of shares of Parent Common Stock
that may be issued by Parent in the Merger without a vote of the stockholders of
Parent pursuant to the DGCL, the applicable rules of the NYSE or otherwise, and
the remainder of such consideration in cash, as provided in the Merger Agreement
and more fully described in Section 12.
Pursuant to the Merger Agreement, Purchaser is obligated to extend the
Offer from time to time in the event that, at a then-scheduled expiration date,
all of the conditions to the Offer have not been satisfied or waived as
permitted by the Merger Agreement, each such extension not to exceed (unless
consented to by the Company) the lesser of 10 additional business days or such
fewer number of days that Purchaser reasonably believes are necessary to cause
the conditions to the Offer to be satisfied. If, on April 2, 1999 (subject to
extension by Purchaser to not later than April 17, 1999 if Parent reasonably
believes that the HSR Condition will be satisfied and the EU Approval will be
obtained during such extended period) (the "Final Expiration Date"), Purchaser
has not consummated the Offer in accordance with its terms, Purchaser will,
unless Parent and the Company otherwise agree, terminate the Offer without
acceptance of any Shares previously tendered, and Parent, Purchaser and the
Company will, upon the terms and conditions of the Merger Agreement, seek to
consummate the Merger.
Certain United States federal income tax consequences of the sale of Shares
pursuant to the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
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THE OFFER
1. TERMS OF THE OFFER; PRORATION.
Upon 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), Purchaser will accept for payment and pay for up to 80,916,766
Shares validly tendered prior to the Expiration Date, and not properly withdrawn
in accordance with Section 4. The term "Expiration Date" shall mean 12:00
midnight, New York City time, on Friday, March 5, 1999, unless and until
Purchaser, in accordance with the terms of the Merger Agreement, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by Purchaser, shall expire.
Upon the terms and subject to the conditions of the Offer, if more than
80,916,766 Shares are validly tendered and not properly withdrawn prior to the
Expiration Date, Purchaser will accept for payment and pay for only 80,916,766
Shares on a pro rata basis (with appropriate adjustments to avoid the purchase
of fractional Shares) based on the number of Shares properly tendered by each
shareholder prior to the Expiration Date and not withdrawn. In the event that
proration of tendered Shares is required, because of the difficulty of
determining the precise number of Shares properly tendered and not withdrawn
(due in part to the guaranteed delivery procedures described in Section 3),
Purchaser does not expect that it will be able to announce the final results of
such proration or pay for any Shares until at least seven NYSE trading days
after the Expiration Date. Preliminary results of proration will be announced by
press release as promptly as practicable after the Expiration Date. Shareholders
may obtain such preliminary information from the Information Agent and may be
able to obtain such information from their broker. Purchaser will not pay for
any Shares accepted for payment pursuant to the Offer until the final proration
factor is known.
The Offer is conditioned upon the satisfaction of the Minimum Condition and
the HSR Condition and receipt of the EU Approval, and the other conditions set
forth in Section 15. If such conditions are not satisfied prior to the
Expiration Date, Purchaser reserves the right, subject to the terms of the
Merger Agreement and subject to complying with applicable rules and regulations
of the Commission, to (i) decline to purchase any Shares tendered in the Offer
and terminate the Offer and return all tendered Shares to the tendering
shareholders, (ii) waive any or all conditions to the Offer (except the Minimum
Condition) and, subject to complying with applicable rules and regulations of
the Commission, purchase all Shares validly tendered, (iii) extend the Offer
and, subject to the right of shareholders to withdraw Shares until the
Expiration Date, retain all Shares which have been tendered during the period or
periods for which the Offer is extended or (iv) subject to the provisions
described below, amend the Offer. Pursuant to the Merger Agreement, subject to
Purchaser's obligations to terminate the Offer described in the next sentence,
Purchaser is obligated to extend the Offer from time to time in the event that,
at a then-scheduled expiration date, all of the conditions to the Offer have not
been satisfied or waived as permitted by the Merger Agreement, each such
extension not to exceed the lesser of 10 additional business days or such fewer
number of days that Purchaser reasonably believes are necessary to cause the
conditions to the Offer to be satisfied. If, by the Final Expiration Date,
Purchaser has not consummated the Offer in accordance with its terms, Purchaser
shall, unless Parent and the Company otherwise agree, terminate the Offer
without acceptance of any Shares previously tendered, and Parent, Purchaser and
the Company shall, upon the terms and conditions of the Merger Agreement, seek
to consummate the Merger.
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the Commission and the terms of the Merger Agreement, Purchaser
may, under certain circumstances, (a) extend the period of time during which the
Offer is open and thereby delay acceptance for payment of and the payment for
any Shares, by giving oral or written notice of such extension to the Depositary
and (b) amend the Offer in any other respect by giving oral or written notice of
such amendment to the Depositary. Pursuant to the terms of the Merger Agreement,
and subject to the proration and other terms of the Offer, including but not
limited to the Offer Conditions, Purchaser has agreed to accept for payment and
pay for all Shares validly tendered, and not withdrawn as soon as it is
permitted to do so under applicable law.
Under the Merger Agreement, the Purchaser expressly reserves the right, in
its sole discretion, subject to the applicable rules and regulations of the
Commission, to make any changes to the terms and conditions to
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<PAGE> 7
the Offer; provided that, unless previously approved by the Company in writing,
no change may be made which (i) changes the Minimum Condition or decreases the
price per Share payable in the Offer, (ii) changes the form of consideration
payable in the Offer, (iii) increases or reduces the maximum number of Shares to
be purchased in the Offer, (iv) amends the Offer Conditions or imposes
conditions to the Offer in addition to those set forth in Section 15 or (v)
makes any other changes to the terms or conditions to the Offer that are adverse
to the holders of the Shares. The Offer Conditions are for the benefit of
Purchaser and may be asserted by Purchaser regardless of the circumstances
giving rise to any such condition (except for any action or inaction by
Purchaser or Parent constituting a breach of the Merger Agreement).
Any extension, delay, waiver, amendment or termination of the Offer will be
followed as promptly as practicable by public announcement thereof, the
announcement in the case of an extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date, in accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
require that material changes be promptly disseminated to holders of Shares.
Subject to applicable law (including such Rules) and without limiting the manner
in which Purchaser may choose to make any public announcement, Purchaser will
not have any obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a press release to the Dow Jones News
Service. As used in this Offer to Purchase, "business day" has the meaning set
forth in Rule 14d-1 under the Exchange Act.
If Purchaser extends the Offer, or if Purchaser (whether before or after
its acceptance for payment of Shares) is delayed in its purchase of, or payment
for, Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may retain tendered Shares on behalf of Purchaser, and such Shares may not be
withdrawn except to the extent tendering shareholders are entitled to the
withdrawal rights described in Section 4. However, the ability of Purchaser to
delay the payment for Shares which Purchaser has accepted for payment is limited
by Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by, or on behalf of,
holders of securities promptly after the termination or withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. In a public
release, the Commission has stated its view that an offer must remain open for a
minimum period of time following a material change in the terms of such offer
and that waiver of a material condition, such as the Minimum Condition, is a
material change in the terms of such offer. The release states that an offer
should remain open for a minimum of five business days from the date a material
change is first published, or sent or given to security holders and that, if
material changes are made with respect to information not materially less
significant than the offer price and the number of shares being sought, a
minimum of 10 business days may be required to allow adequate dissemination and
investor response. If, prior to the Expiration Date, Purchaser increases the
consideration offered to holders of Shares pursuant to the Offer, such increased
consideration will be paid to all holders whose Shares are purchased in the
Offer whether or not such Shares were tendered prior to such increase.
The Company has provided Purchaser with the Company's shareholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the shareholder lists or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
As of the date of this Offer to Purchase, the Rights are associated with
the Shares and do not trade separately. Accordingly, by tendering Shares, a
shareholder is automatically tendering a similar number of
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<PAGE> 8
associated Rights. If, however, pursuant to the Rights Agreement, the Rights
detach and separate certificates representing Rights ("Rights Certificates") are
issued, tendering shareholders will be required to deliver Rights Certificates
with the Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay for up to
80,916,766 Shares which are validly tendered prior to the Expiration Date (and
not properly withdrawn in accordance with Section 4) promptly after the later to
occur of (i) the Expiration Date and (ii) the satisfaction or waiver of the
Offer Conditions set forth in Section 15. Any determination concerning the
satisfaction of such terms and conditions shall be within the reasonable
discretion of Purchaser. See Section 3.
Subject to the applicable rules of the Commission, the Purchaser expressly
reserves the right, in its sole discretion (but subject to the terms and
conditions of the Merger Agreement), to delay acceptance for payment of, or
payment for, Shares in order to comply in whole or in part with any applicable
law, including without limitation the HSR Act and the EU Regulation. See Section
16. If Purchaser is delayed in its acceptance for payment of, or payment for
(whether before or after its acceptance for payment of Shares), Shares or is
unable to accept for payment or pay for Shares pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer (including
such rights as are set forth in Sections 1 and 15) (but subject to compliance
with Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer), the Depositary may, nevertheless,
on behalf of Purchaser, retain tendered Shares, and such Shares may not be
withdrawn except to the extent tendering shareholders are entitled to exercise,
and duly exercise, withdrawal rights as described in Section 4.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) unless Shares
are held in book-entry form through the SSP, certificates for such Shares
("Share Certificates") (or a timely confirmation (a "Book-Entry Confirmation")
of a book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedures set forth in Section 3), (ii) a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined below) and (iii) any other documents required by the Letter of
Transmittal. Accordingly, payment may be made to tendering shareholders at
different times if delivery of the Shares and other required documents occur at
different times. The per Share consideration paid to any holder of Shares
pursuant to the Offer will be the highest per Share consideration paid to any
other holder of such Shares pursuant to the Offer.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary of its acceptance for payment of such Shares pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering shareholders whose shares have been accepted
for payment.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE
PAID BY PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
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If any tendered Shares are not purchased pursuant to the Offer for any
reason (including proration due to tenders of more than 80,916,766 Shares), or
if certificates are submitted representing more Shares than are tendered,
certificates evidencing Shares not tendered or not accepted for purchase will be
returned to the tendering shareholder, or such other person as the tendering
shareholder shall specify in the Letter of Transmittal, as promptly as
practicable following the expiration, termination or withdrawal of the Offer. In
the case of Shares delivered by book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, any such Shares not tendered or not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility from which such Shares
were delivered. In the case of Shares delivered pursuant to the SSP, any such
Shares not tendered or not purchased will be returned by reissuing such Shares
in the form of Shares held through the SSP and will not be returned by returning
certificates representing such Shares. Shareholders may transfer Shares held
through the SSP by contacting the Company's transfer agent. Shareholders may
also contact the Company's transfer agent to have Shares held through the SSP
reissued in certificated form.
3. PROCEDURES FOR TENDERING SHARES.
Valid Tenders. For Shares to be validly tendered pursuant to the Offer,
either a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase prior to the Expiration Date and,
unless Shares are held in book-entry form through the SSP, either (i) Share
Certificates must be received by the Depositary at one of such addresses or such
Shares must be delivered to the Depositary pursuant to the procedures for
book-entry transfer set forth below and a Book-Entry Confirmation must be
received by the Depositary, in each case prior to the Expiration Date, or (ii)
the tendering shareholder must comply with the guaranteed delivery procedures
described below.
If Share Certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) must accompany each delivery. No alternative, conditional or
contingent tenders will be accepted and no fractional Shares will be purchased.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at 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 Book-Entry Transfer Facility's system
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 such Book-Entry Transfer Facility's procedures for such transfer. Although
delivery of Shares may be effected through book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility, either the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message, and any other required
documents must, in either case, be transmitted to, and received by, the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date, or the tendering shareholder must comply
with the guaranteed delivery procedures described below.
THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS MUST BE
TRANSMITTED TO AND RECEIVED BY THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH
ON THE BACK COVER OF THIS OFFER TO PURCHASE. DELIVERY OF THE LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY
WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any
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<PAGE> 10
participant in the Book-Entry Transfer Facility's systems whose name appears on
a security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program, the Stock Exchange Medallion Program or
by any other "eligible guarantor institution," as such term is defined in Rule
17Ad-15 under the Exchange Act (each, an "Eligible Institution" and,
collectively, "Eligible Institutions"). In all other cases, all signatures on
Letters of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If Share Certificates are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made, or Share Certificates not tendered or
not accepted for payment are to be returned, to a person other than the
registered holder of the certificates surrendered, then the tendered Share
Certificates must be endorsed or accompanied by appropriate stock powers, in any
case, signed exactly as the name or names of the registered holders or owners
appear on the certificates, with the signatures on the certificates or stock
powers guaranteed as described above. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates, are not immediately
available (other than Shares held through the SSP) or the procedures for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such shareholder's tender may be effected if all the following conditions
are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the Share Certificates, in proper form for transfer, for (or a
Book-Entry Confirmation with respect to) such tendered Shares, together
with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, or, in the case
of a book-entry transfer, an Agent's Message, and any other required
documents, are received by the Depositary within three NYSE trading days
after the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mailed to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) unless Shares are held in book-entry form
through the Company's SSP, Share Certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when Share Certificates or Book-Entry Confirmations with respect to such
Shares are actually received by the Depositary.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering shareholder and
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering shareholder will
irrevocably appoint designees of Purchaser as such shareholder's
attorneys-in-fact and proxies in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
shareholder's rights with respect to the Shares tendered by such shareholder and
accepted for payment by Purchaser and with respect to any and all dividends
(other than
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regular quarterly dividends with usual record and payment dates for dividends
consistent with past practice, in an amount not to exceed $.13 per Share),
distributions, rights, other Shares or other securities issued or issuable in
respect of such Shares on or after the date hereof (collectively,
"Distributions"). All such proxies will be considered coupled with an interest
in the tendered Shares. Such appointment will be effective if, as and when, and
only to the extent that, Purchaser accepts for payment Shares tendered by such
shareholder as provided herein. All such powers of attorney and proxies will be
irrevocable and will be deemed granted in consideration of the acceptance for
payment by Purchaser of Shares tendered in accordance with the terms of the
Offer. Upon such appointment, all prior powers of attorney, proxies and consents
given by such shareholder with respect to such Shares (and any and all
Distributions) will, without further action, be revoked and no subsequent powers
of attorney, proxies, consents or revocations may be given by such shareholder
(and, if given, will not be deemed effective). The designees of Purchaser will
thereby be empowered to exercise all voting and other rights with respect to
such Shares (and any and all Distributions), including, without limitation, in
respect of any annual or special meeting of the Company's shareholders (and any
adjournment or postponement thereof), actions by written consent in lieu of any
such meeting or otherwise, as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper. Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon Purchaser's acceptance for payment of such Shares, Purchaser
must be able to exercise full voting, consent and other rights with respect to
such Shares (and any and all Distributions), including voting at any meeting of
shareholders.
Determination of Validity. All questions as to the validity, form,
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 will be final and binding. Purchaser reserves the absolute right
to reject any or all tenders of any Shares determined by it not to be in proper
form or the acceptance for payment of which, or payment for which, may, in the
opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the
absolute right, in its sole discretion, to waive any defect or irregularity in
any tender of Shares of any particular shareholder, whether or not similar
defects or irregularities are waived in the case of other shareholders. No
tender of Shares will be deemed to have been validly made until all defects or
irregularities relating thereto have been cured or waived. None of Purchaser,
Parent, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification. Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
Backup Withholding. In order to avoid "backup withholding" of United
States ("U.S.") federal income tax on payments of cash pursuant to the Offer, a
shareholder surrendering Shares in the Offer, or its assignee (in either case,
the "Payee") must, unless an exemption applies, provide the Depositary with such
Payee's correct taxpayer identification number ("TIN") on a Substitute Form W-9
and certify under penalties of perjury that such TIN is correct and that such
Payee is not subject to backup withholding. If a Payee does not provide such
Payee's correct TIN or fails to provide the certifications described above, the
Internal Revenue Service (the "IRS") may impose a penalty on such Payee and
payment of cash to such Payee pursuant to the Offer may be subject to backup
withholding of 31%. All shareholders surrendering Shares pursuant to the Offer
and other Payees should complete and sign the Substitute Form W-9 included as
part of the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists and
is proved in a manner satisfactory to the Purchaser and the Depositary). Certain
Payees (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding. Noncorporate
foreign shareholders should complete and sign a Form W-8, Certificate of Foreign
Status, a copy of which may be obtained from the Depositary, in order to avoid
backup withholding. See Instruction 10 to the Letter of Transmittal.
Other Requirements. Purchaser's acceptance for payment of Shares tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering shareholder and Purchaser upon the terms and
subject to the conditions of the Offer, including the tendering shareholder's
representation and warranty that the tender of the Shares complies with Rule
14e-4 under the Exchange Act, which requires in substance that a tendering
shareholder own all Shares tendered pursuant to the Offer.
9
<PAGE> 12
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4 or as provided by applicable
law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior to
the Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after April 5, 1999. If
Purchaser extends the Offer, is delayed in its acceptance for payment of Shares
or is unable to purchase Shares validly tendered pursuant to the Offer for any
reason, then without prejudice to Purchaser's rights under the Offer, the
Depositary may nevertheless, on behalf of Purchaser, retain tendered Shares and
such Shares may not be withdrawn except to the extent that tendering
shareholders are entitled to withdrawal rights as described in this Section 4.
Any such delay in acceptance for payment will be accompanied by an extension of
the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. In addition, shareholders withdrawing Shares
should specify whether any Shares to be withdrawn are registered as Shares held
through the SSP. If Share Certificates to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant to
the procedures for book-entry transfer as set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility from which such Shares were delivered and otherwise
comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tendered Shares may not be rescinded, and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be retendered by again following one
of the procedures described in Section 3 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a discussion of the material U.S. federal income tax
consequences relating to the sale or exchange of Shares pursuant to the Offer
and/or the Merger. Unless otherwise indicated, this summary deals only with U.S.
Shareholders (as defined below) who hold their Shares as capital assets. This
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), the proposed, temporary and final Treasury regulations promulgated
thereunder, and any relevant administrative rulings or pronouncements or
judicial decisions, all as in effect on the date hereof and all of which are
subject to change, possibly with retroactive effect. This discussion does not
address all of the tax consequences that may be relevant to a particular
Shareholder (as defined below) in light of that Shareholder's specific
circumstances, nor does it discuss the U.S. federal income tax consequences that
may be applicable to certain types of Shareholders, such as Shareholders who
have received their Shares pursuant to the exercise of employee stock options or
otherwise as compensation, dealers in securities, financial institutions,
tax-exempt entities, life insurance companies, persons holding their Shares as a
part of a hedging, integrated, conversion or constructive sale transaction or as
part of a straddle, or persons whose functional currency is not the U.S. dollar,
who may be subject to special rules and/or limitations under the Code which are
not discussed below. In addition, the following discussion does not discuss the
alternative minimum tax consequences, if any, of the sale or exchange of Shares
pursuant to the Offer and/or the Merger, or the state, local or foreign tax
consequence of such sale or exchange of Shares. Consequently, shareholders are
urged to consult their own tax advisers in
10
<PAGE> 13
determining the federal, state, local and foreign income and any other tax
consequences of the sale or exchange of Shares pursuant to the Offer and/or the
Merger.
For purposes of this Section 5, (i) the term "Shareholder" refers to a
beneficial owner of Shares, (ii) the term "U.S. Shareholder" means a Shareholder
who is (a) a citizen or resident of the United States, (b) a corporation or
partnership created or organized in the United States or under the laws of the
United States or any political subdivision thereof, (c) an estate the income of
which is subject to United States federal income taxation regardless of its
source or (d) a trust which is subject to the supervision of a court within the
United States and the control of one or more United States persons (as defined
in Section 7701 (a)(30) of the Code) and (iii) the term "Non-U.S. Shareholder"
means a Shareholder who is not a U.S. Shareholder.
A sale of Shares pursuant to the Offer will be a taxable transaction for
U.S. federal income tax purposes. A tendering Shareholder will recognize gain or
loss on such sale in an amount equal to the difference between the amount of
cash received by such Shareholder pursuant to the Offer and the aggregate tax
basis in the relevant Shares tendered in exchange therefor. In addition, an
exchange of Shares for the shares of Parent Common Stock and/or cash pursuant to
the Merger also will be a taxable transaction for U.S. federal income tax
purposes. In this instance, an exchanging shareholder will recognize gain or
loss in an amount equal to the difference between (i) the sum of (x) the fair
market value, determined as of the time of such exchange, of the shares of
Parent Common Stock and (y) the amount of cash received pursuant to the Merger,
and (ii) the aggregate tax basis in the relevant Shares exchanged therefor. Such
gain or loss generally will be (i) calculated separately for each block of
Shares (i.e., Shares acquired at the same cost in a single transaction) sold or
exchanged pursuant to the Offer or the Merger, (ii) capital gain or loss and
(iii) long-term capital gain or loss if the relevant Shareholder held the Shares
being sold or exchanged for more than one year at the time of such sale or
exchange. The long-term capital gains of individuals, estates and certain trusts
generally are eligible for reduced rates of taxation. Capital losses generally
must be used only to offset capital gains.
Any gain realized by a Non-U.S. Shareholder upon the sale or exchange of
Shares pursuant to the Offer and/or the Merger generally will not be subject to
U.S. federal income or withholding tax unless (i) such gain is effectively
connected with a U.S. trade or business conducted by the Non-U.S. Shareholder in
the United States, (ii) in the case of a Non-U.S. Shareholder who is an
individual, such individual is present in the United States for 183 days or more
in the taxable year during which the sale or exchange of Shares pursuant to the
Offer and/or the Merger occurs and certain other conditions are met or (iii) in
the case a Non-U.S. Shareholder who held, directly or indirectly, more than five
percent of the Shares at any time during the five-year period ending on the date
of the disposition of such Shares, the Company is or has been a U.S. Real
Property Holding Corporation within the meaning of Section 897(c)(2) of the Code
(which the Company does not expect to be the case).
In general, U.S. federal income tax information reporting requirements will
apply to the proceeds derived by a non-corporate U.S. Shareholder from the sale
or exchange of such U.S. Shareholder's Shares. In addition, unless an exemption
applies, the Depositary will be required to withhold 31% of any cash payments to
which a Shareholder or other payee is entitled pursuant to the Offer, unless the
Shareholder or other payee provides his, her or its tax identification number
(social security number or employer identification number) and certifies that
such number is correct. Each Shareholder and, if applicable, each other payee is
required to complete and sign the Form W-9 that will be included as part of the
Letter of Transmittal sent to Shareholders by Purchaser to avoid backup
withholding, unless an applicable exemption exists and is proved in a manner
satisfactory to the Depositary.
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISERS TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY
STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
11
<PAGE> 14
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES.
The Shares are listed on the NYSE under the symbol "MII". The following
table sets forth, for each of the fiscal quarters indicated, the high and low
sales price per Share on the NYSE and the amount of cash dividends paid per
Share, as reported in published financial sources.
<TABLE>
<CAPTION>
SALES PRICES
-----------------------------------
HIGH LOW CASH DIVIDENDS
---- --------- --------------
<S> <C> <C> <C>
FISCAL YEAR ENDED JUNE 30, 1997*:
First Quarter ended September 30, 1996.................... $39 3/4 $33 1/4 $.15
Second Quarter ended December 31, 1996.................... 43 38 7/8 .15
Third Quarter ended March 31, 1997........................ 44 5/8 40 .15
Fourth Quarter ended June 30, 1997........................ 42 7/8 29 7/8 .12
FISCAL YEAR ENDED JUNE 30, 1998:
First Quarter ended September 30, 1997.................... $35 3/4 $30 1/16 $.12
Second Quarter ended December 31, 1997.................... 35 7/8 31 1/16 .12
Third Quarter ended March 31, 1998........................ 34 7/16 29 13/16 .12
Fourth Quarter ended June 30, 1998........................ 33 1/8 24 13/16 .12
FISCAL YEAR ENDED JUNE 30, 1999:
First Quarter ended September 30, 1998.................... $25 15/16 21 7/8 $.13
Second Quarter ended December 31, 1998.................... 30 7/16 21 7/8 .13
Third Quarter through February 4, 1999.................... 35 2/8 24 7/16 --**
</TABLE>
- ---------------
* Stock prices and dividends prior to April 30, 1997 reflect the Company prior
to the separation of the Company's automotive safety products business.
** On January 28, 1999, the Company Board declared a regular quarterly cash
dividend of $.13 payable on March 8, 1999 to holders of record on February
11, 1999. Shareholders of record on February 11, 1999 will be entitled to
receive the cash dividend even if their Shares are purchased in the Offer.
On January 29, 1999, the last full trading day prior to the public
announcement of the execution of the Merger Agreement by the Company, Parent and
Purchaser, the last reported closing sales price of the Shares on the NYSE was
$25 7/8 per Share. On February 4, 1999, the last full trading day prior to the
commencement of the Offer, the last reported sales price of the Shares on the
NYSE was $35 3/4 per Share. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET
QUOTATION FOR THE SHARES.
Under the terms of the Merger Agreement, the Company is not permitted to
declare or pay dividends with respect to the Shares without the prior written
consent of Parent, which consent shall not be unreasonably withheld, except that
the Company may declare and pay to holders of Shares regular quarterly dividends
with usual record and payment dates for dividends consistent with past practice
unless otherwise required by the Merger Agreement, in an amount not to exceed
$0.13 per Share.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING;
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
could reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public. Following
completion of the Offer, at least a majority and up to 67% of the outstanding
Shares will be owned by Purchaser.
Stock Listing. Purchaser does not anticipate that the Shares would be
subject to delisting by the NYSE as a result of completion of the Offer.
According to the NYSE's published guidelines, the NYSE would consider delisting
the Shares if, among other things, (i) the number of record holders of 100 or
more Shares should fall below 1,200; (ii) the number of publicly held Shares
(exclusive of holdings of Parent and
12
<PAGE> 15
Purchaser and any other subsidiaries or affiliates of Parent and of officers or
directors of the Company or their immediate families or other concentrated
holdings of 10% or more ("Excluded Holdings")) should fall below 600,000; or
(iii) the aggregate market value of such publicly held Shares (exclusive of
Excluded Holdings) should fall below $5,000,000. If, as a result of the purchase
of Shares pursuant to the Offer or otherwise, the Shares no longer meet the
requirements of the NYSE for continued listing and the listing of the Shares is
discontinued, the market for the Shares could be adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price or other quotations would be reported by such exchange or
through the National Association of Securities Dealers Automated Quotation
System or other sources. The extent of the public market for the Shares and the
availability of such quotations would depend upon such factors as the number of
shareholders and/or the aggregate market value of the publicly-traded Shares
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration under the
Exchange Act as described below and other factors. Purchaser cannot predict
whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Shares or whether it would cause future market prices to be
greater or less than the Offer Price.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Purchaser does not anticipate that such registration will be
subject to termination as a result of completion of the Offer. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange and held by 300 or more holders of record. Termination of registration
of the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to its shareholders and to the
Commission and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy statement in connection with shareholders' meetings and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Company. Furthermore, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
may be impaired or eliminated.
Purchaser currently intends not to seek delisting of the Shares from the
NYSE and the termination of the registration of the Shares under the Exchange
Act prior to the Effective Time, although such Shares may be delisted by the
NYSE as described above. If the NYSE listing and the Exchange Act registration
of the Shares are not terminated prior to the Merger, then the Shares will be
delisted from the NYSE and the registration of the Shares under the Exchange Act
will be terminated following the consummation of the Merger.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding stock exchange listing
and market quotations, it is possible that, following the Offer, the Shares
would no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers. In addition, if registration of the
Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been furnished by the Company or has been
taken from or based upon publicly available documents and records on file with
the Commission and other public sources. The summary information concerning the
Company in this Section 8 and elsewhere in this Offer to Purchase is derived
from the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1998 (the "Company 10-K") and the Company's Quarterly Report on Form 10-Q for
the six months ended December 31, 1998 (the "Company 10-Q"), as filed with the
Commission pursuant to the Exchange Act, and other publicly available
information.
13
<PAGE> 16
The summary information set forth below is qualified in its entirety by
reference to such reports (which may be obtained and inspected as described
below) and should be considered in conjunction with the more comprehensive
financial and other information in such reports and other publicly available
reports and documents filed by the Company with the Commission and other
publicly available information. Although Purchaser and Parent do not have any
knowledge that would indicate that any statements contained herein based upon
such reports are untrue, neither Parent nor Purchaser assumes responsibility for
the accuracy or completeness of the information concerning the Company contained
in such documents and records or for any failure by the Company to disclose
events which may have occurred or may affect the significance or accuracy of any
such information but which are unknown to Parent or Purchaser.
General. The Company is an Indiana corporation with principal executive
offices located at 100 North Riverside Plaza, Chicago, Illinois 60606-1596. The
telephone number of the Company at such offices is (312) 807-2000.
The Company operates in two business segments: Speciality Chemicals and
Salt, manufacturing and marketing a wide range of products for industrial and
consumer use in the United States and internationally. The Speciality Chemicals
segment manufactures a wide variety of high technology and specialized chemical
products for a multitude of customer applications. The Company's Salt segment
produces and sells salt, principally in the United States, Canada and France,
under (respectively) the MORTON, WINDSOR and Salins du Midi trademarks, for
human and animal consumption, water conditioning and highway ice control, as
well as for industrial and chemical uses.
Selected Financial Information. Set forth below is a summary of certain
selected consolidated financial information with respect to the Company,
excerpted or derived from the Company 10-K and the Company 10-Q. More
comprehensive financial information is included in such reports (including
management's discussion and analysis of financial condition and results of
operations) and in other documents filed by the Company with the Commission. The
following summary is qualified in its entirety by reference to such reports and
other documents and all of the financial information (including any related
notes) contained therein. Such reports, documents and financial information may
be inspected and copies may be obtained from the Commission in the manner set
forth below under "Available Information."
MORTON INTERNATIONAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31
YEAR ENDED JUNE 30, (UNAUDITED)
-------------------------- ----------------
1998 1997 1996 1998 1997
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................... $2,530 $2,341 $2,215 $1,234 $1,266
Income from continuing operations before
income taxes............................. 326 334 285 147 176
Income from continuing operations........... 209 214 179 94 112
Income from discontinued operations, net of
applicable income taxes.................. -- 129 155 -- --
Net income.................................. 209 343 334 94 112
Income per common share:
Basic
Income from continuing operations........ $ 1.59 $ 1.51 $ 1.21 $ .76 $ .84
Income from discontinued operations...... -- .92 1.06 -- --
------ ------ ------ ------ ------
Net Income............................... $ 1.59 $ 2.43 $ 2.27 $ .76 $ .84
====== ====== ====== ====== ======
Diluted
Income from continuing operations........ $ 1.57 $ 1.48 $ 1.20 $ .76 $ .83
Income from discontinued operations...... -- .90 1.05 -- --
------ ------ ------ ------ ------
Net Income............................... $ 1.57 $ 2.38 $ 2.25 $ .76 $ .83
====== ====== ====== ====== ======
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31
YEAR ENDED JUNE 30, (UNAUDITED)
-------------------------- ----------------
1998 1997 1996 1998 1997
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD END):
Total current assets........................ $1,113 $1,390 $ 859 $1,223 $1,171
Total assets................................ 2,548 2,805 2,629 2,707 2,581
Total current liabilities................... 472 523 444 684 455
Long-term debt.............................. 223 224 219 222 226
Total shareholders' equity -- As Reported... 1,514 1,734 1,673 1,462 1,578
Total shareholders' equity -- Restated(1)... 1,531 1,742 1,667 1,462 1,590
</TABLE>
- ---------------
(1) Restated to comply with FASB Statement 130 -- Reporting Comprehensive
Income.
Other Financial Information. During the course of the discussions between
Parent and the Company that led to the execution of the Merger Agreement, the
Company provided Parent or its representatives with certain information about
the Company and its financial performance which Parent believes was not and is
not publicly available. The information provided included financial projections
(the "Company Projections") for the Company as an independent company (i.e.,
without regard to the impact to the Company of a transaction with Parent and
Purchaser). The Company Projections do not take into account any of the
potential effects of the transactions contemplated by the Offer and the Merger.
The Company Projections disclose, among other things, the following:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30
----------------------------------------------
PROJECTED
ESTIMATED ---------------------------------
1999 2000 2001 2002
--------- -------- --------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Total sales....................................... $2,637.2 $2,789.4 $2,973.5 $3,259.5
Net income........................................ $ 215.2 $ 227.1 $ 276.6 $ 343.9
Average shares.................................... 123.3 117.4 116.6 117.4
Net income per share.............................. $ 1.75 $ 1.93 $ 2.37 $ 2.93
</TABLE>
The Company has advised Purchaser and Parent that it does not as a matter
of course make public any projections as to future performance or earnings, and
the projections set forth above are included in this Offer only because the
information was provided to Parent and Purchaser.
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING
PROJECTIONS OR FORECASTS. THE COMPANY HAS ADVISED PARENT AND PURCHASER THAT ITS
INTERNAL OPERATING PROJECTIONS ARE, IN GENERAL, PREPARED SOLELY FOR INTERNAL USE
AND CAPITAL BUDGETING AND OTHER MANAGEMENT DECISIONS AND ARE SUBJECTIVE IN MANY
RESPECTS AND THUS SUSCEPTIBLE TO VARIOUS INTERPRETATIONS AND PERIODIC REVISION
BASED ON ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENTS. THE PROJECTIONS WERE BASED
ON A NUMBER OF ASSUMPTIONS WHICH MAY NOT BE REALIZED AND ARE SUBJECT TO
SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE
CONTROL OF THE COMPANY. THERE CAN BE NO ASSURANCE, AND NO REPRESENTATION OR
WARRANTY IS MADE, THAT ACTUAL RESULTS WILL NOT VARY MATERIALLY FROM THOSE
DESCRIBED ABOVE. THE INCLUSION OF THIS INFORMATION SHOULD NOT BE REGARDED AS AN
INDICATION THAT PARENT, PURCHASER OR ANYONE WHO RECEIVED THIS INFORMATION THEN
CONSIDERED, OR NOW CONSIDERS, IT A RELIABLE PREDICTION OF FUTURE EVENTS, AND
THIS INFORMATION SHOULD NOT BE RELIED ON AS SUCH. NONE OF PARENT, PURCHASER OR
THE DEALER MANAGER ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS,
ACCURACY OR COMPLETENESS OF THE PROJECTIONS, AND THE COMPANY HAS MADE NO
REPRESENTATION TO PARENT OR PURCHASER REGARDING THE PROJECTIONS DESCRIBED ABOVE.
15
<PAGE> 18
NONE OF THE COMPANY, PURCHASER, PARENT OR ANY OF THEIR RESPECTIVE FINANCIAL
ADVISORS OR THE DEALER MANAGER INTENDS TO UPDATE, REVISE OR CORRECT SUCH
PROJECTIONS IF THEY BECOME INACCURATE (EVEN IN THE SHORT TERM).
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's shareholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a web site
on the Internet at http://www.sec.gov that contains reports, proxy statements
and other information relating to the Company which have been filed via the
Commission's EDGAR System.
9. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
General. Parent is a Delaware corporation with its principal executive
offices located at 100 Independence Mall West, Philadelphia, Pennsylvania 19106.
The telephone number of Parent at such location is (215) 592-3000. Parent
produces a variety of chemicals, including specialty polymers and resins.
Purchaser is a newly incorporated Indiana corporation organized in
connection with the Offer and the Merger and has not carried on any significant
activities other than in connection with the Offer and the Merger. The principal
offices of Purchaser are located at 100 Independence Mall West, Philadelphia,
Pennsylvania 19106. The telephone number of Purchaser at such location is (215)
592-3000. All of the outstanding capital stock of Purchaser is owned directly by
Parent. Until immediately prior to the time Purchaser purchases Shares pursuant
to the Offer, it is not anticipated that Purchaser will have any significant
assets or liabilities or engage in any significant activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger.
Financial Information. Set forth below is a summary of certain
consolidated financial information with respect to Parent and its subsidiaries
for its fiscal years ended December 31, 1997, 1996 and 1995, and for the nine
months ended September 30, 1998, excerpted from financial statements presented
in Parent's Annual Reports on Form 10-K for the years ended December 31, 1997
and December 31, 1996 and Parent's Quarterly Report on Form 10-Q for the period
ended September 30, 1998, each as filed with the Commission. More comprehensive
financial information is included in such reports (including management's
discussion and analysis of results of operations and financial position) and
other documents filed by Parent with the Commission, and the financial
information summary set forth below is qualified in its entirety by reference to
such reports, which are incorporated herein by reference, and all the financial
information and related notes contained therein.
16
<PAGE> 19
ROHM AND HAAS COMPANY
SUMMARY OF SELECTED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
YEAR ENDED DECEMBER 31, (UNAUDITED)
-------------------------- ------------------
1997 1996 1995 1998 1997
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................... $3,999 $3,982 $3,884 $2,836 $3,049
Earnings before income taxes and
extraordinary item....................... 611 530 441 594 464
Earnings before extraordinary item.......... 410 363 292 378 312
Net earnings................................ 410 363 292 365 312
Net earnings applicable to common
stockholders............................. 403 356 285 360 306
Earnings per common share before
extraordinary item:(1)
-- Basic................................. 2.17 1.82 1.41 2.09 1.64
-- Diluted............................... 2.13 1.79 1.40 2.05 1.61
Net earnings per common share:(1)
-- Basic................................. 2.17 1.82 1.41 2.02 1.64
-- Diluted............................... 2.13 1.79 1.40 1.98 1.61
BALANCE SHEET DATA (AT PERIOD END):
Total current assets........................ $1,397 $1,456 $1,421 $1,334 $1,391
Total assets................................ 3,900 3,933 3,916 3,629 3,883
Total current liabilities................... 850 886 828 990 787
Long-term debt.............................. 509 562 606 388 551
Total stockholders' equity.................. 1,797 1,728 1,781 1,502 1,784
</TABLE>
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(1) Restated for the 3-for-1 stock split effective September 1, 1998.
On January 25, 1999, Parent announced that its net earnings for 1998 were
$2.45 per share of Parent Common Stock on a diluted basis. Sales for the year
amounted to $3.7 billion. Total net earnings for the year were $440 million.
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning Parent's directors and officers, their
remuneration, options granted to them, the principal holders of Parent's
securities and any material interests of such persons in transactions with
Parent is required to be disclosed in proxy statements distributed to Parent's
stockholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Commission located at Seven World Trade
Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, IL 60661. Copies of such information should be
obtainable by mail, upon payment of the Commission's customary charges, by
writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a web site on the Internet
at http://www.sec.gov that contains reports, proxy statements and other
information relating to Parent which have been filed via the Commission's EDGAR
System.
The name, citizenship, business address, present principal occupation and
material positions held during the past five years of each of the executive
officers and directors of Parent and Purchaser and certain other persons are set
forth in Schedule I to this Offer to Purchase.
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<PAGE> 20
Except as set forth in this Offer to Purchase none of Purchaser, Parent, or
to the best knowledge of Purchaser and Parent, any of the persons listed on
Schedule I hereto or any associate or majority owned subsidiary of Purchaser,
Parent or any of the persons so listed, beneficially owns or has a right to
acquire, directly or indirectly, any Shares, and none of Purchaser or Parent, or
to the best knowledge of Purchaser and Parent, any of the persons or entities
referred to above, nor any of the respective executive officers, directors or
subsidiaries of any of the foregoing, has effected any transaction in the Shares
during the past 60 days. On January 26, 1999, Parent purchased 100 Shares in a
brokers' transaction at a purchase price of $25.75 per Share.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent
or, to the best knowledge of Purchaser and Parent, any of the persons listed on
Schedule I hereto, has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including,
but not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent,
any of their respective affiliates, nor, to the best knowledge of Purchaser or
Parent, any of the persons listed on Schedule I, has had any business
relationships or transactions with the Company or any of its executive officers,
directors or affiliates that would be required to be reported under the rules of
the Commission applicable to the Offer. Except as set forth in this Offer to
Purchase, there have been no contacts, negotiations or transactions between
Purchaser, Parent, any of their respective affiliates or, to the best knowledge
of Purchaser or Parent, any of the persons listed on Schedule I, and the Company
or its affiliates concerning a merger, consolidation or acquisition, tender
offer or other acquisition of securities, election of directors or a sale or
other transfer of a material amount of assets that would be required to be
reported under the rules of the Commission applicable to the Offer.
10. SOURCES AND AMOUNT OF FUNDS.
The Offer is not conditioned upon any financing arrangements. Purchaser
estimates that the total amount of funds required by Purchaser to consummate the
Offer and the Merger, including the fees and expenses of the Offer and the
Merger, is approximately $3.2 billion. Purchaser will obtain all such funds from
Parent in the form of capital contributions or advances. Parent currently
anticipates funding the capital contributions or advances through a new
syndicated bank credit facility to be entered into prior to the consummation of
the Offer.
It is anticipated that any indebtedness incurred by Parent in connection
with the Offer and the Merger will be repaid from funds generated internally by
Parent and its subsidiaries (including, after the Merger, if consummated, funds
generated by the Company and its subsidiaries), through other sources which may
include the proceeds of future bank refinancings, dispositions or the public or
private sale of debt or equity securities from time to time, or through a
combination of two or more such sources. No final decisions have been made,
however, concerning the method Parent will employ to repay any such
indebtedness. Such decisions, when made, will be based on Parent's review from
time to time of the advisability of particular actions, as well as on prevailing
interest rates and financial and other economic conditions.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In light of the increasing challenges facing specialty chemicals companies,
including intensifying competition from traditional competitors and the
emergence of strong European competitors, commoditization of certain product
lines resulting in declining profit margins and slowed earnings growth, changes
in global economic conditions, particularly in Asia, as well as accelerated
acquisition activity and globalization of chemical companies over the last
several years, during the summer of 1998 the Company commenced a review of the
strategic alternatives available to it. In connection with its review, the
Company engaged Goldman Sachs as its financial advisor to assist the Company in
its analysis and consideration of various strategic alternatives. Over the next
several months, the Company evaluated a range of strategic alternatives,
including the potential divestiture of non-core assets, selected acquisitions to
enhance the Company's portfolio of
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<PAGE> 21
businesses and achieve critical mass in selected business areas, and potential
business combination transactions with both larger and smaller chemical industry
participants. During this period, the Company and its financial advisor had
contacts with various parties to explore on a preliminary basis several of these
alternatives. The directors of the Company were periodically updated regarding
these contacts.
For several years, Parent had been seeking acquisition candidates that
could expand its technological and market base and enhance the value of Parent
for its stockholders. Parent had identified the Company as one of a few
acquisition candidates that fit its objectives.
In October 1998, J. Lawrence Wilson, Parent's Chairman and Chief Executive
Officer, contacted S. Jay Stewart, Chairman and Chief Executive Officer of the
Company, and stated that Parent would be interested in exploring a possible
business combination transaction with the Company. Mr. Stewart agreed to meet
with Mr. Wilson and Rajiv L. Gupta, Parent's Vice Chairman designate, on
November 11, 1998. At the meeting the executives discussed a possible business
combination transaction between the companies and agreed that representatives of
the Company's and Parent's respective managements would meet as the next step in
evaluating such a transaction. On November 24, 1998, the parties executed a
confidentiality agreement and began to exchange financial and other information
relating to their respective businesses.
On December 11, 1998, representatives of management of Parent and the
Company met to discuss the rationale for, and benefits of, a possible business
combination, potential transaction structures and preliminary due diligence
requirements, and to establish a framework for continuing the discussions
between the two companies. Following that meeting, Mr. Wilson contacted Mr.
Stewart and indicated that Parent would be interested in pursuing a transaction
with consideration consisting of 60% cash and 40% Parent Common Stock that would
value the Company, on a preliminary basis, in excess of $35 per Share if
Parent's management concluded that certain levels of cost savings could be
achieved. Messrs. Wilson and Stewart agreed that members of senior management of
the Company and Parent would meet to define in more detail the potential
benefits that could be achieved by combining the two companies.
On January 7, 1999 members of senior management of the Company and Parent
met to begin quantifying the level of cost savings and other benefits that might
be achievable through a combination of the two companies.
Following this meeting, Parent engaged Wasserstein Perella as its financial
advisor and Simpson Thacher & Bartlett as its legal advisor in connection with a
possible transaction between Parent and the Company.
On January 13, 1999, the Company's and Parent's respective financial and
legal advisors met to discuss potential structuring alternatives for a possible
transaction between the two companies as well as the timing and other
considerations relevant to the possible alternative transaction structures, in
preparation for a meeting between members of senior management of the Company
and Parent scheduled for the next day. Parent's advisors described a "two-step"
transaction structure in which Parent would purchase 60% of the Company's
outstanding shares in a cash tender offer followed by a "back-end" merger in
which the remaining Shares would be exchanged for Parent Common Stock based on a
fixed exchange ratio. The Company's advisors stated the Company's preference for
a single-step merger structure and discussed certain issues relating to a
two-step structure, including protections as to the value of the consideration
to be received by the Company's shareholders, the timing of the second-step
merger and assurance of completion. The parties' advisors also discussed other
aspects of a possible business combination, including the impact on timing of
the required regulatory approvals, and whether a tax-free transaction for
Company shareholders could be achieved. The Company's advisors indicated that
the Company would seek a commitment from the Haas Family Stockholders who
control approximately 39% of Parent's outstanding voting power to support a
transaction. Parent's advisors also discussed certain transaction protection
mechanisms.
At a meeting on January 14, 1999, Mr. Wilson restated Parent's continuing
interest in a transaction that would value the Company above a $35 per Share
price and provide for a combination of 60% cash and 40% stock consideration, but
indicated that his management team had not yet been able to conclude that the
levels of cost savings necessary to justify such a price could be obtained. At
that meeting, representatives from Parent's and the Company's senior management
continued their review of the companies' respective
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<PAGE> 22
businesses and explored additional opportunities for potential cost savings that
might be achieved through combining the two companies. After consulting with the
Company's senior management and its financial and legal advisors later that day,
Mr. Stewart informed Mr. Wilson that the Company would require a higher
transaction price and discussed the Company's concerns regarding transaction
structure and timing. Messrs. Wilson and Stewart agreed to continue their
discussions on the financial and other terms of a potential transaction early
the following week.
During the period from January 18 through January 21, 1999, Mr. Wilson and
Mr. Stewart held several telephone conversations. No specific decisions were
reached regarding the proposed transaction, but the parties agreed that
representatives of management and the legal and financial advisors of both
companies would meet on January 24th.
On January 24, 1999, members of the Company's and Parent's senior
management and their financial and legal advisors met to discuss the financial
and other terms of a possible business combination transaction between the
companies. Parent indicated that it would be willing to increase the total
consideration to be paid to Company shareholders to $36 3/8 per Share,
consisting of 60% cash consideration and 40% stock consideration, with a
floating exchange ratio for the stock portion, subject to a collar, provided
that the transaction be structured as a cash tender offer followed by a back-end
merger. The parties continued to discuss the topics noted above, including
transaction structure, timing and conditions of closing, the percentages of cash
and stock in the transaction, the terms of a "collar" or similar mechanism to
provide some protection to Company shareholders with respect to the value of the
Parent Common Stock to be received in the Merger, and Parent's request for
various deal protection provisions. In order to address the Company's
requirement that a two-step transaction structure minimize the risks to the
Company's shareholders as to timing and value, Parent indicated its willingness,
in the event that Parent stockholder approval was not obtained, to replace a
portion of the stock consideration with sufficient cash to complete the
transaction without such approval. The parties did not come to an agreement with
respect to the financial or other significant terms of the transaction,
including price and structure, and agreed to continue the ongoing discussions
between the companies' legal and financial advisors and to consider the
proposals discussed at the meeting.
On January 25, 1999, Mr. Wilson contacted Mr. Stewart and described a
proposal to increase the transaction value to $37 1/8 per Share, with 67% of the
Shares to be acquired for cash in a tender offer. Mr. Wilson proposed providing
for a collar mechanism along the lines that the Company had proposed at the
meeting on January 24th. Mr. Stewart indicated that he was prepared to pursue
discussions of a transaction based on Mr. Wilson's proposal.
Throughout the remainder of the week of January 25, the parties' legal and
financial advisors negotiated the terms and conditions of the proposed merger
agreement, and the parties and their advisors also conducted due diligence with
respect to the other party.
On January 28, 1999, the Company Board met to consider a possible business
combination transaction with Parent. At the meeting, members of senior
management and representatives of the Company's legal and financial advisors
reviewed with the Company Board, among other things, the status of the ongoing
discussions between Parent and the Company, factors affecting consolidation and
profitability in the chemicals industry and management's views on the
advisability of pursuing a transaction with Parent. The Company's legal and
financial advisors also discussed the proposed terms and structure of a business
combination with Parent. After considering these discussions, the Company Board
agreed that management should pursue further discussions with Parent, subject to
satisfactory resolution of certain issues related to timing and certainty.
Teams from the Company and Parent, including their respective legal and
financial advisors, met on January 29, 1999 to continue the negotiation of the
terms of the transaction and the draft merger agreement, including the collar
provision. Following these discussions, the parties agreed to base the initial
exchange ratio for the stock consideration component on Parent's closing price
on January 29, with a collar adjustment mechanism at stock prices within a 10%
range (on either side) of that closing price.
20
<PAGE> 23
Throughout the remainder of the weekend, the parties negotiated the terms
of the Merger Agreement, including matters relating to transaction structure,
timing of the Offer and Merger, the nature and extent of any termination fees,
the conditions for consummation of the transaction and other matters described
above. In addition, the parties discussed the terms of the employment agreements
to be entered into at the time of execution of the Merger Agreement. See Section
12.
On January 31, 1999, the Company Board met to consider the proposed
transaction with Parent. Representatives of the Company's senior management and
the Company's legal and financial advisors made presentations and reviewed
certain matters. The Company's legal advisors reviewed with the Company Board
the transaction terms that had been negotiated since the Board meeting on
January 28, 1999. Goldman Sachs made a presentation including, among other
things, a financial analysis of the proposed transaction with Parent and
rendered its oral opinion, subsequently confirmed in writing, that as of such
date, and based upon and subject to certain matters and assumptions, the Offer
consideration and the Merger Consideration (as defined in Section 12) to be
received by the holders of Shares in the Offer and the Merger, taken as a
unitary transaction, are fair from a financial point of view to such holders.
Following discussion, the Company Board unanimously approved the Offer and the
Merger and determined to recommend that Company shareholders accept the Offer,
tender their Shares thereunder and approve the Merger Agreement.
On January 31, 1999, Parent's Board of Directors met to consider the
proposed transaction with the Company. Representatives of Parent's senior
management and Parent's legal and financial advisors made presentations and
reviewed, among other things, the transaction terms that had been negotiated
with the Company and the employment arrangements that had been agreed to with
Messrs. Stewart and Johnston. Wasserstein Perella made a presentation including,
among other things, a financial analysis of the proposed transaction with the
Company and rendered its oral opinion, subsequently confirmed in writing, to the
effect that, as of such date, subject to the various assumptions and limitations
set forth therein, the consideration payable pursuant to the Merger Agreement is
fair to Parent from a financial point of view. Following discussion, Parent's
Board of Directors, by a unanimous vote of the directors present, approved and
adopted the Merger Agreement and the transactions contemplated thereby and
resolved to recommend that stockholders of Parent vote in favor of the issuance
of Parent Common Stock in connection with the Merger and the amendment of the
Certificate of Incorporation to increase to 400 million the number of authorized
shares of Parent Common Stock.
After the requisite approvals were obtained from the Company Board and the
Parent Board, the Merger Agreement was executed on January 31, 1999. The parties
issued a joint press release announcing execution of the Merger Agreement before
the opening of the NYSE on February 1, 1999.
12. THE MERGER AGREEMENT AND CERTAIN OTHER AGREEMENTS.
Merger Agreement
The following is a summary of the Merger Agreement, which summary is
qualified in its entirety by reference to the Merger Agreement which is filed as
an exhibit to the Tender Offer Statement on Schedule 14D-1.
The Offer. The Merger Agreement provides for the commencement of the Offer
by Purchaser. The obligation of Purchaser to accept for payment Shares tendered
pursuant to the Offer is subject only to the satisfaction or waiver by Purchaser
of the conditions set forth in Section 15 hereof. Under the Merger Agreement,
Purchaser may, in its sole discretion, waive any such condition (other than the
Minimum Condition) and make any other changes in the terms and conditions of the
Offer; provided that, unless previously approved by the Company in writing, no
change may be made which (i) changes the Minimum Condition, (ii) decreases the
price per Share payable in the Offer, (iii) changes the form of consideration
payable in the Offer, (iv) increases or reduces the maximum number of Shares to
be purchased in the Offer, (v) amends the Offer conditions set forth in Section
15 hereof or imposes additional conditions to the Offer, or (vi) makes other
changes to the terms or conditions to the Offer that are adverse to the holders
of Shares. Purchaser has agreed that, subject to the terms and conditions of the
Merger Agreement, including the Offer Conditions, it will accept for payment and
pay for Shares as soon as it is permitted to do so under applicable
21
<PAGE> 24
law. Purchaser has agreed that unless the Merger Agreement has been terminated
pursuant to its terms and subject to the following sentence, Purchaser will
extend the Offer from time to time in the event that, at a then-scheduled
expiration date, all of the conditions set forth in Section 15 hereof have not
been satisfied or waived as permitted pursuant to the Merger Agreement, each
such extension not to exceed (unless otherwise consented to in writing by the
Company) the lesser of 10 additional business days or such fewer number of days
that Purchaser reasonably believes are necessary to cause such conditions to be
satisfied. If, however, on April 2, 1999 (subject to extension pursuant to the
proviso to this sentence), Purchaser has not consummated the Offer in accordance
with its terms, Purchaser has agreed to terminate the Offer without the
acceptance of any Shares previously tendered, and the parties have agreed, upon
the terms and conditions of the Merger Agreement, to seek to consummate the
Merger; provided, however, that such date may be further extended by Parent, but
in no event beyond April 17, 1999, if Parent reasonably believes that the
required regulatory approvals pursuant to the HSR Act and the EU Approval will
be obtained during such extended period. In the event that the Merger Agreement
is terminated, Purchaser has agreed to, and Parent has agreed to cause Purchaser
to, promptly terminate the Offer without accepting any Shares for payment.
The Merger. The Merger Agreement provides that, as soon as practicable
after the satisfaction or waiver of the conditions to the Merger set forth
therein, Purchaser will be merged with and into the Company in accordance with
the IBCL. As a result of the Merger, the separate corporate existence of
Purchaser will cease and the Company will continue as the surviving corporation
(the "Surviving Corporation"). Pursuant to the terms of the Merger Agreement, at
the Effective Time and without any further action on the part of the Company and
Purchaser, the articles of incorporation of the Company as in effect immediately
prior to the Effective Time shall be amended so as to read in their entirety as
set forth in the Merger Agreement and, as so amended, will be the articles of
incorporation of the Surviving Corporation. At the Effective Time and without
any further action on the part of the Company and Purchaser, the By-Laws of
Purchaser shall be the By-Laws of the Surviving Corporation. The Merger
Agreement provides that the directors of Purchaser immediately prior to the
Effective Time will be the initial directors of the Surviving Corporation and
that the officers of the Company immediately prior to the Effective Time shall
be the initial officers of the Surviving Corporation.
Conversion of Shares. The Merger Agreement provides that, except as
provided below in "Cash Alternative Structure," at the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the following securities: (i) if Purchaser has purchased,
pursuant to the Offer, 80,916,766 Shares, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares held in the treasury
of the Company and Shares owned by Parent or Purchaser ("Cancellation Shares")
which will be cancelled without consideration therefor) will be cancelled,
extinguished and converted into the right to receive a number (rounded to the
nearest one-millionth of a share) of fully paid and nonassessable shares of
Parent Common Stock equal to the Exchange Ratio (as defined below); (ii) if the
Offer is terminated on the Final Expiration Date but the Merger Agreement has
not been terminated or if Purchaser shall have purchased, pursuant to the Offer,
less than 80,916,766 Shares (the number of Shares so purchased, the "Purchased
Share Number"), each Share issued and outstanding immediately prior to the
Effective Time (other than Cancellation Shares) will be cancelled, extinguished
and converted into the right to receive, (A) cash, in an amount equal to the
product of Cash Proration Factor One (as defined below) multiplied by $37.125
and (B) a number (rounded to the nearest one-millionth of a share) of fully paid
and non-assessable shares of Parent Common Stock equal to the product of (x) one
minus Cash Proration Factor One multiplied by (y) the Exchange Ratio; and (iii)
each Share of Purchaser issued and outstanding immediately prior to the
Effective Time will be converted into and become one validly issued, fully paid
and nonassessable share of identical common stock of the Surviving Corporation.
If prior to the Effective Time, Parent or the Company, as the case may be,
should split, combine or otherwise reclassify the Parent Common Stock or the
Shares, or pay (or set a record date that is prior to the Effective Time with
respect to) a stock dividend or other stock distribution in Parent Common Stock
or Shares, or otherwise change the Parent Common Stock or Shares into any other
securities, or make any other such stock dividend or distribution with respect
to the Parent Common Stock or the Shares in capital stock of Parent or the
Company or of their respective subsidiaries in respect of the Parent Common
Stock or the Common Stock, respectively, then the Merger Agreement provides that
the Merger Consideration and the
22
<PAGE> 25
Exchange Ratio will be appropriately adjusted to reflect such split,
combination, dividend or other distribution or change to provide the holders of
Shares, the same economic effect as contemplated by the Merger Agreement prior
to such event.
For purposes of the Merger Agreement, the "Exchange Ratio" is equal to the
number (rounded to the nearest one-millionth) obtained by dividing $37.125 by
the Parent Common Stock Price (as defined below); provided that the Exchange
Ratio will not be less than 1.088710 or greater than 1.330645. The "Parent
Common Stock Price" is equal to the average per share closing price of the
Parent Common Stock on the NYSE Composite Transactions Tape for the twenty
trading-day period ending on the second trading day prior to the Effective Time.
"Cash Proration Factor One" means a fraction, of which (A) the numerator is
equal to (x) 80,916,766 minus (y) the Purchased Share Number, if any, and (B)
the denominator is equal to the number of Shares issued and outstanding
immediately prior to the Effective Time (other than Cancellation Shares) (the
"Final Outstanding Number").
The Merger Agreement provides that each holder of Shares exchanged pursuant
to the Merger who would otherwise have been entitled to receive a fraction of a
share of Parent Common Stock will receive, in lieu thereof, cash (without
interest) in an amount equal to the product of (i) such fractional part of a
share of Parent Common Stock multiplied by (ii) the average closing price of the
Parent Common Stock on the NYSE Composite Transactions Tape for the five trading
days immediately prior to the Effective Time. The consideration provided for
clauses (i) and (ii) in the paragraph above labelled "Conversion of Shares,"
together with the consideration provided for in the preceding sentence, is
referred to herein as the "Merger Consideration" (except as described below
under "Cash Alternative Structure").
Cash Alternative Structure. Pursuant to the terms of the Merger Agreement,
if (a) following the consummation of the Offer, either (x) the Parent
Stockholders Meeting (as defined below under "Meetings") has occurred and at
such meeting (or any adjournments thereof), the Parent Stockholder Approval (as
defined below under "Representations and Warranties") is not obtained or (y) the
Parent Stockholder Approval has not been obtained prior to the 45th day after
the Registration Statement (as defined below under "Meetings") is declared
effective by the Commission, (or, if there exists at such time any injunction or
other order which prohibits, restrains, enjoins or restricts Parent from holding
the Parent Stockholders Meeting or a stop order suspending the effectiveness of
the Registration Statement has been issued by the Commission, by not later than
the 30th day after such 45th day) or (b) all three of the following have
occurred: (i) the Offer is terminated at the Final Expiration Date and the
Merger Agreement has not been terminated, (ii) the Parent Stockholders Meeting
has occurred and at such meeting (or any adjournments thereof) the Parent
Stockholder Approval is not obtained and (iii) the Haas Family Stockholders,
which as of the date of the Merger Agreement owned approximately 39% of the
outstanding voting power of the Parent Common Stock, shall not have voted the
greater of (A) 95% of the shares of Parent Common Stock beneficially owned by
such entities and their affiliates as of the date of the Merger Agreement
(approximately 35% of the outstanding voting power of the Parent Common Stock as
of such date) and (B) such number of shares so owned by such entities on the
record date for the Parent Stockholders Meeting in favor of the Parent
Stockholders Approval, the Parent Stockholders Approval shall not be a condition
to consummation of the Merger, and the Merger Consideration to be received in
respect of shares of Common Stock in the Merger will be modified (the "Cash
Alternative Structure") as set forth below.
In the event that the Cash Alternative Structure is required to be
effected, then notwithstanding anything to the contrary provided for in the
Merger Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Purchaser, the Company or the holders of Parent Common
Stock or Common Stock, each Share issued and outstanding immediately prior to
the Effective Time (other than Cancellation Shares) will be cancelled,
extinguished and converted into the right to receive:
(i) if Purchaser has purchased, pursuant to the Offer, 80,916,766
Shares, (a) cash, in an amount equal to the product of (x) Cash Proration
Factor Two (as defined below), multiplied by (y) the product of the
Exchange Ratio and the Adjusted Parent Common Stock Price (as defined
below); and (b) a number (rounded to the nearest ten-thousandth of a share)
of fully paid and non-assessable shares of
23
<PAGE> 26
Parent Common Stock equal to the product of (x) the Exchange Ratio
multiplied by (y) one minus Cash Proration Factor Two.
(ii) if the Offer is terminated but the Merger Agreement has not been
terminated or if the Purchased Share Number is less than 80,916,766, (a)
cash, in an amount equal to the sum of (x) the product of Cash Proration
Factor One, multiplied by $37.125 plus (y) the product of (A) Cash
Proration Factor Two minus Cash Proration Factor One, multiplied by (B) the
product of the Exchange Ratio and the Adjusted Parent Common Stock Price
and (b) a number (rounded to the nearest ten-thousandth of a share) of
fully paid and non-assessable shares of Parent Common Stock equal to the
product of (x) the Exchange Ratio multiplied by (y) one minus Cash
Proration Factor Two.
"Cash Proration Factor Two" is a fraction, of which (A) the numerator is
equal to (x) the Final Outstanding Number minus (y) the Maximum Share-for-Share
Number and (B) the denominator of which is equal to the Final Outstanding
Number. The "Maximum Share-for-Share Number" is equal to (A) the maximum number
of shares of Parent Common Stock that may be issued by Parent in the Merger
without a vote of its stockholders pursuant to the DGCL, the applicable rules of
the NYSE or otherwise (taking into account all shares of Parent Common Stock
then outstanding or reserved for issuance in connection with any securities,
options or rights convertible into, exchangeable or exercisable for Parent
Common Stock (including, without limitation, Company Stock Options (as defined
below under "Stock Options") not cancelled pursuant to the Merger Agreement)),
divided by (B) the Exchange Ratio. The "Adjusted Parent Common Stock Price" is
equal to the average per share closing price of the Parent Common Stock on the
NYSE Composite Transactions Tape for the five trading-day period ending on the
second trading day prior to the Effective Time.
Stock Options. The Merger Agreement provides that as soon as practicable
following the date of the Merger Agreement, the Board of Directors of the
Company will adopt such resolutions or take such other actions as may be
required to adjust the terms of all outstanding employee or director stock
options to purchase shares of Common Stock and any related stock appreciation
rights ("Company Stock Options") granted under any stock option or stock
purchase plan, program or arrangement of the Company and its subsidiaries,
including without limitation, the 1989 Incentive Plan and the 1997 Incentive
Plan (collectively, the "Stock Plans"), to provide that, at the Effective Time,
each Company Stock Option outstanding immediately prior to the Effective Time
will (except to the extent that Parent and the holder of a Company Stock Option
otherwise agree prior to the Effective Time and except as otherwise provided in
the Merger Agreement with respect to any qualified stock options): (a) if such
Company Stock Option is or becomes exercisable before the Merger or as a
consequence of the transactions contemplated by the Merger Agreement and the
holder of such Company Stock Option elects by written notice to Parent prior to
the date 10 business days prior to the Effective Time to receive the payment
contemplated by this clause (a), be cancelled in exchange for a payment from the
Surviving Corporation (subject to any applicable withholding taxes) equal to the
product of (1) the total number of Shares subject to such Company Stock Option
and (2) the excess of $37.125 over the exercise price per Share subject to such
Company Stock Option; or (b) with respect to any Company Stock Option not
canceled pursuant to clause (a) above, be deemed to constitute an option to
acquire, on the same terms and conditions (including, if any, related stock
appreciation rights and limited stock appreciation rights) as were applicable
under such Company Stock Option, the number of shares of Parent Common Stock
equal to the product of (1) the number of shares of Common Stock issuable upon
exercise of such Company Stock Option and (2) the Exchange Ratio, at a price per
share equal to (1) the exercise price per share for the shares of Common Stock
otherwise purchasable pursuant to such Company Stock Option divided by (2) the
Exchange Ratio.
The Merger Agreement also provides that, except as provided therein or as
otherwise agreed to by the parties, the Stock Plans and any other plan, program
or arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any subsidiary will terminate as
of the Effective Time, and the Company will ensure that following the Effective
Time no holder of a Company Stock Option nor any participant in any Stock Plan
will have any right thereunder to acquire equity securities of the Company or
the Surviving Corporation. With respect to the Company Stock Options not
canceled pursuant to clause (a) in the preceding paragraph, Parent will, as of
the Effective Time, reserve for issuance a number of
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shares of Parent Common Stock equal to the number of shares which may become
issuable upon exercise of such Company Stock Options, such number not to be
reduced except to the extent such options or related stock appreciation rights
are exercised, cancelled or terminated pursuant to their terms.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto, including
representations by the Company as to the Company's (and, subject to certain
exceptions, its subsidiaries') jurisdiction of organization and qualification,
capitalization, power and authority to enter into and consummate the
transactions pursuant to the Merger Agreement, absence of conflicts between
organizational documents, laws and agreements and the transactions pursuant to
the Merger Agreement, governmental consents in connection with the transactions
pursuant to the Merger Agreement, permits, filings with the Commission,
financial statements, absence of certain changes since June 30, 1998 (including
the absence of any material adverse effect with respect to the Company),
litigation, employee benefit plans, tax matters, environmental matters, "Y2K"
compliance and intellectual property matters.
The Merger Agreement includes representations and warranties of Parent and
Purchaser concerning Parent's (and subject to certain exceptions, its
subsidiaries') and Purchaser's jurisdiction of organization and qualification,
capitalization, power and authority to enter into and consummate the transaction
pursuant to the Merger Agreement, absence of conflicts between organizational
documents, laws and agreements and the transactions pursuant to the Merger
Agreement, governmental consents in connection with the transactions pursuant to
the Merger Agreement, permits, filings with the Commission, financial
statements, absence of certain changes since December 31, 1997 (including the
absence of any material adverse effect with respect to Parent), litigation,
employee benefit plans and environmental matters.
Agreements of the Company, Parent and Purchaser.
Conduct of Business of the Company Pending the Merger. In the Merger
Agreement, the Company agreed that, during the period from the date thereof to
the Effective Time, unless Parent otherwise consents in writing (which consent
shall not be unreasonably withheld) or except as permitted by the Merger
Agreement, the businesses of the Company and its subsidiaries will be conducted
in all material respects only in the ordinary course of business and in
substantially the same manner as previously conducted. The Company agreed that
(subject to certain exceptions), between the date of the Merger Agreement and
the Effective Time, neither the Company nor any of its subsidiaries would,
directly or indirectly do, or commit to do, any of the following without the
prior written consent of Parent, which consent may not be unreasonably withheld:
(a) amend or otherwise change its Articles of Incorporation or By-Laws
or the equivalent organizational documents or the agreement;
(b) issue, deliver, sell, pledge, dispose of or encumber, or authorize
or commit to the issuance, sale, pledge, disposition or encumbrance of, (i)
any shares of capital stock of any class, any Company voting debt or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock, or any Company voting debt or any
other ownership interest of the Company or any of its subsidiaries (except
for the issuance of Shares (and the related Rights) required to be issued
pursuant to the terms of Company Stock Options outstanding as of January
31, 1999) or (ii) any assets of the Company or any of its subsidiaries that
are, individually or in the aggregate, material to the business of the
Company and its subsidiaries, taken as a whole, except for sales of
products in the ordinary course of business and in a manner consistent with
past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock (other than (i) regular quarterly dividends
with usual record and payment dates for dividends consistent with past
practice (unless otherwise required by the Merger Agreement), in an amount
not to exceed $.13 per share, (ii) dividends by wholly owned subsidiaries
of the Company; and (iii) dividends required to be paid pursuant to the
terms of organizational documents of non-wholly owned subsidiaries in
effect on the date of the Merger Agreement;
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(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or any
securities convertible into or exercisable for any shares of its capital
stock, other than pursuant to Company Stock Options and Stock Plans in
accordance with their terms as in effect on the date of the Merger
Agreement;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money other than
short-term borrowings under the Company's existing credit facilities or
issue any debt securities or, other than in the ordinary course of business
and in amounts that are not material, assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations of
any person, or make any loans or advances (other than loans or advances to
employees of the Company and its subsidiaries in the ordinary course of
business consistent with past practice or guarantees of obligations of
subsidiaries) or make any capital contributions to, or investments in, any
other person, other than in the ordinary course of business and in amounts
that are not material; (iii) enter into any material contract or agreement
other than in the ordinary course of business consistent with past
practice; or (iv) authorize any single capital expenditure which is in
excess of $10 million or capital expenditures which are, in the aggregate,
in excess of $50 million for the Company and its subsidiaries taken as a
whole (except to the extent such expenditures were disclosed to Parent in
the Company's budget as of the date of the Merger Agreement);
(f) except to the extent required under existing employee and director
benefit plans, agreements or arrangements as in effect on the date of the
Merger Agreement and except for renewals in the ordinary course, increase
the compensation or fringe benefits of any of its directors, officers or
employees, except for increases in salary or wages or, in connection with a
promotion or change in position granted in the ordinary course, benefits
received by employees of the Company or its subsidiaries who are not one of
the 50 officers of the Company with the highest base salary in the ordinary
course of business in accordance with past practice, or grant any severance
or termination pay not currently required to be paid under existing
severance plans or contracts other than in the ordinary course of business
consistent with past practice to, or enter into any employment, consulting
or severance agreement or arrangement with any present or former director,
officer or other employee of the Company or any of its subsidiaries (other
than an agreement with an employee who is not one of the 50 officers of the
Company with the highest base salary), or, except as is required by law,
establish, adopt, enter into or amend or terminate any collective
bargaining agreement, Company Plan (as defined in the Merger Agreement) or
employee benefit arrangement that would have been Company Plans if they
were in effect as of the date of the Merger Agreement, including, but not
limited to, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
(g) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
practices or principles used by it;
(h) except as may be required by law, make any material tax election,
make or change any method of accounting with respect to taxes, file any
amended tax returns that may have a material adverse effect on the tax
position of the Company or any of its subsidiaries or settle or compromise
any material federal, state, local or foreign tax liability;
(i) settle or compromise any pending or threatened suit, action or
claim which is material to the Company or any of its subsidiaries, taken as
a whole, or which relates to the transactions contemplated by the Merger
Agreement;
(j) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries not constituting
an inactive subsidiary (other than the Merger);
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<PAGE> 29
(k) pay, discharge or satisfy any material claims, liabilities or
obligations, other than the payment, discharge or satisfaction (i) in the
ordinary course of business and consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved against
in the financial statements of the Company, (ii) of liabilities incurred in
the ordinary course of business and consistent with past practice and (iii)
of liabilities required to be paid, discharged or satisfied;
(l) enter into any "non-compete" or similar agreement; or
(m) propose to do or agree to do any of the foregoing or propose to
take any action which would make any of the representations or warranties
of the Company contained in the Merger Agreement untrue and incorrect as of
the date when made if such action had then been taken, or would result in
any of the conditions set forth in Section 15 hereof not being satisfied.
Conduct of Business of Parent Pending the Merger. In the Merger Agreement,
Parent agrees that, during the period from the date of the Merger Agreement to
the Effective Time Parent will use its reasonable best efforts to preserve
substantially intact its and its subsidiaries' current business organizations,
keep available the services of present officers and key employees and preserve
the present relationships of the Parent and its subsidiaries to the end that
their goodwill and ongoing businesses shall be materially unimpaired at the
Effective Time. In the Merger Agreement, Parent agreed that (subject to certain
exceptions), between the date of the Merger Agreement and the Effective Time,
neither Parent nor any of its subsidiaries would directly or indirectly do, or
commit to do, any of the following without the prior written consent of the
Company, which consent may not be unreasonably withheld:
(a) in the case of Parent only, amend or otherwise change its
Certificate of Incorporation or By-Laws (other than the Charter
Amendment(as defined below under "Meetings"));
(b) in the case of Parent only, declare, set aside, make or pay any
dividend or other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock (other than regular
quarterly dividends with usual record and payment dates consistent with
past practice (unless otherwise required by the Merger Agreement), in an
amount not to exceed $.18 per share);
(c) in the case of Parent only, adopt a plan of complete or partial
liquidation or dissolution;
(d) in the case of Parent only, deliver, sell, dispose of, or
authorize or commit to the issuance, sale or disposition of any shares of
capital stock of any class, any voting debt of Parent or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of capital stock, or any voting debt of Parent (except for the
issuance of options in the ordinary course consistent with past practice
and except for issuances in connection with acquisitions or mergers
permitted by the Merger Agreement);
(e) in the case of Parent only, redeem, purchase or otherwise acquire,
directly or indirectly, any capital stock of Parent, other than pursuant to
options and benefit plans;
(f) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof if (i) the aggregate consideration is in excess of $500
million for any individual transaction and $750 million for all such
transactions or (ii) such acquisition would be reasonably likely to prevent
or materially delay the Offer or the Merger; or
(g) propose to do or agree to do any of the foregoing or any action
which would be reasonably likely to prevent or materially delay the Offer
or the Merger or make any of the representations or warranties of Parent or
Purchaser contained in the Merger Agreement untrue and incorrect as of the
date when made if such action had then been taken.
Coordination of Dividends. The Company and Parent agreed in the Merger
Agreement to coordinate with each other the declaration and payment of dividends
in respect of the Shares and the Parent Common Stock and the record dates and
the payment dates relating thereto, so that holders of Shares not receive two
dividends, or fail to receive one dividend, for any single calendar quarter with
respect to their Shares and/or shares of Parent Common Stock any such holder
receives in exchange therefor pursuant to the Merger.
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<PAGE> 30
Meetings. The Company agreed in the Merger Agreement that, acting through
its Board of Directors, it will call and hold a meeting of its shareholders as
soon as practicable following consummation of the Offer for the purpose of
considering and taking action on the Merger Agreement and the transactions
contemplated thereby (the "Company Shareholders Meeting") and except to the
extent otherwise required by the fiduciary duties of the Board of Directors of
the Company under applicable law, (i) include in the joint proxy statement to be
filed in connection with the Company Shareholders Meeting and the Parent
Stockholders Meeting referred to below (the "Proxy Statement") the unanimous
recommendation of the Board of Directors that the shareholders of the Company
vote in favor of the approval of the Merger Agreement and the transactions
contemplated thereby and (ii) use its reasonable best efforts to obtain the
necessary approval of the Merger Agreement and the transactions contemplated
thereby by its shareholders. In the Merger Agreement, the Company represented
that the approval of the Merger Agreement by the holders of a majority of all
votes entitled to be cast by the Common Stock (the "Company Shareholder
Approval") is the only vote of the shareholders of the Company necessary to
authorize the Merger Agreement. Parent has agreed to cause Purchaser to, and
Purchaser shall vote all shares of Common Stock acquired by Purchaser pursuant
to the Offer or otherwise owned by Parent or Purchaser (the "Tendered Shares")
in favor of the approval of the Merger Agreement at the Company Shareholders
Meeting or any adjournment thereof. In addition, between the date of
consummation of the Offer and the date of the Company Shareholders Meeting,
Parent and Purchaser have agreed that neither shall sell, transfer, dispose of
or encumber in any manner or otherwise subject to any voting or other agreement
with any third party any of the Tendered Shares or any voting rights with
respect thereto.
Parent agreed in the Merger Agreement that, acting through its Board of
Directors, it will call and hold a meeting (the "Parent Stockholders Meeting")
of its stockholders as soon as practicable following the consummation of the
Offer for the purpose of considering and taking action on the issuance of the
shares of Parent Common Stock and the Charter Amendment (as defined below) and
(i) include in the Proxy Statement relating thereto the recommendation of the
Board of Directors that the stockholders of Parent vote in favor of the approval
of the issuance of the shares of Parent Common Stock and the Charter Amendment
and the written opinion of Wasserstein Perella to the effect that, as of the
date of such opinion, the consideration to be paid by Parent to the holders of
shares of the Company Common Stock in the Offer and the Merger is fair to Parent
from a financial point of view and (ii) use its reasonable best efforts to
obtain the necessary approval of the issuance of the shares of Parent Common
Stock and the Charter Amendment by its stockholders. In the Merger Agreement,
Parent represented that (where the Cash Alternative Structure is not required to
be effected), (i) the issuance of the shares of Parent Common Stock in the
Merger pursuant to the Merger Agreement requires the approval of a majority of
the votes cast at a meeting at which there is a quorum by the holders of the
Parent Common Stock and the convertible preferred stock of Parent, voting
together and not as separate classes and (ii) the amendment to the Certificate
of Incorporation of Parent to increase the number of authorized shares of Parent
Common Stock to 400 million (the "Charter Amendment") requires the approval of
the holders of a majority of the outstanding shares of (A) Parent Common Stock,
voting as a class, and (B) Parent Common Stock and such convertible preferred
stock, voting together and not as separate classes (collectively, the "Parent
Stockholder Approval").
Parent and the Company agreed in the Merger Agreement to use their
reasonable best efforts to hold the Company Shareholders Meeting and the Parent
Stockholders Meeting on the same day. Parent agreed in the Merger Agreement to
use its reasonable best efforts, subject to compliance with the applicable rules
and regulations under the Exchange Act governing the solicitation of proxies, to
cooperate with the Company in obtaining the agreement of the record holders of
the shares of Parent Common Stock owned by the Haas Family Stockholders to enter
into a voting agreement with the Company substantially in the form provided by
the Company to Parent prior to the date of the Merger Agreement. In addition, as
soon as practicable following the date of the Merger Agreement, the Company and
Parent agreed to prepare and file with the SEC under the Exchange Act and the
rules and regulations promulgated thereunder the Proxy Statement and Parent
shall prepare and file with the Commission a registration statement on Form S-4
with respect to the issuance of Parent Common Stock (the "Registration
Statement"), in which the Proxy Statement will be included as a prospectus. Each
of the Company and Parent agreed to use its reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing.
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<PAGE> 31
Company Board Representation. Promptly upon the purchase by Purchaser of
Shares pursuant to the Offer and, from time to time thereafter, subject to the
terms of the Merger Agreement, Purchaser will be entitled by the terms thereof
to designate up to such number of directors (the "Parent Designees"), rounded up
to the next whole number, on the Board of Directors of the Company as will give
Purchaser representation on the Board of Directors equal to the product of the
total number of directors on such Board (giving effect to the directors elected
as described in this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Purchaser or any affiliate of Purchaser
bears to the total number of Shares then outstanding, and the Company has
agreed, at such time, promptly to take all action necessary to cause the Parent
Designees to be so elected, including either increasing the size of the Board of
Directors or securing the resignations of incumbent directors or both. Following
the appointment of the Parent Designees as described in the previous sentence
and prior to the Effective Time, the Merger Agreement provides that the Board of
Directors of the Company will form a committee of the Board comprised solely of
directors who are not Parent Designees (the "Continuing Director Committee"),
which committee will be delegated sole responsibility for the following matters:
(i) any amendment, or waiver, of any term or condition of the Merger Agreement
or the Articles of Incorporation or By-Laws of the Company; (ii) any termination
of the Merger Agreement by the Company; (iii) any extension by the Company of
the time for performance of any of the obligations or other acts of Purchaser or
Parent under the Merger Agreement; (iv) any waiver, assertion or enforcement of
the Company's rights under the Merger Agreement; (v) any other consent,
agreement or action by the Company or the Company's Board of Directors with
respect to the Merger Agreement; (vi) the declaration of quarterly dividends in
an amount not to exceed $.13 per share of Company Common Stock; and (vii)
permitted changes in the composition, compensation or benefits of the senior
management of the Company and its operating divisions.
No Solicitation of Transactions. Pursuant to the Merger Agreement, the
Company, its affiliates and their respective officers, directors, employees,
representatives and agents agreed immediately to cease any existing discussions
or negotiations, if any, with any parties conducted prior to the date thereof
with respect to any Business Combination Proposal (as defined below). Prior to
the purchase of Shares pursuant to the Offer, the Merger Agreement provides that
the Company may, directly or indirectly, furnish information and access, in each
case only in response to a request for such information or access to any person
made after the date thereof which was not encouraged, solicited or initiated by
the Company or any of its affiliates or any of its or their respective officers,
directors, employees, representatives or agents after the date hereof, pursuant
to appropriate confidentiality agreements containing terms substantially similar
to those contained in the confidentiality agreement between the Company and
Parent dated November 24, 1998, and may participate in discussions and negotiate
with such person concerning any Business Combination Proposal, if, and only to
the extent that, (i) such person has submitted a written Business Combination
Proposal to the Company Board relating to any such transaction, (ii) the Company
Board, after consultation with its independent financial advisers, determines in
good faith that (x) the person making such Business Combination Proposal is
reasonably capable of completing such Business Combination Proposal, taking into
account the legal, financial, regulatory and other aspects of such Business
Combination Proposal and the person making such Business Combination Proposal
and (y) such Business Combination Proposal would reasonably be expected to be a
Superior Proposal (as defined below) and (iii) the Company Board determines in
good faith, based upon the advice of outside counsel to the Company, that,
assuming such Business Combination Proposal is a Superior Proposal, failure to
take such action would violate its fiduciary duties under applicable law. The
Company Board of Directors of the Company has agreed to notify Parent promptly
(but in any event within 24 hours) if any such proposal is made and shall in
such notice indicate in reasonable detail the identity of the offeror and the
material terms and conditions of any proposal and shall keep Parent promptly
advised of the status and material terms of any such inquiry, offer or proposal.
Except as described in this paragraph, the Company and its affiliates have
agreed pursuant to the Merger Agreement to use their reasonable best efforts to
cause their respective officers, directors, employees, representatives or agents
not to, directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent and
Purchaser, any affiliate or associate of Parent and Purchaser or any designees
of Parent or Purchaser) concerning any Business Combination Proposal; provided,
however, that nothing therein would prevent the Company Board from
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<PAGE> 32
taking, and disclosing to the Company's shareholders, a position contemplated by
Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard to any
tender offer or from making any disclosure ("Required Disclosure") to its
shareholders if the Company Board shall conclude in good faith that such
disclosure is required under applicable law; provided, further, that the Company
Board will not recommend that the shareholders of the Company tender their
shares of Common Stock in connection with any such tender offer unless the
Company Board has determined in good faith, based upon the advice of outside
counsel to the Company, that failing to take such action would constitute a
breach of the Company Board's fiduciary duty under applicable law. The Company
agreed, pursuant to the Merger Agreement not to release any third party from, or
waive any provisions of, any confidentiality or standstill agreement to which
the Company is a party, unless the Board shall have determined in good faith,
based upon the advice of outside counsel, that failing to release such third
party or waive such provisions would constitute a breach of the Company Board's
fiduciary duty under applicable law. A "Business Combination Proposal" means any
tender or exchange offer, proposal for a merger, consolidation or other business
combination involving the Company or any of its material subsidiaries, or any
proposal or offer (in each case, whether or not in writing and whether or not
delivered to the stockholders of a party generally) to acquire in any manner,
directly or indirectly, a substantial equity interest in or a substantial
portion of the assets of the Company or any of its material subsidiaries, other
than pursuant to the transactions contemplated by the Merger Agreement. A
"Superior Proposal" is a Business Combination proposal that involves payment of
consideration to the Company's shareholders and other terms and conditions that,
taken as a whole, are superior to the Offer and the Merger.
Employee Benefits Matters. On and after the Effective Time, the Merger
Agreement provides that Parent will cause the Surviving Corporation and its
subsidiaries to promptly pay or provide when due all compensation and benefits
as provided pursuant to the terms of, and to honor in accordance with their
currently existing terms (except to the extent amended or terminated in
accordance with such terms), all compensation arrangements, employment
agreements and employee or director benefit plans, programs and policies in
existence as of the date thereof for all employees (and former employees) and
directors (and former directors) of the Company and its subsidiaries. Parent
agreed in the Merger Agreement to cause the Surviving Corporation, for the
period commencing at the Effective Time and ending on December 31, 2000, to
provide employee benefits under plans, programs and arrangements which, in the
aggregate, will provide benefits to the employees of the Surviving Corporation
and its subsidiaries (other than employees covered by a collective bargaining
agreement) which are no less favorable in the aggregate than those provided
pursuant to the plans, programs and arrangements (other than those related to
the equity securities of the Company) of the Company and its subsidiaries in
effect on the date of the Merger Agreement.
Directors' and Officers' Indemnification and Insurance. The Merger
Agreement provides that the Articles of Incorporation of the Surviving
Corporation will contain provisions no less favorable with respect to
indemnification than are set forth in the Articles of Incorporation of the
Company, which provisions will not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at the Effective Time
were directors, officers or employees of the Company. Parent agreed (subject to
certain limitations) in the Merger Agreement to cause to be maintained in effect
for six years from the Effective Time the current policies (or appropriate
substitute policies) of the directors' and officers' liability insurance
maintained by the Company with respect to matters or events occurring prior to
the Effective Time to the extent available; provided, however, that in no event
shall Parent or the Company be required to expend more than an amount per year
equal to 200% of current annual premiums paid by the Company . In addition,
Parent agreed in the Merger Agreement, for six years after the Effective Time,
that it will or will cause the Surviving Corporation to indemnify and hold
harmless each present and former director and officer of the Company, determined
as of the Effective Time (the "Indemnified Parties"), against any costs or
expenses incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters relating to their duties or actions in their
capacity as officers and directors and existing or occurring at or prior to the
Effective Time to the fullest extent permitted under applicable law.
Certain Other Actions. The Merger Agreement provides that, upon the terms
and subject to the conditions thereof, each of the parties thereto will use its
reasonable best efforts to take, or cause to be taken,
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all appropriate action, and to do or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by the Merger Agreement as soon as
practicable, including but not limited to (i) cooperating in the preparation and
filing of the Offer documents, the Proxy Statement, the Registration Statement,
any required filings under the HSR Act or other foreign filings and any
amendments to any thereof; (ii) promptly making all required regulatory filings
and applications including without limitation, responding promptly to requests
for further information, to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company and its subsidiaries as are necessary for
the consummation of the transactions contemplated by the Merger Agreement and to
fulfill the conditions to the Offer and the Merger; (iii) avoiding the entry of,
or having vacated or terminated, any decree, order, or judgment that would
restrain, prevent, or delay the consummation of the Offer or the Merger,
including but not limited to defending through litigation on the merits any
claim asserted in any court by an party; and (iv) taking any and all reasonable
steps necessary to avoid or eliminate each and every impediment under any
antitrust, competition, or trade regulation law that is asserted by any
governmental entity with respect to the Offer or the Merger so as to enable the
consummation of the Offer or the Merger to occur as expeditiously as possible,
including but not limited to, proposing, negotiating, committing to and
effecting, by consent decree, hold separate order or otherwise, the sale,
divestiture or disposition of such assets or businesses of the Parent or the
Company or any of their respective subsidiaries, (or otherwise taking or
committing to take any action that limits, in any material respect, the freedom
of action with respect to, or its ability to retain, any of the businesses,
product lines, or assets of Parent, the Company or their respective
subsidiaries) as may be required in order to avoid the entry of, or to effect
the dissolution of, any injunction, temporary restraining order, or other order
in any suit or proceeding, which would otherwise have the effect of preventing
or delaying the consummation of the Offer or the Merger; provided, however, that
Parent will not be required to agree to any hold separate order, sale,
divestiture, or disposition of assets or businesses of Parent or the Company
which account, in the aggregate, for more than $160 million in sales of Parent
or the Company, as the case may be, in the most recently completed fiscal year.
At the request of Parent, the Company will be required to agree to divest, hold
separate or otherwise take or commit to take any action that limits its freedom
of action with respect to, or its ability to retain, any of the businesses,
product lines or assets of the Company or any of its subsidiaries, provided that
any such action may be conditioned upon the consummation of the Merger.
Notwithstanding anything to the contrary contained in the Merger Agreement, in
connection with any filing or submission required or action to be taken by
Parent, the Company, or any of their respective Subsidiaries to consummate the
Offer and the Merger or other transactions contemplated in the Merger Agreement,
the Company shall not, without Parent's prior written consent, recommend,
suggest, or commit to any sale, divestiture or disposition of assets or
businesses of the Company or its Subsidiaries. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of the Merger Agreement, the proper officers and directors of each
party to the Merger Agreement shall use their reasonable best efforts to take
all such necessary action.
Parent Board of Directors. Effective at the Effective Time, Parent agreed
in the Merger Agreement to increase the size of its Board of Directors by adding
three directorships and to elect Mr. S. Jay Stewart and two other current
directors of the Company to be mutually agreed by the Company and Parent.
Conditions to the Merger.
Conditions to Obligation of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger are, pursuant to the
Merger Agreement, subject to the satisfaction at or prior to the Effective Time
of the following conditions: (i) the Company Shareholder Approval having been
obtained; (ii) except if the Cash Alternative Structure is required, the Parent
Stockholder Approval having been obtained; (iii) no statute, rule, regulation,
executive order, decree, ruling, injunction or other order (whether temporary,
preliminary or permanent) having been enacted, entered, promulgated or enforced
by any United States, foreign, federal or state court or governmental authority
and being in effect which prohibits, restrains, enjoins or restricts the
consummation of the Merger; (iv) unless Purchaser has terminated the Offer
without terminating the Merger Agreement, Purchaser having purchased Shares
pursuant to the Offer; (v) the Parent Common Stock to be issued in the Merger
and such other shares to be reserved for issuance in connection
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with the Merger having been approved for listing on the NYSE, subject to
official notice of issuance and (vi) the Registration Statement having been
declared effective by the Commission under the Securities Act, no stop order
suspending the effectiveness of the Registration Statement shall having been
issued by the Commission and no proceedings for that purpose initiated or
threatened by the Commission.
Additional Conditions to Obligation of Parent and Purchaser to Effect the
Merger. If the Offer is terminated and the Merger Agreement has not been
terminated, then the obligations of Parent and Purchaser to consummate the
Merger are also subject, pursuant to the terms of the Merger Agreement, to the
satisfaction at or prior to the Effective Time of the following conditions: (i)
the representations and warranties of the Company set forth in the Merger
Agreement that are qualified as to material adverse effect being true and
correct immediately prior to the Effective Time (except to the extent such
representations and warranties shall have been made as of an earlier date, in
which case such representations and warranties being so true and correct as of
such earlier date) with the same force and effect as if then made; (ii) the
representations and warranties of the Company set forth in the Merger Agreement
that are not qualified as to Material Adverse Effect (as defined in the Merger
Agreement) being true and correct in all material respects immediately prior to
the Effective Time (except to the extent such representations and warranties
shall have been made as of an earlier date, in which case such representations
and warranties being true and correct in all material respects as of such
earlier date) with the same force and effect as if then made; (iii) the Company
having performed and complied in all material respects with all agreements and
covenants required to be performed or complied with by it on or before the
Effective Time; (iv) there not having been instituted and continuing or pending
any suit, action or proceeding brought by any U.S. governmental authority before
any federal or state court with respect to the transactions contemplated by the
Merger Agreement which would reasonably be expected to have the effect of making
illegal or otherwise restraining or prohibiting the Merger; (v) All waiting
periods under the HSR Act having expired or having been terminated and the EU
Approval having been received; (vi) any applicable waiting periods applicable to
the Merger under any laws or regulations of any foreign jurisdiction in which
either the Company or Parent (directly or through subsidiaries, in each case)
has material assets or conducts material operations, having expired or been
terminated, and all regulatory approvals applicable to the Merger having been
obtained, other than such waiting periods and approvals the failure of which to
be satisfied or obtained would not have a material adverse effect on the Company
or Parent.
Additional Conditions to Obligation of the Company to Effect the
Merger. If the Offer is terminated but the Merger Agreement has not been
terminated, then the obligations of the Company to consummate the Merger shall
also be subject to the satisfaction at or prior to the Effective Time of the
following conditions: (i) the representations and warranties of Parent and
Purchaser set forth in the Merger Agreement that are qualified as to material
adverse effect being true and correct immediately prior to the Effective Time
(except to the extent such representations and warranties were made as of an
earlier date, in which case such representations and warranties having been so
true and correct as of such earlier date) with the same force and effect as if
then made and (ii) the representations and warranties of Parent and Purchaser
set forth in the Merger Agreement that are not qualified as to material adverse
effect being true and correct in all material respects immediately prior to the
Effective Time (except to the extent such representations and warranties were
made as of an earlier date, in which case such representations and warranties
having been true and correct as of such earlier date) with the same force and
effect as if then made; (iii) Parent and Purchaser having performed and complied
in all material respects with all agreements and covenants required to be
performed or complied with by them on or before the Effective Time; (iv) all
waiting periods under the HSR Act having expired or been terminated and the EU
Approval having been received; and (v) any applicable waiting periods applicable
to the Merger under any laws or regulations of any foreign jurisdiction in which
either the Company or Parent (directly or through subsidiaries, in each case)
has material assets or conducts material operations, having expired or been
terminated, and all regulatory approvals applicable to the Merger having been
obtained, other than such waiting periods and approvals the failure of which to
be satisfied or obtained would not have a material adverse effect on Parent
after the Merger.
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Termination. The Merger Agreement may be terminated pursuant to its terms
and the Offer and Merger contemplated thereby may be abandoned at any time prior
to the Effective Time, notwithstanding approval hereof by the shareholders of
the Company or the stockholders of Parent:
(i) by mutual written consent of Parent, Purchaser and the Company;
(ii) by Parent or the Company if any court of competent jurisdiction
or other governmental body located or having jurisdiction within the United
States or any country or economic region in which either the Company or
Parent, directly or indirectly, has material assets or operations, shall
have issued a final order, injunction, decree, judgment or ruling or taken
any other final action restraining, enjoining or otherwise prohibiting the
Offer or the Merger and such order, injunction, decree, judgment, ruling or
other action is or becomes final and nonappealable;
(iii) unless the Offer has been consummated, by the Company if (a)
there has been a breach of any representation or warranty on the part of
Parent or Purchaser contained in the Merger Agreement which would have a
material adverse effect with respect to Parent, (b) there has been a breach
of any covenant or agreement on the part of Parent or the Purchaser
contained in the Merger Agreement which would have a material adverse
effect with respect to Parent or which materially adversely affects the
consummation of the Offer (unless the Offer has been terminated but the
Merger Agreement has not been terminated) or the Merger, and which, in the
case of clauses (a) and (b), has not been cured prior to the 20th business
day following notice of such breach, (c) the Merger has not been
consummated on or prior to November 30, 1999 (unless such failure is caused
by or results from the failure of any representation or warranty of the
Company to be true and correct in any material respect or the failure of
the Company to perform in any material respect any of its covenants or
agreements contained in the Merger Agreement) or (d) any person has made a
bona fide written offer to acquire the Company which was not solicited
after the date of the Merger Agreement (1) that the Board of Directors of
the Company determines in its good faith judgment is a Superior Proposal
and (2) as a result of which the Board of Directors determines in good
faith, based upon the advice of outside counsel, that failure to take such
action would violate its fiduciary duties under applicable law; provided,
however, that not less than two business days prior to such termination,
the Merger Agreement provides that Company must notify Parent of its
intention to terminate the Merger Agreement pursuant to the provision
described in this clause and must cause its respective financial and legal
advisers to negotiate during such two-day period with Parent to make such
adjustments in the terms and conditions of the Merger Agreement as would
enable the Company to proceed with the transactions contemplated therein on
such adjusted terms, and notwithstanding such negotiations and adjustments,
the Board concludes, in its good faith judgment, that the transactions
contemplated in the Merger Agreement on such terms as adjusted, are not at
least as favorable to the shareholders of the Company as such offer;
provided, further, that such termination under this clause will not be
effective until the Company has made payment of the termination fee
described below;
(iv) unless the Offer has been consummated, by Parent if (a) there has
been a breach of any representation or warranty on the part of the Company
contained in the Merger Agreement which would have a material adverse
effect with respect to the Company, (b) there has been a breach of any
covenant or agreement on the part of the Company contained in the Merger
Agreement which would have a material adverse effect on the Company or
which materially adversely affects the consummation of the Offer (unless
the Offer has been terminated and the Merger Agreement has not been
terminated) or the Merger, and which, in the case of clauses (a) and (b),
shall not have been cured prior to the 20th business day following notice
of such breach or (c) the Board of Directors of the Company has withdrawn
or modified in a manner adverse to Purchaser its approval or recommendation
of the Offer, the Merger Agreement or the Merger, has recommended another
Business Combination Proposal or has failed to publicly affirm its approval
or recommendation of the Offer, the Merger Agreement and the Merger within
15 days of Parent's request, which request may only be made with respect to
any Business Combination Proposal on a single occasion, after any Business
Combination Proposal has been disclosed to the Company's shareholders
generally, or shall have resolved to effect any of the foregoing;
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(v) if the Offer has been terminated (but the Merger Agreement has not
been terminated) by Parent if the Merger has not been consummated on or
prior to November 30, 1999 (unless such failure is caused by or results
from the failure of any representation or warranty of Parent to be true and
correct in any material respect or the failure of Parent to perform in any
material respect any of its covenants or agreements contained in the Merger
Agreement);
(vi) unless the Offer shall have been consummated, by Parent or the
Company if the Company Shareholder Approval shall not have been obtained
upon a vote held at the Company Shareholders Meeting (or any adjournment
thereof); or
(vii) unless the Offer has been consummated or the Cash Alternative
Structure is required to be effected, by Parent or the Company if the
Parent Stockholder Approval has not been obtained upon a vote held at the
Parent Stockholders Meeting (or any adjournment thereof).
Breakup Fees. If:
(i) (x) Parent or the Company terminates the Merger Agreement pursuant
to clause (vi) above, (y) on or prior to the date of the Company
Stockholders Meeting any person (including the Company but not including
Parent or Purchaser) has made a public announcement with respect to a Third
Party Acquisition (as defined below) that contemplates a direct or indirect
consideration (or implicit valuation) for Shares (including the value of
any stub equity) in excess of the Merger Consideration and (z) within 12
months following such termination, the Company, directly or indirectly,
enters into an agreement with respect to a Third Party Acquisition, or a
Third Party Acquisition occurs;
(ii) (x) the Company terminates the Merger Agreement pursuant to
clause (iii)(c) above at a time when Parent would have been permitted to
terminate the Merger Agreement pursuant to clause (iv)(b) above as a result
of a willful or bad faith breach of any covenant or agreement contained in
the Merger Agreement, (y) prior to such termination, any person (not
including Parent or Purchaser) has disclosed publicly or to the Company a
Third Party Acquisition that contemplates a direct or indirect
consideration (implicit valuation) for Shares (including the value of any
stub equity) in excess of the Merger Consideration and (z) within 12 months
following such termination, the Company directly or indirectly, enters into
an agreement with respect to a Third Party Acquisition, or a Third Party
Acquisition occurs; or
(iii) (x) the Company terminates the Merger Agreement pursuant to
clause (iii)(d) above or (y) the Company terminates the Merger Agreement
pursuant to clause (iii)(c) above and at such time Parent would have been
permitted to terminate the Merger Agreement under clause (iv)(c) above or
(z) Parent terminates the Merger Agreement pursuant to clause (iv)(c)
above;
then the Company shall pay to Parent a fee, in cash, of $140 million.
If Parent or the Company terminates the Merger Agreement pursuant to clause
(vii) above, (y) on or prior to the date of the Parent Stockholders Meeting any
person (including Parent but not including the Company) has made a public
announcement with respect to a Parent Third Party Acquisition (as defined below)
that directly or indirectly contemplates (or by its terms would require) the
rejection by the stockholders of Parent of the Parent Stockholder Approval
contemplated by the Merger Agreement, and (z) within 12 months following such
termination, Parent, directly or indirectly, enters into an agreement with
respect to a Parent Third Party Acquisition, or a Parent Third Party Acquisition
occurs, then Parent shall pay to the Company a fee, in cash, of $140 million.
"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger, tender offer or otherwise
by any person or group of persons acting in concert other than Parent, Purchaser
or any affiliate thereof (a "Third Party"); (ii) the acquisition by a Third
Party of 50.0% or more of the assets of the Company and its subsidiaries, taken
as a whole, in one transaction or a related series of transactions; (iii) the
acquisition by a Third Party of beneficial ownership of 35.0% or more of the
outstanding Shares in one transaction or a related series of transactions; or
(iv) the adoption by the Company of a plan of liquidation. "Parent Third Party
Acquisition" means (i) the acquisition of Parent by merger,
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tender offer or otherwise by any person or group of persons acting in concert
other than the Company or any affiliate thereof (a "Parent Third Party"); (ii)
the acquisition by a Parent Third Party of 50.0% or more of the assets of Parent
and its subsidiaries, taken as a whole, in one transaction or a related series
of transactions; or (iii) the acquisition by a Parent Third Party of beneficial
ownership of 35.0% or more of the outstanding shares of Parent Common Stock in
one transaction or a related series of transactions unless immediately following
such acquisition, the Haas Family Stockholders beneficially owns a greater
percentage of the outstanding shares of Parent Common Stock than such Parent
Third Party.
Confidentiality Agreement.
The Company and Parent are also parties to a Confidentiality Agreement
dated November 24, 1999 containing customary terms, including a standstill
pension. The Confidentiality Agreement is filed as an exhibit to the Tender
Offer Statement on Schedule 14D-1.
Employment Agreements.
In connection with the execution of the Merger Agreement, S. Jay Stewart,
the Chairman and Chief Executive Officer of the Company, has entered into a new
employment agreement with Parent and the Company (the "Stewart Agreement"),
which will replace his existing employment agreement with the Company ("Mr.
Stewart's Current Employment Agreement") effective as of the Effective Time.
Also in connection with the execution of the Merger Agreement, William E.
Johnston, President and Chief Operating Officer of the Company, has entered into
an amendment to his employment agreements with the Company.
Pursuant to the Stewart Agreement, for a term of one year after the
Effective Time of the Merger, Mr. Stewart will serve as a Vice Chairman and a
member of the Board of Directors of Parent. He will be a full-time employee of
Parent, will be entitled to participate in all employee benefit plans of Parent
on the same basis as other senior executives of Parent, and will receive during
the one-year term of the agreement cash compensation of $1.95 million (which
represents the aggregate of his current annual base salary, his target annual
bonus under the Company's 1999 fiscal year annual incentive plan and his target
long-term incentive plan award for the award cycle that ends at the end of the
Company's 1999 fiscal year). Mr. Stewart's Current Employment Agreement provides
for certain severance benefits in the event that Mr. Stewart terminates his
employment for "good reason" (as defined in Mr. Stewart's Current Employment
Agreement), and consummation of the Offer or approval of the Merger by the
Company's shareholders would constitute such "good reason." Pursuant to the
Stewart Agreement, if Mr. Stewart's employment with Parent is terminated at any
time after the Effective Time for any reason, Mr. Stewart will be entitled to
receive severance benefits based upon those provided for under Mr. Stewart's
Current Employment Agreement assuming that it would have been extended through
its final termination date of September 30, 2003 (which is Mr. Stewart's
mandatory retirement date). These severance benefits include $2.185 million in
cash (which represents the annualized amount of cash severance, calculated based
upon current compensation, to which he would be entitled under Mr. Stewart's
Current Employment Agreement) per year from the date of termination through
September 30, 2003 (prorated for partial years). The severance benefits Mr.
Stewart will receive will also include continued welfare and fringe benefits and
perquisites for the same period, pension benefits not less than he would have
received had he remained employed during this period with compensation not less
than his current compensation, and lifetime medical benefits for himself and his
spouse not less favorable than those in effect currently for senior executives
of the Company who are entitled pursuant to the Company's employment benefit
plans to retire with full benefits. Mr. Stewart will also continue (as under Mr.
Stewart's Current Employment Agreement) to be entitled to receive an additional
payment to make him whole for any excise tax on "excess parachute payments" for
which he may be liable.
Pursuant to the amendment (the "Johnston Amendment") to Mr. Johnston's
employment agreement, Mr. Johnston will be employed by Parent after the Merger
as a Senior Vice President of Parent, a member of Parent's Executive Council and
the principal operating officer of Parent and the Company in Chicago. Pursuant
to Mr. Johnston's employment agreement, the consummation of the Offer or
approval of the Merger by the Company's shareholders would each constitute a
"change of control" triggering the effectiveness of the employment agreement for
a three-year term. Upon consummation of the Merger, Mr. Johnston would have
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"good reason" (as defined in Mr. Johnston's employment agreement) to terminate
his employment by virtue of the change in his position. If he were to terminate
his employment under such provision, Mr. Johnston would be entitled to receive
certain severance benefits, including an amount in cash equal to three years'
compensation (including base salary and annual and long-term bonuses), a pension
amount representing the value of additional credits for these additional years
and continued welfare benefits through the end of the term of his employment
agreement. The Johnston Amendment provides that, upon consummation of the
Merger, Mr. Johnston will receive a lump sum payment in cash equal to the cash
severance benefits he would have received under his employment agreement absent
the Johnston Amendment. In addition, following the termination of his employment
for any reason during the term of his employment agreement, Mr. Johnston will
receive the pension and welfare benefits provided for by his employment
agreement. If his employment is terminated by Parent without "cause" or by Mr.
Johnston for "good reason" (as defined in his employment agreement as modified
by the Johnston Amendment) during the one-year period following the Effective
Time, he will also receive cash severance pay (computed in the same manner as
under his employment agreement) for the balance, if any, of such one-year
period. The Johnston Amendment also makes clear that the supplemental executive
retirement benefits to which Mr. Johnston is currently entitled will remain
applicable after the Merger. Mr. Johnston will also continue (as under his
employment agreement) to be entitled to receive an additional payment to make
him whole for any excise tax on "excess parachute payments" for which he may be
liable.
Rights Plan Amendment. The Rights Agreement contains certain provisions
that may delay, defer or prevent a takeover of the Company. In connection with
the Merger Agreement, the Company and First Chicago Trust Company of New York
entered into Amendment No. 1, dated as of January 31, 1999 (the "Rights Plan
Amendment"), to the Rights Agreement. The Rights Plan Amendment provides, among
other things, that the Rights will not become exercisable or separate from the
related Shares as a result of the execution, delivery or performance of the
Merger Agreement, the announcement or making of the Offer, the acquisition of
Shares pursuant to the Offer or the Merger, the consummation of the Offer or the
Merger or any other transactions contemplated by the Merger Agreement. The
Rights Plan Amendment also provides that the Rights will expire immediately
prior to the consummation of the Offer or, if the Offer is not consummated, the
Merger. Pursuant to the Merger Agreement, the Company is not permitted to
otherwise amend the Rights Agreement.
13. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; OTHER
MATTERS.
Purpose of the Offer and the Merger. The purpose of the Offer is to enable
Parent, through Purchaser, to acquire a majority equity interest in the Company
as a first step in consummating a business combination. The Offer is being made
pursuant to the Merger Agreement and is intended to increase the likelihood that
the Merger will be effected. The purpose of the Merger is for Parent to acquire
all the Shares not purchased pursuant to the Offer and thereby accomplish the
business combination. Upon consummation of the Merger, the Company will become a
wholly owned subsidiary of Parent.
Company Shareholder Approval. Under the IBCL and the Articles of
Incorporation, the approval of the Company Board and the affirmative vote of the
holders of a majority of all votes entitled to be cast by the outstanding Shares
are required to adopt and approve the Merger Agreement and the Merger. The
Company has represented in the Merger Agreement that the execution and delivery
of the Merger Agreement by the Company and the consummation by the Company of
the transactions contemplated by the Merger Agreement have been duly authorized
by all necessary corporate action on the part of the Company, subject to the
approval of the Merger and the Merger Agreement by the Company's shareholders in
accordance with the IBCL. In addition, the Company has represented that the
affirmative vote of the holders of a majority of all votes entitled to be cast
by the outstanding Shares is the only vote of the holders of any class or series
of the Company's capital stock which is necessary to approve the Merger
Agreement and the transactions contemplated thereby, including the Merger.
Therefore the only remaining required corporate action of the Company will be
the approval of the Merger Agreement and the Merger by the affirmative vote of
the holders of a majority of all votes entitled to be cast by the outstanding
Shares. The Company has agreed in the Merger Agreement to, through the Company
Board, duly call, give notice of, convene and hold a meeting of its shareholders
as soon as practicable following consummation of the Offer for the purpose of
considering and
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taking action on the Merger Agreement and the transactions contemplated thereby.
The Merger Agreement provides that Parent will cause Purchaser to be present, in
person or by proxy at, and vote all of the Shares acquired by Purchaser pursuant
to the Offer or otherwise owned by Parent or Purchaser in favor of the approval
of the Merger Agreement at any such meeting. In the event that Parent, Purchaser
and Parent's other subsidiaries acquire in the aggregate a majority of the
Shares entitled to vote on the approval of the Merger and the Merger Agreement,
they would have the ability to effect the Merger without the affirmative votes
of any other shareholders.
Parent Stockholder Approval. The proposed issuance of shares of Parent
Common Stock in the Merger requires Parent stockholder approval under the NYSE
rules as well as stockholder approval to amend the Certificate of Incorporation
to increase the authorized Parent Common Stock. Under the DGCL and the
Certificate of Incorporation, the Charter Amendment requires the affirmative
vote of the holders of a majority of the outstanding shares of Parent Common
Stock, voting as a class, and Parent Common Stock and Convertible Preferred
Stock, voting together and not as separate classes. Under the rules of the NYSE,
the issuance of shares of Parent Common Stock in the Merger requires the
approval of a majority of the vote cast at a meeting at which there is a quorum
by the holders of Parent Common Stock and Convertible Preferred Stock, voting
together and not as separate classes. Parent has been advised by the Haas Family
Stockholders, who beneficially own shares of Parent Common Stock constituting
approximately 39% of the outstanding voting power of Parent as of January 29,
1999, that they support the transactions contemplated by the Merger Agreement.
Parent agreed in the Merger Agreement that, acting through its Board of
Directors, it will call and hold a meeting of its stockholders as soon as
practicable following the consummation of the Offer for the purpose of
considering and taking action on the issuance of the shares of Parent Common
Stock and the Charter Amendment. Pursuant to the Merger Agreement, if following
consummation of the Offer, the Parent Stockholders Approval is not obtained
prior to the 45th day after the effectiveness of the Registration Statement
relating to such meeting (subject to an extension for not more than 30 days if
there exists an injunction or order restraining the holding of such meeting),
the Parent Stockholder approvals will no longer be a condition to closing the
Merger, and Parent and the Company shall be required to effect the Cash
Alternative Structure. See Section 12.
Dissenters' Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer in which
Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes, however, that Rule 13e-3 will not be applicable to the Merger because
it is anticipated that the Merger would be effected within one year following
consummation of the Offer and in the Merger shareholders would receive the same
value per Share offered during the Offer. If Rule 13e-3 were applicable to the
Merger, it would require, among other things, that certain financial information
concerning the Company, and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority shareholders in
such a transaction, be filed with the Commission and disclosed to minority
shareholders prior to consummation of the transaction. The purchase of a
substantial number of Shares pursuant to the Offer may result in the Company
being able to terminate its Exchange Act registration, although Parent has no
current intention to do so prior to the Effective Time. See Section 7. If such
registration were terminated, Rule 13e-3 would be inapplicable to any such
future Merger or such alternative transaction.
Plans for the Company. Parent will continue to evaluate and review the
Company and its business, assets, corporate structure, capitalization,
operations, properties, policies, management and personnel with a view towards
determining how to optimally realize any potential benefits which arise from the
combination of the operations of the Company with those of Parent. Such
evaluation and review is ongoing and is not expected to be completed until after
the consummation of the Offer and the Merger. If, as and to the extent that
Purchaser acquires control of the Company, Parent and Purchaser will complete
such evaluation and review of the Company and will determine what, if any,
changes would be desirable in light of the
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circumstances which then exist. Such changes could include, among other things,
changes in the Company's business, corporate structure, Articles of
Incorporation, By-Laws, capitalization or management or involve consolidating
and streamlining certain operations and reorganizing other businesses and
operations.
Except as disclosed in this Offer to Purchase, and except as may be
effected in connection with the integration of operations referred to above,
neither Parent nor Purchaser has any present plans or proposals that would
result in an extraordinary corporate transaction, such as a merger,
reorganization, liquidation, or sale or transfer of a material amount of assets,
involving the Company or any of its subsidiaries, or any material changes in the
Company's capitalization, corporate structure, business or composition of its
management or the Company Board.
14. DIVIDENDS AND DISTRIBUTIONS.
If the Company should, on or after the date of the Merger Agreement (except
as contemplated thereby), split, combine or otherwise reclassify the Parent
Common Stock or the Shares or pay (or set a record date that is prior to the
Effective Time with respect to) a stock dividend or other stock distribution in
Parent Common Stock or the Shares or otherwise change the Parent Common Stock or
the Shares into any other securities, or make any other such stock dividend or
distribution with respect to the Parent Common Stock or the Shares in capital
stock of Parent or the Company or of their respective subsidiaries in respect of
the Parent Common Stock or the Shares, respectively, or disclose that it has
taken any such action, then without prejudice to Purchaser's rights under
Section 15, Purchaser may make such adjustments to the Offer Price and other
terms of the Offer as it deems appropriate to reflect such split, combination or
other distribution or change.
If, on or after the date of the Merger Agreement (except as contemplated
thereby), the Company should declare or pay any cash or stock dividend (other
than regular quarterly dividends with usual record and payment dates for
dividends consistent with past practice, in an amount not to exceed $.13 per
Share), or other distribution on, or issue any right with respect to, the Shares
that is payable or distributable to shareholders of record on a date prior to
the transfer to the name of Purchaser or the nominee or transferee of Purchaser
on the Company's stock transfer records of such Shares that are purchased
pursuant to the Offer, then without prejudice to Purchaser's rights under
Section 15, (a) the purchase price payable per Share by Purchaser pursuant to
the Offer will be reduced to the extent any such dividend or distribution is
payable in cash and (b) any noncash dividend, distribution (including additional
Shares) or right received and held by a tendering shareholder will be required
to be promptly remitted and transferred by the tendering shareholder to the
Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer. Pending such remittance, Purchaser will, subject to
applicable law, be entitled to all rights and privileges as owner of any such
dividend, distribution or right and may withhold the entire purchase price or
deduct from the purchase price the amount or value thereof, as determined by
Purchaser in its sole discretion.
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15. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer and subject to the terms
of the Merger Agreement, Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the Commission, including
Rule 14e-1(c) under the Exchange Act (relating to Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for any Shares tendered pursuant to the Offer, and may postpone the
acceptance for payment or, subject to the restriction referred to above, payment
for any Shares tendered pursuant to the Offer, and may amend or, not prior to
the Final Expiration Date, terminate the Offer (whether or not any Shares have
theretofore been purchased or paid for) if, prior to the expiration of the
Offer, (i) a number of shares of Company Common Stock which, together with any
Shares owned by Parent or Purchaser, constitutes at least a majority of the
voting power (determined on a fully-diluted basis), on the date of purchase, of
all the securities of the Company entitled to vote generally in the election of
directors or on a merger shall not have been validly tendered and not properly
withdrawn prior to the expiration of the Offer (the "Minimum Condition") or (ii)
at any time on or after the date of the Merger Agreement and prior to the
acceptance for payment of Shares, any of the following conditions occurs or has
occurred and continues to exist:
(a) there shall have been instituted and pending any suit, action,
investigation or proceeding brought by any governmental authority before
any federal or state court or any order or preliminary or permanent
injunction shall have been entered in any action or proceeding before any
federal or state court or governmental, administrative or regulatory
authority or agency, or any other action shall have been taken, or statute,
rule, regulation, legislation, judgment or order enacted, entered,
enforced, promulgated, amended, issued or deemed applicable to Parent,
Purchaser, the Company or any subsidiary or affiliate of Purchaser or the
Company or the Offer or the Merger, by any legislative body, court,
government or governmental, administrative or regulatory authority or
agency which would reasonably be expected to have the effect of: (i) making
illegal, materially delaying or otherwise restraining or prohibiting or
making materially more costly the making of the Offer, the acceptance for
payment of, or payment for, some of or all the Shares by Purchaser or any
of its affiliates, the consummation of the Merger or materially delaying
the Merger; (ii) prohibiting or materially limiting the ownership or
operation by the Company or any of its subsidiaries or Parent, Purchaser or
any of Parent's affiliates of all or any material portion of the business
or assets of the Company and its subsidiaries, taken as a whole, or Parent
and any of its subsidiaries, taken as a whole, or compelling Parent,
Purchaser or any of Parent's subsidiaries to dispose of or hold separate
all or any material portion of the business or assets of the Company and
any of its subsidiaries, taken as a whole, or Parent and its subsidiaries,
taken as a whole, as a result of the transactions contemplated by the Offer
or the Merger Agreement; (iii) imposing or confirming material limitations
on the ability of Parent, Purchaser or any of Parent's affiliates
effectively to acquire or hold or to exercise full rights of ownership of
Shares, including but not limited to the right to vote any Shares acquired
or owned by Parent or Purchaser or any of its affiliates on all matters
properly presented to the shareholders of the Company, including but not
limited to the adoption and approval of the Merger Agreement and the Merger
or the right to vote any shares of capital stock of any subsidiary directly
or indirectly owned by the Company; or (iv) requiring divestiture by Parent
or Purchaser or any of their affiliates of any Shares, except, in the case
of clauses (i) through (iv), where such events are consistent with or
result from Parent's and the Company's obligations under Section 6.9 of the
Merger Agreement ("Further Action; Reasonable Best Efforts");
(b) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to Material Adverse Effect
shall not be true and correct, or any such representations and warranties
that are not so qualified shall not be true and correct in any material
respect, in each case as if such representations and warranties were made
at the time of such determination (other than to the extent such
representations and warranties are made as of a specified date, in which
case, such representations and warranties shall not be so true and correct
as of such date);
(c) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
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<PAGE> 42
(d) the Merger Agreement shall have been terminated in accordance with
its terms or the Offer shall have been amended or terminated with the
consent of the Company; or
(e) (i) any waiting periods under the HSR Act shall have expired or
been terminated and the EU Approval shall have been received, in each case
to the extent applicable to the purchase of Shares pursuant to the Offer;
and (ii) any applicable waiting periods applicable to the purchase of
Shares pursuant to the Offer under any laws or regulations of any foreign
jurisdiction in which either the Company or Parent (directly or through
subsidiaries, in each case) has material assets or conducts material
operations, shall not have expired or been terminated, or any regulatory
approval applicable to the purchase of Shares pursuant to the Offer shall
not have been obtained, other than such failures to obtain, expire,
terminate or receive as would not have a Material Adverse Effect on Parent
or the Company
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances (including any
action or inaction by Purchaser or any of its affiliates but subject to the
terms of the Merger Agreement) giving rise to any such condition, makes it
inadvisable to proceed with the Offer or with such acceptance for payment of or
payment for Shares or to proceed with the Merger.
The foregoing conditions are for the benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
condition or may be waived by Purchaser in whole or in part at any time and from
time to time in its sole discretion (subject to the terms of the Merger
Agreement). The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. Except as described in this Section 16, based on a review of
publicly available filings made by the Company with the Commission and other
publicly available information concerning the Company, neither Purchaser nor
Parent is aware of any license or regulatory permit that appears to be material
to the business of the Company and its subsidiaries, taken as a whole, that
might be adversely affected by the acquisition of Shares by Parent or Purchaser
pursuant to the Offer, the Merger or otherwise, or of any approval or other
action by any governmental, administrative or regulatory agency or authority,
domestic or foreign, that would be required prior to the acquisition of Shares
by Purchaser pursuant to the Offer, the Merger or otherwise. Should any such
approval or other action be required, Purchaser and Parent presently contemplate
that such approval or other action will be sought, except as described below
under "-- State Antitakeover Statutes." While, except as otherwise described in
this Offer to Purchase, Purchaser does not presently intend to delay the
acceptance for payment of, or payment for, Shares tendered pursuant to the Offer
pending the outcome of any such matter, there can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that failure to obtain any such approval or
other action might not result in consequences adverse to the Company's business
or that certain parts of the Company's business might not have to be disposed
of, or other substantial conditions complied with, in the event that such
approvals were not obtained or such other actions were not taken or in order to
obtain any such approval or other action. If certain types of adverse action are
taken with respect to the matters discussed below, Purchaser could decline to
accept for payment, or pay for, any Shares tendered. See Section 15 for certain
conditions to the Offer, including conditions with respect to governmental
actions.
State Antitakeover Statutes. Under Chapter 42 of the IBCL ("Chapter 42"),
unless the articles of incorporation or the by-laws of an "issuing public
corporation" (as defined below) provide that the provisions of Chapter 42 do not
apply to acquisitions of shares of such issuing public corporation, an acquiring
person, such as Purchaser, who makes a "control share acquisition" (as defined
below) with respect to such issuing public corporation may not exercise voting
rights pertaining to any "control shares" (as defined below) unless such rights
are conferred by holders of a majority of the outstanding shares of voting stock
of such issuing public corporation, excluding shares held by such acquiring
person or any officer or employee director of such
40
<PAGE> 43
issuing public corporation ("interested shares"), at a meeting of the
shareholders. Chapter 42 defines "issuing public corporation" generally as any
corporation that has (i) 100 or more shareholders, (ii) its principal office or
substantial assets within Indiana and (iii) more than 10% of its shareholders
resident in Indiana, more than 10% of its shares owned by Indiana residents or
10,000 shareholders resident in Indiana. Chapter 42 defines "control shares"
generally as an aggregate number of shares owned by a person or in respect of
which the person may exercise or direct the exercise of the voting power of the
issuing public corporation in an election of directors within any of the
following ranges: (a) one-fifth or more but less than one-third, (b) one-third
or more but less than a majority or (c) a majority or more. Chapter 42 defines a
"control share acquisition" generally as the acquisition of either ownership or
the power to direct the voting power of issued and outstanding control shares.
The Company does not have its principal office or substantial assets within
Indiana; accordingly, Chapter 42 of the IBCL is inapplicable to the Offer.
Chapter 43 of the IBCL, in general, prohibits an Indiana corporation such
as the Company from engaging in a "business combination" (defined as a variety
of transactions, including mergers) with an "interested shareholder" (defined
generally as a person that is the beneficial owner of 10% or more of a
corporation's outstanding voting stock) for a period of five years following the
date that such person became an interested shareholder unless, among other
things, prior to the date such person became an interested shareholder, the
board of directors of the corporation approved either the business combination
or the transaction that resulted in the shareholder becoming an interested
shareholder. The Company Board has approved the Merger Agreement and the
Purchaser's acquisition of Shares pursuant to the Offer. Therefore, Chapter 43
of the IBCL is inapplicable to the Merger.
Indiana also has a takeover offers statute that by its terms would be in
applicable to the Offer because the Company does not have its principal place of
business in Indiana.
A number of states have adopted takeover laws and regulations that purport,
to varying degrees, to apply to attempts to acquire corporations that are
incorporated in such states, or whose business operations have substantial
economic effects in such states, or which have substantial assets, security
holders, employees, principal executive offices or principal places of business
in such states. In Edgar v. Mite Corp., the Supreme Court of the United States
(the "Supreme Court") invalidated on constitutional grounds the Illinois
Business Takeover statute, which, as a matter of state securities law, made
certain corporate acquisitions more difficult. However, in 1987, in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana may,
as a matter of corporate law and, in particular, with respect to those aspects
of corporate law concerning corporate governance, constitutionally disqualify a
potential acquirer from voting on the affairs of a target corporation without
the prior approval of the remaining shareholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of shareholders in the state and were incorporated there.
Subsequently, in TLX Acquisition Corp. v. Telex Corp., a federal district court
in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as
they applied to corporations incorporated outside Oklahoma in that they would
subject such corporations to inconsistent regulations. Similarly, in Tyson
Foods, Inc. v. McReynolds, a federal district court of Tennessee ruled that four
Tennessee takeover statutes were unconstitutional as applied to corporations
incorporated outside Tennessee. This decision was affirmed by the United States
court of Appeals for the Sixth Circuit. In December 1988, a federal district
court in Florida held in Grand Metropolitan PLC v. Butterworth that the
provisions of the Florida Affiliated Transactions Act and the Florida Control
Share Acquisition Act were unconstitutional as applied to corporations
incorporated outside of Florida.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of Indiana will by their terms
apply to the Offer, and, except as set forth above with respect to the IBCL,
neither Parent nor Purchaser has attempted to comply with any state antitakeover
statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state antitakeover statute is applicable to the Offer
or the Merger and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, Purchaser might
be required to file certain information with, or to receive approvals from, the
relevant state authorities, and Purchaser might be unable to accept for payment
41
<PAGE> 44
or pay for Shares tendered pursuant to the Offer or may be delayed in continuing
or consummating the Offer or the Merger. In such case, Purchaser may not be
obligated to accept for payment, or pay for, any Shares tendered pursuant to the
Offer. See Section 15.
United States Antitrust. The Offer and the Merger are subject to the HSR
Act, which provides that certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division of the
United States Department of Justice (the "Antitrust Division") and the United
States Federal Trade Commission (the "FTC") and certain waiting period
requirements have been satisfied.
The rules promulgated by the FTC require the filing by each of Parent and
the Company of a Notification and Report Form with respect to the Offer under
the HSR Act. Parent expects to make the required filing as soon as practicable
after the date hereof. The waiting period under the HSR Act with respect to the
Offer will expire at 11:59 p.m., New York City time, on the fifteenth day after
the date Parent's form was filed unless early termination of the waiting period
is granted. However, the Antitrust Division or the FTC may extend the waiting
period by requesting additional information or documentary material from Parent.
If such a request is made, such waiting period will expire at 11:59 p.m., New
York City time, on the tenth day after substantial compliance by Parent with
such request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. In
practice, complying with a request for additional information or documentary
material can take a significant amount of time. In addition, if the Antitrust
Division or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and may
agree to delay consummation of the transaction while such negotiations continue.
The Purchaser will not accept for payment Shares tendered pursuant to the Offer
unless and until the waiting period requirements imposed by the HSR Act with
respect to the Offer have been satisfied. See Section 15.
The FTC and the Antitrust Division frequently scrutinize the legality under
the Antitrust Laws (as defined below) of transactions such as Purchaser's
acquisition of Shares pursuant to the Offer and the Merger. At any time before
or after Purchaser's acquisition of Shares, the Antitrust Division or the FTC
could take such action under the Antitrust Laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition of
Shares pursuant to the Offer or otherwise seeking divestiture of Shares acquired
by Purchaser or divestiture of substantial assets of Parent or its subsidiaries.
Private parties, as well as state governments, may also bring legal action under
the Antitrust Laws under certain circumstances. Based upon an examination of
publicly available information provided by the Company relating to the
businesses in which the Company and its subsidiaries are engaged, Parent and
Purchaser believe that the acquisition of Shares by Purchaser will not violate
the Antitrust Laws. Nevertheless, there can be no assurance that a challenge to
the Offer or other acquisition of Shares by Purchaser on antitrust grounds will
not be made or, if such a challenge is made, of the result. See Section 15 for
certain conditions to the Offer, including conditions with respect to litigation
and certain government actions.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal, state and
foreign statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines, and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade.
European Union Antitrust. Parent and the Company each conduct substantial
operations with the European Economic Area (the "EEA") and certain of the
individual member states of the EEA. Council Regulation (EEC) No. 4064/89 of 21
December 1989 (the "Merger Regulation") and Article 57 of the EEA agreement
require that concentrations with a "Community dimension" be notified to the
European Commission for review and approval for compatibility with the common
market prior to being put into effect. The Offer is be deemed to have a
"Community dimension" if the combined aggregate worldwide turnover of Parent and
the Company together exceeds ECU 5 billion, and if the aggregate Community-wide
turnover of each of Parent and the Company exceed ECU 250 million, provided that
both Parent and the Company do not receive more than two-thirds of their
respective Community-wide turnover from the same member state.
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<PAGE> 45
Parent believes that the Offer will be considered to have a "Community
dimension." If the Offer falls within the Merger Regulation, the European
Commission, as opposed to the individual member states, has exclusive
jurisdiction to review the Offer, subject to certain exceptions.
Under the Merger Regulation, a concentration that meets the foregoing
criteria requires the filing of a notification in a prescribed form with the
European Commission. Parent expects to file the required notification in by
mid-February 1999. Transactions subject to the filing requirements of the Merger
Regulation are suspended automatically and may not be put into effect before
notification, or until such time as they have been declared compatible with the
common market. In the case of a public bid, the bidder may acquire shares of the
target company during the suspension period, but may not vote such shares until
after the end of the period unless the European Commission grants permission to
do so in order to maintain the full value of the bidder's investment.
The European Commission must review a proposed acquisition of which it has
been notified to determine whether the proposed acquisition is compatible with
the common market. An acquisition which does not create or strengthen a dominant
position, as a result of which effective competition would be significantly
impeded in the common market or in a substantial part of it, is compatible with
the common market. In addition, where the parties to the concentration offer
commitments to the European Commission during the initial one-month period in
order to alleviate any serious doubts that the European Commission may have as
to compatibility with the common market, the initial one-month period can be
extended to six weeks. Where the European Commission finds that a proposed
transaction raises serious doubts as to its compatibility with the common
market, the European Commission may, within one month of receiving the
notification, initiate proceedings to investigate the proposed transaction.
Those proceedings may last a further four months. If the European Commission
fails to reach a decision within either of these time periods, the transaction
will be deemed to be compatible with the common market. If the European
Commission declares that the transaction is incompatible with the common market,
it may prevent the consummation of the transaction, order a divestiture if the
transaction has already been consummated, or impose conditions or other
obligations.
Based upon an examination of publicly available information relating to the
businesses in which Parent and its subsidiaries and the Company and its
subsidiaries are engaged, Parent believes that the Offer is compatible with the
common market under the Merger Regulation. Nevertheless, there can be no
assurance that a challenge to the Offer will not be made pursuant to the Merger
Regulation on the grounds that the Offer is not compatible with the common
market or, alternatively, pursuant to the merger regulations of one or more of
the various member states, or, if such a challenge is made, what the outcome
will be. Any such challenge could impose conditions on the consummation of the
Offer or otherwise require changes to the terms of the Offer, which could result
in conditions to the Offer not being satisfied. See Section 15 for a discussion
of certain conditions of the Offer, including conditions with respect to
confirmation from the European Commission that the transactions contemplated by
the Merger Agreement and the offering documents are compatible with the common
market.
Other Foreign Approvals. According to publicly available information, the
Company conducts business in a number of other foreign countries and
jurisdictions. In connection with the acquisition of the Shares pursuant to the
Offer or the Merger, the laws of certain of those foreign countries and
jurisdictions may require the filing of information with, or the obtaining of
the approval or consent of, governmental authorities in such countries and
jurisdictions. The governments in such countries and jurisdictions might attempt
to impose additional conditions on the Company's operations conducted in such
countries and jurisdictions as a result of the acquisitions of the Shares
pursuant to the Offer or the Merger. If such approvals or consents are found to
be required, the parties intend to make the appropriate filings and
applications. In the event such a filing or applications is made for the
requisite foreign approvals or consents, there can be no assurance that such
approvals or consents will be granted and, if such approvals or consents are
received, there can be no assurance as to the date of such approvals or
consents. In addition, there can be no assurance that Purchaser will be able to
cause the Company or its subsidiaries to satisfy or comply with such laws or
that compliance or noncompliance will not have adverse consequences for the
Company or any subsidiary after purchase of the Shares pursuant to the Offer or
the Merger.
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<PAGE> 46
17. FEES AND EXPENSES.
Purchaser and Parent have retained D.F. King & Co., Inc. to serve as the
Information Agent and EquiServe to serve as the Depositary in connection with
the Offer. The Information Agent may contact holders of Shares by personal
interview, mail, telephone, telex, telegraph and other methods of electronic
communication and may request brokers, dealers, banks, trust companies and other
nominees to forward the offering materials to beneficial holders. The
Information Agent and the Depositary will receive reasonable and customary
compensation for their services, will be reimbursed for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection with their services, including certain liabilities under
the Federal securities laws.
Parent has engaged Wasserstein Perella to act as its financial adviser and
as the Dealer Manager. Pursuant to a letter agreement dated January 31, 1999,
Parent has agreed to pay Wasserstein Perella for its services, including its
services as Dealer Manager, (i) $250,000 upon the execution of such letter
agreement (the "Upfront Fee"), (ii) $1 million upon execution of the Merger
Agreement, (iii) $10 million upon completion of the Offer and (iv) $5.5 million
at the Effective Time of the Merger (against which the Upfront Fee will be
credited). Parent has also agreed to reimburse Wasserstein Perella for its
reasonable out-of-pocket expenses related to its engagement, including the
reasonable fees and expenses of its counsel, and to indemnify Wasserstein
Perella against certain liabilities and expenses in connection with its
services, including certain liabilities under Federal securities laws.
Except as set forth above, neither Parent nor Purchaser will pay any fees
or commissions to any broker or dealer or other person or entity in connection
with the solicitation of tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by Purchaser for reasonable and customary mailing and handling expenses incurred
by them in forwarding offering materials to their customers.
18. MISCELLANEOUS.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. Purchaser is
not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of the Shares pursuant thereto, Purchaser shall make a
good faith effort to comply with such statute or seek to have such statute
declared inapplicable to the Offer. If, after such good faith effort, Purchaser
cannot comply with such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) holders of Shares in such state. In
those jurisdictions where the securities, blue sky or other 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 Manager 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
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
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<PAGE> 47
Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed with the Commission the Schedule 14D-9 pursuant
to Rule 14d-9 under the Exchange Act, setting forth its recommendation with
respect to the Offer and the reasons for its recommendation and furnishing
certain additional related information. Such Schedules and any amendments
thereto, including exhibits, should be available for inspection and copies
should be obtainable in the same manner set forth in Section 8 of this Offer to
Purchase (except that such material will not be available at the regional
offices of the Commission).
MORTON ACQUISITION CORP.
February 5, 1999
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SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND PURCHASER AND CERTAIN OTHER PERSONS
1. Directors and Executive Officers of Parent. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of Parent. Unless otherwise indicated, each such
person is a citizen of the United States of America and the business address of
each such person is c/o Rohm and Haas Company, 100 Independence Mall West,
Philadelphia, Pennsylvania 19106. Unless otherwise indicated, each occupation
set forth opposite an individual's name refers to employment with Parent. Unless
otherwise indicated, each such person has held his or her present occupation as
set forth below, or has been an executive officer at Parent for the past five
years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- --------------------------------------------------
<S> <C>
William J. Avery.......................... Director since 1997. Mr. Avery, chairman, chief
executive officer and director of Crown Cork & Seal
Company, Inc.
Daniel B. Burke........................... Director since 1986. Mr. Burke, director of
CapitalCities/ABC, Inc. until February 1996; chief
executive officer, president and director of Capital
Cities/ABC, Inc. from 1990 to 1994; director of
Consolidated Rail Corporation, Darden Restaurants and
Morgan Stanley, Dean Witter, Discover & Co.
Earl G. Graves............................ Director since 1984. Mr. Graves, chairman and chief
executive officer of Earl G. Graves Ltd.; publisher and
editor of Black Enterprise magazine; General Partner,
Black Enterprise/ Greenwich Street Fund; chairman and
chief executive officer of Pepsi-Cola of Washington,
D.C., L.P. until 1999; director of Aetna Life and
Casualty Company, AMR Corporation/American Airlines,
Inc. and Federated Department Stores.
James A. Henderson........................ Director since 1989. Mr. Henderson, chairman, chief
executive officer and director of Cummins Engine
Company, Inc. since 1995; chief executive officer,
president and director of Cummins Engine Company, Inc.
from 1994 to 1995 and previously president, chief
operating officer and director of Cummins Engine
Company, Inc.; director of Ameritech Corporation,
International Paper and Ryerson Tull, Inc.
John H. McArthur.......................... Director since 1977. Mr. McArthur, Senior Advisor to the
President, World Bank Group; formerly dean of Harvard
Business School until retirement in 1995; director of
BCE, Inc., Cabot Corporation, Columbia/HCA Healthcare
Corp., Glaxo Wellcome Inc., Glaxo Wellcome Plc., Springs
Industries, Inc., The AES Corporation and Vincam Group,
Inc. Mr. McArthur is a citizen of Canada.
</TABLE>
I-1
<PAGE> 49
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- --------------------------------------------------
<S> <C>
Jorge P. Montoya.......................... Director since 1996. Mr. Montoya, President, Global Food
& Beverage, The Procter & Gamble Company, and President,
Procter & Gamble Latin America since January 1, 1999,
previously executive vice president, The Procter &
Gamble Company and president, Procter & Gamble Latin
America 1995-1999; group vice president, The Procter &
Gamble Company and president, Procter & Gamble Latin
America from 1991 to 1995. Mr. Montoya is a citizen of
Peru.
Sandra O. Moose........................... Director since 1981. Dr. Moose, senior vice president
and director of The Boston Consulting Group, Inc.;
director of GTE Corporation and twenty-three investment
companies sponsored by The New England Funds.
John P. Mulroney.......................... Director from 1982 through 1998. Mr. Mulroney, president
and chief operating officer of Rohm and Haas from 1986
until his retirement on December 31, 1998; director of
Teradyne Inc. and Aluminum Company of America.
Gilbert S. Omenn.......................... Director since 1987. Dr. Omenn, executive vice president
for medical affairs, The University of Michigan, CEO,
The University of Michigan Health System and Professor
of Internal Medicine, Human Genetics & Public Health
since 1997; dean of the School of Public Health and
Community Medicine at the University of Washington,
Seattle and Professor of Medicine and of Environmental
Health from 1982 until 1997; director of Amgen Inc.
Ronaldo H. Schmitz........................ Director since 1992. Dr. Schmitz, member of the Board of
Managing Directors of Deutsche Bank AG since 1991; vice
chairman of Supervisory Board of Bertelsmann AG and
director of Glaxo Wellcome Plc. Mr. Schmitz is a citizen
of Germany.
Alan Schriesheim.......................... Director since 1989. Dr. Schriesheim, director emeritus
of Argonne National Laboratory since 1996; chief
executive officer and director of Argonne National
Laboratory from 1984 to 1996; director of HEICO
Corporation.
Marna C. Whittington...................... Director since 1989. Dr. Whittington, chief operating
officer, Morgan Stanley Institutions Investment
Management since 1996; partner of the investment
management firm of Miller, Anderson & Sherrerd from 1994
until acquired by Morgan Stanley in 1996; director of
Federated Department Stores.
J. Lawrence Wilson........................ Director since 1977. Mr. Wilson, chairman and chief
executive officer of Rohm and Haas since 1988; director
of Mead Corporation, The Vanguard Group of Investment
Companies and Cummins Engine Company, Inc.
J. Michael Fitzpatrick.................... Director since 1999. Dr. Fitzpatrick, president and
chief operating officer since 1999; vice president since
1993; chief technology officer from 1996 through 1998;
previously director of research from 1993 to 1995 and
general manager of Rohm and Haas (UK) Limited and
European regional business director for polymers and
resins from 1990 to 1993.
</TABLE>
I-2
<PAGE> 50
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- --------------------------------------------------
<S> <C>
Rajiv L. Gupta............................ Director since 1999. Mr. Gupta, vice chairman, vice
president and regional director of Asia-Pacific from
1993 through 1998; previously director of plastics
additives from 1989 to 1993.
Bradley J. Bell........................... Mr. Bell, Senior Vice President and Chief Financial
Officer since 1999; vice president, chief financial
officer and treasurer from 1997 to 1998; previously vice
president and treasurer of Whirlpool Corporation from
1987 to 1997.
Patrick R. Colau.......................... Dr. Colau, Senior Vice President and Director of the
performance polymers business group since 1999; vice
president 1995-1998; director of polymers and resins
from 1996 through 1998; previously chief operating
officer from 1994 to 1995 and chief executive officer
from 1992 to 1994 of Shipley Company.
Nance K. Dicciani......................... Dr. Dicciani, Senior Vice President, director of the
specialty chemicals business group and director of the
European Region since 1999; vice president 1993-1998;
director of monomers and chairman of RohMax from 1996 to
1998; previously director for petroleum chemicals from
1991 to 1996.
Maria L. Guerin........................... Dr. Guerin, Vice President and director of human
resources since 1994.
Charles M. Tatum.......................... Dr. Tatum, Senior Vice President and Chief Technology
Officer since 1999; vice president 1990-1998; director
of plastics additives from 1994 through 1998; previously
director of research from 1989 to 1994.
Robert P. Vogel........................... Mr. Vogel, Vice President and General Counsel since
1994.
</TABLE>
2. Directors and Executive Officers of Purchaser. The following table
sets forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of Purchaser. Each such person is a citizen of
the United States of America, and the business address of each such person is
c/o Rohm and Haas Company, 100 Independence Mall West, Philadelphia,
Pennsylvania 19106.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- --------------------------------------------------
<S> <C>
Bradley J. Bell........................... Director and Vice President and Treasurer of Purchaser
since 1999. See Part 1 of the Schedule I.
Rajiv L. Gupta............................ Director and President of Purchaser since 1999. See Part
1 of this Schedule I.
J. Lawrence Wilson........................ Director and Chairman of Purchaser since 1999. See Part
1 of this Schedule I.
Robert P. Vogel........................... Vice President of Purchaser since 1999. See Part 1 of
this Schedule I.
Gail P. Granoff........................... Secretary and Assistant Treasurer since 1999. Corporate
Secretary and Assistant General Counsel for Parent.
</TABLE>
I-3
<PAGE> 51
3. Certain Stockholders. The following table sets forth the name and
present principal occupation or employment, and material occupations, positions,
offices or employments for the past years, of the following persons. Each such
person is a citizen of the United States of America and unless otherwise
indicated, the business address of each such person is c/o Rohm and Haas
Company, 100 Independence Mall West, Philadelphia, Pennsylvania 19106.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- --------------------------------------------------
<S> <C>
John C. Haas......................................... Mr. Haas, is a retired officer and director of
Parent.
John O. Haas......................................... Mr. Haas, is a librarian.
425 Lombard Street
Philadelphia, Pennsylvania 19147
William D. Haas...................................... Mr. Haas, is a schoolteacher.
P.O. Box 125
Bear Creek, Pennsylvania 18602
Thomas W. Haas....................................... Mr. Haas, is a corporate trustee of the William
583 Bay Road Penn Foundation, a certified flight instructor and
Durham, New Hampshire 03824 is involved in other philanthropic work.
</TABLE>
I-4
<PAGE> 52
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each shareholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at the applicable address set forth below:
The Depositary for the Offer is:
EQUISERVE
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Federal Express or
other Courier:
EquiServe EquiServe EquiServe
Corporate Actions c/o Securities Transfer & Corporate Actions
Suite 4660 Reporting Services Inc. Suite 4680
P.O. Box 2569 Attn: Corporate Actions 14 Wall Street, 8th Floor
Jersey City, NJ 07303-2569 100 William Street, Galleria New York, NY 10005
New York, NY 10038
Facsimile Transmission Telephone to Confirm Fax
(201) 222-4720 or (201) 222-4707
(201) 222-4721
</TABLE>
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may be directed to the Information Agent or the
Dealer Manager at the addresses and telephone numbers set forth below.
Shareholders may also contact their broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 Water Street
New York, NY 10005
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL FREE: (800) 431-9633
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, NY 10019
Call Collect: (212) 969-2700
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MORTON INTERNATIONAL, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED FEBRUARY 5, 1999
BY
MORTON ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
The Depositary for the Offer is:
EQUISERVE
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Federal Express or
other Courier:
EquiServe EquiServe EquiServe
Corporate Actions c/o Securities Transfer & Corporate Actions
Suite 4660 Reporting Services Inc. Suite 4680
P.O. Box 2569 Attn: Corporate Actions 14 Wall Street, 8th Floor
Jersey City, NJ 07303-2569 100 William Street, Galleria New York, NY 10005
New York, NY 10038
</TABLE>
<TABLE>
<S> <C> <C>
Facsimile Transmission Telephone to Confirm Fax
(201) 222-4720 or (201) 222-4707
(201) 222-4721
</TABLE>
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, MARCH 5, 1999, UNLESS THE OFFER IS EXTENDED.
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by shareholders of Morton
International, Inc. (the "Company") if certificates for Shares (as defined
below) are to be forwarded herewith or, unless an Agent's Message (as defined in
Section 2 of the Offer to Purchase) is utilized, if delivery of Shares is to be
made by book-entry transfer to an account maintained by the Depositary at the
Book-Entry Transfer Facility (as defined in and pursuant to the procedures set
forth in Section 3 of the Offer to Purchase) or delivery of Shares is to be made
through the Company's Shareholder Services Program (the "SSP").
<PAGE> 2
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available, or who cannot complete the
procedure for book-entry transfer on a timely basis, or who cannot deliver all
other required documents to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase), must tender their Shares
according to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------
TOTAL NUMBER
SHARE OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S) TENDERED**
<S> <C> <C> <C>
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
Total Shares
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by shareholders who deliver Shares by book-entry
transfer ("Book-Entry Shareholders") or who hold Shares through the
Shareholder Services Program.
** Unless otherwise indicated, all Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered. See
Instruction 4.
- --------------------------------------------------------------------------------
TENDER OF SHARES HELD IN THE COMPANY'S
SHAREHOLDER SERVICES PROGRAM
- --------------------------------------------------------------------------------
[ ] By checking this box, I represent that my shares are held in the Company's
Shareholder Services Program and I hereby instruct you to tender on my behalf
the following number of Shares:
------------------------ Shares*
* I understand and agree that all Shares held in my Shareholder Services Program
account 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 (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
Account Number
Transaction Code Number
<PAGE> 3
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s)
Window Ticket Number (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution that Guaranteed Delivery
IF DELIVERED BY BOOK-ENTRY TRANSFER, CHECK BOX: [ ]
Account Number
Transaction Code Number
<PAGE> 4
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Morton Acquisition Corp. (formerly known
as Gershwin Acquisition Corp.), an Indiana corporation ("Purchaser") and a
wholly owned subsidiary of Rohm and Haas Company, a Delaware corporation
("Parent"), the above-described shares of common stock, par value $1.00 per
share (the "Shares"), of Morton International, Inc., an Indiana corporation (the
"Company"), pursuant to Purchaser's offer to purchase up to 80,916,766 Shares
(representing 67% of the issued and outstanding Shares as of January 29, 1999)
and the associated preferred share purchase rights ("Rights") at a purchase
price of $37.125 per Share, net to the seller in cash, without interest (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase dated February 5, 1999, and in this Letter of Transmittal
(which, together with any amendments or supplements thereto or hereto,
collectively constitute the "Offer"). The Rights will expire immediately prior
to consummation of the Offer. Unless the context requires otherwise, all
references to "Shares" shall be deemed to refer also to the Rights. Receipt of
the Offer is hereby acknowledged.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), and
effective upon acceptance for payment of the Shares tendered herewith in
accordance with the terms of the Offer, the undersigned hereby sells, assigns
and transfers to, or upon the order of, Purchaser all right, title and interest
in and to all the Shares that are being tendered hereby (and any and all
dividends (other than regular quarterly dividends with usual record and payment
dates for dividends consistent with past practice, in an amount not to exceed
$.13 per Share), distributions, rights, other Shares or other securities issued
or issuable in respect thereof on or after the date hereof (collectively,
"Distributions")) and irrevocably constitutes and appoints EquiServe (the
"Depositary") the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Shares (and all Distributions), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (i) deliver certificates for such Shares (and any
and all Distributions), or transfer ownership of such Shares (and any and all
Distributions) 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 Purchaser, (ii) in the case
of participants in the SSP, place a stop order against the Shares held under the
SSP and, following expiration of the Offer, to instruct the transfer agent to
transfer such Shares, (iii) present such Shares (and any and all Distributions)
for transfer on the books of the Company and (iv) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
<PAGE> 5
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints J. Lawrence Wilson, Rajiv L. Gupta and Bradley J. Bell in their
respective capacities as officers or directors of Purchaser, and any individual
who shall thereafter succeed to any such office of Purchaser, and each of them,
and any other designees of Purchaser, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote at any annual or
special meeting of the Company's shareholders or any adjournment or postponement
thereof or otherwise in such manner as each such attorney-in-fact and proxy or
his substitute shall in his sole discretion deem proper with respect to, to
execute any written consent concerning any matter as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper with
respect to, and to otherwise act as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, all of the
Shares (and any and all Distributions) tendered hereby and accepted for payment
by Purchaser. This appointment will be effective if and when, and only to the
extent that, Purchaser accepts such Shares for payment pursuant to the Offer.
This power of attorney and proxy are irrevocable and are granted in
consideration of the acceptance for payment of such Shares in accordance with
the terms of the Offer. Such acceptance for payment shall, without further
action, revoke any prior powers of attorney and proxies granted by the
undersigned at any time with respect to such Shares (and any and all
Distributions), and no subsequent powers of attorney, proxies, consents or
revocations may be given by the undersigned with respect thereto (and, if given,
will not be deemed effective). Purchaser reserves the right to require that, in
order for Shares or other securities to be deemed validly tendered, immediately
upon Purchaser's acceptance for payment of such Shares, Purchaser must be able
to exercise full voting, consent and other rights with respect to such Shares
(and any and all Distributions), including voting at any meeting of the
Company's shareholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that the undersigned owns the Shares
tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that the
tender of the tendered Shares complies with Rule 14e-4 under the Exchange Act,
and that when the same are accepted for payment by Purchaser, Purchaser will
acquire good, marketable and unencumbered title thereto and to all
Distributions, free and clear of all liens, restrictions, charges and
encumbrances and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby and all
Distributions. In addition, the undersigned shall remit and transfer promptly to
the Depositary for the account of Purchaser all Distributions in respect of the
Shares tendered hereby, accompanied by appropriate documentation of transfer,
and, pending such remittance and transfer or appropriate assurance thereof,
Purchaser shall be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire purchase price of the Shares tendered
hereby or deduct from such purchase price, the amount or value of such
Distribution as determined by Purchaser in its sole discretion.
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, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer (and if
the Offer is extended or amended, the terms or conditions of any such extension
or amendment). Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the terms of the Merger Agreement, the price
to be paid to the undersigned will be the amended price notwithstanding the fact
that a different price is stated in this Letter of Transmittal. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
Purchaser may not be required to accept for payment any of the Shares tendered
hereby.
<PAGE> 6
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return any
certificates for Shares not tendered or accepted for payment in the name(s) of
the registered holder(s) appearing above under "Description of Shares Tendered".
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price of all Shares purchased and/or
return any certificates for Shares not tendered or not accepted for payment (and
any accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing above under "Description of Shares Tendered." In the event
that the boxes entitled "Special Payment Instructions" and "Special Delivery
Instructions" are both completed, please issue the check for the purchase price
of all Shares purchased and/or return any certificates evidencing Shares not
tendered or not accepted for payment (and any accompanying documents, as
appropriate) in the name(s) of, and deliver such check and/or return any such
certificates (and any accompanying documents, as appropriate) to, the person(s)
so indicated. Unless otherwise indicated herein in the box entitled "Special
Payment Instructions," please credit any Shares tendered herewith by book-entry
transfer that are not accepted for payment by crediting the account at the
Book-Entry Transfer Facility designated above. The undersigned recognizes that
Purchaser has no obligation, pursuant to the "Special Payment Instructions," to
transfer any Shares from the name of the registered holder thereof if Purchaser
does not accept for payment any of the Shares so tendered.
<PAGE> 7
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
accepted for payment is to be issued in the name of someone other than the
undersigned, or if certificates for Shares not tendered or not accepted
for payment are to be issued in the name of someone other than the
undersigned.
Issue check and/or certificate(s) to:
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY
NUMBER)(SEE SUBSTITUTE FORM W-9)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment is to be sent to someone other than the undersigned
or to the undersigned at an address other than that shown under
"Description of Shares Tendered."
Mail check and/or certificates to:
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
<PAGE> 8
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF OWNER(S))
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificate(s) or on a security position listing or by the 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 5.)
Name(s)
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Name of Firm
- -------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
- --------------------------------------------------------------------
(SEE INSTRUCTION 5)
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ZIP CODE)
Area Code and Telephone Number
- ---------------------------------------------------
Taxpayer Identification or Social Security Number
- -----------------------------------
(SEE SUBSTITUTE FORM W-9 BELOW)
Dated:
- ------------------------------------, 1999
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized signature(s)
- ---------------------------------------------------------------
Name(s)
------------------------------------------------------------------------
Name of Firm
- -------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ZIP CODE)
Area Code and Telephone Number
- ---------------------------------------------------
Dated:
- ------------------------------------, 1999
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in the Book-Entry Transfer Facility's systems whose name appears on
a security position listing as the owner of the Shares) of Shares tendered
herewith, unless such registered holder(s) has completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program or
by any other "eligible guarantor institution," as such term is defined in Rule
17Ad-15 under the Exchange Act (each, an "Eligible Institution"). In all other
cases, all signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed
by shareholders if certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if tenders are to be made pursuant to the procedure
for tender by book-entry transfer set forth in Section 3 of the Offer to
Purchase or if delivery of Shares is to be made through to the SSP. Shareholders
delivering Shares through the SSP should see Instruction 12. Share Certificates
evidencing tendered Shares, or timely confirmation (a "Book-Entry Confirmation")
of a book-entry transfer of Shares into the Depositary's account at the
Book-Entry Transfer Facility, as well as this Letter of Transmittal (or a
facsimile hereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other documents required by this Letter of Transmittal, must
be received by the Depositary at one of its addresses set forth herein prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase).
Shareholders whose Share Certificates are not immediately available, or who
cannot complete the procedure for delivery by book-entry transfer on a timely
basis or who cannot deliver all other required documents to the Depositary prior
to the Expiration Date, may tender their Shares by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedure set forth in Section 3 of 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 made available by the Purchaser, must be received by
the Depositary prior to the Expiration Date and (iii) the Share Certificates (or
a Book-Entry Confirmation) representing all tendered Shares, in proper form for
transfer, in each case together with the Letter of Transmittal (or a facsimile
thereof) or, in the case of Shares held through the SSP, a Letter of
Transmittal, in each case, properly completed and duly executed, with any
required signature guarantees (or, in the case of a book-entry delivery, an
Agent's Message) and any other documents required by this Letter of Transmittal,
must be received by the Depositary within three New York Stock Exchange, Inc.
trading days after the date of execution of such Notice of the Guaranteed
Delivery. If Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND THE RISK OF THE TENDERING SHAREHOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY (INCLUDING, IN THE CASE OF BOOK ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
<PAGE> 10
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed scheduled attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO BOOK-ENTRY SHAREHOLDERS). If fewer
than all the Shares evidenced by any Share Certificate submitted or held through
the SSP are to be tendered, fill in the number of Shares which are to be
tendered in the box entitled "Number of Shares Tendered" or "Tender of Shares
Held in the Company's Shareholder Services Program," as applicable. In such
cases, new Share Certificates for the Shares that were evidenced by your old
Share Certificates, but were not tendered by you, will be sent to you, or, in
the case of Shares held through the SSP, will be reissued as Shares held through
the SSP, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by Share Certificates delivered to the Depositary or held through
the SSP will be deemed to have been tendered unless indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever, or the name listed in the SSP.
If any of the Shares tendered hereby are held of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates or through the SSP, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal as there are different
registrations.
If this Letter of Transmittal or any certificates or stock powers are
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 Purchaser of the authority of such person so to act must be
submitted. If this Letter of Transmittal is signed by the registered holder(s)
of the Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment to be made or certificates for
Shares not tendered or not accepted for payment are to be issued in the name of
a person other than the registered holder(s). Signatures on any such Share
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 certificate(s) listed and transmitted hereby, the
certificate(s) 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 certificate(s). Signature(s) on any such Share Certificates or stock
powers must be guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price is to be made to, or if certificate(s) for Shares
not tendered or not accepted for payment are to be registered in the name of,
any person other than the registered holder(s), or if tendered certificate(s)
are registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such other person) payable on account of the
transfer to such other person will be deducted from the purchase price of such
Shares purchased unless evidence satisfactory to Purchaser of the payment of
such taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificate(s) evidencing the Shares
tendered hereby.
<PAGE> 11
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal or if a check and/or such certificates are to be returned
to a person other than the person(s) signing this Letter of Transmittal or to an
address other than that shown in this Letter of Transmittal, the appropriate
boxes on this Letter of Transmittal must be completed.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or Dealer Manager at the addresses and phone
numbers set forth below, or from brokers, dealers, commercial banks or trust
companies.
9. WAIVER OF CONDITIONS. Subject to the terms and conditions of the
Merger Agreement (as defined in the Offer to Purchase), Purchaser reserves the
right, in its sole discretion, to waive, at any time or from time to time, any
of the specified conditions of the Offer, in whole or in part, in the case of
any Shares tendered.
10. BACKUP WITHHOLDING; SUBSTITUTE FORM W-9.
Important Tax Information.
Under Federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
shareholder's correct TIN on Substitute Form W-9 below. If such shareholder is
an individual, the TIN is his social security number. If the Depositary is not
provided with the correct TIN, the shareholder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments that are made to
such shareholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding.
Certain shareholders (including, among others, corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that shareholder must submit a Form W-8, Certificate of Foreign
Status, signed under penalties of perjury, attesting to that individual's exempt
status. Such statements can be obtained from the Depositary. Exempt
shareholders, other than foreign individuals, should furnish their TIN, write
"Exempt" in Part 3 of the Substitute Form W-9 below, and sign, date and return
the Substitute Form W-9 to the Depositary. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons 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 from the Internal Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such shareholder is awaiting a taxpayer identification number).
<PAGE> 12
What Number to Give the Depositary
The shareholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
If the tendering shareholder has not been issued a TIN and has applied for a TIN
or intends to apply for a TIN in the near future, such shareholder should write
"Applied For" in the space provided for the TIN in Part 1 of the Substitute Form
W-9 and sign and date the Substitute Form W-9, and the shareholder or other
payee must also complete the Certificate of Awaiting Taxpayer Identification
Number below in order to avoid backup withholding. Notwithstanding that the
Certificate of Awaiting Taxpayer Identification Number is completed, the
Depositary will withhold 31% on all payments made prior to the time a properly
certified TIN is provided to the Depositary. However, such amounts will be
refunded to such shareholder if a TIN is provided to the Depositary within 60
days.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the transfer agent at (800)446-2617. The shareholder will then
be instructed as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.
12. SHAREHOLDER SERVICES PROGRAM SHARES. If a tendering shareholder
desires to tender Shares credited to the shareholder's account under the SSP,
the box captioned "Tender of Shares Held in the Company's Shareholder Services
Program" should be completed. If a shareholder authorizes a tender of Shares
held through the SSP, all such Shares credited to such shareholder's account
will be tendered, unless otherwise specified in the appropriate space in the box
captioned "Tender of Shares Held in the Company's Shareholder Services Program."
If the box captioned "Tender of Shares Held in the Company's Shareholder
Services Program" is not checked, NO Shares held in the tendering shareholder's
account will be tendered.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION
DATE, OR THE TENDERING SHAREHOLDER MUST COMPLY WITH THE PROCEDURES FOR
GUARANTEED DELIVERY.
<PAGE> 13
- --------------------------------------------------------------------------------
PAYER'S NAME: EQUISERVE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT ------------------------------
FORM W-9 AND CERTIFY BY SIGNING AND DATING BELOW. Social Security Number
If you do not have a TIN, see "What Number to Give OR
DEPARTMENT OF THE the Depositary" in Instruction 10. ------------------------------
TREASURY Employer Identification Number
INTERNAL REVENUE SERVICE
--------------------------------------------------------------------------------------------
PAYER'S REQUEST FOR PART 2 -- CERTIFICATION -- Under penalties of PART 3 --
TAXPAYER IDENTIFICATION perjury, I certify that: For Payees Exempt from Backup
NO. ("TIN") Withholding (see the enclosed
(1) The number shown on this form is my correct Guidelines for Certification of
Taxpayer Identification Number (or I am waiting for a Taxpayer Identification Number
number to be issued to me), and on Substitute Form W-9.)
(2) I am not subject to backup withholding because
(a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
--------------------------------------------------------------------------------------------
CERTIFICATE INSTRUCTIONS --You must cross out item (2) above if you have been notified by
the IRS that you are currently subject to backup withholding because of under-reporting
interest or dividends on your tax return. However, if after being notified by the IRS that
you were subject to backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out such item (2).
--------------------------------------------------------------------------------------------
SIGNATURE
SIGN HERE -----------------------------------------------------
-- DATE
-----------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER, PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED
FOR" IN THE BOX IN PART 1 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld.
Signature:
- --------------------------------------------------------------------- Date:
- -----------------------------, 1999
<PAGE> 14
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL FREE: (800) 431-9633
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, New York 10019
Call Toll Free: (212) 969-2700
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MORTON INTERNATIONAL, INC.
TO
MORTON ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
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 (as defined below) are not immediately available, if the procedure for
book-entry transfer cannot be completed on a timely basis, or if time will not
permit all required documents to reach EquiServe (the "Depositary") prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase described
below). Such form may be delivered by hand, transmitted by facsimile
transmission or mailed to the Depositary. See Section 3 of the Offer to
Purchase.
The Depositary for the Offer is:
EQUISERVE
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Federal Express or
other Courier:
EquiServe EquiServe EquiServe
Corporate Actions c/o Securities Transfer & Corporate Actions
Suite 4660 Reporting Services Inc. Suite 4680
P.O. Box 2569 Attn: Corporate Actions 14 Wall Street, 18th Floor
Jersey City, NJ 07303-2569 100 William Street, Galleria New York, NY 10005
New York, NY 10038
Facsimile Transmission: Telephone to Confirm Fax
(201) 222-4720 or (201) 222-4707
(201) 222-4721
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE NUMBER OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Morton Acquisition Corp. (formerly known
as Gershwin Acquisition Corp.), an Indiana corporation and a wholly owned
subsidiary of Rohm and Haas Company, a Delaware corporation, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated February 5,
1999 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, constitute the "Offer"),
receipt of which is hereby acknowledged, the number of shares set forth below of
common stock, par value $1.00 per share (the "Shares"), of Morton International,
Inc., an Indiana corporation (the "Company"), and the associated preferred share
purchase rights (the "Rights") pursuant to the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase. Unless the context otherwise
requires, references therein to "Shares" shall be deemed to include the
associated Rights.
<TABLE>
<S> <C>
Signature(s) ------------------------------------ Address(es) -------------------------------------
- --------------------------------------------------- ---------------------------------------------------
Name(s) of Record Holder(s) ----------------- ZIP CODE
- --------------------------------------------------- Area Code and Tel. No.(s) ---------------------
PLEASE PRINT OR TYPE
- --------------------------------------------------- (Check box if Shares will be tendered by
Number of Shares ------------------------------ book-entry transfer: [ ])
Certificate No.(s) (If Available) Account Number -------------------------------
- ---------------------------------------------------
Dated , 1999
------------------------------------
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, (a) represents that the above
named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule
14e-4 under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b)
represents that such tender of Shares complies with Rule 14e-4 and (c)
guarantees to deliver to the Depositary either the certificates evidencing all
tendered Shares, in proper form for transfer, or to deliver Shares pursuant to
the procedure for book-entry transfer into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility"), in either case
together with the Letter of Transmittal (or a facsimile thereof)or, in the case
of Shares held in book-entry form through the Company's Shareholder Services
Program, a Letter of Transmittal (or a facsimile thereof), in each case,
properly completed and duly executed, with any required signature guarantees or
an Agent's Message (as defined in the Offer to Purchase) in the case of a
book-entry delivery, and any other required documents, all within three New York
Stock Exchange, Inc. trading days after the date hereof.
<TABLE>
<S> <C>
- ------------------------------------------ ------------------------------------------
Name of Firm Authorized Signature
Name
- ------------------------------------------ ------------------------------------------
Address Please Print or Type
Title
- ------------------------------------------ ------------------------------------------
Zip Code
Dated --------- , 1999
- ------------------------------------------
Area Code and Tel. No.
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
OFFER TO PURCHASE FOR CASH
UP TO 80,916,766 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MORTON INTERNATIONAL, INC.
AT
$37.125 NET PER SHARE
BY
MORTON ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, MARCH 5, 1999, UNLESS THE OFFER IS EXTENDED.
February 5, 1999
To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees:
We have been appointed by Morton Acquisition Corp. (formerly known as
Gershwin Acquisition Corp.), an Indiana corporation ("Purchaser") and a wholly
owned subsidiary of Rohm and Haas Company, a Delaware corporation ("Parent"), to
act as Dealer Manager in connection with Purchaser's offer to purchase up to
80,916,766 shares (representing 67% of the issued and outstanding shares as of
January 29, 1999) of common stock, par value $1.00 per share (the "Shares"), of
Morton International, Inc., an Indiana corporation (the "Company"), and the
associated preferred share purchase rights ("Rights"), at a purchase price of
$37.125 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated February
5, 1999 (the "Offer to Purchase") and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") enclosed herewith. The Rights will expire immediately
prior to the consummation of the Offer. As used herein, unless the context
otherwise requires, the term "Shares" includes the associated Rights. Holders of
Shares whose certificates for such Shares (the "Share Certificates") are not
immediately available, who cannot complete the procedures for book-entry
transfer on a timely basis, or who cannot deliver all other required documents
to the Depositary (as defined below) prior to the Expiration Date (as defined in
the Offer to Purchase), must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
1. Offer to Purchase dated February 5, 1999;
2. Letter of Transmittal for your use in accepting the Offer and tendering
Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if Share
Certificates are not immediately available or if such certificates and all other
required documents cannot be delivered to EquiServe (the "Depositary"), or if
the procedures for book-entry transfer cannot be completed on a timely basis;
4. A printed form of letter which 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;
5. The Letter to Shareholders of the Company from S. Jay Stewart, the
Chairman and Chief Executive Officer of the Company, accompanied by the
Company's Solicitation/Recommendation Statement on
<PAGE> 2
Schedule 14D-9, which includes the recommendation of the Board of Directors of
the Company (the "Board of Directors") that shareholders accept the Offer and
tender their Shares to Purchaser pursuant to the Offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not properly withdrawn prior to the Expiration Date a number of
Shares which, together with any Shares owned by Parent or Purchaser, constitute
at least a majority of the voting power (determined on a fully-diluted basis) of
all the securities of the Company entitled to vote generally in the election of
directors or on a merger, (ii) any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, having expired
or been terminated and (iii) notification of and approval by the European
Commission under the EU Council Regulation 4064/89, as amended, having been
obtained.
The Board of Directors has unanimously approved and adopted the Merger
Agreement (as defined below) and the transactions contemplated thereby,
including the Offer and the Merger (as defined below), and determined that the
Offer and the Merger are fair to, and in the best interests of, the Company and
its shareholders and recommends that shareholders accept the Offer and tender
their Shares to Purchaser pursuant to the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 31, 1999 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides for, among other things, the making of
the Offer by Purchaser, and further provides that, following the completion of
the Offer, upon the terms and subject to the conditions of the Merger Agreement,
and in accordance with the Indiana Business Corporation Law, Purchaser will be
merged with and into the Company (the "Merger"). Following the Merger, the
Company will continue as the surviving corporation and become a wholly owned
subsidiary of Parent, and the separate corporate existence of Purchaser will
cease.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and other required documents should be sent to
the Depositary and (ii) unless Shares are held in book-entry form through the
Company's SSP, Share Certificates representing the tendered Shares should be
delivered to the Depositary, or such Shares should be tendered by book-entry
transfer into the Depositary's account maintained at the Book-Entry Transfer
Facility (as described in the Offer to Purchase), all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
If the holders of Shares wish to tender, but it is impracticable for them
to forward their Share Certificates or other required documents prior to the
Expiration Date or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary, the Information Agent and the Dealer
Manager as described in the Offer to Purchase) for soliciting tenders of Shares
pursuant to the Offer. Purchaser will, however, upon request, reimburse you for
customary mailing and handling costs incurred by you in forwarding the enclosed
materials to your customers.
2
<PAGE> 3
Purchaser will pay or cause to be paid all stock transfer taxes applicable to
its purchase of Shares pursuant to the Offer, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, MARCH 5, 1999, UNLESS THE OFFER IS
EXTENDED.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers set
forth on the back cover of the Offer to Purchase.
Very truly yours,
Wasserstein Perella & Co., Inc.
31 West 52nd Street
New York, New York 10019
Call Collect: (212) 969-2700
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE DEALER MANAGER, THE INFORMATION
AGENT, THE DEPOSITARY, OR ANY AFFILIATE OF ANY OF THE FOREGOING, 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.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
UP TO 80,916,766 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MORTON INTERNATIONAL, INC.
AT
$37.125 NET PER SHARE
BY
MORTON ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, MARCH 5, 1999, UNLESS THE OFFER IS EXTENDED.
February 5, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated February 5,
1999 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") in connection with the offer by Morton Acquisition Corp. (formerly
known as Gershwin Acquisition Corp.), an Indiana corporation ("Purchaser") and a
wholly owned subsidiary of Rohm and Haas Company, a Delaware corporation
("Parent"), to purchase up to 80,916,766 shares (representing 67% of the issued
and outstanding shares as of January 29, 1999) of common stock, par value $1.00
per share (the "Shares"), of Morton International, Inc., an Indiana corporation
(the "Company"), and the associated preferred share purchase rights ("Rights"),
at a purchase price of $37.125 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer to
Purchase and in the related Letter of Transmittal enclosed herewith (which, as
amended from time to time, together constitute the "Offer"). The Rights will
expire immediately prior to the consummation of the Offer. Unless the context
requires otherwise, all references to "Shares" shall be deemed to refer also to
the Rights. Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available or who cannot complete the
procedures for book-entry transfer on a timely basis, or who cannot deliver all
other required documents to EquiServe (the "Depositary"), prior to the
Expiration Date (as defined in Section 1 the Offer to Purchase), must tender
their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. WE ARE THE HOLDER OF RECORD OF SHARES HELD
FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER
OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE ENCLOSED LETTER OF TRANSMITTAL
IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO
TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
<PAGE> 2
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase. Your attention is invited to the
following:
1. The offer price is $37.125 per Share, net to the seller in cash without
interest.
2. The Offer is being made for up to 80,916,766 Shares.
3. The Board of Directors of the Company has unanimously approved and
adopted the Merger Agreement (as defined below) and the transactions
contemplated thereby, including the Offer and the Merger (each as defined in the
Offer to Purchase), and determined that the Offer and the Merger are fair to,
and in the best interests of, the Company and its shareholders and recommends
that shareholders accept the Offer and tender their Shares pursuant to the
Offer.
4. The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of January 31, 1999 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company. The Merger Agreement provides, among other things,
that, subject to the terms and conditions of the Merger Agreement, subsequent to
the consummation of the Offer, Purchaser will merge with and into the Company.
5. The Offer, proration period and withdrawal rights expire at 12:00
Midnight, New York City time, on Friday, March 5, 1999, unless the Offer is
extended.
6. Any stock transfer taxes applicable to the sale of Shares to Purchaser
pursuant to the Offer will be paid by Purchaser, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
7. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not properly withdrawn prior to the Expiration Date a
number of Shares which, together with any Shares owned by Parent or Purchaser,
constitute at least a majority of the voting power (determined on a
fully-diluted basis) of all the securities of the Company entitled to vote
generally in the election of directors or on a merger, (ii) any applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, having expired or been terminated and (iii) notification of and
approval by the European Commission under the EU Council Regulation 4064/89, as
amended, having been obtained.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. Purchaser is
not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of the Shares pursuant thereto, Purchaser shall make a
good faith effort to comply with such statute or seek to have such statute
declared inapplicable to the Offer. If, after such good faith effort, Purchaser
cannot comply with such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) holders of Shares in such state. In
those jurisdictions where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer will be deemed to be
made on behalf of Purchaser by the Dealer Manager for the Offer or one or more
registered brokers or dealers licensed under the laws of such jurisdictions.
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 instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares will
be tendered unless otherwise specified on the reverse side of this letter. YOUR
INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A
TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH UP TO 80,916,766
OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MORTON INTERNATIONAL, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated February 5, 1999 and the related Letter of Transmittal
in connection with the Offer by Morton Acquisition Corp. (formerly known as
Gershwin Acquisition Corp.), an Indiana corporation and a wholly owned
subsidiary of Rohm and Haas Company, a Delaware corporation, to purchase up to
80,916,766 shares (representing 67% of the issued and outstanding shares as of
January 29, 1999) of common stock, par value $1.00 per share (the "Shares"), of
Morton International, Inc., an Indiana corporation, and the associated preferred
share purchase rights, at a purchase price of $37.125 per Share, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Offer to Purchase and the related Letter of Transmittal.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of Shares Tendered:*
- ---------------------------------------------------------------------------
Account No:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
SIGN HERE
Signature(s):
- --------------------------------------------------------------------------------
Please type or print address(es):
- ------------------------------------------------------------------------
Area Code and Telephone Number:
- ---------------------------------------------------------------------
Taxpayer Identification or Social Security Number(s):
- -------------------------------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU)
TO GIVE THE PAYER. -- Social security numbers have nine digits separated by two
hyphens: i.e., 000-00-0000. Employee 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. All "Section" references are to the
Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. Individual The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under state law
5. Sole proprietorship The owner(3)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or pension The legal entity(4)
trust
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or other
tax-exempt organization account
10. Partnership The partnership
11. A broker or registered nominee The broker or
nominee
12. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
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 Card, at the local
Social Administration office, or Form SS-4, Application for Employer
Identification Number, by calling 1 (800) TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from withholding include:
- An organization exempt from tax under Section 501(a), an individual
retirement account (IRA), or a custodial account under Section 403(b)(7), if
the account satisfies the requirements of Section 401(f)(2).
- The United States or a state thereof, the District of Columbia, a possession
of the United States, or a political subdivision or wholly-owned agency or
instrumentality of any one or more of the foregoing.
- An international organization or any agency or instrumentality thereof.
- A foreign government and any political subdivision, agency or
instrumentality thereof.
Payees that may be exempt from backup withholding include:
- A corporation.
- A financial institution.
- A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
- A futures commission merchant registered with the Commodity Futures Trading
Commission.
- A foreign central bank of issue.
Payments of dividends and patronage dividends generally exempt from backup
withholding include:
- 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 alien partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by an ESOP.
Payments of interest generally exempt from backup withholding include:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more 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 to you.
Certain payments, other than payments of interest, dividends, and patronage
dividends, that are exempt from information reporting are also exempt from
backup withholding. For details, see the regulations under sections 6041, 6041A,
6042, 6044, 6045, 6049, 6050A and 6050N.
Exempt payees described above must file Form W-9 or a substitute Form W-9 to
avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER,
FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 3 OF THE
FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE OF INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
PRIVACY ACT NOTICE. -- Section 6109 requires you to provide your correct
taxpayer identification number to payers, who must report the payments to the
IRS. The IRS uses the number for identification purposes and may also provide
this information to various government agencies for tax enforcement or
litigation purposes. Payers must be given the numbers whether or not recipients
are required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to payer. Certain penalties may also apply.
PENALTIES
(1) 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. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
ROHM AND HAAS COMMENCES TENDER OFFER
FOR MORTON INTERNATIONAL
MORTON SHAREHOLDERS TO RECEIVE $37.125 PER SHARE IN CASH FOR UP TO
67% OF MORTON SHARES IN FIRST STEP OF TRANSACTION
PHILADELPHIA, PA (FEBRUARY 5, 1999) - Rohm and Haas [NYSE: ROH] announced
today that its wholly owned subsidiary, Morton Acquisition Corp., has commenced
the previously announced cash tender offer to purchase up to 80,916,766 shares
of Morton International, Inc. [NYSE: MII] common stock for $37.125 per share.
This represents 67% of the outstanding Morton shares on January 29, 1999.
The tender offer is subject to certain conditions including, among other
things, the tender of at least a majority of the outstanding shares of Morton on
a fully diluted basis, the expiration or termination of the applicable waiting
period under the Hart-Scott-Rodino Act, and the receipt of EU approval. The
offer, proration period, and withdrawal rights are scheduled to expire at 12:00
midnight, New York City time on Friday, March 5, 1999, unless the offer is
extended. The tender offer is not conditioned upon obtaining financing.
Following the successful completion of the tender offer, Rohm and Haas will
acquire the remaining Morton shares in a second-step merger in which each share
of Morton will be exchanged for Rohm and Haas shares valued at $37.125, subject
to a collar, or, if fewer than 80,916,766 shares are purchased in the tender,
for a combination of cash and Rohm and Haas stock.
This press release is neither an offer to purchase nor a solicitation of an
offer to sell securities. The tender offer is made only through the Offer to
Purchase and the related Letter of Transmittal which are being mailed to Morton
shareholders beginning February 5, 1999. Wasserstein Perella & Co., Inc. is
acting as the Dealer Manager.
D.F. King & Co., Inc. is acting as Information Agent for Rohm and Haas in
the tender offer. Copies of the offering documents may be obtained by calling
D.F. King & Co., Inc. at (212) 269-5550 (call collect) or 1-800-431-9633 (toll
free).
6
<PAGE> 2
Chicago-based Morton International manufactures and markets specialty
chemicals and salt products with total annual sales for the fiscal year ended
June 30, 1998 of $2.5 billion
Rohm and Haas is a Fortune 400 specialty chemical company with $4 billion
in annual sales. The company's specialty products are found in many items that
improve the quality of life, including decorative and industrial paints,
semiconductors, shampoos and other personal-care items, and water purification
systems.
CONTACTS FOR ROHM AND HAAS:
MEDIA:
John McGinnis
(215) 592-2409
INVESTORS:
Eric Norris
(215) 592-2664
Note to Editors: Today's news release, along with other news about Rohm and
Haas, is available on the Internet at http://www.rohmhaas.com.
7
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated February 5, 1999 and the related Letter of
Transmittal (and any amendments or supplements thereto), and is being made to
all holders of Shares. Purchaser (as defined below) is not aware of any state
where the making of the Offer is prohibited by administrative or judicial action
pursuant to any valid state statute. If Purchaser becomes aware of any valid
state statute prohibiting the making of the Offer or the acceptance of the
Shares pursuant thereto, Purchaser shall make a good faith effort to comply with
such statute or seek to have such statute declared inapplicable to the Offer.
If, after such good faith effort, Purchaser cannot comply with such state
statute, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) holders of Shares in such state. In those jurisdictions where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer is being made on behalf of Purchaser by Wasserstein
Perella & Co., Inc. or one or more registered brokers or dealers licensed under
the laws of such jurisdictions.
NOTICE OF OFFER TO PURCHASE FOR CASH
UP TO 80,916,766 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MORTON INTERNATIONAL, INC.
AT
$37.125 NET PER SHARE
BY
MORTON ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
Morton Acquisition Corp. (formerly known as Gershwin Acquisition Corp.), an
Indiana corporation ("Purchaser") and a wholly owned subsidiary of Rohm and Haas
Company, a Delaware corporation ("Parent"), is offering to purchase up to
80,916,766 shares (representing 67% of the issued and outstanding shares as of
January 29, 1999) of Common Stock, par value $1.00 per share (the "Shares"), of
Morton International, Inc., an Indiana corporation (the "Company"), and the
associated preferred share purchase rights ("Rights"), at a purchase price of
$37.125 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated February
5, 1999 (the "Offer to Purchase") and in the related Letter of Transmittal
(which, as amended or supplemented from time to time, collectively constitute
the "Offer"). The Rights will expire immediately prior to the consummation of
the Offer. Unless the context otherwise requires, references herein to "Shares"
shall be deemed to include the associated Rights.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, MARCH 5, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of Shares which, together with any Shares owned by Parent or Purchaser,
constitutes at least a majority of the voting power (determined on a
fully-diluted basis) of all the securities of the Company entitled to vote
generally in the election of directors or on a merger, (2) any applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, having expired or been terminated (the "HSR Approval") and (3)
notification of and approval by the European Commission under the EU Council
Regulation 4064/89, as amended ("EU Approval"), having been obtained. The Offer
is also subject to the other conditions set forth in the Offer to Purchase. See
Section 15 of the Offer to Purchase.
The Board of Directors of the Company has unanimously approved and adopted
the Merger Agreement (as defined below) and the transactions contemplated
thereby, including the Offer and the Merger (as defined below), and determined
that the Offer and the Merger are fair to, and in the best interests of, the
Company and its shareholders and recommends that shareholders accept the Offer
and tender their Shares pursuant to the Offer.
<PAGE> 2
Upon the terms and subject to the conditions of the Offer, if more than
80,916,766 Shares are validly tendered and not withdrawn prior to the Expiration
Date (as defined below), Purchaser will accept for payment and pay for only
80,916,766 Shares on a pro rata basis (with appropriate adjustments to avoid
purchase of fractional Shares) based on the number of Shares properly tendered
by each shareholder prior to the Expiration Date and not withdrawn. In the event
that proration of tendered Shares is required, because of the difficulty of
determining the precise number of Shares properly tendered and not withdrawn
(due in part to the guaranteed delivery procedures described in Section 3 of the
Offer to Purchase), Purchaser does not expect that it will be able to announce
the final results of such proration or pay for any Shares until at least seven
New York Stock Exchange, Inc. trading days after the Expiration Date.
Preliminary results of proration will be announced by press release as promptly
as practicable after the Expiration Date. Shareholders may obtain such
preliminary information from the Information Agent and may be able to obtain
such information from their broker.
The purpose of the Offer is for Parent, through Purchaser, to acquire a
majority equity interest in the Company as the first step in a business
combination. The Offer is being made pursuant to the terms of the Agreement and
Plan of Merger, dated as of January 31, 1999 (the "Merger Agreement"), among
Parent, Purchaser and the Company. The Merger Agreement provides that, among
other things, subject to the satisfaction or waiver of certain conditions,
following completion of the Offer and in accordance with the Indiana Business
Corporation Law, Purchaser will be merged with and into the Company (the
"Merger"). Following consummation of the Merger, the Company will continue as
the surviving corporation and will become a wholly owned subsidiary of Parent.
As more fully described in Section 12 of the Offer to Purchase, at the effective
time of the Merger (the "Effective Time"), (i) if Purchaser shall have
purchased, pursuant to the Offer, an aggregate of 80,916,766 Shares (the
"Maximum Offer Number of Shares"), each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held in the treasury of the
Company and each Share owned by Parent or Purchaser) shall be cancelled,
extinguished and converted into the right to receive a number (rounded to the
nearest one-millionth of a share) of fully paid and nonassessable shares of
common stock, par value $2.50 per share (the "Parent Common Stock"), of Parent
equal to the number (the "Exchange Ratio") (rounded to the nearest
one-millionth) obtained by dividing $37.125 by the Parent Common Stock Price (as
defined in Section 12 of the Offer to Purchase); provided that the Exchange
Ratio shall not be less than 1.088710 or greater than 1.330645, and (ii) if
Purchaser shall have purchased, pursuant to the Offer, less than the Maximum
Offer Number of Shares, each Share issued and outstanding immediately prior to
the Effective Time (other than Shares held in the treasury of the Company and
each Share owned by Parent or Purchaser) shall be cancelled, extinguished and
converted into the right to receive (i) cash, in an amount equal to the product
of Cash Proration Factor One (as defined in Section 12 of the Offer to Purchase)
multiplied by $37.125 and (ii) a number (rounded to the nearest one-millionth of
a share) of fully paid and nonassessable shares of Parent Common Stock equal to
the product of (a) 1 minus Cash Proration Factor One multiplied by (b) the
Exchange Ratio. In the event that, following completion of the Offer, Parent
does not receive the approval of the stockholders of Parent necessary to issue
such number of shares of Parent Common Stock in the Merger, the consideration to
be received by holders of Shares in the Merger will be adjusted to reduce the
stock portion of the consideration to provide that such holders will receive, in
the aggregate, the maximum number of shares of Parent Common Stock that may be
issued by Parent in the Merger without a vote of the stockholders of Parent
pursuant to the Delaware General Corporation Law, the applicable rules of the
New York Stock Exchange, Inc. or otherwise and the remainder of such
consideration in cash, as provided in the Merger Agreement. The Offer does not
constitute an offer to sell or a solicitation of an offer to buy any securities
of Parent. Such an offer may be made only pursuant to a prospectus.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary (as defined in the Offer to Purchase) of its acceptance for payment
of such Shares. Upon the terms and subject to the conditions of the Offer,
payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering shareholders for the purpose of receiving payments from
Purchaser and transmitting payments to tendering shareholders. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) unless Shares are held in
book-entry form through the Company's Shareholder Services Program (as defined
in the Offer to Purchase), certificates representing Shares (the "Share
Certificates") (or a timely confirmation of a book-entry transfer of such
Shares, into the Depositary's account at the Book-Entry Transfer Facility (as
defined in the Offer to Purchase) pursuant to the procedures set forth in
Section 3 of the Offer to Purchase), (ii) the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message (as defined in the Offer to Purchase) and (iii) any other documents
required by the Letter of Transmittal. The per Share
<PAGE> 3
consideration paid to any shareholder pursuant to the Offer will be the highest
per Share consideration paid to any other shareholder pursuant to the Offer.
Under no circumstances will interest be paid on the purchase price to be
paid by Purchaser for such Shares, regardless of any extension of the Offer or
any delay in making such payment.
The term "Expiration Date" shall mean 12:00 Midnight, New York City time,
on Friday, March 5, 1999, unless and until Purchaser (in accordance with the
terms of the Merger Agreement), shall have extended the period of time during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by Purchaser, shall
expire.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission, Purchaser may, under
certain circumstances, (a) extend the period of time during which the Offer is
open and thereby delay acceptance for payment of and the payment for any Shares,
by giving oral or written notice of such extension to the Depositary and (b)
amend the Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. Any extension, delay, waiver, amendment or
termination of the Offer will be followed as promptly as practicable by a public
announcement thereof, the announcement in the case of an extension to be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the right of a tendering shareholder to withdraw such shareholder's
Shares. Pursuant to the Merger Agreement, Purchaser shall extend the Offer from
time to time in the event that, at a then-scheduled expiration date, all of the
conditions to the Offer have not been satisfied or waived as permitted by the
Merger Agreement, each such extension not to exceed the lesser of 10 additional
business days or such fewer number of days that Purchaser reasonably believes
are necessary to cause the conditions to the Offer to be satisfied. If, on April
2, 1999 (subject to extension by Purchaser to not later than April 17, 1999 if
Parent reasonably believes that the required HSR Approval and EU Approval will
be obtained by such date), Purchaser has not consummated the Offer in accordance
with its terms, Purchaser shall, unless Parent and the Company otherwise agree,
terminate the Offer without acceptance of any Shares previously tendered, and
Parent, Purchaser and the Company shall, upon the terms and conditions of the
Merger Agreement, seek to consummate the Merger.
Except as otherwise provided below, tenders of Shares made pursuant to the
Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at
any time prior to the Expiration Date and, unless theretofore accepted for
payment pursuant to the Offer, may also be withdrawn at any time after April 5,
1999. For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. If
Purchaser extends the Offer, is delayed in its acceptance for payment of Shares
or is unable to accept Shares for payment pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may, nevertheless, on behalf of Purchaser, retain tendered Shares, and such
Shares may not be withdrawn except to the extent that tendering shareholders are
entitled to withdrawal rights as described in Section 4 of the Offer to
Purchase. Any such notice of withdrawal must specify the name of the person
having tendered the Shares to be withdrawn, the number of Shares to be withdrawn
and the name of the registered holder, if different from the name of the person
who tendered such Shares. If Share Certificates to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered for
the account of an Eligible Institution (as defined in the Offer to Purchase),
the signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been delivered pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer to Purchase, any notice
of withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals
of tenders of Shares may not be rescinded, and any Shares properly withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) under the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
The Company has provided Purchaser with the Company's shareholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and
<PAGE> 4
other relevant documents will be mailed to record holders of Shares whose names
appear on the shareholder list, and will be furnished to brokers, dealers,
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the Company's shareholder lists, or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information and should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer documents may be directed
to the Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth below, and copies will be furnished promptly at
Purchaser's expense. Neither Parent nor Purchaser will pay any fees or
commissions to any broker or dealer or other person other than the Information
Agent and the Dealer Manager for soliciting tenders of Shares pursuant to the
Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 431-9633
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, NY 10019
Call Collect (212) 969-2700
February 5, 1999
<PAGE> 1
----------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Among
ROHM AND HAAS COMPANY
GERSHWIN ACQUISITION CORP.
and
MORTON INTERNATIONAL, INC.
Dated as of January 31, 1999
----------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
THE OFFER.............................................................. 1
SECTION 1.1 The Offer.............................................. 1
SECTION 1.2 Company Action......................................... 3
ARTICLE II
THE MERGER............................................................ 4
SECTION 2.1 The Merger............................................. 4
SECTION 2.2 Effective Time......................................... 4
SECTION 2.3 Effects of the Merger.................................. 4
SECTION 2.4 Articles of Incorporation; By-Laws..................... 4
SECTION 2.5 Directors and Officers................................. 5
SECTION 2.6 Conversion of Securities............................... 5
SECTION 2.7 Treatment of Options; Stock Plans...................... 6
SECTION 2.8 Surrender of Shares; Stock Transfer Books.............. 8
SECTION 2.9 Distributions with Respect to Unexchanged Shares....... 10
SECTION 2.11 Fractional Shares...................................... 10
SECTION 2.12 Lost Certificates...................................... 10
SECTION 2.13 Withholding Rights..................................... 11
SECTION 2.14 Alternative Merger Consideration....................... 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................... 12
SECTION 3.1 Organization and Qualification......................... 12
SECTION 3.2 Articles of Incorporation and By-Laws.................. 12
SECTION 3.3 Capitalization......................................... 13
SECTION 3.4 Authority Relative to This Agreement................... 14
SECTION 3.5 No Conflict; Required Filings and Consents............. 15
SECTION 3.6 Compliance; Permits.................................... 16
SECTION 3.7 SEC Filings; Financial Statements...................... 17
SECTION 3.8 Absence of Certain Changes or Events................... 17
SECTION 3.9 Absence of Litigation.................................. 18
SECTION 3.10 Employee Benefit Plans................................. 18
SECTION 3.11 Tax Matters............................................ 20
SECTION 3.12 Offer Documents; Proxy Statement....................... 21
SECTION 3.13 Environmental Matters.................................. 22
SECTION 3.14 Year 2000.............................................. 24
SECTION 3.15 Intellectual Property.................................. 24
SECTION 3.16 Contracts.............................................. 25
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SECTION 3.17 Opinion of Company Financial Adviser................... 25
SECTION 3.18 Brokers................................................ 25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER.................................................. 26
SECTION 4.1 Organization and Qualification......................... 26
SECTION 4.2 Certificate of Incorporation and By-Laws............... 26
SECTION 4.3 Capitalization......................................... 26
SECTION 4.4 Authority Relative to This Agreement................... 28
SECTION 4.5 No Conflict; Required Filings and Consents............. 29
SECTION 4.6 SEC Filings; Financial Statements...................... 30
SECTION 4.7 Absence of Certain Changes or Events................... 30
SECTION 4.8 Offer Documents; Proxy Statement....................... 31
SECTION 4.9 Brokers................................................ 31
SECTION 4.10 Operations of Purchaser................................ 32
SECTION 4.11 Opinion of Parent Financial Adviser.................... 32
SECTION 4.12 Funds.................................................. 32
SECTION 4.13 Compliance; Permits.................................... 32
SECTION 4.14 Absence of Litigation.................................. 32
SECTION 4.15 Employee Benefit Plans................................. 33
SECTION 4.16 Environmental Matters.................................. 34
SECTION 4.17 Contracts.............................................. 35
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER................................ 36
SECTION 5.1 Conduct of Business of the Company Pending the Merger.. 36
SECTION 5.2 Conduct of Business of Parent Pending the Merger....... 38
SECTION 5.3 Coordination of Dividends.............................. 39
ARTICLE VI
ADDITIONAL AGREEMENTS................................................. 40
SECTION 6.1 Meetings............................................... 40
SECTION 6.2 Proxy Statement; Registration Statement................ 41
SECTION 6.3 Company Board Representation; Section 14(f)............ 41
SECTION 6.4 Confidentiality........................................ 42
SECTION 6.5 No Solicitation of Transactions........................ 43
SECTION 6.6 Employee Benefits Matters.............................. 44
SECTION 6.7 Directors' and Officers' Indemnification and Insurance. 45
SECTION 6.8 Notification of Certain Matters........................ 46
SECTION 6.9 Further Action; Reasonable Best Efforts................ 47
SECTION 6.10 Public Announcements................................... 48
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SECTION 6.11 Affiliates............................................. 48
SECTION 6.12 Stock Exchange Listing................................. 48
SECTION 6.13 Accountants' Letters................................... 48
SECTION 6.14 Parent Board of Directors.............................. 49
SECTION 6.15 Alternative Transaction Structure...................... 49
SECTION 6.16 Delivery of List of Company Plans...................... 49
ARTICLE VII
CONDITIONS OF MERGER.................................................. 50
SECTION 7.1 Conditions to Obligation of Each Party to Effect the
Merger.............................................. 50
SECTION 7.2 Additional Conditions to Obligation of Parent and
Purchaser to Effect the Merger...................... 51
SECTION 7.3 Additional Conditions to Obligation of the Company to
Effect the Merger................................... 51
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER..................................... 52
SECTION 8.1 Termination............................................ 52
SECTION 8.2 Effect of Termination.................................. 54
SECTION 8.3 Fees and Expenses...................................... 54
SECTION 8.4 Amendment.............................................. 56
SECTION 8.5 Waiver................................................. 56
ARTICLE IX
GENERAL PROVISIONS.................................................... 56
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements.......................................... 56
SECTION 9.2 Notices................................................ 56
SECTION 9.3 Certain Definitions.................................... 57
SECTION 9.4 Severability........................................... 58
SECTION 9.5 Entire Agreement; Assignment........................... 59
SECTION 9.6 Parties in Interest.................................... 59
SECTION 9.7 Governing Law; Submission to Jurisdiction.............. 59
SECTION 9.8 Headings............................................... 59
SECTION 9.9 Counterparts........................................... 59
</TABLE>
Annex - Offer Conditions
Exhibit 2.4 - Form of Articles of Incorporation of the Surviving Corporation
Exhibit 6.11 - Form of Affiliate Letter
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<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 31, 1999 (the
"Agreement"), among ROHM AND HAAS COMPANY, a Delaware corporation ("Parent"),
GERSHWIN ACQUISITION CORP., an Indiana corporation and a wholly owned subsidiary
of Parent ("Purchaser"), and MORTON INTERNATIONAL, INC., an Indiana corporation
(the "Company").
WHEREAS, the Board of Directors of the Company has determined that
it is in the best interests of the Company and the shareholders of the Company
for the Company to enter into this Agreement with Parent and Purchaser,
providing for the offer (the "Offer") by Purchaser to purchase up to 80,916,766
shares of Company Common Stock (as defined in Section 1.1) and associated Rights
(as defined in Section 1.1) pursuant to the Offer (as defined in Section 1.1),
as described herein, and the merger (the "Merger") of Purchaser with the Company
in accordance with the Business Corporation Law of the State of Indiana ("BCL"),
upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of Parent has approved the Offer and
the Merger of Purchaser with the Company in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), and the Board of
Directors of Purchaser has approved the Offer and the Merger of Purchaser with
the Company in accordance with the BCL, in each case, upon the terms and subject
to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 8.1 and subject to the
satisfaction of the conditions set forth in Annex A hereto (the "Offer
Conditions"), Purchaser shall, as soon as reasonably practicable after the date
hereof (and in any event within five business days from the date of public
announcement of the execution hereof), commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) an offer (the "Offer") to purchase for cash up to 80,916,766 of the
issued and outstanding shares of Common Stock, par value $1.00 per share
("Company Common Stock"), of the Company and the associated Preferred Stock
Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of April 24, 1997, between the Company and First Chicago Trust Company of New
York (the "Rights Agreement") at a price of $37.125 per share of Company Common
Stock, net to the seller in cash. The obligation of Purchaser to accept for
payment shares of Company Common Stock tendered pursuant to the Offer shall be
subject only to the satisfaction
<PAGE> 6
2
or waiver by Purchaser of the Offer Conditions. Purchaser expressly reserves the
right, in its sole discretion, to waive any such condition (other than the
Minimum Condition as defined in the Offer Conditions) and make any other changes
in the terms and conditions of the Offer; provided that, unless previously
approved by the Company in writing, no change may be made which changes the
Minimum Condition or decreases the price per share of Company Common Stock
payable in the Offer, changes the form of consideration payable in the Offer,
increases or reduces the maximum number (80,916,766 Shares) of shares of Company
Common Stock to be purchased in the Offer (the "Maximum Offer Number"), amends
the Offer Conditions or imposes conditions to the Offer in addition to the Offer
Conditions, or makes other changes to the terms or conditions to the Offer that
are adverse to the holders of Company Common Stock. Purchaser covenants and
agrees that, subject to the terms and conditions of this Agreement, including
but not limited to the Offer Conditions, it will accept for payment and pay for
shares of Company Common Stock as soon as it is permitted to do so under
applicable law. The Offer shall initially be scheduled to expire 20 business
days following the commencement thereof, provided that, unless this Agreement
has been terminated pursuant to Section 8.1 and subject to Section 1.1(b),
Purchaser shall extend the Offer from time to time in the event that, at a
then-scheduled expiration date, all of the Offer Conditions have not been
satisfied or waived as permitted pursuant to this Agreement, each such extension
not to exceed (unless otherwise consented to in writing by the Company) the
lesser of 10 additional business days or such fewer number of days that
Purchaser reasonably believes are necessary to cause the Offer Conditions to be
satisfied. It is agreed that the Offer Conditions are for the benefit of
Purchaser and may be asserted by Purchaser regardless of the circumstances
giving rise to any such condition (except for any action or inaction by
Purchaser or Parent constituting a breach of this Agreement). Except as provided
in Section 1.1(b) or 1.1(d), Purchaser shall not terminate the Offer without
purchasing shares of Company Common Stock pursuant to the Offer.
(b) If, on April 2, 1999 (subject to extension pursuant to the
proviso to this sentence, the "Final Expiration Date"), Purchaser has not
consummated the Offer in accordance with its terms, Purchaser shall thereupon
terminate the Offer without the acceptance of any Shares previously tendered and
the parties shall, upon the terms and conditions hereof, seek to consummate the
Merger; provided, however, that the Final Expiration Date may be further
extended by Parent, but in no event beyond April 17, 1999, if Parent reasonably
believes that the required regulatory approvals pursuant to the HSR Act (as
defined in Section 3.5(b)) and the notification of and approval by the European
Commission under the EU Council Regulation 4064/89, as amended (the "EU
Approval"), will be obtained during such extended period. If, at the Final
Expiration Date, all Offer Conditions have not been satisfied, Purchaser shall,
unless Parent and the Company otherwise agree, terminate the Offer, and the
parties shall, subject to the terms and conditions hereof, seek to consummate
the Merger.
(c) As soon as reasonably practicable on the date the Offer is
commenced, Purchaser shall file a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer with the Securities and Exchange
Commission (the "SEC"). The Schedule 14D-1 shall contain an Offer to Purchase
and forms of the related letter of transmittal (which Schedule 14D-1, Offer to
Purchase and other documents, together with any supplements or amendments
thereto, are referred to herein collectively as the "Offer Documents"). The
Offer
<PAGE> 7
3
Documents and all amendments thereto will comply in all material respects with
the Exchange Act and the rules and regulations promulgated thereunder. Parent
and Purchaser agree that the Company and its counsel shall be given an
opportunity to review the Schedule 14D-1 before it is filed with the SEC.
Parent, Purchaser and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents that shall have become
false or misleading in any material respect, and Parent and Purchaser further
agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to
be filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of shares of Company Common Stock, in each case as and
to the extent required by applicable federal securities laws.
(d) In the event that this Agreement has been terminated pursuant to
Section 8.1, Purchaser shall, and Parent shall cause Purchaser to, promptly
terminate the Offer without accepting any shares of Company Common Stock for
payment. Parent will provide the Company with a copy of any comments Parent or
Purchaser may receive from the SEC or its staff with respect to the Offer
Documents promptly following receipt thereof.
SECTION 1.2 Company Action. (a) The Company shall use its reasonable best
efforts to cause Goldman, Sachs & Co. (the "Company Financial Adviser") to
permit the inclusion of the fairness opinion referred to in Section 3.17 (or a
reference thereto) in the Schedule 14D-9 referred to below and the Proxy
Statement referred to in Section 3.12 and a reference to such opinion in the
Offer Documents. Except to the extent otherwise required by the fiduciary duties
of the Board of Directors of the Company under applicable law, the Company
hereby consents to the inclusion in the Offer Documents of the recommendations
of the Company's Board of Directors described in Section 3.4.
(b) The Company shall file with the SEC, contemporaneously with the
commencement of the Offer pursuant to Section 1.1, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9"), containing the recommendations of the Company's
Board of Directors described in Section 1.2(a)(i) and shall promptly mail the
Schedule 14D-9 to the shareholders of the Company. The Schedule 14D-9 and all
amendments thereto will comply in all material respects with the Exchange Act
and the rules and regulations promulgated thereunder. The Company, Parent and
Purchaser each agrees promptly to correct any information provided by it for use
in the Schedule 14D-9 that shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to
holders of shares of Company Common Stock, in each case as and to the extent
required by applicable federal securities laws.
(c) In connection with the Offer, the Company shall promptly furnish
Purchaser with mailing labels, security position listings, any non-objecting
beneficial owner lists and any available listings or computer files containing
the names and addresses of the record holders of shares of Company Common Stock,
each as of a recent date, and shall promptly furnish Purchaser with such
additional information (including but not limited to updated lists of
shareholders, mailing labels, security position listings and non-objecting
beneficial owner lists) and such other assistance as Parent, Purchaser or their
agents may reasonably require in
<PAGE> 8
4
communicating the Offer to the record and beneficial holders of shares of
Company Common Stock. Subject to the requirements of applicable law, and except
for such steps as are appropriate to disseminate the Offer Documents and any
other documents necessary to consummate the Merger, Parent, Purchaser and their
affiliates, associates, agents and advisors shall use the information contained
in any such labels, listings and files only in connection with the Offer and the
Merger, and, if this Agreement shall be terminated, will deliver to the Company
all copies of such information then in their possession.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions
of this Agreement and in accordance with the BCL, at the Effective Time (as
defined in Section 2.2), Purchaser shall be merged with and into the Company. As
a result of the Merger, the separate corporate existence of Purchaser shall
cease and the Company shall continue as the surviving corporation of the Merger
(the "Surviving Corporation"). At Parent's election, any direct or indirect
wholly owned subsidiary of Parent other than Purchaser may be merged with and
into the Company instead of the Purchaser (provided that such election shall not
delay the consummation of the Merger or adversely affect the benefits of the
Merger to the Company and its shareholders). As a condition of such an election,
the parties (and such additional subsidiary) shall execute an appropriate
amendment to this Agreement in order to reflect such election.
SECTION 2.2 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing articles of merger
(the "Articles of Merger") with the Secretary of State of the State of Indiana,
in such form as required by and executed in accordance with the relevant
provisions of the BCL (the date and time of the filing of the Articles of Merger
with the Secretary of State of the State of Indiana (or such later time as is
specified in the Articles of Merger as agreed between Parent and the Company)
being the "Effective Time").
SECTION 2.3 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the BCL. Without limiting the
generality of the foregoing and subject thereto, at the Effective Time, all the
property, rights, privileges, immunities, powers and franchises of the Company
and Purchaser shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Purchaser shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 2.4 Articles of Incorporation; By-Laws. (a) At the Effective
Time and without any further action on the part of the Company and Purchaser,
the articles of incorporation of the Company as in effect immediately prior to
the Effective Time shall be amended so as to read in their entirety as set forth
in Exhibit 2.4 hereto and, as so amended, shall be the articles of incorporation
of the Surviving Corporation until thereafter amended as provided therein and
under the BCL.
<PAGE> 9
5
(b) At the Effective Time and without any further action on the part
of the Company and Purchaser, the By-Laws of Purchaser shall be the By-Laws of
the Surviving Corporation and thereafter may be amended or repealed in
accordance with their terms or the Articles of Incorporation of the Surviving
Corporation and as provided by law.
SECTION 2.5 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
SECTION 2.6 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:
(a) Subject to Section 2.14, if Purchaser shall have purchased,
pursuant to the Offer, the Maximum Offer Number of shares of Company
Common Stock, each share of Company Common Stock (each, a "Share" and
collectively, the "Shares") issued and outstanding immediately prior to
the Effective Time (other than any Shares to be cancelled pursuant to
Section 2.6(c)) shall be cancelled, extinguished and converted into the
right to receive a number (rounded to the nearest one-millionth of a
share) of fully paid and nonassessable shares of common stock, par value
$2.50 per share ("Parent Common Stock"), of Parent equal to the Exchange
Ratio (as defined below).
(b) Subject to Section 2.14, if the Offer is terminated pursuant to
Section 1.1(b) or if Purchaser shall have purchased, pursuant to the
Offer, less than the Maximum Offer Number of shares of Company Common
Stock (the number of Shares so paid for and purchased in the Offer being
referred to herein as the "Purchased Share Number"), each Share issued and
outstanding immediately prior to the Effective Time (other than any Shares
to be cancelled pursuant to Section 2.6(c)) shall be cancelled,
extinguished and converted into the right to receive, (i) cash, in an
amount equal to the product of Cash Proration Factor One (as defined
below) multiplied by $37.125 and (ii) a number (rounded to the nearest
one-millionth of a share) of fully paid and non-assessable shares of
Parent Common Stock equal to the product of (x) 1 minus Cash Proration
Factor One multiplied by (y) the Exchange Ratio.
(c) Each Share held in the treasury of the Company and each Share
owned by Parent or Purchaser, in each case immediately prior to the
Effective Time, shall be cancelled and retired without any conversion
thereof and no payment or distribution shall be made with respect thereto.
(d) Each share of common stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted into and become
one validly
<PAGE> 10
6
issued, fully paid and nonassessable share of identical common stock of
the Surviving Corporation.
(e) If prior to the Effective Time, Parent or the Company, as the
case may be, should (in the case of the Company, after obtaining the
consent required by Section 5.1 hereof) split, combine or otherwise
reclassify the Parent Common Stock or the Company Common Stock, or pay (or
set a record date that is prior to the Effective Time with respect to) a
stock dividend or other stock distribution in Parent Common Stock or
Company Common Stock, or otherwise change the Parent Common Stock or
Company Common Stock into any other securities, or make any other such
stock dividend or distribution with respect to the Parent Common Stock or
the Company Common Stock in capital stock of Parent or the Company or of
their respective subsidiaries in respect of the Parent Common Stock or the
Company Common Stock, respectively, then the Merger Consideration and the
Exchange Ratio will be appropriately adjusted to reflect such split,
combination, dividend or other distribution or change to provide the
holders of Company Common Stock the same economic effect as contemplated
by this Agreement prior to such event.
For purposes of this Agreement, "Exchange Ratio" is equal to the
number (rounded to the nearest one-millionth) obtained by dividing $37.125 by
the Parent Common Stock Price (as defined below); provided that the Exchange
Ratio shall not be less than 1.088710 or greater than 1.330645. The "Parent
Common Stock Price" is equal to the average per share closing price of the
Parent Common Stock on the New York Stock Exchange ("NYSE") Composite
Transactions Tape for the twenty trading-day period ending on the second trading
day prior to the Effective Time. "Cash Proration Factor One" shall be a
fraction, of which (A) the numerator is equal to (x) the Maximum Offer Number
minus (y) the Purchased Share Number, if any, and (B) the denominator is equal
to the number of Shares issued and outstanding immediately prior to the
Effective Time (excluding Shares to be cancelled pursuant to Section 2.6(c))
(the "Final Outstanding Number"). The consideration provided for in Sections
2.6(a) and (b), together with the consideration provided for in Section 2.11, is
referred to herein as the "Merger Consideration;" provided, that if the Cash
Alternative Structure (as defined in Section 6.15) is required to be effected,
the term "Merger Consideration" shall instead refer to the consideration
provided for in Section 2.14, together with the consideration provided for in
Section 2.11. At the Effective Time, all Shares shall no longer be outstanding
and shall be cancelled and retired and shall cease to exist (in the case of the
Shares to be cancelled pursuant to Section 2.6(c), without the payment of any
consideration therefor), and each certificate (a "Certificate") formerly
representing any of such Shares, other than the Shares to be cancelled pursuant
to Section 2.6(c), shall thereafter represent only the right to receive the
Merger Consideration and the right to receive any distribution or dividends
pursuant to Section 2.9.
SECTION 2.7 Treatment of Options; Stock Plans. As soon as
practicable following the date of this Agreement, the Board of Directors of the
Company (or, if appropriate, any committee administering the Stock Plans (as
defined below)) shall adopt such resolutions or take such other actions as may
be required to effect the following:
<PAGE> 11
7
(a) adjust the terms of all outstanding employee or director stock
options to purchase shares of Company Common Stock and any related stock
appreciation rights ("Company Stock Options") granted under any stock
option or stock purchase plan, program or arrangement of the Company and
its subsidiaries, including without limitation, the 1989 Incentive Plan
and the 1997 Incentive Plan (collectively, the "Stock Plans"), to provide
that, at the Effective Time, each Company Stock Option outstanding
immediately prior to the Effective Time shall (except to the extent that
Parent and the holder of a Company Stock Option otherwise agree prior to
the Effective Time): (i) if such Company Stock Option is or becomes
exercisable before the Merger or as a consequence of the transactions
contemplated by this Agreement and the holder of such Company Stock Option
shall have elected by written notice to Parent prior to the date 10
business days prior to the Effective Time to receive the payment
contemplated by this clause (i), be cancelled in exchange for a payment
from the Surviving Corporation (subject to any applicable withholding
taxes) equal to the product of (1) the total number of shares of Company
Common Stock subject to such Company Stock Option and (2) the excess of
$37.125 over the exercise price per share of Company Common Stock subject
to such Company Stock Option, payable in cash immediately following the
Effective Time; provided, however, that with respect to any person subject
to Section 16(a) of the Exchange Act any such amount to be paid shall be
paid as soon as practicable after the first date payment can be made
without liability for such person under Section 16(b) of the Exchange Act;
or (ii) with respect to any Company Stock Option not cancelled pursuant to
clause (i) above, be deemed to constitute an option to acquire, on the
same terms and conditions (including, if any, related stock appreciation
rights and limited stock appreciation rights) as were applicable under
such Company Stock Option, the number of shares of Parent Common Stock
equal to the product of (1) the number of shares of Company Common Stock
issuable upon exercise of such Company Stock Option and (2) the Exchange
Ratio, at a price per share equal to (1) the exercise price per share for
the shares of Company Common Stock otherwise purchasable pursuant to such
Company Stock Option divided by (2) the Exchange Ratio; provided, however,
that in the case of any Company Stock Option to which Sections 422 and 423
of the Internal Revenue Code of 1986, as amended (the "Code"), applies by
reason of its qualification under any of Sections 422-424 of the Code
("qualified stock options"), Parent shall cause the exercise price, the
number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option to be determined in a good faith
effort to comply with Section 424(a) of the Code and provided, further,
that if such Company Stock Option had associated with it a stock
appreciation right and/or limited stock appreciation right, the number and
kind of shares subject to such right and the exercise price thereof shall
be adjusted in the same manner as provided above for such Company Stock
Option, and the terms and conditions thereof shall otherwise remain the
same as they were immediately before the Effective Time;
(b) except as provided herein or as otherwise agreed to by the
parties, the Stock Plans and any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of
the capital stock of the Company or any subsidiary shall terminate as of
the Effective Time, and the Company shall ensure that following the
<PAGE> 12
8
Effective Time no holder of a Company Stock Option nor any participant in
any Stock Plan shall have any right thereunder to acquire equity
securities of the Company or the Surviving Corporation; and
(c) with respect to the Company Stock Options not cancelled
pursuant to clause (a)(i) above, Parent shall, as of the Effective Time,
reserve for issuance a number of shares of Parent Common Stock equal to
the number of shares which may become issuable upon exercise of such
Company Stock Options, such number not to be reduced except to the extent
such options or related stock appreciation rights are exercised, cancelled
or terminated pursuant to their terms. Upon the Effective Time or as soon
as reasonably practicable thereafter, Parent shall file with the SEC a
Registration Statement or Registration Statements on Form S-8 covering all
shares of Parent Common Stock to be issued pursuant to the Company Stock
Options and shall cause such Registration Statement to remain effective so
long as Parent continues to have a registration statement on Form S-8
outstanding for other Parent Stock Options.
SECTION 2.8 Surrender of Shares; Stock Transfer Books. (a) Prior to
the Effective Time, Purchaser shall designate a bank or trust company,
reasonably satisfactory to the Company, to act as agent for the holders of
Shares in connection with the Merger (the "Exchange Agent") to receive the
Merger Consideration to which holders of Shares shall become entitled pursuant
hereto. Promptly following the Effective Time, Parent or Purchaser will deposit
with the Exchange Agent certificates representing Parent Common Stock and cash
sufficient to make all payments pursuant to Section 2.6(a), 2.6(b) or 2.14 and
Section 2.11, and when and as needed, Parent or Purchaser will deposit with the
Exchange Agent cash sufficient to make all payments pursuant to Section 2.9. Any
such cash shall be invested by the Exchange Agent as directed by Purchaser or,
after the Effective Time, the Surviving Corporation, provided that such
investments shall be in obligations of or guaranteed by the United States of
America, in commercial paper obligations rated A-1 or P-1 or better by Moody's
Investors Service, Inc. or Standard & Poor's Corporation, respectively, or in
certificates of deposit, bank repurchase agreements or banker's acceptances of
commercial banks with capital exceeding $500 million. Any net profit resulting
from, or interest or income produced by, such investments will be payable to the
Surviving Corporation or Parent, as Parent directs. Any cash and certificates of
Parent Common Stock deposited with the Exchange Agent shall hereinafter be
referred to as the "Exchange Fund".
(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each record holder (other than the Purchaser), as of
the Effective Time, a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the Certificates for payment
of the Merger Consideration in respect thereof. Upon surrender to the Exchange
Agent of a Certificate, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, and such other
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate or
certificates representing the number of full shares of Parent Common Stock and
the
<PAGE> 13
9
amount of cash, if any, into which the aggregate number of shares of Company
Common Stock previously represented by such Certificate or Certificates
surrendered shall have been converted pursuant to this Agreement, and such
Certificate or Certificates shall then be cancelled. No interest shall be paid
or accrued for the benefit of holders of the Certificates on cash payable as
Merger Consideration, whether in lieu of fractional shares or otherwise, or cash
payable pursuant to Section 2.9, upon the surrender of the Certificates. If any
certificate for Parent Common Stock is to be issued in, or if cash is to be
remitted to, a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of such exchange 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 issuance of
certificates for such Parent Common Stock to a person other than the person in
whose name the surrendered Certificate is registered, or shall have established
to the satisfaction of the Surviving Corporation that such tax either has been
paid or is not applicable. In the event of a transfer of ownership of Company
Common Stock which is not registered in the transfer records of the Company, one
or more shares of Parent Common Stock evidencing, in the aggregate, the proper
number of shares of Parent Common Stock, a check in the proper amount of cash
Merger Consideration, if any, and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.9, may be issued with respect to
such Company Common Stock to such a transferee if the Certificate representing
such shares of Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence any applicable stock transfer taxes have been paid.
(c) At any time following one year after the Effective Time, the
Surviving Corporation shall be entitled to require the Exchange Agent to deliver
to it any portion of the Exchange Fund (including any interest received with
respect to any cash portion thereof) which had been made available to the
Exchange Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the Merger Consideration and any dividends or
distributions with respect to the Parent Common Stock payable upon due surrender
of their Certificates. Notwithstanding the foregoing, neither the Surviving
Corporation nor the Exchange Agent shall be liable to any holder of a
Certificate for Merger Consideration from the Exchange Fund delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. Any portion of the Exchange Fund remaining unclaimed by holders of
shares of Company Common Stock five years after the Effective Time (or such
earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any governmental entity) shall, to the extent
permitted by law, become the property of the Surviving Corporation free and
clear of any claims or interest of any Person previously entitled thereto. None
of Parent, Purchaser, the Company, the Surviving Corporation or the Exchange
Agent shall be liable to any person in respect of any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company. From
and after the Effective Time, the holders
<PAGE> 14
10
of Certificates evidencing ownership of Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares
except as otherwise provided for herein or by applicable law.
SECTION 2.9 Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made with respect to shares of
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to shares of Parent
Common Stock that such holder would be entitled to receive upon surrender of
such Certificate and no cash payment in lieu of fractional shares shall be paid
to any such holder pursuant to Section 2.11 until such holder shall surrender
such Certificate in accordance with Section 2.8. Subject to the effect of
applicable laws, following the surrender of any such Certificate, there shall be
paid to such holder of shares of Parent Common Stock issuable in exchange
therefor, without interest, (a) promptly after the time of such surrender, the
amount of any cash payable in lieu of fractional shares of Parent Common Stock
to which such holder is entitled pursuant to Section 2.11 and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock, and
(b) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable with respect
to such shares of Parent Common Stock.
SECTION 2.10 No Further Ownership Rights in Company Common Stock.
All shares of Parent Common Stock issued and cash paid upon the surrender for
exchange of Certificates in accordance with the terms of this Article II
(including any cash paid pursuant to Section 2.11) shall be deemed to have been
issued (and paid) in full satisfaction of all rights represented by such
Certificates.
SECTION 2.11 Fractional Shares. (a) No certificates or scrip or
shares of Parent Common Stock representing fractional shares of Parent Common
Stock shall be issued upon the surrender for exchange of Certificates and such
fractional interests will not entitle the owner thereof to vote or to have any
rights of a stockholder of Parent or a holder of shares of Parent Common Stock.
(b) Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a share of Parent
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to the product of (i) such fractional part of a share of Parent Common
Stock multiplied by (ii) the average closing price of the Parent Common Stock on
the NYSE Composite Transactions Tape for the five trading days immediately prior
to the Effective Time.
SECTION 2.12 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as
<PAGE> 15
11
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will deliver in exchange for such lost, stolen
or destroyed Certificate the applicable Merger Consideration with respect to the
shares of Company Common Stock formerly represented thereby and any unpaid
dividends and distributions on shares of Parent Common Stock deliverable in
respect thereof, pursuant to this Agreement.
SECTION 2.13 Withholding Rights. Each of the Surviving Corporation
and Parent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Shares such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Parent, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by the Surviving Corporation or Parent,
as the case may be.
SECTION 2.14 Alternative Merger Consideration. In the event that the
Cash Alternative Structure is required to be effected, then notwithstanding
anything to the contrary provided for in Sections 2.6(a) or (b), at the
Effective Time, by virtue of the Merger and without any action on the part of
Purchaser, the Company or the holders of Parent Common Stock or Company Common
Stock, each Share issued and outstanding immediately prior to the Effective Time
(other than Shares canceled pursuant to Section 2.6(c)) shall be cancelled,
extinguished and converted into the right to receive:
(a) If Purchaser shall have purchased, pursuant to the Offer, the
Maximum Offer Number, (i) cash, in an amount equal to the product of (x) Cash
Proration Factor Two (as defined below), multiplied by (y) the product of the
Exchange Ratio and the Adjusted Parent Common Stock Price (as defined below);
and (ii) a number (rounded to the nearest ten-thousandth of a share) of fully
paid and non-assessable shares of Parent Common Stock equal to the product of
(x) the Exchange Ratio multiplied by (y) one minus Cash Proration Factor Two.
(b) If the Offer is terminated pursuant to Section 1.1(b) or if the
Purchased Share Number is less than the Maximum Offer Number, (i) cash, in an
amount equal to the sum of (x) the product of Cash Proration Factor One,
multiplied by $37.125 plus (y) the product of (A) Cash Proration Factor Two
minus Cash Proration Factor One, multiplied by (B) the product of the Exchange
Ratio and the Adjusted Parent Common Stock Price and (ii) a number (rounded to
the nearest ten-thousandth of a share) of fully paid and non-assessable shares
of Parent Common Stock equal to the product of (x) the Exchange Ratio multiplied
by (y) one minus Cash Proration Factor Two.
For purposes of this Section 2.14, "Cash Proration Factor Two" shall
be a fraction, of which (A) the numerator is equal to (x) the Final Outstanding
Number minus (y) the Maximum Share-for-Share Number and (B) the denominator of
which is equal to the Final Outstanding Number. The "Maximum Share-for-Share
Number" shall be equal to (A) the maximum number of shares of Parent Common
Stock that may be issued by Parent in the Merger
<PAGE> 16
12
without a vote of its stockholders pursuant to the DGCL, the applicable rules of
the NYSE or otherwise (taking into account all shares of Parent Common Stock
then outstanding or reserved for issuance in connection with any securities,
options or rights convertible into, exchangeable or exercisable for Parent
Common Stock (including, without limitation, Company Stock Options not cancelled
pursuant to Section 2.7(a)(i) of this Agreement)), divided by (B) the Exchange
Ratio. The "Adjusted Parent Common Stock Price" is equal to the average per
share closing price of the Parent Common Stock on the NYSE Composite
Transactions Tape for the five trading-day period ending on the second trading
day prior to the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that, except as set forth in the disclosure schedule delivered by the Company to
Purchaser (the "Company Disclosure Schedule") at or prior to the date of
execution of this Agreement where the relevance of such disclosure to the
applicable representation and warranty is reasonably evident from the nature of
the disclosure:
SECTION 3.1 Organization and Qualification. Each of the Company and
each of its subsidiaries is a corporation or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation and has the requisite power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where such failures to be so organized, existing and in good standing or to have
such power and authority would not, individually or in the aggregate, have a
Material Adverse Effect (as defined below) or prevent or materially delay the
consummation of the Offer or the Merger. Each of the Company and each of its
subsidiaries is duly qualified or licensed as a foreign entity to do business,
and is in good standing, in each jurisdiction where the character of its
properties owned, leased or operated by it or the nature of its activities makes
such qualification or licensing necessary, except for such failures to be so
duly qualified or licensed and in good standing as would not, individually or in
the aggregate, have a Material Adverse Effect or prevent or materially delay the
consummation of the Offer or the Merger. When used in connection with the
Company or any of its subsidiaries, the term "Material Adverse Effect" means any
change or effect that is or would be materially adverse to the business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, and when used in connection with Parent or any
of its subsidiaries, the term "Material Adverse Effect" means any change or
effect that is or would be materially adverse to the business, financial
condition or results of operations of Parent and its subsidiaries, taken as a
whole.
SECTION 3.2 Articles of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of the Restated
Articles of Incorporation of the Company (the "Articles of Incorporation") and
the By-Laws of the Company as currently in effect. No other similar
organizational documents are applicable to or binding
<PAGE> 17
13
upon the Company. The Company is not in violation in any material respect of any
of the provisions of its Articles of Incorporation or By-Laws.
SECTION 3.3 Capitalization. (a) The authorized capital stock of the
Company consists of 500,000,000 shares of Company Common Stock and 25,000,000
shares of preferred stock, par value $1.00 per share ("Company Preferred
Stock"). As of January 29, 1999, (i) 120,771,293 shares of Company Common Stock
were issued and outstanding, all of which were duly authorized, validly issued,
fully paid and nonassessable and were issued free of preemptive (or similar)
rights, (ii) 19,346,205 shares of Company Common Stock were held in the treasury
of the Company and (iii) an aggregate of 7,626,428 shares of Company Common
Stock were reserved for issuance and issuable upon or otherwise deliverable in
connection with the exercise of outstanding Company Stock Options issued
pursuant to the Company Plans (as defined in Section 3.10). Since January 29,
1999, no options to purchase shares of Company Common Stock have been granted
and no shares of Company Common Stock have been issued except for shares issued
pursuant to the exercise of Company Stock Options outstanding as of January 29,
1999. No shares of Company Preferred Stock are issued and outstanding. Except
(i) as set forth above, (ii) as a result of the exercise of Company Stock
Options outstanding as of January 29, 1999, (iii) with respect to no more than
50,000 options granted to Company employees since January 29, 1999 and prior to
the Effective Time consistent with past practice and (iv) Rights issued pursuant
to the Rights Plan, there are outstanding (a) no shares of capital stock or
other voting securities of the Company, (b) no securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (c) no options or other rights to acquire from the
Company, and no obligation of the Company to issue, deliver or sell or cause to
be issued, delivered or sold, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company and (d) no equity equivalents, interests in the ownership or earnings of
the Company or other similar rights (collectively, "Company Securities"). Other
than the Company Plans, there are no outstanding obligations of the Company or
any of its subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities or outstanding material obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any capital stock of any
subsidiary. There are no other options, calls, warrants or other similar rights
(other than Rights issued pursuant to the Rights Plan), agreements, arrangements
or commitments relating to the issued or unissued capital stock of the Company
or any of its subsidiaries to which the Company or any of its subsidiaries is a
party. All shares of Company Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be duly authorized, validly issued, fully paid
and nonassessable and free of preemptive (or similar) rights and registration
rights. There are no outstanding contractual obligations of the Company or any
of its subsidiaries to provide funds in any material amount to or make any
material investment (in the form of a loan, capital contribution or otherwise)
in any such subsidiary or any other entity.
(b) Each of the outstanding shares of capital stock of each of the
Company's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and all such shares are owned by the Company or another wholly
owned subsidiary of the Company and are owned free and clear of all security
interests, liens, claims, pledges, agreements, limitations in voting
<PAGE> 18
14
rights, charges or other encumbrances of any nature whatsoever, except for such
failures to own such shares free and clear as would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has delivered to Parent
prior to the date hereof a chart of the subsidiaries of the Company which
evidences, among other things, the percentage of capital stock or other equity
interests owned by the Company, directly or indirectly, in such subsidiaries as
of the date hereof. No entity in which the Company owns less than a 50% interest
and which is not disclosed in such chart, is, individually or when taken
together with all such other entities, material to the business of the Company
and its subsidiaries, taken as a whole.
(c) No bonds, debentures, notes or other indebtedness of the Company
having the right to vote on any matters on which holders of capital stock of the
Company may vote ("Company Voting Debt") are issued and outstanding.
(d) There are no voting trusts, proxies or other agreements or
commitments of any character to which the Company or any of its "significant
subsidiaries" (as defined in Regulation S-X) is a party or by which the Company
or any of its significant subsidiaries is bound with respect to the voting of
any shares of capital stock of the Company or any of its significant
subsidiaries or with respect to the registration of the offering, sale or
delivery of any shares of capital stock of the Company or any of its significant
subsidiaries under the Securities Act.
SECTION 3.4 Authority Relative to This Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than, with respect to the Merger, the
approval of this Agreement by the holders of a majority of all votes entitled to
be cast by the Company Common Stock (the "Company Shareholder Approval") and the
filing of appropriate merger documents as required by the BCL). This Agreement
has been duly and validly executed and delivered by the Company and, assuming
the due authorization, execution and delivery hereof by Parent and Purchaser,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms. The Board of Directors of the
Company by resolutions duly adopted by unanimous vote of the directors present
at a meeting duly called and held on January 31, 1999 and not subsequently
rescinded or modified in any way has duly (A) approved and adopted this
Agreement and the transactions contemplated hereby (including but not limited to
the Offer and the Merger), (B) determined that this Agreement and the
transactions contemplated hereby (including but not limited to the Offer and the
Merger) are fair to and in the best interests of the Company and its
shareholders, (C) resolved to recommend that the shareholders of the Company
accept the Offer, tender their shares of Company Common Stock to Purchaser
thereunder and approve this Agreement and the transactions contemplated hereby
and (D) taken all other action necessary to render (i) the limitation on
business combinations contained in Chapter 42 and Chapter 43 of the BCL (or any
similar provision) and
<PAGE> 19
15
(ii) the supermajority stockholder voting requirements of Article Eighth of the
Articles of Incorporation inapplicable to the transactions contemplated hereby,
including the Offer and the Merger (it being understood that the Company shall
not be deemed to be in breach of clauses (B) or (C) of this sentence if the
Board of Directors of the Company shall have withdrawn or modified its
recommendation in compliance with the terms and conditions of this Agreement).
As a result of the foregoing actions, the only vote required to authorize the
Merger is the affirmative vote of the holders of a majority of all votes
entitled to be cast by the holders of the Company Common Stock. The Board of
Directors of the Company has taken all action necessary to amend the Rights
Agreement (subject only to the execution of such amendment by the Rights Agent,
which execution the Company shall cause to take place prior to commencement of
the Offer) to provide that, (i) so long as this Agreement has not been
terminated pursuant to Section 8.1, a Distribution Date (as such term is defined
in the Rights Agreement) shall not occur or be deemed to occur, (ii) the Rights
shall not separate (to the extent that the Rights Agreement otherwise provides
for such separation) or become exercisable, and neither Parent nor Purchaser
shall become an Acquiring Person (as such term is defined in the Rights
Agreement) as a result of the execution, delivery or performance of this
Agreement, the announcement, making or consummation of the Offer, the
acquisition of shares of Company Common Stock pursuant to the Offer or the
Merger, the consummation of the Merger or any other transactions contemplated by
this Agreement and (iii) the Rights shall expire immediately prior to the
consummation of the Offer or, if the Offer is not consummated, the Merger. So
long as this Agreement has not been terminated pursuant to Section 8.1, no other
action is required to prevent the holders of Rights from having any rights under
the Rights Agreement as a result of the Offer, the Merger or any other
transaction contemplated by this Agreement.
SECTION 3.5 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby by the Company do not and will not: (i) conflict with or
violate the Articles of Incorporation or By-Laws of the Company or the
equivalent organizational documents of any of its subsidiaries; (ii) assuming
that all consents, approvals and authorizations contemplated by clauses (i),
(ii) and (iii) of subsection (b) below have been obtained and all filings
described in such clauses have been made, conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties are bound
or affected; or (iii) result in any breach or violation of or constitute a
default (or an event which with notice or lapse of time or both could become a
default) or result in the loss of a material benefit under, or give rise to any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of their
respective properties are bound or affected, except, in the case of clauses (ii)
and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, have a Material
Adverse Effect or prevent or materially delay consummation of the Offer or the
Merger and except with respect to change in control or similar acceleration
rights under Company Plans as disclosed in the Company SEC
<PAGE> 20
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Reports (as defined in Section 3.7) filed with the SEC and publicly available
prior to the date hereof.
(b) The execution, delivery and performance of this Agreement by the
Company and the consummation of the Offer or the Merger or the other
transactions contemplated hereby by the Company do not and will not require any
consent, approval, authorization or permit of, action by, filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except for (i) applicable requirements of the Exchange Act and the Securities
Act and the rules and regulations promulgated thereunder, rules and regulations
of the NYSE, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), or foreign filings or approvals, state securities,
takeover and "blue sky" laws, (ii) the filing and recordation of appropriate
merger or other documents as required by the BCL and the filing of the Charter
Amendment (as defined in Section 4.4) under the DGCL and (iii) such consents,
approvals, authorizations, permits, actions, filings or notifications the
failure of which to make or obtain would not, individually or in the aggregate,
have a Material Adverse Effect or prevent or materially delay consummation of
the Offer or the Merger.
SECTION 3.6 Compliance; Permits. (a) Except as disclosed in the
Company SEC Reports filed and publicly available prior to the date of this
Agreement, neither the Company nor any of its subsidiaries is in conflict with,
or in default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties are bound or affected, or (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties are bound or affected, except for any
such conflicts, defaults or violations which would not, individually or in the
aggregate, have a Material Adverse Effect or prevent or materially delay
consummation of the Offer or the Merger.
(b) Except as disclosed in the Company SEC Reports filed and
publicly available prior to the date of this Agreement and except as would not,
individually or in the aggregate, have a Material Adverse Effect or prevent or
materially delay the consummation of the Offer or the Merger, the Company and
its subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all governmental or regulatory authorities, domestic or foreign,
which are necessary for the operation of the businesses of the Company and its
subsidiaries as presently conducted (the "Company Permits"). The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply would not, individually or in the aggregate, have
a Material Adverse Effect or prevent or materially delay the consummation of the
Offer or the Merger. Except as disclosed in the Company SEC Reports filed and
publicly available prior to the date of this Agreement, the businesses of the
Company and its subsidiaries are not being conducted in violation of, and the
Company has not received any written notices or to its knowledge, any oral
notices, of violations with respect to, any law, ordinance or regulation of any
governmental or regulatory authority, domestic or foreign, except for violations
which would not, individually or in the aggregate, have a Material Adverse
Effect or prevent or materially delay the consummation of the Offer or the
Merger.
<PAGE> 21
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SECTION 3.7 SEC Filings; Financial Statements. (a) The Company and,
to the extent applicable, each of its then or current subsidiaries, has filed
all forms, reports, statements and documents required to be filed with the SEC
since March 11, 1997 (together with any other filings on Form 8-K, collectively,
including the exhibits thereto, the "Company SEC Reports"), each of which
complied when filed in all material respects with the applicable requirements of
the Securities Act, and the rules and regulations promulgated thereunder, or the
Exchange Act, and the rules and regulations promulgated thereunder, each as in
effect on the date so filed. None of the Company SEC Reports (including but not
limited to any financial statements or schedules included or incorporated by
reference therein) contained when filed, or (except to the extent revised or
superseded by a subsequent filing with the SEC) contains, any untrue statement
of a material fact or omitted or omits to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the audited and unaudited consolidated financial
statements of the Company (including any related notes thereto) included in the
Company SEC Reports has been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly presents
the consolidated financial position of the Company and its subsidiaries at the
respective date thereof and the consolidated results of its operations and
changes in cash flows for the periods indicated, except that the unaudited
interim consolidated financial statements are subject to normal and recurring
year-end adjustments that have not been and are not expected to be material in
amount.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and its subsidiaries at June 30, 1998, including
the notes thereto, neither the Company nor any of its subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) which would be required to be reflected on a balance sheet or in
the notes thereto prepared in accordance with generally accepted accounting
principles, except for liabilities or obligations incurred since June 30, 1998
which would not, individually or in the aggregate, have a Material Adverse
Effect.
(d) The Company has heretofore furnished or made available to Parent
a complete and correct copy of any material amendments or modifications which
have not yet been filed with the SEC to agreements, documents or other
instruments which previously had been filed by the Company with the SEC pursuant
to the Securities Act and the rules and regulations promulgated thereunder or
the Exchange Act and the rules and regulations promulgated thereunder.
SECTION 3.8 Absence of Certain Changes or Events. Since June 30,
1998, except as disclosed in the Company SEC Reports filed and publicly
available prior to the date of this Agreement, the Company and its subsidiaries
have in all material respects conducted their businesses only in the ordinary
course and in a manner consistent with past practice and, since such date in the
case of clauses (i) and (ii) and from such date through the date of this
Agreement, in the case of clauses (iii) through (vii), there has not been: (i)
any condition, event
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18
or occurrence, other than conditions, events or occurrences which have not had
or would not, individually or in the aggregate, have a Material Adverse Effect
other than changes or effects due to general economic or industry conditions;
(ii) any damage, destruction or loss (whether or not covered by insurance) with
respect to any assets of the Company or any of its subsidiaries, except for such
damage, destruction or loss as would not, individually or in the aggregate, have
a Material Adverse Effect; (iii) any change by the Company in its accounting
methods, principles or practices (except to the extent required by applicable
accounting principles and SEC rules and regulations); (iv) any material
revaluation by the Company of any of its material assets, including but not
limited to, writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; (v) any entry by the
Company or any of its subsidiaries into any commitment or transactions material
to the Company and its subsidiaries taken as a whole (other than commitments or
transactions entered into in the ordinary course of business); (vi) any
declaration, setting aside or payment of any dividends or distributions in
respect of the Shares other than the regular quarterly dividend in the amount of
$.13 per share; or (vii) any increase (in the case of directors and executive
officers of the Company) or any material increase (in the case of other
officers, directors and key employees) in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including without limitation the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan or agreement or
arrangement, or any other increase (in the case of directors and executive
officers of the Company) or any material increase (in the case of other
officers, directors and key employees) in the compensation payable or to become
payable to any present or former directors, officers or key employees of the
Company or any of its subsidiaries, except for increases in base compensation
and bonuses in the ordinary course of business consistent with past practice.
SECTION 3.9 Absence of Litigation. Except as disclosed in the
Company SEC Reports filed and publicly available prior to the date of this
Agreement, there are no suits, claims, actions, proceedings or investigations
(collectively, "Claims") pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries, or any properties
or rights of the Company or any of its subsidiaries, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign, except for such Claims as would not, individually or in the
aggregate, have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries nor any of their respective properties is or are subject to any
order, writ, judgment, injunction, decree, determination or award (collectively,
"Orders"), except for such Orders as would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.10 Employee Benefit Plans. Except as would not,
individually or in the aggregate, have a Material Adverse Effect or as disclosed
in the Company SEC Reports filed and publicly available prior to the date of
this Agreement:
(a) For purposes of this Agreement, the term "Company Plans" shall
include each "employee benefit plan" (within the meaning of section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, multiemployer plans within the
meaning of ERISA section 3(37)), stock
<PAGE> 23
19
purchase, stock option, severance, employment, change-in-control, fringe
benefit, collective bargaining, bonus, incentive, deferred compensation
and all other employee benefit plans, agreements, programs, policies or
other arrangements, whether or not subject to ERISA (including any funding
mechanism therefor now in effect or required in the future as a result of
the transaction contemplated by this Agreement or otherwise), whether
formal or informal, foreign or domestic, oral or written, legally binding
or not, under which any current or former employee or director of the
Company or any of its subsidiaries, has any present or future right to
benefits or under which the Company or any of its subsidiaries has any
present or future liability.
(b) (i) Each Company Plan has been established and administered in
all material respects in accordance with its terms, and in compliance with
the applicable provisions of ERISA, the Code, and other applicable laws,
rules and regulations; (ii) each Company Plan which is intended to be
qualified within the meaning of Code section 401(a) is so qualified and
has received a favorable determination letter as to its qualification, and
nothing has occurred, whether by action or failure to act, that would
reasonably be expected to cause the loss of such qualification; (iii) no
event has occurred and no condition exists that would reasonably be
expected to subject the Company or any of its subsidiaries, either
directly or by reason of their affiliation with any member of their
"Controlled Group" (defined as any organization which is a member of a
controlled group of organizations within the meaning of Code sections
414(b), (c), (m) or (o)), to any excise tax, fine, lien or penalty imposed
by ERISA, the Code or other applicable laws, rules and regulations; (iv)
no "reportable event" (as such term is defined in ERISA section 4043),
"prohibited transaction" (as such term is defined in ERISA section 406 and
Code section 4975) or "accumulated funding deficiency" (as such term is
defined in ERISA section 302 and Code section 412 (whether or not waived))
has occurred with respect to any Company Plan; and (v) all insurance
premiums and contributions required to be paid with respect to any Company
Plan as of the Closing Date have been or will be timely paid prior thereto
and adequate reserves have been provided for in the Company SEC Reports
for any premiums or contributions (or portions thereof) attributable to
service on or prior to the Closing Date; provided, however, that any
representation or warranty made in (i) through (v), above shall, with
respect to any Company Plan that is a multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA, be limited to the knowledge of the
Company.
(c) With respect to each of the Company Plans that is not a
multiemployer plan within the meaning of section 4001(a)(3) of ERISA but
is subject to Title IV of ERISA, as of the Effective Time, there has not
been an adverse change in the "amount of unfunded benefit liabilities" (as
defined in ERISA Section 4001(a)(18)) since June 30, 1998.
(d) With respect to any multiemployer plan (within the meaning of
ERISA section 4001(a)(3)): (i) none of the Company, any of its
subsidiaries or any member of their Controlled Group has incurred any
withdrawal liability under Title IV of ERISA that has not been satisfied
or, to the knowledge of the Company, would be subject to such
<PAGE> 24
20
liability if, as of the Effective Time, the Company, any of its
subsidiaries or any member of their Controlled Group were to engage in a
complete withdrawal (as defined in ERISA section 4203) or partial
withdrawal (as defined in ERISA section 4205) from any such multiemployer
plan; and (ii) to the knowledge of the Company, no multiemployer plan to
which the Company, any of its subsidiaries or any member of their
Controlled Group has any liabilities or contributes, is in reorganization
or insolvent (as those terms are defined in ERISA sections 4241 and 4245,
respectively).
(e) With respect to any Company Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or, to the knowledge of the Company, threatened, (ii) no facts or
circumstances exist, to the knowledge of the Company, that could give rise
to any such actions, suits or claims and (iii) there is not any matter
pending (other than routine qualification determination filings) before
the IRS, the Department of Labor or the Pension Benefit Guaranty
Corporation.
(f) No Company Plan exists that could result in the payment to any
present or former employee of the Company or any of its subsidiaries of
any money or other property or accelerate or provide any other rights or
benefits to any present or former employee of the Company or any of its
subsidiaries as a result of the transaction contemplated by this
Agreement, whether or not such payment would constitute a parachute
payment within the meaning of Code section 280G and whether or not some
other subsequent action or event in addition to the transactions
contemplated by this Agreement would be required to trigger such payment,
acceleration or provision.
SECTION 3.11 Tax Matters. (a) Except for such failures to file or
pay as would not, individually or in the aggregate, have a Materially Adverse
Effect or as disclosed in the Company SEC Reports that are publicly available
prior to the date hereof, the Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for tax purposes of which the
Company or any of its subsidiaries is or has been a member has timely filed all
Tax Returns required to be filed by it in the manner provided by law and has
paid, or provided adequate reserves for the payment of (in accordance with
generally accepted accounting principles), all Taxes (including interest and
penalties) that are due and payable as of the date hereof. All such Tax Returns
were true, correct and complete in all material respects. Except (x) as has been
disclosed in Schedule 3.11 of the Company Disclosure Schedule, (y) as would not,
individually or in the aggregate, have a Material Adverse Effect or (z) as
disclosed in the Company SEC Reports that are publicly available prior to the
date hereof: (i) no claim for unpaid Taxes has been proposed in writing against
the Company and its subsidiaries or has become a lien or encumbrance of any kind
against the property of the Company or any of its subsidiaries or is being
asserted against the Company or any of its subsidiaries; (ii) as of the date
hereof no audit of any Tax Return of the Company or any of its subsidiaries is
being conducted by a Tax authority, no audit or other proceeding by any Tax
authority has formally commenced and there is no claim or assessment pending,
and, to the knowledge of the Company, no notice has been given to the Company
and its subsidiaries that such an audit or other proceeding is pending with
respect to any Taxes due from or with respect to the Company and its
subsidiaries or any Tax Return filed by or with respect to the Company and its
subsidiaries; (iii) the United
<PAGE> 25
21
States federal income tax returns of the Company and its subsidiaries have been
audited or settled or are closed to assessment; (iv) no extension or waiver of
the statute of limitations on the assessment of any Taxes has been granted by
the Company or any of its subsidiaries and is currently in effect and no power
of attorney granted by or with respect to the Company and its Subsidiaries
relating to Taxes is currently in force; (v) neither the Company nor its
subsidiaries is a party to or bound by, and does not have any obligation under,
any Tax sharing agreement or similar contract or arrangement or any agreement
that obligates it to make any payment computed by reference to the Taxes,
taxable income or taxable losses of any other person; and (vi) none of the
Company nor any of its subsidiaries has been a member of an affiliated group
(other than the group to which its is currently a member) filing a consolidated
federal income Tax Return. As used herein, "Taxes" shall mean any taxes of any
kind, including but not limited to those on or measured by or referred to as
income, gross receipts, capital, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, value added, property or windfall profits taxes, customs, duties or
similar fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any governmental authority, domestic or foreign. As used herein, "Tax Return"
shall mean any return, report or statement required to be filed with any
governmental authority with respect to Taxes.
(b) The Company received a private letter ruling (the "Ruling") from
the Internal Revenue Service ("IRS"), dated March 20, 1997 (Reference
CC:DOM:CORP:4, PLR-253482-96) as to the United States federal income tax
consequences of the Contribution and the Spinoff (each as defined in the
Distribution Agreement, dated as of April 30, 1997, between the entity formerly
known as Morton International, Inc. ("Old Company") and the Company) and the
Ruling has not been revoked. All of the representations and information provided
to the IRS with respect to Old Company, the Company or their respective
subsidiaries in connection with the Ruling, were correct and complete in all
material respects as of the date of the Ruling and, to the knowledge of the
Company, as of the date hereof, there has been no breach of such representations
or other change in circumstances that would cause the Ruling to be invalid or
revoked. No claim has been asserted against Old Company, Autoliv AB, the Company
or any of their affiliates with respect to the Contribution and Spinoff which
could result in an indemnity obligation of the Company pursuant to the Tax
Sharing Agreement dated as of April 30, 1997 by and between Old Company and the
Company, or otherwise. At the time of the Contribution and Distribution, there
was no plan or intention on the part of the Company to effect transactions that
would result in an acquisition of a 50% or greater interest in the voting power
or value of the stock of the Company.
SECTION 3.12 Offer Documents; Proxy Statement. Neither the Schedule
14D-9, nor any of the information supplied by the Company for inclusion in the
Offer Documents, shall, at the respective times such Schedule 14D-9, the Offer
Documents or any amendments or supplements thereto are filed with the SEC or are
first published, sent or given to shareholders, as the case may be, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
joint proxy statement to be sent to the shareholders of the Company and the
stockholders of Parent in connection with the
<PAGE> 26
22
Company Shareholders Meeting (as defined in Section 6.1) or the Parent
Stockholders Meeting (as defined in Section 6.1), as the case may be (such joint
proxy statement, as amended or supplemented, is herein referred to as the "Proxy
Statement"), shall, at the date the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to Company shareholders and Parent
stockholders and at the time of the Company Shareholders Meeting or the Parent
Stockholders Meeting, be false or misleading with respect to any material fact,
or omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Company Shareholders Meeting or the Parent Stockholders Meeting which has become
false or misleading. The registration statement on Form S-4 of Parent with
respect to the issuance of Parent Common Stock in the Merger (the "Registration
Statement") will not, at the time the Registration Statement becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein not misleading. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any information
supplied by Parent or Purchaser or any of their respective representatives which
is contained in the Schedule 14D-9 or the Proxy Statement or the Registration
Statement. The Schedule 14D- 9 and the Proxy Statement will comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder.
SECTION 3.13 Environmental Matters. Except as would not,
individually or in the aggregate, have a Material Adverse Effect or as disclosed
in the Company SEC Reports filed and publicly available prior to the date of
this Agreement: (a) the Company and its subsidiaries have in effect all
Environmental Permits (as hereinafter defined) required under applicable
Environmental Laws (as hereinafter defined) and necessary for it to own, lease
or operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such Environmental
Permit. "Environmental Permit" means any permit, license, approval or other
authorization under any applicable law, regulation and other requirement of any
country, state, municipality or other subdivision thereof relating to pollution
or protection of health or the environment, including laws, regulations or other
requirements relating to emissions, discharges, releases of pollutants,
contaminants, hazardous substances, toxic materials, or wastes into ambient air,
surface water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of chemical substances, pollutants, contaminants or hazardous or toxic
materials or wastes.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect or as disclosed in the Company SEC Reports filed and
publicly available prior to the date of this Agreement, (i) each of the Company
and its subsidiaries and their respective properties, assets, businesses and
operations is, and has been, and (ii) to the knowledge of the Company, each of
the Company's former subsidiaries, while subsidiaries of the Company and their
respective properties, assets, businesses and operations, were in compliance
with all applicable Environmental Laws and Environmental Permits. The term
"Environmental Laws" means any federal, state, local or foreign statute, code,
ordinance, rule, regulation, permit, consent, approval,
<PAGE> 27
23
license, judgment, order, writ, decree, injunction or other authorization,
including the requirement to register underground storage tanks, relating to:
(i) emissions, discharges, releases or threatened releases of Hazardous Material
(as hereinafter defined) into the environment, including, without limitation,
into ambient air, soil, sediments, land surface or subsurface, buildings or
facilities, surface water, groundwater, publicly-owned treatment works, septic
systems or land; or (ii) the generation, treatment, storage, disposal, use,
handling, manufacturing, transportation or shipment of Hazardous Material.
(c) Except as would not, individually or in the aggregate, have a
Material Adverse Effect or as disclosed in the Company SEC Reports filed and
publicly available prior to the date of this Agreement, (i) during the period of
ownership or operation by the Company and its subsidiaries of any of their
respective current or, to the knowledge of the Company, previously-owned
properties, there have been no Releases (as hereinafter defined) of Hazardous
Material in, on, under or from such properties, or to its knowledge any
surrounding site or any off-site location, and (ii) to its knowledge prior to
the period of ownership by the Company and its subsidiaries of any of their
respective current or previously-owned properties there were no Releases of
Hazardous Material in, on, under or affecting any such property, any surrounding
site or any off-site location. The term "Hazardous Material" means (1) hazardous
materials, pollutants or contaminants, medical, hazardous or infectious wastes,
hazardous waste constituents, hazardous chemicals, hazardous or toxic
pollutants, and hazardous or toxic substances as those terms are defined in or
regulated by any applicable Environmental Law, including without limitation, the
following statutes and their implementing regulations: the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq., the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act, 42 U.S.C. Section 9601 et seq.,
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Clean
Water Act, 33 U.S.C. Section 1251 et seq. and the Clean Air Act, 42 U.S.C.
Section 7401 et seq., (2) petroleum, including crude oil and any fractions
thereof, (3) natural gas, synthetic gas and any mixtures thereof, (4)
radioactive materials including, without limitation, source byproduct or special
nuclear materials and (5) pesticides. "Releases" means spills, leaks,
discharges, disposal, pumping, pouring, emissions, injection, emptying,
leaching, dumping or allowing to escape.
(d) Except as would not, individually or in the aggregate, have a
Material Adverse Effect or as disclosed in the Company SEC Reports filed and
publicly available prior to the date of this Agreement, (i) the Company and its
subsidiaries and their respective properties, assets, businesses and operations
are not subject to any Environmental Claims (direct or contingent, and whether
known or unknown) or Environmental Liabilities (as such terms are hereinafter
defined) arising from or based upon any act, omission, event, condition or
circumstance occurring or existing on or prior to the date hereof or for which
the Company and its subsidiaries are responsible, including without limitation,
any such Environmental Claims or Environmental Liabilities arising from or based
upon the ownership or operation of assets, businesses or properties of the
Company or any subsidiary or their respective predecessors, and (ii) neither the
Company nor any of its subsidiaries has received any written notice of any
violation of any Environmental Law or Environmental Permit or any Environmental
Claim in
<PAGE> 28
24
connection with their respective assets, properties, businesses or operations,
or, in each case, those of their respective predecessors. The term
"Environmental Claim" means any third party (including governmental agencies,
regulatory agencies and employees) action, lawsuit, claim, proceeding (including
claims or proceedings under the Occupational Safety and Health Act or similar
laws relating to safety of employees) which seeks to impose liability for (i)
noise; (ii) pollution or contamination of the air, surface water, ground water
or land; (iii) solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation; (iv) exposure to hazardous or toxic
substances; (v) the safety or health of employees; or (vi) the manufacture,
processing, distribution in commerce, use, or storage of chemical or other
hazardous substances. An "Environmental Claim" includes, but is not limited to,
a common law action, as well as a proceeding to issue, modify or terminate an
Environmental Permit of the Company or any of its subsidiaries. The term
"Environmental Liabilities" includes all costs arising from any Environmental
Claim or violation or alleged violation or circumstance or condition which would
give rise to a violation or liability under any Environmental Permit or
Environmental Law under any theory of recovery, at law or in equity, and whether
based on negligence, strict liability or otherwise, including but not limited
to: remedial, removal, response, abatement, investigative, monitoring, personal
injury and damage to property, and any other related costs, expenses, losses,
damages, penalties, fines, liabilities and obligations, including attorneys'
fees and court costs.
SECTION 3.14 Year 2000. To the knowledge of the Company, the
software, operations, systems and processes (including, to the knowledge of the
Company, software, operations, systems and processes obtained from third
parties) which, in whole or in part, are used, operated, relied upon, or
integral to, the Company's or any of its subsidiaries, conduct of their
business, are Year 2000 Compliant (as hereinafter defined), except as disclosed
in the Company SEC Reports filed and publicly available prior to the date of
this Agreement or where the failure to be Year 2000 Compliant would not,
individually or in the aggregate, have a Material Adverse Effect. For purposes
of this Agreement, "Year 2000 Compliant" means the ability to process (including
calculate, compare, sequence, display or store), transmit or receive data or
data/time data from, into and between the twentieth and twenty-first centuries,
and the years 1999 and 2000, and leap year calculations without error or
malfunction.
SECTION 3.15 Intellectual Property. Except as would not,
individually or in the aggregate, have a Material Adverse Effect and except as
disclosed in the Company SEC Reports filed and publicly available prior to the
date of this Agreement: (a) the Company and each of its subsidiaries owns, is
licensed or otherwise has the right to use, all Intellectual Property (as
defined below) used in or necessary for the conduct of its business as currently
conducted; (b) the use of any Intellectual Property by the Company and its
subsidiaries does not infringe on or otherwise violate the rights of any person
and is in accordance with any applicable license pursuant to which the Company
or any subsidiary acquired the right to use any Intellectual Property; (c) to
the knowledge of the Company, no person is challenging, infringing on or
otherwise violating any right of the Company or any of its subsidiaries with
respect to any Intellectual Property owned by and/or licensed to the Company or
its subsidiaries; and (d) neither the Company nor any of its subsidiaries has
received any written notice of any pending claim with respect to any
Intellectual Property used by the Company and its subsidiaries and to its
knowledge no Intellectual Property owned and/or licensed by the Company or its
subsidiaries is
<PAGE> 29
25
being used or enforced in a manner that would result in the abandonment,
cancellation or unenforceability of such Intellectual Property. For purposes of
this Agreement, "Intellectual Property" shall mean trademarks, service marks,
brand names, certification marks, trade dress and other indications of origin,
the goodwill associated with the foregoing and registrations in any jurisdiction
of, and applications in any jurisdiction to register, the foregoing, including
any extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including, without limitation,
divisions, continuations, continuations in part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any person; proprietary
writings and other works, whether copyrightable or not, in any jurisdiction;
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; any similar intellectual
property or proprietary rights; and any claims or causes of action arising out
of or relating to any infringement or misappropriation of any of the foregoing.
SECTION 3.16 Contracts. Except for employee benefit plans, contracts
disclosed in Section 6.17 of the Company Disclosure Schedule and any contracts
filed as an exhibit to any Company SEC Reports ("Filed Contracts"), Section 3.16
of the Company Disclosure Schedule lists all oral or written contracts,
agreements, arrangements, guarantees, leases and executory commitments that
exist as of the date hereof to which the Company or any of its subsidiaries is a
party or by which it is bound which are or would be required to be filed as an
exhibit to the Company SEC Reports (the listed contracts and the Filed
Contracts, the "Contracts"). All of the Contracts governed by the laws of the
United States or any state and, to the knowledge of the Company, all of the
Contracts governed by the laws of any foreign jurisdiction, are valid and
binding obligations of the Company or such subsidiary and, to the knowledge of
the Company, the valid and binding obligation of each other party thereto except
such Contracts which if not so valid and binding would not, individually or in
the aggregate, have a Material Adverse Effect. Neither the Company or such
subsidiary nor, to the knowledge of the Company, any other party thereto is in
violation of or in default in respect of, nor has there occurred an event or
condition which with the passage of time or giving of notice (or both) would
constitute a default under or permit the termination of, any such Contract
except such violations or defaults under or terminations which would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.17 Opinion of Company Financial Adviser. The Company has
received the opinion of the Company Financial Adviser, dated the date of this
Agreement, to the effect that, as of such date, the consideration to be received
by the holders of Shares, other than Parent and Purchaser, pursuant to the Offer
and the Merger, taken as a unitary transaction, is fair to such holders from a
financial point of view.
SECTION 3.18 Brokers. No broker, finder or investment banker (other
than the Company Financial Adviser) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement and the Option Agreement based upon arrangements made by and on behalf
of the Company. The Company has heretofore
<PAGE> 30
26
furnished to Parent a complete and correct copy of all agreements between the
Company and the Company Financial Adviser pursuant to which such firm would be
entitled to any payment relating to the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that except as set forth in the disclosure schedule
delivered by the Parent and Purchaser to the Company at or prior to the date of
execution of this Agreement (the "Parent Disclosure Schedule") where the
relevance of such disclosure to the applicable representation and warranty is
reasonably evident from the nature of the disclosure:
SECTION 4.1 Organization and Qualification. Each of Parent and each
of its subsidiaries is a corporation or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation and has the requisite power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power and authority would not, individually or in the aggregate, have a
Material Adverse Effect or prevent or materially delay the consummation of the
Offer or the Merger. Each of Parent and its subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing as would not, individually or in the aggregate,
have a Material Adverse Effect or prevent or materially delay the consummation
of the Offer or the Merger.
SECTION 4.2 Certificate of Incorporation and By-Laws. Parent has
heretofore furnished to the Company a complete and correct copy of the Restated
Certificate of Incorporation and the By-Laws of Parent and the Articles of
Incorporation and By-Laws of the Purchaser, in each case as currently in effect.
No other similar organizational documents are applicable to or binding upon
Parent or the Purchaser. Neither Parent nor the Purchaser is in violation in any
material respect of any of the provisions of its Restated Certificate of
Incorporation or By-Laws or Articles of Incorporation or By-Laws, respectively.
SECTION 4.3 Capitalization. (a) Prior to giving effect to the
Charter Amendment, the authorized capital stock of Parent consists of
200,000,000 shares of Parent Common Stock and 25,000,000 shares of preferred
stock, par value $1.00 per share ("Parent Preferred Stock"). As of January 27,
1999, (i) 167,587,287 shares of Parent Common Stock were issued and outstanding,
all of which were duly authorized, validly issued, fully paid and nonassessable
and were issued free of preemptive (or similar) rights, (ii) 29,369,853 shares
of Parent Common Stock were held in the treasury of Parent, (iii) an aggregate
of 3,705,268 shares
<PAGE> 31
27
of Parent Common Stock were reserved (x) for issuance and issuable upon or
otherwise deliverable in connection with the exercise of outstanding options
issued pursuant to Parent's stock option plans and (y) for issuance under
Parent's Non-Qualified Stock Savings Plan and the 1997 Non-Employee Director's
Stock Plan and (iv) an aggregate of 3,416,866 shares of Parent Common Stock were
reserved for issuance and issuable upon or otherwise deliverable in connection
with conversion of the Convertible Preferred Stock (as defined below). Since
January 27, 1999, no options to purchase shares of Parent Common Stock have been
granted and no shares of Parent Common Stock have been issued except for shares
issued pursuant to the exercise of options outstanding as of January 27, 1999.
As of the date hereof, 1,457,956 shares of $2.75 Cumulative Convertible
Preferred Stock (the "Convertible Preferred Stock") are issued and outstanding.
Except (i) as set forth above, (ii) as a result of options granted after January
27, 1999 to Parent employees from time to time in the ordinary course of
business and (iii) as a result of the exercise of options outstanding as of
January 27, 1999, there are outstanding (a) no shares of capital stock or other
voting securities of Parent, (b) no securities of Parent convertible into or
exchangeable for shares of capital stock or voting securities of Parent, (c) no
options or other rights to acquire from Parent, and no obligation of Parent to
issue, deliver or sell or cause to be issued, delivered or sold, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Parent and (d) no equity equivalents,
interests in the ownership or earnings of Parent or other similar rights
(collectively, "Parent Securities"). Upon issuance, the shares of Parent Common
Stock to be issued in the Merger will be duly authorized, validly issued, fully
paid, nonassessable and free of preemptive (or similar) rights. Other than
Parent stock option plans or benefit plans, programs or arrangements, there are
no outstanding obligations of Parent or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Parent Securities. There are no other options,
calls, warrants or other similar rights, agreements, arrangements or commitments
relating to the issued or unissued capital stock of Parent to which Parent or
any of its subsidiaries is a party. All shares of Parent Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive (or similar)
rights and registration rights. There are no outstanding contractual obligations
of Parent or any of its subsidiaries to provide funds in any material amount to
or make any material investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity.
(b) Each of the outstanding shares of capital stock of each of
Parent's subsidiaries (including Purchaser) is duly authorized, validly issued,
fully paid and nonassessable and all such shares are owned by Parent or another
wholly owned subsidiary of Parent and are owned free and clear of all security
interests, liens, claims, pledges, agreements, limitations in voting rights,
charges or other encumbrances of any nature whatsoever, except for such failures
to own such shares free and clear as would not, individually or in the
aggregate, have a Material Adverse Effect. Parent has delivered to the Company
prior to the date hereof a chart of the subsidiaries of Parent which evidences,
among other things, the percentage of capital stock or other equity interests
owned by Parent, directly or indirectly, in such subsidiaries. No entity in
which Parent owns less than a 50% interest and which is not disclosed in such
chart, is, individually or when taken together with all such other entities,
material to the business of Parent and its subsidiaries,
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taken as a whole. The authorized capital stock of Purchaser consists of 1,000
shares of common stock, par value $.01 per share, all of which are solely owned
by Parent.
(c) No bonds, debentures, notes or other indebtedness of Parent
having the right to vote on any matters on which holders of capital stock of
Parent may vote are issued and outstanding.
(d) There are no voting trusts, proxies or other agreements or
commitments of any character to which Parent or any of its significant
subsidiaries is a party or by which Parent or any of its significant
subsidiaries is bound with respect to the voting of any shares of capital stock
of Parent or any of its significant subsidiaries or with respect to the
registration of the offering, sale or delivery of any shares of capital stock of
Parent or any of its significant subsidiaries under the Securities Act.
(e) As of the date hereof, Parent and its subsidiaries do not own
more than 1,000 shares of Company Common Stock.
SECTION 4.4 Authority Relative to This Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Purchaser and the consummation by each of
Parent and Purchaser of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Parent and
Purchaser and no other corporate proceedings on the part of Parent or Purchaser
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than, in the case of Parent where the Cash Alternative
Structure is not required to be effected), (i) the issuance of the shares of
Parent Common Stock in the Merger pursuant to this Agreement requires the
approval of a majority of the votes cast at a meeting at which there is a quorum
by the holders of the Parent Common Stock and the Convertible Preferred Stock,
voting together and not as separate classes, and (ii) an amendment to the
Restated Certificate of Incorporation of Parent to increase the number of
authorized shares of Parent Common Stock to 400 million (the "Charter
Amendment") requires the approval of the holders of a majority of the
outstanding shares of (A) Parent Common Stock, voting as a class, and (B) Parent
Common Stock and Convertible Preferred Stock, voting together and not as
separate classes (collectively, the "Parent Stockholder Approval"), and, in the
case of Purchaser, the filing of appropriate merger documents as required by the
BCL). If the Cash Alternative Structure is required to be effected, no vote of
the stockholders of Parent shall be required to authorize this Agreement or to
consummate the transactions contemplated hereby, including the issuance of the
shares of Parent Common Stock in the Merger pursuant to this Agreement. Prior to
the Effective Time, the Board of Directors of Parent, or an appropriate
committee of non-employee directors thereof, will have adopted a resolution
consistent with the interpretive guidance of the SEC so that the acquisition by
any officer or director of the Company who may become a covered person of Parent
for purposes of Section 16 of the Exchange Act and the rules and regulations
thereunder ("Section 16") of shares of Parent Common Stock or options to acquire
Parent Common Stock pursuant to this Agreement and the Merger shall be an exempt
transaction for purposes of Section 16. The
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Board of Directors of Parent by resolutions duly adopted by a unanimous vote of
the directors present at a meeting duly called and held and not subsequently
rescinded or modified in any way has duly (A) approved and adopted this
Agreement and the transactions contemplated hereby (including but not limited to
the Offer, the Merger and the Charter Amendment), (B) determined that this
Agreement and the transactions contemplated hereby (including but not limited to
the Offer, the Merger and the Charter Amendment) are fair to and in the best
interests of Parent and (C) resolved to recommend that the stockholders of
Parent vote in favor of the matters described in the second preceding sentence.
This Agreement has been duly and validly executed and delivered by Parent and
Purchaser and, assuming the due authorization, execution and delivery hereof by
the Company, constitutes a legal, valid and binding obligation of each of Parent
and Purchaser enforceable against Parent and Purchaser in accordance with its
terms.
SECTION 4.5 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby by Parent and Purchaser do not and will not: (i) conflict
with or violate the certificate of incorporation or by-laws of Parent or
articles of incorporation or by-laws of Purchaser or the equivalent
organizational documents of any of its subsidiaries; (ii) assuming that all
consents, approvals and authorizations contemplated by clauses (i), (ii) and
(iii) of subsection (b) below have been obtained and all filings described in
such clauses have been made, conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or any of its subsidiaries or by
which its or any of their respective properties are bound or affected; or (iii)
result in any breach or violation of or constitute a default (or an event which
with notice or lapse of time or both could become a default) or result in the
loss of a material benefit under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the property or assets of Parent or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or any of its subsidiaries is a party or by which Parent or any
of its subsidiaries or any of its or any of their respective properties are
bound or affected, except, in the case of clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a Material Adverse Effect or prevent or
materially delay the consummation of the Offer or the Merger.
(b) The execution, delivery and performance of this Agreement by
Parent and Purchaser and the consummation of the Offer or the Merger or the
other transactions contemplated hereby do not and will not require any consent,
approval, authorization or permit of, action by, filing with or notification to,
any governmental or regulatory authority, domestic or foreign, except for (i)
applicable requirements of the Exchange Act, the Securities Act and the rules
and regulations promulgated thereunder, rules and regulations of the NYSE, the
HSR Act or foreign filings or approvals, state securities, takeover and "blue
sky" laws, (ii) the filing and recordation of appropriate merger or other
documents as required by the BCL and the filing of the Charter Amendment under
the DGCL, and (iii) such consents, approvals, authorizations, permits, actions,
filings or notifications the failure of which to make or obtain would not,
individually or in the aggregate, have a Material Adverse Effect or prevent or
materially delay consummation of the Offer or the Merger.
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SECTION 4.6 SEC Filings; Financial Statements. (a) Parent and, to
the extent applicable, each of its then or current subsidiaries, has filed all
forms, reports, statements and documents required to be filed with the SEC since
January 1, 1997 (together with any other filings on Form 8-K, collectively,
including the exhibits thereto, the "Parent SEC Reports"), each of which
complied when filed in all material respects with the applicable requirements of
the Securities Act, and the rules and regulations promulgated thereunder, or the
Exchange Act, and the rules and regulations promulgated thereunder, each as in
effect on the date so filed. None of the Parent SEC Reports (including but not
limited to any financial statements or schedules included or incorporated by
reference therein) contained when filed, or (except to the extent revised or
superseded by a subsequent filing with the SEC) contains, any untrue statement
of a material fact or omitted or omits to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the audited and unaudited consolidated financial
statements of Parent (including any related notes thereto) included in the
Parent SEC Reports has been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly presents
the consolidated financial position of Parent and its subsidiaries at the
respective date thereof and the consolidated results of its operations and
changes in cash flows for the periods indicated, except that the unaudited
interim consolidated financial statements are subject to normal and recurring
year-end adjustments that have not been and are not expected to be material in
amount.
(c) Except as and to the extent set forth on the consolidated
balance sheet of Parent and its subsidiaries at December 31, 1997, including the
notes thereto, neither Parent nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which would be required to be reflected on a balance sheet or in the notes
thereto prepared in accordance with generally accepted accounting principles,
except for liabilities or obligations incurred since December 31, 1997 which
would not, individually or in the aggregate, have a Material Adverse Effect.
(d) Parent has heretofore furnished or made available to the Company
a complete and correct copy of any material amendments or modifications which
have not yet been filed with the SEC to agreements, documents or other
instruments which previously had been filed by Parent with the SEC pursuant to
the Securities Act and the rules and regulations promulgated thereunder or the
Exchange Act and the rules and regulations promulgated thereunder.
SECTION 4.7 Absence of Certain Changes or Events. Since December 31,
1997, except as disclosed in the Parent SEC Reports filed and publicly available
prior to the date of this Agreement, Parent and its subsidiaries have in all
material respects conducted their businesses only in the ordinary course and in
a manner consistent with past practice and, since such date in the case of
clauses (i) and (ii) and from such date through the date of this Agreement, in
the case of clauses (iii) through (vi), there has not been: (i) any condition,
event or occurrence other than conditions, events or occurrences which have not
had or would not, individually or in the
<PAGE> 35
31
aggregate, have a Material Adverse Effect other than changes or effects due to
general economic and industry conditions; or (ii) any damage, destruction or
loss (whether or not covered by insurance) with respect to any assets of Parent
or any of its subsidiaries except for such damage, destruction or loss as would
not, individually or in the aggregate, have a Material Adverse Effect; (iii) any
change by Parent in its accounting methods, principles or practices (except as
required by applicable accounting principles and SEC rules and regulations);
(iv) any material revaluation by Parent of any of its assets, including but not
limited to, writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; (v) any entry by
Parent or any of its subsidiaries into any commitment or transactions material
to Parent and its subsidiaries taken as a whole (other than commitments or
transactions entered into in the ordinary course of business); or (vi) any
declaration, setting aside or payment of any dividends or distributions in
respect of the shares of Parent Common Stock other than the regular quarterly
dividend in the amount of $.18 per share.
SECTION 4.8 Offer Documents; Proxy Statement. Neither the Offer
Documents nor any of the information supplied by Purchaser or Parent for
inclusion in the Schedule 14D-9 shall, at the respective times such Offer
Documents and Schedule 14D-9 are filed with the SEC or are first published, sent
or given to shareholders, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Proxy Statement shall not, at the date the Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to Company
Shareholders and Parent Stockholders and at the time of the Company Shareholders
Meeting or the Parent Stockholders Meeting, be false or misleading with respect
to any material fact, or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in the light
of the circumstances under which they are made, not misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Shareholders Meeting or the Parent
Stockholders Meeting which has become false or misleading. The Registration
Statement will not, at the time the Registration Statement becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading. Notwithstanding the foregoing, Parent and
Purchaser make no representation or warranty with respect to any information
supplied by the Company or any of its representatives which is contained in the
Offer Documents, the Proxy Statement or the Registration Statement. The Offer
Documents, as amended and supplemented, the Proxy Statement and the Registration
Statement will comply in all material respects as to form with the requirements
of the Exchange Act and the rules and regulations promulgated thereunder and the
Securities Act and the rules and regulations promulgated thereunder, as
applicable.
SECTION 4.9 Brokers. No broker, finder or investment banker (other
than Wasserstein Perella & Co., Inc.) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement and the Option Agreement based upon arrangements made by and on behalf
of Parent or Purchaser.
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SECTION 4.10 Operations of Purchaser. Purchaser (and any other
wholly owned subsidiary of Parent which may be used to effect the Offer and the
Merger pursuant to 2.1) was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated by this
Agreement.
SECTION 4.11 Opinion of Parent Financial Adviser. The Parent has
received the opinion of Wasserstein Perella & Co., Inc. (the "Parent Financial
Adviser"), dated the date of this Agreement, to the effect that, as of such
date, the consideration payable pursuant to the Merger Agreement is fair to
Parent from a financial point of view.
SECTION 4.12 Funds. Parent or Purchaser, at the expiration date of
the Offer and at the Effective Time, will have the funds necessary to consummate
the Offer and the Merger, respectively.
SECTION 4.13 Compliance; Permits. (a) Except as disclosed in the
Parent SEC Reports filed and publicly available prior to the date of this
Agreement, neither Parent nor any of its subsidiaries is in conflict with, or in
default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to Parent or any of its subsidiaries or by which its or any of
their respective properties are bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its subsidiaries is a
party or by which Parent or any of its subsidiaries or its or any of their
respective properties are bound or affected, except for any such conflicts,
defaults or violations which would not, individually or in the aggregate, have a
Material Adverse Effect or prevent or materially delay consummation of the Offer
or the Merger.
(b) Except as disclosed in the Parent SEC Reports filed and publicly
available prior to the date of this Agreement and except as would not,
individually or in the aggregate, have a Material Adverse Effect or prevent or
materially delay the consummation of the Offer or the Merger, Parent and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all governmental or regulatory authorities, domestic or foreign,
which are necessary for the operation of the businesses of Parent and its
subsidiaries as presently conducted (the "Parent Permits"). Parent and its
subsidiaries are in compliance with the terms of the Parent Permits, except
where the failure so to comply would not, individually or in the aggregate, have
a Material Adverse Effect or prevent or materially delay the consummation of the
Offer or the Merger. Except as disclosed in the Parent SEC Reports filed and
publicly available prior to the date of this Agreement, the businesses of the
Parent and its subsidiaries are not being conducted in violation of, and Parent
has not received any written notices or, to its knowledge, any oral notices, of
violations with respect to, any law, ordinance or regulation of any governmental
or regulatory authority, domestic or foreign, except for violations which would
not, individually or in the aggregate, have a Material Adverse Effect or prevent
or materially delay the consummation of the Offer or the Merger.
SECTION 4.14 Absence of Litigation. Except as disclosed in the
Parent SEC Reports filed and publicly available prior to the date of this
Agreement, there are no Claims
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33
pending or, to the knowledge of Parent, threatened against or affecting Parent
or any of its subsidiaries, or any properties or rights of Parent or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, except for such Claims as
would not, individually or in the aggregate, have a Material Adverse Effect.
Neither Parent nor any of its subsidiaries nor any of their respective
properties is or are subject to any Orders, except for such Orders as would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 4.15 Employee Benefit Plans. Except as would not,
individually or in the aggregate, have a Material Adverse Effect or as disclosed
in the Parent SEC Reports filed and publicly available prior to the date of this
Agreement:
(a) For purposes of this Agreement, the term "Parent Plans" shall
include each "employee benefit plan" (within the meaning of section 3(3)
of the ERISA), including, without limitation, multiemployer plans within
the meaning of ERISA section 3(37)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective
bargaining, bonus, incentive, deferred compensation and all other employee
benefit plans, agreements, programs, policies or other arrangements,
whether or not subject to ERISA (including any funding mechanism therefor
now in effect or required in the future as a result of the transaction
contemplated by this Agreement or otherwise), whether formal or informal,
foreign or domestic, oral or written, legally binding or not, under which
any current or former employee or director of Parent or any of its
subsidiaries, has any present or future right to benefits or under which
Parent or any of its subsidiaries has any present or future liability.
(b) (i) Each Parent Plan has been established and administered in
all material respects in accordance with its terms, and in compliance with
the applicable provisions of ERISA, the Code, and other applicable laws,
rules and regulations; (ii) each Parent Plan which is intended to be
qualified within the meaning of Code section 401(a) is so qualified and
has received a favorable determination letter as to its qualification, and
nothing has occurred, whether by action or failure to act, that would
reasonably be expected to cause the loss of such qualification; (iii) no
event has occurred and no condition exists that would reasonably be
expected to subject Parent or any of its subsidiaries, either directly or
by reason of their affiliation with any member of their "Controlled Group"
(defined as any organization which is a member of a controlled group of
organizations within the meaning of Code sections 414(b), (c), (m) or
(o)), to any excise tax, fine, lien or penalty imposed by ERISA, the Code
or other applicable laws, rules and regulations; (iv) no "reportable
event" (as such term is defined in ERISA section 4043), "prohibited
transaction" (as such term is defined in ERISA section 406 and Code
section 4975) or "accumulated funding deficiency" (as such term is defined
in ERISA section 302 and Code section 412 (whether or not waived)) has
occurred with respect to any Parent Plan; and (v) all insurance premiums
and contributions required to be paid with respect to any Parent Plan as
of the Closing Date have been or will be timely paid prior thereto and
adequate reserves have been provided for in the Parent SEC Reports for any
premiums or contributions (or portions thereof) attributable to service on
or prior to
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the Closing Date; provided, however, that any representation or warranty
made in (i) through (v), above shall, with respect to any Parent Plan that
is a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA,
be limited to the knowledge of Parent.
(c) With respect to each of the Parent Plans that is not a
multiemployer plan within the meaning of section 4001(a)(3) of ERISA but
is subject to Title IV of ERISA, as of the Effective Time, there has not
been an adverse change in the "amount of unfunded benefit liabilities" (as
defined in ERISA Section 4001(a)(18)) since June 30, 1998.
(d) With respect to any multiemployer plan (within the meaning of
ERISA section 4001(a)(3)): (i) none of Parent, any of its subsidiaries or
any member of their Controlled Group has incurred any withdrawal liability
under Title IV of ERISA that has not been satisfied or, to the knowledge
of Parent, would be subject to such liability if, as of the Effective
Time, Parent, any of its subsidiaries or any member of their Controlled
Group were to engage in a complete withdrawal (as defined in ERISA section
4203) or partial withdrawal (as defined in ERISA section 4205) from any
such multiemployer plan; and (ii) to the knowledge of Parent, no
multiemployer plan to which Parent, any of its subsidiaries or any member
of their Controlled Group has any liabilities or contributes, is in
reorganization or insolvent (as those terms are defined in ERISA sections
4241 and 4245, respectively).
(e) With respect to any Parent Plan, (i) no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are
pending or, to the knowledge of Parent, threatened, (ii) no facts or
circumstances exist, to the knowledge of Parent, that could give rise to
any such actions, suits or claims and (iii) there is not any matter
pending (other than routine qualification determination filings) before
the IRS, the Department of Labor or the Pension Benefit Guaranty
Corporation.
SECTION 4.16 Environmental Matters. Except as would not,
individually or in the aggregate, have a Material Adverse Effect or as disclosed
in the Parent SEC Reports filed and publicly available prior to the date of this
Agreement: (a) Parent and its subsidiaries have in effect all Environmental
Permits required under applicable Environmental Laws and necessary for it to
own, lease or operate its properties and assets and to carry on its business as
now conducted, and there has occurred no default under any such Environmental
Permit.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect or as disclosed in the Parent SEC Reports filed and
publicly available prior to the date of this Agreement, (i) each of Parent and
its subsidiaries and their respective properties, assets, businesses and
operations is, and has been, and (ii) to the knowledge of Parent, each of
Parent's former subsidiaries, while subsidiaries of Parent and their respective
properties, assets, businesses and operations, were in compliance with all
applicable Environmental Laws and Environmental Permits.
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(c) Except as would not, individually or in the aggregate, have a
Material Adverse Effect or as disclosed in the Parent SEC Reports filed and
publicly available prior to the date of this Agreement, (i) during the period of
ownership or operation by Parent and its subsidiaries of any of their respective
current or, to the knowledge of Parent, previously-owned properties, there have
been no Releases of Hazardous Material in, on, under or from such properties, or
to its knowledge any surrounding site or any off-site location, and (ii) to its
knowledge prior to the period of ownership by Parent and its subsidiaries of any
of their respective current or previously-owned properties there were no
Releases of Hazardous Material in, on, under or affecting any such property, any
surrounding site or any off-site location.
(d) Except as would not, individually or in the aggregate, have a
Material Adverse Effect or as disclosed in the Parent SEC Reports filed and
publicly available prior to the date of this Agreement, (i) Parent and its
subsidiaries and their respective properties, assets, businesses and operations
are not subject to any Environmental Claims (direct or contingent, and whether
known or unknown) or Environmental Liabilities (as such terms are hereinafter
defined) arising from or based upon any act, omission, event, condition or
circumstance occurring or existing on or prior to the date hereof or for which
Parent and its subsidiaries are responsible, including without limitation, any
such Environmental Claims or Environmental Liabilities arising from or based
upon the ownership or operation of assets, businesses or properties of Parent or
any subsidiary or their respective predecessors, and (ii) neither Parent nor any
of its subsidiaries has received any written notice of any violation of any
Environmental Law or Environmental Permit or any Environmental Claim in
connection with their respective assets, properties, businesses or operations,
or, in each case, those of their respective predecessors.
SECTION 4.17 Contracts. Except for employee benefit plans, contracts
and any contracts filed as an exhibit to any Parent SEC Reports (the "Parent
Filed Contracts"), Section 4.17 of the Parent Disclosure Schedule lists all oral
or written contracts, agreements, arrangements, guarantees, leases and executory
commitments that exist as of the date hereof to which Parent or any of its
subsidiaries is a party or by which it is bound which are or would be required
to be filed as an exhibit to the Parent SEC Reports (the listed contracts and
the filed contracts, the "Contracts"). All of the Contracts governed by the laws
of the United States or any state and, to the knowledge of Parent, all of the
Contracts governed by the laws of any foreign jurisdiction, are valid and
binding obligations of Parent or such subsidiary and, to the knowledge of
Parent, the valid and binding obligation of each other party thereto except such
Contracts which if not so valid and binding would not, individually or in the
aggregate, have a Material Adverse Effect. Neither Parent or such subsidiary
nor, to the knowledge of Parent, any other party thereto is in violation of or
in default in respect of, nor has there occurred an event or condition which
with the passage of time or giving of notice (or both) would constitute a
default under or permit the termination of, any such Contract except such
violations or defaults under or terminations which would not, individually or in
the aggregate, have a Material Adverse Effect.
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company Pending the Merger.
The Company covenants and agrees that, during the period from the date hereof to
the Effective Time, unless Parent shall otherwise consent in writing (which
consent shall not be unreasonably withheld) or except as permitted by this
Agreement, the businesses of the Company and its subsidiaries shall be conducted
in all material respects only in the ordinary course of business and in
substantially the same manner as heretofore conducted; and the Company and its
subsidiaries shall each use its reasonable best efforts to preserve
substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers and key
employees of the Company and its subsidiaries, to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that currently
maintained, and to preserve the present relationships of the Company and its
subsidiaries with customers, suppliers and other persons with which the Company
or any of its subsidiaries has significant business relations, in each case in
all material respects. By way of amplification and not limitation, neither the
Company nor any of its subsidiaries shall, between the date of this Agreement
and the Effective Time, directly or indirectly do, or commit to do, any of the
following without the prior written consent of Parent, which consent shall not
be unreasonably withheld, and except as permitted by this Agreement or as set
forth in Section 5.1 of the Company Disclosure Schedule:
(a) Amend or otherwise change its Articles of Incorporation or
By-Laws or the equivalent organizational documents or the Rights
Agreement;
(b) Issue, deliver, sell, pledge, dispose of or encumber, or
authorize or commit to the issuance, sale, pledge, disposition or
encumbrance of, (A) any shares of capital stock of any class, any Company
Voting Debt or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any Company
Voting Debt or any other ownership interest (including but not limited to
stock appreciation rights or phantom stock) of the Company or any of its
subsidiaries (except for the issuance of shares of Company Common Stock
(and the related Rights) required to be issued pursuant to the terms of
Company Stock Options outstanding as of January 31, 1999) or (B) any
assets of the Company or any of its subsidiaries that are, individually or
in the aggregate, material to the business of the Company and its
subsidiaries, taken as a whole, except for sales of products in the
ordinary course of business and in a manner consistent with past practice;
(c) Declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock (other than (1) regular quarterly dividends
with usual record and payment dates for dividends consistent with past
practice (unless otherwise required by Section 5.3), in an amount not to
exceed $.13 per share, (2) dividends by wholly owned subsidiaries of the
Company; and (3)
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dividends required to be paid pursuant to the terms of organizational
documents of non-wholly owned subsidiaries in effect on the date hereof;
(d) Reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or any
securities convertible into or exercisable for any shares of its capital
stock, other than pursuant to Company Stock Options and Stock Plans in
accordance with their terms as in effect on the date hereof;
(e) (i) Acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money
(including by issuance of debt securities) other than short-term
borrowings under the Company's existing credit facilities or issue any
debt securities or, other than in the ordinary course of business and in
amounts that are not material, assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any person,
or make any loans or advances (other than loans or advances to employees
of the Company and its subsidiaries in the ordinary course of business
consistent with past practice or guarantees of obligations of
subsidiaries) or make any capital contributions to, or investments in, any
other person, other than in the ordinary course of business and in amounts
that are not material; (iii) enter into any material contract or agreement
other than in the ordinary course of business consistent with past
practice; or (iv) authorize any single capital expenditure which is in
excess of $10 million or capital expenditures which are, in the aggregate,
in excess of $50 million for the Company and its subsidiaries taken as a
whole (except to the extent such expenditures are budgeted in the
Company's budget as of the date hereof, as set forth in Section 5.1 of the
Company Disclosure Schedule);
(f) Except to the extent required under existing employee and
director benefit plans, agreements or arrangements as in effect on the
date of this Agreement and except for renewals in the ordinary course,
increase the compensation or fringe benefits of any of its directors,
officers or employees, except for increases in salary or wages or, in
connection with a promotion or change in position granted in the ordinary
course, benefits received by employees of the Company or its subsidiaries
who are not one of the 50 officers of the Company with the highest base
salary in the ordinary course of business in accordance with past
practice, or grant any severance or termination pay not currently required
to be paid under existing severance plans or contracts other than in the
ordinary course of business consistent with past practice to, or enter
into any employment, consulting or severance agreement or arrangement with
any present or former director, officer or other employee of the Company
or any of its subsidiaries (other than an agreement with an employee who
is not one of the 50 officers of the Company with the highest base
salary), or, except as is required by law, establish, adopt, enter into or
amend or terminate any collective bargaining agreement, Company Plan or
employee benefit arrangement that would have been Company Plans if they
were in effect as of the date hereof, including, but not limited to,
bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment,
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38
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
(g) Except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
practices or principles used by it;
(h) Except as may be required by law, make any material tax
election, make or change any method of accounting with respect to Taxes,
file any amended Tax Returns that may have a material adverse effect on
the tax position of the Company or any of its subsidiaries or settle or
compromise any material federal, state, local or foreign Tax liability;
(i) Settle or compromise any pending or threatened suit, action or
claim which is material to the Company or any of its subsidiaries, taken
as a whole, or which relates to the transactions contemplated hereby;
(j) Adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries not constituting
an inactive subsidiary (other than the Merger);
(k) Pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (1) in the
ordinary course of business and consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved against
in the financial statements of the Company, (2) of liabilities incurred in
the ordinary course of business and consistent with past practice and (3)
of liabilities required to be paid, discharged or satisfied;
(l) Enter into any "non-compete" or similar agreement; or
(m) Take, or propose to take, or agree to take in writing or
otherwise, any of the actions described in Sections 5.1(a) through 5.1(l)
or any action which would make any of the representations or warranties of
the Company contained in this Agreement untrue and incorrect as of the
date when made if such action had then been taken, or would result in any
of the conditions set forth in Annex A not being satisfied.
SECTION 5.2 Conduct of Business of Parent Pending the Merger. Parent
covenants and agrees that, during the period from the date hereof to the
Effective Time Parent shall use its reasonable best efforts to preserve
substantially intact its and its subsidiaries' current business organizations,
keep available the services of the present officers and key employees of Parent
and its subsidiaries and preserve the present relationships of Parent and its
subsidiaries with customers, suppliers and other persons with which Parent or
any of its subsidiaries has significant business relations to the end that their
goodwill and ongoing businesses shall be materially unimpaired at the Effective
Time. By way of amplification and not
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39
limitation, except as set forth in Section 5.2 of the Parent Disclosure Schedule
and except as permitted by this Agreement, neither Parent nor any of its
subsidiaries shall, between the date of this Agreement and the Effective Time,
directly or indirectly do, or commit to do, any of the following without the
prior written consent of the Company, which consent shall not be unreasonably
withheld:
(a) In the case of Parent only, amend or otherwise change its
Certificate of Incorporation or By-Laws (other than the Charter Amendment);
(b) In the case of Parent only, declare, set aside, make or pay any
dividend or other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock (other than regular quarterly dividends
with usual record and payment dates consistent with past practice (unless
otherwise required by Section 5.3), in an amount not to exceed $.18 per share);
(c) In the case of Parent only, adopt a plan of complete or partial
liquidation or dissolution;
(d) In the case of Parent only, issue, deliver, sell, dispose of, or
authorize or commit to the issuance, sale or disposition of any shares of
capital stock of any class, any Parent Voting Debt or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock, or any Parent Voting Debt (except for the issuance of options in
the ordinary course consistent with past practice and except for issuances in
connection with acquisitions or mergers permitted hereby);
(e) In the case of Parent only, redeem, purchase or otherwise
acquire, directly or indirectly, any capital stock of Parent, other than
pursuant to options and benefit plans;
(f) Acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof if (i) the aggregate consideration is in excess of $500 million for any
individual transaction and $750 million for all such transactions or (ii) such
acquisition would be reasonably likely to prevent or materially delay the Offer
or the Merger; or
(g) Take, or propose to take, or agree to take in writing or
otherwise, any of the actions described in Sections 5.2(a) through 5.2(f) or any
action which would be reasonably likely to prevent or materially delay the Offer
or the Merger or make any of the representations or warranties of Parent or the
Purchaser contained in this Agreement untrue and incorrect as of the date when
made if such action had then been taken.
SECTION 5.3 Coordination of Dividends. Each of the Company and
Parent shall coordinate with the other the declaration and payment of dividends
in respect of the Company Common Stock and the Parent Common Stock and the
record dates and the payment dates relating thereto, it being the intention of
the Company and Parent that holders of Company Common Stock shall not receive
two dividends, or fail to receive one dividend, for any single
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40
calendar quarter with respect to their shares of Company Common Stock and/or
shares of Parent Common Stock any such holder receives in exchange therefor
pursuant to the Merger.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Meetings. (a) The Company, acting through its Board of
Directors, shall in accordance with and subject to applicable law and the
Articles of Incorporation and By-Laws, (i) duly call, give notice of, convene
and hold a meeting of its shareholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
this Agreement and the transactions contemplated hereby (the "Company
Shareholders Meeting") and (ii) except to the extent otherwise required by the
fiduciary duties of the Board of Directors of the Company under applicable law,
(A) include in the Proxy Statement the unanimous recommendation of the Board of
Directors that the shareholders of the Company vote in favor of the approval of
this Agreement and the transactions contemplated hereby and (B) use its
reasonable best efforts to obtain the necessary approval of this Agreement and
the transactions contemplated hereby by its shareholders. Parent shall cause
Purchaser to, and Purchaser shall, be present, in person or by proxy at, and
vote all shares of Company Common Stock acquired by Purchaser pursuant to the
Offer or otherwise owned by Parent or Purchaser (the "Tendered Shares") in favor
of the approval of this Agreement at the Company Shareholders Meeting or any
adjournment thereof. Between the date of consummation of the Offer and the date
of the Company Shareholders Meeting, Parent and Purchaser shall not sell,
transfer, dispose of or encumber in any manner or otherwise subject to any
voting or other agreement with any third party any of the Tendered Shares or any
voting rights with respect thereto. Between the date hereof and the Effective
Time, neither Parent nor any of its subsidiaries shall acquire, or agree to
acquire, whether in the open market or otherwise, any rights in any equity
securities of the Company other than pursuant to the Offer or the Merger.
(b) Parent, acting through its Board of Directors, shall in
accordance with and subject to applicable law and Parent's Certificate of
Incorporation and By-Laws, (i) duly call, give notice of, convene and hold a
meeting of its stockholders as soon as practicable following the consummation of
the Offer for the purpose of considering and taking action on the issuance of
the shares of Parent Common Stock and the Charter Amendment (the "Parent
Stockholders Meeting") and (ii) (A) include in the Proxy Statement the unanimous
recommendation of the Board of Directors that the stockholders of Parent vote in
favor of the approval of the issuance of the shares of Parent Common Stock and
the Charter Amendment and the written opinion of the Parent Financial Adviser to
the effect that, as of the date of such opinion, the consideration to be paid by
Parent to the holders of shares of the Company Common Stock in the Offer and the
Merger is fair, from a financial point of view, to Parent and its stockholders
and (B) use its reasonable best efforts to obtain the necessary approval of the
issuance of the shares of Parent Common Stock and the Charter Amendment by its
stockholders.
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41
(c) Parent and the Company will use their reasonable best efforts to
hold the Company Shareholders Meeting and the Parent Stockholders Meeting on the
same day.
(d) Parent covenants that it shall use its reasonable best efforts,
subject to compliance with the applicable rules and regulations under the
Exchange Act governing the solicitation of proxies, to cooperate with the
Company in obtaining the agreement of the record holders of the shares of Parent
Common Stock owned by the Haas family and related trusts (comprising
approximately 39% of the outstanding voting power of the Parent Common Stock as
of the date of this Agreement) to enter into a voting agreement with the Company
substantially in the form provided by the Company to Parent prior to the date
hereof.
SECTION 6.2 Proxy Statement; Registration Statement. As soon as
practicable following the date of this Agreement, the Company and Parent shall
prepare and file with the SEC under the Exchange Act and the rules and
regulations promulgated thereunder the Proxy Statement and Parent shall prepare
and file with the SEC the Registration Statement, in which the Proxy Statement
will be included as a prospectus. Each of the Company and Parent shall use its
reasonable best efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing. Each of
the Company and Parent agrees to use its reasonable best efforts, after
consultation with the other parties hereto, to respond promptly to any comments
made by the SEC with respect to the Proxy Statement and the Registration
Statement and any preliminary version thereof filed by it. The Company and
Parent shall cause such Proxy Statement to be mailed to their respective
shareholders and stockholders as of the record date for the Company Shareholders
Meeting and the Parent Stockholders Meeting, as the case may be, at the earliest
practicable time after the Registration Statement has been declared effective by
the SEC and the Offer has been consummated. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified) required to be taken under any applicable state securities laws in
connection with the issuance of the Parent Common Stock in the Merger.
SECTION 6.3 Company Board Representation; Section 14(f). (a)
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer and,
from time to time thereafter, subject to the terms of this Section, Purchaser
shall be entitled to designate up to such number of directors (the "Parent
Designees"), rounded up to the next whole number, on the Board of Directors of
the Company as shall give Purchaser representation on the Board of Directors
equal to the product of the total number of directors on such Board (giving
effect to the directors elected pursuant to this sentence) multiplied by the
percentage that the aggregate number of Shares beneficially owned by Purchaser
or any affiliate of Purchaser bears to the total number of Shares then
outstanding, and the Company shall, at such time, promptly take all action
necessary to cause the Parent Designees to be so elected, including either
increasing the size of the Board of Directors or securing the resignations of
incumbent directors or both. At such times, the Company will use its reasonable
best efforts to cause persons designated by Purchaser to constitute the same
percentage as is on the board of each committee of the Board of Directors (other
than the committee formed pursuant to Section 6.3(c)).
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42
(b) The Company's obligations to appoint designees to its Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 6.3 and shall include in the Schedule 14D-9 or a separate
Rule 14f-1 information statement provided to shareholders such information with
respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 to fulfill its obligations under this Section 6.3.
Parent or Purchaser will supply to the Company and be solely responsible for any
information with respect to either of them and their nominees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-1.
(c) Immediately following the election or appointment of the Parent
Designees pursuant to this Section 6.3 and prior to the Effective Time, the
Board of Directors of the Company shall form a committee of the Board comprised
solely of directors who are not Parent Designees (the "Continuing Director
Committee"), which committee shall be delegated sole responsibility for the
following matters: (i) any amendment, or waiver, of any term or condition of
this Agreement or the Articles of Incorporation or By-Laws of the Company; (ii)
any termination of this Agreement by the Company; (iii) any extension by the
Company of the time for performance of any of the obligations or other acts of
Purchaser or Parent under this Agreement; (iv) any waiver, assertion or
enforcement of the Company's rights under this Agreement; (v) any other consent,
agreement or action by the Company or the Company's Board of Directors with
respect to this Agreement; (vi) the declaration of quarterly dividends in an
amount not to exceed $.13 per share of Company Common Stock; and (vii) subject
to Section 5.1, changes in the composition, compensation or benefits of the
senior management of the Company and its operating divisions.
(d) Prior to the Effective Time, without the consent of a majority
of the Continuing Directors, the Parent Designees shall not propose, approve or
cause any action by the Board of Directors of the Company, which action is in
violation of the terms of this Agreement, or would require the consent of Parent
pursuant to Section 5.1. In the event that Parent or Purchaser breaches its
obligations under this Agreement, or the Parent Designees breach the terms of
this Section, including by seeking to dissolve or otherwise impair the rights or
authority of the Committee described in paragraph (c) above, Parent shall cause
the Parent Designees to promptly resign from the Company Board of Directors and
shall not otherwise seek to elect directors to such Board.
(e) Parent, on behalf of the Parent Designees, acknowledges that
such designees have a "direct or indirect interest" as defined in Section
23-1-35-2 of the IBCL with respect to this Agreement and the transactions
contemplated hereby, including without limitation the matters delegated to the
committee formed pursuant to Section 6.3(c).
SECTION 6.4 Confidentiality. (a) From the date hereof to the
Effective Time, the Company shall, and shall cause its subsidiaries, officers,
directors, employees, auditors and other agents to, afford the officers,
employees, auditors and other agents of Parent, and financing sources who shall
agree to be bound by the provisions of this Section 6.4 as though a party
hereto, reasonable access, consistent with applicable law and confidentiality or
similar
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43
agreements with third parties, at all reasonable times to its officers,
employees, agents, properties, offices, plants and other facilities and to all
books and records, and shall furnish Parent and such financing sources with all
financial, operating and other data and information as Parent, through its
officers, employees or agents, or such financing sources may from time to time
reasonably request. From the date hereof to the Effective Time, Parent shall,
and shall cause its officers and employees to afford the officers, employees,
financial advisor, accountants and counsel of the Company reasonable access at
all reasonable times, consistent with applicable law and confidentiality or
similar agreements with third parties and consistent with the Company's rights
under this Agreement, including to confirm compliance by Parent with its
obligations hereunder and the representations and warranties of Parent contained
herein, to officers, employees, auditors, books and records and such other
information as the Company, through its officers, employees, financial advisor,
accountants and counsel reasonably may request.
(b) Information obtained by Parent and Purchaser pursuant to Section
6.4(a) shall be subject to the Confidentiality Agreement, dated November 24,
1998 (the "Confidentiality Agreement"), between the Company and Parent.
(c) No investigation pursuant to this Section 6.4 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
SECTION 6.5 No Solicitation of Transactions. The Company, its
affiliates and their respective officers, directors, employees, representatives
and agents shall immediately cease any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to any Business
Combination Proposal (as hereinafter defined). Prior to the purchase of Shares
pursuant to the Offer, the Company may, directly or indirectly, furnish
information and access, in each case only in response to a request for such
information or access to any person made after the date hereof which was not
encouraged, solicited or initiated by the Company or any of its affiliates or
any of its or their respective officers, directors, employees, representatives
or agents after the date hereof, pursuant to appropriate confidentiality
agreements containing terms substantially similar to those contained in the
Confidentiality Agreement, and may participate in discussions and negotiate with
such person concerning any Business Combination Proposal, if, and only to the
extent that, (i) such person has submitted a written Business Combination
Proposal to the Board of Directors of the Company relating to any such
transaction, (ii) the Board, after consultation with its independent financial
advisers, determines in good faith that (x) the person making such Business
Combination Proposal is reasonably capable of completing such Business
Combination Proposal, taking into account the legal, financial, regulatory and
other aspects of such Business Combination Proposal and the person making such
Business Combination Proposal and (y) such Business Combination Proposal would
reasonably be expected to be a Superior Proposal (as defined below) and (iii)
the Board determines in good faith, based upon the advice of outside counsel to
the Company, that, assuming such Business Combination Proposal is a Superior
Proposal, failure to take such action would violate its fiduciary duties under
applicable law. The Board shall notify Parent promptly (but in any event within
24 hours) if any such proposal is made and shall in such notice, indicate in
reasonable detail the identity of the offeror and the material terms and
conditions of any proposal and shall
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44
keep Parent promptly advised of the status and material terms of any such
inquiry, offer or proposal. Except as set forth in this Section 6.5, neither the
Company or any of its affiliates, shall, and each shall use their reasonable
best efforts to cause their respective officers, directors, employees,
representatives or agents, not to, directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Parent and Purchaser, any affiliate or associate of Parent and
Purchaser or any designees of Parent or Purchaser) concerning any Business
Combination Proposal; provided, however, that nothing herein shall prevent the
Board from taking, and disclosing to the Company's shareholders, a position
contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act with
regard to any tender offer or from making any disclosure ("Required Disclosure")
to its shareholders if the Board shall conclude in good faith that such
disclosure is required under applicable law; provided, further, that the Board
shall not recommend that the shareholders of the Company tender their shares of
Company Common Stock in connection with any such tender offer unless the Board
shall have determined in good faith, based upon the advice of outside counsel to
the Company, that failing to take such action would constitute a breach of the
Board's fiduciary duty under applicable law. The Company agrees not to release
any third party from, or waive any provisions of, any confidentiality or
standstill agreement to which the Company is a party, unless the Board shall
have determined in good faith, based upon the advice of outside counsel, that
failing to release such third party or waive such provisions would constitute a
breach of the Board's fiduciary duty under applicable law. As used in this
Section 6.5, "Business Combination Proposal" shall mean any tender or exchange
offer, proposal for a merger, consolidation or other business combination
involving the Company or any of its material subsidiaries, or any proposal or
offer (in each case, whether or not in writing and whether or not delivered to
the stockholders of a party generally) to acquire in any manner, directly or
indirectly, a substantial equity interest in or a substantial portion of the
assets of the Company or any of its material subsidiaries, other than pursuant
to the transactions contemplated by this Agreement. A "Superior Proposal" is a
Business Combination proposal that involves payment of consideration to the
Company's shareholders and other terms and conditions that, taken as a whole,
are superior to the Offer and the Merger.
SECTION 6.6 Employee Benefits Matters. (a) On and after the
Effective Time, Parent shall cause the Surviving Corporation and its
subsidiaries to promptly pay or provide when due all compensation and benefits
as provided pursuant to the terms of, and to honor in accordance with their
currently existing terms (except to the extent amended or terminated in
accordance with such terms), all compensation arrangements, employment
agreements and employee or director benefit plans, programs and policies in
existence as of the date hereof for all employees (and former employees) and
directors (and former directors) of the Company and its subsidiaries.
(b) Parent shall cause the Surviving Corporation, for the period
commencing at the Effective Time and ending on December 31, 2000, to provide
employee benefits under plans, programs and arrangements which, in the
aggregate, will provide benefits to the employees of the Surviving Corporation
and its subsidiaries (other than employees covered by a collective bargaining
agreement) which are no less favorable in the aggregate than those provided
pursuant to the plans, programs and arrangements (other than those related to
the equity securities of the
<PAGE> 49
45
Company) of the Company and its subsidiaries in effect on the date hereof;
provided, however, that nothing herein shall prevent the amendment or
termination of any specific plan, program or arrangement (except that the
Company's Separation Allowance policy will not be amended to reduce the benefits
thereunder with respect to terminations of employees occurring before January 1,
2001), require that the Surviving Corporation provide or permit investment in
the securities of Parent, the Company or the Surviving Corporation or interfere
with the Surviving Corporation's right or obligation to make such changes as are
necessary to comply with applicable law.
(c) Employees of the Surviving Corporation shall be given credit for
all service with the Company and its subsidiaries, to the same extent as such
service was credited for such purpose by the Company, under each employee
benefit plan, program, or arrangement of the Parent in which such employees are
eligible to participate for all purposes, except for purposes of benefit
accrual, under defined benefit pension plans, and, in all cases, except to the
extent such credit would result in duplication of benefits. If employees of the
Surviving Corporation and its subsidiaries become eligible to participate in a
medical, dental or health plan of Parent or its subsidiaries, Parent shall cause
such plan to (i) waive any preexisting condition limitations for conditions
covered under the applicable medical, health or dental plans of the Company and
its subsidiaries and (ii) honor any deductible and out of pocket expenses
incurred by the employees and their beneficiaries under such plans during the
portion of the calendar year prior to such participation. Notwithstanding the
foregoing, in no event shall the employees be entitled to any credit for
service, deductibles or out of pocket expenses to the extent that it would
result in a duplication of benefits with respect to the same period of service,
deductible or out of pocket expenses.
(d) Nothing in this Section 6.6 shall require the continued
employment of any person.
(e) The Company and Parent shall take all steps as are necessary or
appropriate to ensure that the provisions set forth in Appendix E to the Morton
International, Inc. Pension Plan, Appendix E to the Morton International, Inc.
Pension Plan for Collective-Bargaining Employees and Appendix C to the Morton
International, Inc. Retirement Income Plan for Collective-Bargaining Employees
(i) do not become not effective as a result of, or are rescinded with respect to
(as applicable), the consummation of any of the transactions contemplated by
this Agreement, and (ii) are terminated effective as of the Effective Time.
Within 30 days after the date of this Agreement, or such shorter period as is
necessary to accomplish the purposes hereof, the Company shall advise Parent in
writing of all necessary actions required to be taken by Parent to implement the
matters contemplated by the preceding sentence, it being understood that certain
actions may be required to be taken after the Merger.
SECTION 6.7 Directors' and Officers' Indemnification and Insurance.
(a) The Articles of Incorporation of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set forth
in Article Ninth of the Articles of Incorporation of the Company, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights
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46
thereunder of individuals who at the Effective Time were directors, officers or
employees of the Company.
(b) Parent shall cause to be maintained in effect for six years from
the Effective Time the current policies of the directors' and officers'
liability insurance maintained by the Company (provided that Parent may
substitute therefor policies of at least the same coverage containing terms and
conditions which are not materially less advantageous) with respect to matters
or events occurring prior to the Effective Time to the extent available;
provided, however, that in no event shall Parent or the Company be required to
expend more than an amount per year equal to 200% of current annual premiums
paid by the Company (which amounts under current policies are set forth on
Schedule 6.7) to maintain or procure insurance coverage pursuant hereto; and,
provided, further that if the annual premiums of such insurance coverage exceed
such amount, the Surviving Corporation shall be obligated to obtain a policy
with the greatest coverage available for a cost not exceeding such amount.
(c) For six years after the Effective Time, Parent agrees that it
will or will cause the Surviving Corporation to indemnify and hold harmless each
present and former director and officer of the Company, determined as of the
Effective Time (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
relating to their duties or actions in their capacity as officers and directors
and existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent
permitted under applicable law (and Parent shall, or shall cause the Surviving
Corporation to, also advance fees and expenses (including reasonable attorneys'
fees) as incurred to the fullest extent permitted under applicable law provided
the person to whom expenses are advanced provides a customary undertaking
complying with applicable law to repay such advances if it is ultimately
determined that such person is not entitled to indemnification).
(d) Nothing in this Agreement is intended to, shall be construed to
or shall release, waive or impair any rights to directors' and officers'
insurance claims under any policy that is or has been in existence with respect
to the Company or any of its officers, directors or employees, it being
understood and agreed that the indemnification provided for in this Section 6.7
is not prior to or in substitution for any such claims under such policies.
SECTION 6.8 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would, if such representation or warranty were required
to be made at such time, be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
and (ii) any failure of the Company, Parent or Purchaser, as the case may be, to
comply in all material respects with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this
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Section 6.8 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
SECTION 6.9 Further Action; Reasonable Best Efforts. (a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
its reasonable best efforts to take, or cause to be taken, all appropriate
action, and to do or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable, including
but not limited to (i) cooperating in the preparation and filing of the Offer
Documents, the Schedule 14D- 9, the Proxy Statement, the Registration Statement,
any required filings under the HSR Act or other foreign filings and any
amendments to any thereof; (ii) promptly making all required regulatory filings
and applications including, without limitation, responding promptly to requests
for further information, to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company and its subsidiaries as are necessary for
the consummation of the transactions contemplated by this Agreement and to
fulfill the conditions to the Offer and the Merger; (iii) avoiding the entry of,
or having vacated or terminated, any decree, order, or judgment that would
restrain, prevent, or delay the consummation of the Offer or the Merger,
including but not limited to defending through litigation on the merits any
claim asserted in any court by an party; and (iv) taking any and all reasonable
steps necessary to avoid or eliminate each and every impediment under any
antitrust, competition, or trade regulation law that is asserted by any
governmental entity with respect to the Offer or the Merger so as to enable the
consummation of the Offer or the Merger to occur as expeditiously as possible,
including but not limited to, proposing, negotiating, committing to and
effecting, by consent decree, hold separate order or otherwise, the sale,
divestiture or disposition of such assets or businesses of the Parent or the
Company or any of their respective subsidiaries, (or otherwise taking or
committing to take any action that limits, in any material respect, the freedom
of action with respect to, or its ability to retain, any of the businesses,
product lines, or assets of Parent, the Company or their respective
subsidiaries) as may be required in order to avoid the entry of, or to effect
the dissolution of, any injunction, temporary restraining order, or other order
in any suit or proceeding, which would otherwise have the effect of preventing
or delaying the consummation of the Offer or the Merger; provided, however, that
Parent shall not be required to agree to any hold separate order, sale,
divestiture, or disposition of assets or businesses of Parent or the Company
which account, in the aggregate, for more than $160 million in sales of Parent
or the Company, as the case may be, in the most recently completed fiscal year.
At the request or Parent, the Company shall agree to divest, hold separate or
otherwise take or commit to take any action that limits its freedom of action
with respect to, or its ability to retain, any of the businesses, product lines
or assets of the Company or any of its Subsidiaries, provided that any such
action may be conditioned upon the consummation of the Merger. Notwithstanding
anything to the contrary contained in this Agreement, in connection with any
filing or submission required or action to be taken by Parent, the Company, or
any of their respective Subsidiaries to consummate the Offer and the Merger or
other transactions contemplated in this Agreement, the Company shall not,
without Parent's prior written consent, recommend, suggest, or commit to any
sale, divestiture or disposition of assets or businesses of the Company or its
Subsidiaries. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the
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48
proper officers and directors of each party to this Agreement shall use their
reasonable best efforts to take all such necessary action.
(b) The Company and Parent shall keep the other apprised of the
status of matters relating to the completion of the transactions contemplated
hereby and work cooperatively in connection with obtaining the requisite
approvals and consents of governmental order, including, without limitation: (i)
promptly notifying the other of, and if in writing, furnishing the other with
copies of (or, in the case of material oral communications, advise the other
orally of), any communications from or with any governmental authority with
respect to the Offer or the Merger or any of the other transactions contemplated
by this Agreement; (ii) permitting the other party to review in advance, and
considering in good faith the views of one another in connection with, any
proposed communication with any governmental authority in connection with
proceedings under or relating to the HSR Act or any other antitrust law; and
(iii) not agreeing to participate in any meeting or discussion with any
governmental authority in connection with proceedings under or relating to the
HSR Act or any other antitrust law unless it consults with the other party in
advance.
SECTION 6.10 Public Announcements. The initial press release
pertaining to the transactions contemplated by this Agreement shall be a joint
press release and thereafter Parent and the Company shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to the Offer or the Merger and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with its securities exchange.
SECTION 6.11 Affiliates. Not less than 30 days prior to the
Effective Time, the Company shall deliver to Parent a letter identifying all
persons who, in the opinion of the Company, may be deemed at the time this
Agreement is submitted for approval by the shareholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act,
and such list shall be updated as necessary to reflect any changes from the date
thereof. The Company shall use reasonable best efforts to cause each person
identified on such list to deliver to Parent not less than 15 days prior to the
Effective Time, a written agreement substantially in the form attached as
Exhibit 6.11 hereto (an "Affiliate Agreement"). For so long as the shares of
Parent Common Stock issued pursuant to the Merger are subject to the resale
restrictions set forth in Rule 145 under the Securities Act, Parent will use its
reasonable best efforts to comply with the provisions of Rule 144(c) under the
Securities Act.
SECTION 6.12 Stock Exchange Listing. Parent shall use its reasonable
best efforts to cause the shares of Parent Common Stock to be issued in the
Merger and the shares of Parent Common Stock to be reserved for issuance upon
the exercise of the Company Stock Options to be approved for listing on the
NYSE, subject to official notice of issuance, prior to the Closing Date.
SECTION 6.13 Accountants' Letters. The Company shall use its
reasonable best efforts to cause to be delivered to Parent a letter of the
Company's independent public accountants, dated a date within two business days
before the date on which the Registration
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49
Statement shall become effective and addressed to Parent, in form and substance
reasonably satisfactory to Parent and customary in scope and substance for
comfort letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement. Parent shall use
its reasonable best efforts to cause to be delivered to the Company a letter of
Parent's independent public accountants, dated a date within two business days
before the date on which the Registration Statement shall become effective and
addressed to the Company, in form and substance reasonably satisfactory to the
Company and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
SECTION 6.14 Parent Board of Directors. Effective at the Effective
Time, Parent shall increase the size of its Board of Directors by adding three
directorships and elect Mr. S. Jay Stewart and two other current directors of
the Company to be mutually agreed by the Company and Parent.
SECTION 6.15 Alternative Transaction Structure. If (a) following the
consummation of the Offer, either (x) the Parent Stockholders Meeting has
occurred and at such meeting (or any adjournments thereof), the Parent
Stockholder Approval is not obtained or (y) the Parent Stockholder Approval has
not been obtained prior to the 45th day after the Registration Statement is
declared effective by the SEC (or, if there shall exist at such time any
injunction or other order (whether temporary, preliminary or permanent) which
prohibits, restrains, enjoins or restricts Parent from holding the Parent
Stockholders Meeting or a stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC, by not later than the
30th day after such 45th day) or (b) all three of the following have occurred:
(i) the Offer is terminated pursuant to Section 1.1(b), (ii) the Parent
Stockholders Meeting has occurred and at such meeting (or any adjournments
thereof) the Parent Stockholder Approval is not obtained and (iii) the Parent
stockholders described in Section 6.1(d) shall not have voted (by proxy or in
person) the greater of (A) 95% of the shares of Parent Common Stock beneficially
owned by such entities and their affiliates as of the date hereof (which Parent
represents to be approximately 39% of the outstanding voting power as of the
date hereof) and (B) such number of shares so owned by such entities on the
record date for the Parent Stockholders Meeting in favor of the Parent
Stockholders Approval, the Parent Stockholders Approval shall not be a condition
to consummation of the Merger, and the Merger Consideration to be received in
respect of shares of Company Common Stock in the Merger pursuant to Section 2.6
shall be modified as set forth in Section 2.14 (the "Cash Alternative
Structure").
SECTION 6.16 Delivery of List of Company Plans. (a) As soon as
reasonably practicable, but except in the case of Foreign Plans (as defined
below) not more than 15 days, after the date hereof, the Company shall provide a
true and complete list of all Company Plans. The term "Foreign Plans" means all
Company Plans which provide benefits to or which are participated in by,
non-U.S. employees and former employees (other than those required by local
law).
(b) With respect to each Company Plan (other than Foreign Plans that
are required by law), as soon as reasonably practicable, but except in the case
of Foreign Plans not
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50
more than 15 days, after the date hereof, the Company shall deliver or make
available to Parent a current, accurate and complete copy (or, to the extent no
such copy exists, an accurate description) thereof and, to the extent
applicable: (i) any related trust agreement or other funding instrument; (ii)
the most recent determination letter, if applicable; (iii) any summary plan
description and other material written communications by the Company or any of
its subsidiaries to their employees concerning the extent of the benefits
provided under a Company Plan; and (iv) for the three most recent years (A) the
Form 5500 and attached schedules, (B) audited financial statements and (C)
actuarial valuation reports.
(c) Notwithstanding the foregoing, the Company shall not be deemed
to be in breach of subsections (a) and (b) of this Section 6.16 unless the
Company, taking into account the totality of the circumstances and the
materiality of the omission, acted in bad faith or with gross negligence.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) The Company Shareholder Approval shall have been obtained.
(b) (i) Except as provided in Section 6.15, the Parent Stockholder
Approval shall have been obtained.
(c) No statute, rule, regulation, executive order, decree, ruling,
injunction or other order (whether temporary, preliminary or permanent)
shall have been enacted, entered, promulgated or enforced by any United
States, foreign, federal or state court or governmental authority and
shall be in effect which prohibits, restrains, enjoins or restricts the
consummation of the Merger.
(d) Unless the Purchaser shall have terminated the Offer pursuant to
Section 1.1(b), Purchaser shall have purchased Shares pursuant to the
Offer.
(e) The Parent Common Stock to be issued in the Merger and such
other shares to be reserved for issuance in connection with the Merger
shall have been approved for listing on the NYSE, subject to official
notice of issuance.
(f) The Registration Statement shall have been declared effective by
the SEC under the Securities Act. No stop order suspending the
effectiveness of the Registration Statement shall have been issued by the
SEC and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
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51
SECTION 7.2 Additional Conditions to Obligation of Parent and
Purchaser to Effect the Merger. If the Offer is terminated pursuant to Section
1.1(b), then the obligations of Parent and Purchaser to consummate the Merger
shall also be subject to the satisfaction at or prior to the Effective Time of
the following conditions:
(a)(i) The representations and warranties of the Company set forth
in this Agreement that are qualified as to Material Adverse Effect shall be true
and correct immediately prior to the Effective Time (except to the extent such
representations and warranties shall have been made as of an earlier date, in
which case such representations and warranties shall have been so true and
correct as of such earlier date) with the same force and effect as if then made
and (ii) the representations and warranties of the Company set forth in this
agreement that are not qualified as to Material Adverse Effect shall be true and
correct in all material respects immediately prior to the Effective Time (except
to the extent such representations and warranties shall have been made as of an
earlier date, in which case such representations and warranties shall have been
true and correct in all material respects as of such earlier date) with the same
force and effect as if then made.
(b) The Company shall have performed and complied in all material
respects with all agreements and covenants required to be performed or complied
with by it on or before the Effective Time.
(c) There shall not have been instituted and continuing or pending
any suit, action or proceeding brought by any U.S. governmental authority before
any federal or state court with respect to the transactions contemplated by this
Agreement which would reasonably be expected to have the effect of making
illegal or otherwise restraining or prohibiting the Merger.
(d) (i) All waiting periods under the HSR Act shall have expired or
been terminated and the EU Approval shall have been received; and (ii) any
applicable waiting periods applicable to the Merger under any laws or
regulations of any foreign jurisdiction in which either the Company or Parent
(directly or through subsidiaries, in each case) has material assets or conducts
material operations, shall have expired or been terminated, and all regulatory
approvals applicable to the Merger shall have been obtained, other than such
waiting periods and approvals the failure of which to be satisfied or obtained
would not have a Material Adverse Effect on the Company or Parent.
SECTION 7.3 Additional Conditions to Obligation of the Company to
Effect the Merger. If the Offer is terminated pursuant to Section 1.1(b), then
the obligations of the Company to consummate the Merger shall also be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a)(i) The representations and warranties of Parent and Purchaser
set forth in this Agreement that are qualified as to Material Adverse Effect
shall be true and correct immediately prior to the Effective Time (except to the
extent such representations and warranties shall have been made as of an earlier
date, in which case such representations and warranties shall have been so true
and correct as of such earlier date) with the same force and effect as if then
made
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52
and (ii) the representations and warranties of Parent and Purchaser set forth in
this Agreement that are not qualified as to Material Adverse Effect shall be
true and correct in all material respects immediately prior to the Effective
Time (except to the extent such representations and warranties shall have been
made as of an earlier date, in which case such representations and warranties
shall have been true and correct as of such earlier date) with the same force
and effect as if then made.
(b) Parent and Purchaser shall have performed and complied in all
material respects with all agreements and covenants required to be performed or
complied with by them on or before the Effective Time.
(c) (i) All waiting periods under the HSR Act shall have expired or
been terminated and the EU Approval shall have been received; and (ii) any
applicable waiting periods applicable to the Merger under any laws or
regulations of any foreign jurisdiction in which either the Company or Parent
(directly or through subsidiaries, in each case) has material assets or conducts
material operations, shall have expired or been terminated, and all regulatory
approvals applicable to the Merger shall have been obtained, other than such
waiting periods and approvals the failure of which to be satisfied or obtained
would not have a Material Adverse Effect on Parent after the Merger.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the
Offer and Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval hereof by the shareholders of the
Company or the stockholders of Parent:
(a) By mutual written consent of Parent, Purchaser and
the Company;
(b) By Parent or the Company if any court of competent jurisdiction
or other governmental body located or having jurisdiction within the
United States or any country or economic region in which either the
Company or Parent, directly or indirectly, has material assets or
operations, shall have issued a final order, injunction, decree, judgment
or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the Offer or the Merger and such order, injunction,
decree, judgment, ruling or other action is or shall have become final and
nonappealable;
(c) Unless the Offer shall have been consummated, by the Company if
(i) there shall have been a breach of any representation or warranty on
the part of Parent or Purchaser contained in this Agreement which would
have a Material Adverse Effect with respect to Parent, (ii) there shall
have been a breach of any covenant or agreement on the part of Parent or
the Purchaser contained in this Agreement which would have a Material
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53
Adverse Effect with respect to Parent or which materially adversely
affects the consummation of the Offer (unless the Offer has been
terminated pursuant to Section 1.1(b)) or the Merger, and which, in the
case of clauses (i) and (ii), shall not have been cured prior to the 20th
business day following notice of such breach, (iii) the Merger shall not
have been consummated on or prior to November 30, 1999 (unless such
failure is caused by or results from the failure of any representation or
warranty of the Company to be true and correct in any material respect or
the failure of the Company to perform in any material respect any of its
covenants or agreements contained in this Agreement) or (iv) any person
shall have made a bona fide written offer to acquire the Company which was
not solicited after the date hereof (A) that the Board of Directors of the
Company determines in its good faith judgment is a Superior Proposal and
(B) as a result of which the Board of Directors determines in good faith,
based upon the advice of outside counsel, that failure to take such action
would violate its fiduciary duties under applicable law; provided,
however, that not less than two business days prior to such termination,
the Company shall notify Parent of its intention to terminate this
Agreement pursuant to this Section 8.1(c) (iv) and shall cause its
respective financial and legal advisers to negotiate during such two-day
period with Parent to make such adjustments in the terms and conditions of
this Agreement as would enable the Company to proceed with the
transactions contemplated herein on such adjusted terms, and
notwithstanding such negotiations and adjustments, the Board concludes, in
its good faith judgment, that the transactions contemplated herein on such
terms as adjusted, are not at least as favorable to the shareholders of
the Company as such offer; provided, further, that such termination under
clause (iv) shall not be effective until the Company has made payment of
the full fee required by Section 8.3;
(d) Unless the Offer shall have been consummated, by Parent if (i)
there shall have been a breach of any representation or warranty on the
part of the Company contained in this Agreement which would have a
Material Adverse Effect with respect to the Company, (ii) there shall have
been a breach of any covenant or agreement on the part of the Company
contained in this Agreement which would have a Material Adverse Effect on
the Company or which materially adversely affects the consummation of the
Offer (unless the Offer has been terminated pursuant to Section 1.1(b)) or
the Merger, and which, in the case of clauses (i) and (ii), shall not have
been cured prior to the 20th business day following notice of such breach
or (iii) the Board of Directors of the Company shall have withdrawn or
modified (including by amendment of the Schedule 14D-9) in a manner
adverse to Purchaser its approval or recommendation of the Offer, this
Agreement or the Merger, shall have recommended another Business
Combination Proposal or shall have failed to publicly affirm its approval
or recommendation of the Offer, this Agreement and the Merger within 15
days of Parent's request, which request may only be made with respect to
any Business Combination Proposal on a single occasion, after any Business
Combination Proposal shall have been disclosed to the Company's
shareholders generally, or shall have resolved to effect any of the
foregoing;
(e) If the Offer has been terminated pursuant to Section 1.1(b), by
Parent if the Merger has not been consummated on or prior to November 30,
1999 (unless such failure
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54
is caused by or results from the failure of any representation or warranty
of Parent to be true and correct in any material respect or the failure of
Parent to perform in any material respect any of its covenants or
agreements contained in this Agreement);
(f) Unless the Offer shall have been consummated, by Parent or the
Company if the Company Shareholder Approval shall not have been obtained
upon a vote held at the Company Shareholders Meeting (or any adjournment
thereof); or
(g) Unless the Offer shall have been consummated or the Cash
Alternative Structure is required to be effected, by Parent or the Company
if the Parent Stockholder Approval shall not have been obtained upon a
vote held at the Parent Stockholders Meeting (or any adjournment thereof).
SECTION 8.2 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto except as
set forth in Section 8.3 and Section 9.1; provided, however, that nothing herein
shall relieve any party from liability for any breach hereof.
SECTION 8.3 Fees and Expenses.
(a) If:
(i) (x) Parent or the Company terminates this Agreement pursuant to
Section 8.1(f) hereof, (y) on or prior to the date of the Company
Stockholders Meeting any person (including the Company but not including
Parent or Purchaser) shall have made a public announcement with respect to
a Third Party Acquisition (as defined below) that contemplates a direct or
indirect consideration (or implicit valuation) for Shares (including the
value of any stub equity) in excess of the Merger Consideration and (z)
within 12 months following such termination, the Company, directly or
indirectly, enters into an agreement with respect to a Third Party
Acquisition, or a Third Party Acquisition occurs;
(ii) (x) The Company terminates this Agreement pursuant to Section
8.1(c)(iii) hereof at a time when Parent would have been permitted to
terminate this Agreement pursuant to Section 8.1(d)(ii) as a result of a
willful or bad faith breach of any covenant or agreement contained in this
Agreement, (y) prior to such termination, any person (not including Parent
or Purchaser) shall have disclosed publicly or to the Company a Third
Party Acquisition that contemplates a direct or indirect consideration
(implicit valuation) for Shares (including the value of any stub equity)
in excess of the Merger Consideration and (z) within 12 months following
such termination, the Company directly or indirectly, enters into an
agreement with respect to a Third Party Acquisition, or a Third Party
Acquisition occurs; or
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(iii) (x) the Company terminates this Agreement pursuant to
8.1(c)(iv) or (y) the Company terminates this Agreement pursuant to
Section 8.1(c)(iii) hereof and at such time Parent would have been
permitted to terminate this Agreement under Section 8.1(d)(iii) hereof or
(z) Parent terminates this Agreement pursuant to Section 8.1(d)(iii)
hereof;
then the Company shall pay to Parent (a) within one business day following (i)
in the case of clause 8.3(a)(i) or (a)(ii), the execution and delivery of such
agreement or such occurrence, as the case may be, or (ii) any termination by
Parent contemplated by Section 8.3(a)(iii) or (b) simultaneously with any
termination by the Company contemplated by Section 8.3(a)(iii), a fee, in cash,
of $140 million, provided, however, that the Company in no event shall be
obligated to pay more than one such fee with respect to all such agreements and
occurrences and such termination.
(b) If Parent or the Company terminates this Agreement pursuant to
Section 8.1(g) hereof, (y) on or prior to the date of the Parent Stockholders
Meeting any person (including Parent but not including the Company) shall have
made a public announcement with respect to a Parent Third Party Acquisition (as
defined below) that directly or indirectly contemplates (or by its terms would
require) the rejection by the stockholders of Parent of the Parent Stockholder
Approval contemplated herein, and (z) within 12 months following such
termination, Parent, directly or indirectly, enters into an agreement with
respect to a Parent Third Party Acquisition, or a Parent Third Party Acquisition
occurs, then Parent shall pay to the Company within one business day following
the execution and delivery of such agreement or such occurrence, as the case may
be, a fee, in cash, of $140 million.
"Third Party Acquisition" means the occurrence of any of the
following events: (i) the acquisition of the Company by merger, tender offer or
otherwise by any person or group of persons acting in concert other than Parent,
Purchaser or any affiliate thereof (a "Third Party"); (ii) the acquisition by a
Third Party of 50.0% or more of the assets of the Company and its subsidiaries,
taken as a whole, in one transaction or a related series of transactions; (iii)
the acquisition by a Third Party of beneficial ownership of 35.0% or more of the
outstanding Shares in one transaction or a related series of transactions; or
(iv) the adoption by the Company of a plan of liquidation. "Parent Third Party
Acquisition" means (i) the acquisition of Parent by merger, tender offer or
otherwise by any person or group of persons acting in concert other than the
Company or any affiliate thereof (a "Parent Third Party"); (ii) the acquisition
by a Parent Third Party of 50.0% or more of the assets of Parent and its
subsidiaries, taken as a whole, in one transaction or a related series of
transactions; or (iii) the acquisition by a Parent Third Party of beneficial
ownership of 35.0% or more of the outstanding shares of Parent Common Stock in
one transaction or a related series of transactions unless immediately following
such acquisition, the Haas family stockholders referred to in Section 6.1(d)
beneficially owns a greater percentage of the outstanding shares of Parent
Common Stock than such Parent Third Party.
(c) All payments made under this Section 8.3 shall be made by wire
transfer of immediately available funds to an account designated by Parent or
the Company, as the case may
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be. No party shall be entitled to receive payments under this Section 8.3 if it
has materially breached its obligations under this Agreement.
(d) Except as otherwise specifically provided herein, each party
shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
SECTION 8.4 Amendment. Subject to Section 6.3, this Agreement may be
amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after approval of this Agreement by the shareholders of
the Company, no amendment may be made which would reduce the amount or change
the type of consideration into which each Share shall be converted upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.5 Waiver. Subject to Section 6.3, at any time prior to the
Effective Time, any party hereto may (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Article II, Section 6.6, Section 6.7 and Article IX shall survive the
Effective Time and those set forth in Section 6.4(b), Section 8.3 and Article IX
shall survive termination of this Agreement.
SECTION 9.2 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
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if to Parent or Purchaser:
Rohm and Haas Company
100 Independence Mall West
Philadelphia, Pennsylvania 19106
Attention: Corporate Secretary
Facsimile: (215) 592-3227
with an additional copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: William E. Curbow, Esq.
Facsimile: (212) 455-2502
if to the Company:
Morton International, Inc.
100 North Riverside Plaza
Chicago, Illinois 60606
Attention: Corporate Secretary
Facsimile: (312) 807-2101
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Eric S. Robinson, Esq.
Facsimile: (212) 403-2000
SECTION 9.3 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a person means a person that, directly or
indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, the first mentioned person;
(b) "beneficial owner" with respect to any Shares means a person who
shall be deemed to be the beneficial owner of such Shares (i) which such
person or any of its affiliates or associates beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2 of the Exchange Act)
has, directly or indirectly, (A) the right to acquire (whether such right
is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange
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rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding or (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom
such person or any of its affiliates or person with whom such person or
any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of any shares;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock,
as trustee or executor, by contract or credit arrangement or otherwise;
(d) "generally accepted accounting principles" shall mean the
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as may be approved by a significant
segment of the accounting profession in the United States, in each case
applied on a consistent basis during the periods involved;
(e) "knowledge" of the Company or Parent shall mean the actual
knowledge, after reasonable inquiry, of such entity's executive officers.
(f) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(g) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation,
partnership, joint venture or other legal entity of which the Company, the
Surviving Corporation, Parent or such other person, as the case may be
(either alone or through or together with any other subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity interests
the holder of which is generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity.
SECTION 9.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
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SECTION 9.5 Entire Agreement; Assignment. This Agreement, the Option
Agreement and the Confidentiality Agreement constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof. This Agreement shall not
be assigned by operation of law or otherwise, except that Parent and Purchaser
may assign all or any of their respective rights and obligations hereunder to
any direct or indirect wholly owned subsidiary or subsidiaries of Parent,
provided that no such assignment shall relieve the assigning party of its
obligations hereunder if such assignee does not perform such obligations.
SECTION 9.6 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, except for the provisions of Section 6.7 (which
provisions are also intended to be for the benefit of the persons described
therein), is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.7 Governing Law; Submission to Jurisdiction. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Indiana, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof. The Company, Parent and
Purchaser hereby (w) submit to the jurisdiction of any State and Federal courts
sitting in Indiana with respect to matters arising out of or relating hereto,
(x) agree that all claims with respect to such matters may be heard and
determined in an action or proceeding in such Indiana State or Federal court,
and (y) agree that a final judgment in any such action or proceeding will be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
SECTION 9.8 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.9 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
<PAGE> 64
60
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
ROHM AND HAAS COMPANY
By: /s/ J. Lawrence Wilson
----------------------------------------
Name: J. Lawrence Wilson
Title: Chairman and Chief Executive
Officer
GERSHWIN ACQUISITION CORP.
By: /s/ Rajiv L. Gupta
----------------------------------------
Name: Rajiv L. Gupta
Title: Vice Chairman
MORTON INTERNATIONAL, INC.
By: /s/ S. Jay Stewart
----------------------------------------
Name: S. Jay Stewart
Title: Chairman and Chief Executive
Officer
<PAGE> 65
ANNEX A
Offer Conditions
The capitalized terms used in this Annex A have the meanings set
forth in the attached Agreement, except that the term "Merger Agreement" shall
be deemed to refer to the attached Agreement and the term "Commission" shall be
deemed to refer to the SEC.
Notwithstanding any other provision of the Offer and subject to the
terms of the Merger Agreement, Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for any Shares tendered pursuant to the Offer, and
may postpone the acceptance for payment or, subject to the restriction referred
to above, payment for any Shares tendered pursuant to the Offer, and may amend
or, not prior to the Final Expiration Date, terminate the Offer (whether or not
any Shares have theretofore been purchased or paid for) if, prior to the
expiration of the Offer, (i) a number of shares of Company Common Stock which,
together with any Shares owned by Parent or Purchaser, constitutes at least a
majority of the voting power (determined on a fully-diluted basis), on the date
of purchase, of all the securities of the Company entitled to vote generally in
the election of directors or on a merger shall not have been validly tendered
and not properly withdrawn prior to the expiration of the Offer (the "Minimum
Condition") or (ii) at any time on or after the date of the Merger Agreement and
prior to the acceptance for payment of Shares, any of the following conditions
occurs or has occurred and continues to exist:
(a) there shall have been instituted and pending any suit, action,
investigation or proceeding brought by any governmental authority before
any federal or state court or any order or preliminary or permanent
injunction shall have been entered in any action or proceeding before any
federal or state court or governmental, administrative or regulatory
authority or agency, or any other action shall have been taken, or
statute, rule, regulation, legislation, judgment or order enacted,
entered, enforced, promulgated, amended, issued or deemed applicable to
Parent, Purchaser, the Company or any subsidiary or affiliate of Purchaser
or the Company or the Offer or the Merger, by any legislative body, court,
government or governmental, administrative or regulatory authority or
agency which would reasonably be expected to have the effect of: (i)
making illegal, materially delaying or otherwise restraining or
prohibiting or making materially more costly the making of the Offer, the
acceptance for payment of, or payment for, some of or all the Shares by
Purchaser or any of its affiliates, the consummation of the Merger or
materially delaying the Merger; (ii) prohibiting or materially limiting
the ownership or operation by the Company or any of its subsidiaries or
Parent, Purchaser or any of Parent's affiliates of all or any material
portion of the business or assets of the Company and its subsidiaries,
taken as a whole, or Parent and any of its subsidiaries, taken as a whole,
or compelling Parent, Purchaser or any of Parent's subsidiaries to dispose
of or hold separate all or any material portion of the business or assets
of the Company and any of its subsidiaries, taken as a whole, or Parent
and its subsidiaries, taken as a whole, as a result of the transactions
contemplated by the Offer or the Merger Agreement; (iii) imposing or
<PAGE> 66
confirming material limitations on the ability of Parent, Purchaser or any
of Parent's affiliates effectively to acquire or hold or to exercise full
rights of ownership of Shares, including but not limited to the right to
vote any Shares acquired or owned by Parent or Purchaser or any of its
affiliates on all matters properly presented to the shareholders of the
Company, including but not limited to the adoption and approval of the
Merger Agreement and the Merger or the right to vote any shares of capital
stock of any subsidiary directly or indirectly owned by the Company; or
(iv) requiring divestiture by Parent or Purchaser or any of their
affiliates of any Shares, except, in the case of clauses (i) through (iv),
where such events are consistent with or result from Parent's and the
Company's obligations under Section 6.9;
(b) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to Material Adverse
Effect shall not be true and correct, or any such representations and
warranties that are not so qualified shall not be true and correct in any
material respect, in each case as if such representations and warranties
were made at the time of such determination (other than to the extent such
representations and warranties are made as of a specified date, in which
case, such representations and warranties shall not be so true and correct
as of such date);
(c) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
(d) the Merger Agreement shall have been terminated in accordance
with its terms or the Offer shall have been amended or terminated with the
consent of the Company; or
(e) (i) any waiting periods under the HSR Act shall have expired or
been terminated and the EU Approval shall have been received, in each case
to the extent applicable to the purchase of Shares pursuant to the Offer;
and (ii) any applicable waiting periods applicable to the purchase of
Shares pursuant to the Offer under any laws or regulations of any foreign
jurisdiction in which either the Company or Parent (directly or through
subsidiaries, in each case) has material assets or conducts material
operations, shall not have expired or been terminated, or any regulatory
approval applicable to the purchase of Shares pursuant to the Offer shall
not have been obtained, other than such failures to obtain, expire,
terminate or receive as would not have a Material Adverse Effect on Parent
or the Company.
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances (including any
action or inaction by Purchaser or any of its affiliates but subject to the
terms of the Merger Agreement) giving rise to any such condition, makes it
inadvisable to proceed with the Offer or with such acceptance for payment of or
payment for Shares or to proceed with the Merger.
The foregoing conditions are for the benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
condition or may be waived by
<PAGE> 67
Purchaser in whole or in part at any time and from time to time in its sole
discretion (subject to the terms of the Merger Agreement). The failure by
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
<PAGE> 68
EXHIBIT 2.4
RESTATED ARTICLES OF INCORPORATION
OF
MORTON INTERNATIONAL, INC.
(originally incorporated as Gershwin Acquisition Corp. on January 28, 1999)
ARTICLE I
NAME
The name of the Corporation is Morton International, Inc.
ARTICLE II
PURPOSES AND POWERS
Section 2.1. Purposes of the Corporation. The purpose for which the
Corporation is formed is to engage in the transaction of any or all lawful
business for which corporations may now or hereafter be incorporated under the
Corporation Law.
Section 2.2. Powers of the Corporation. The Corporation shall have
(a) all powers now or hereafter authorized by or vested in corporations pursuant
to the provisions of the Corporation Law, (b) all powers now or hereafter vested
in corporations by common law or any other statute or act, and (c) all powers
authorized by or vested in the Corporation by the provisions of these Articles
of Incorporation or by the provisions of its By-Laws as from time to time in
effect.
ARTICLE III
TERM OF EXISTENCE
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
REGISTERED OFFICE AND AGENT
The street address of the Corporation's registered office is 1 North
Capitol Avenue, Indianapolis, IN 46204 and the name of its registered agent at
such office is CT Corporation System.
<PAGE> 69
2
ARTICLE V
SHARES
Section 5.1. Authorized Class and Number of Shares. The capital
stock of the Corporation shall be of one class and kind, which may be referred
to as common shares. The total number of shares which the Corporation has
authority to issue shall be 1,000 shares. The Corporation's shares shall have a
par or stated value of $1.00 per share.
Section 5.2. Voting Rights of Shares. Except as otherwise provided
by the Corporation Law and subject to such shareholder disclosure and
recognition procedures (which may include voting prohibition sanctions) as the
Corporation may by action of its Board of Directors establish, the Corporation's
shares have unlimited voting rights and each outstanding share shall, when
validly issued by the Corporation, entitle the record holder thereof to one vote
at all shareholders' meetings on all matters submitted to a vote of the
shareholders of the Corporation.
Section 5.3. Other Terms of Shares. The Corporation's shares shall
be equal in every respect insofar as their relationship to the Corporation is
concerned (but such equality of rights shall not imply equality of treatment as
to redemption or other acquisition of shares by the Corporation). The holders of
shares shall be entitled to share ratably in such dividends or other
distributions (other than purchases, redemptions or other acquisitions of shares
by the Corporation), if any, as are declared and paid from time to time on the
shares at the discretion of the Board of Directors. In the event of any
liquidation, dissolution or winding up of the Corporation, either voluntary or
involuntary, the holders of shares shall be entitled to share, ratably according
to the number of shares held by them, in all remaining assets of the Corporation
available for distribution to its shareholders.
When the Corporation receives the consideration specified in a
subscription agreement entered into before incorporation, or for which the Board
of Directors authorized the issuance of shares, as the case may be, the shares
issued therefor shall be fully paid and nonassessable.
The Corporation shall have the power to declare and pay dividends or
other distributions upon the issued and outstanding shares of the Corporation,
subject to the limitation that a dividend or other distribution may not be made
if, after giving it effect, the Corporation would not be able to pay its debts
as they become due in the usual course of business or the Corporation's total
assets would be less than its total liabilities. The Corporation shall have the
power to issue shares as a share dividend or other distribution in respect of
issued and outstanding shares.
The Corporation shall have the power to acquire (by purchase,
redemption or otherwise), hold, own, pledge, sell, transfer, assign, reissue,
cancel or otherwise dispose of the shares of the Corporation in the manner and
to the extent now or hereafter permitted by the laws of the State of Indiana
(but such power shall not imply an obligation on the part of the owner or holder
of any share to sell or otherwise transfer such share to the Corporation),
including the
<PAGE> 70
3
power to purchase, redeem or otherwise acquire the Corporation's own shares,
directly or indirectly, and without pro rata treatment of the owners or holders
thereof, unless, after giving effect thereto, the Corporation would not be able
to pay its debts as they become due in the usual course of business or the
Corporation's total assets would be less than its total liabilities. Shares of
the Corporation purchased, redeemed or otherwise acquired by it shall constitute
authorized but unissued shares, unless the Board of Directors adopts a
resolution providing that such shares constitute authorized and issued but not
outstanding shares.
The Board of Directors of the Corporation may dispose of, issue and
sell shares in accordance with, and in such amounts as may be permitted by, the
laws of the State of Indiana and the provisions of these Articles of
Incorporation and for such consideration, at such price or prices, at such time
or times and upon such terms and conditions (including the privilege of
selectively repurchasing the same) as the Board of Directors of the Corporation
shall determine, without the authorization or approval by any shareholders of
the Corporation. Shares may be disposed of, issued and sold to such persons,
firms or corporations as the Board of Directors may determine, without any
preemptive or other right on the part of the owners or holders of other shares
of the Corporation to acquire such shares by reason of their ownership of such
other shares.
ARTICLE VI
DIRECTORS
Section 6.1. Number. The initial Board of Directors shall be
comprised of three (3) members, which number may be changed by amendment to the
By-Laws.
Section 6.2. Qualifications. Directors need not be shareholders of
the Corporation or residents of this or any other state in the United States.
Section 6.3. Vacancies. Vacancies occurring in the Board of
Directors shall be filled in the manner provided in the By-Laws or, if the
By-Laws do not provide for the filling of vacancies, in the manner provided by
the Corporation Law. The By-Laws may also provide that in certain circumstances
specified therein, vacancies occurring in the Board of Directors may be filled
by vote of the shareholders at a special meeting called for that purpose or at
the next annual meeting of shareholders.
Section 6.4. Liability of Directors. A Director's responsibility to
the Corporation shall be limited to discharging his or her duties as a Director,
including his duties as a member of any committee of the Board of Directors upon
which he or she may serve, in good faith, with the care an ordinarily prudent
person in a like position would exercise under similar circumstances, and in a
manner the Director reasonably believes to be in the best interests of the
Corporation, all based on the facts then known to the Director.
In discharging his or her duties, a Director is entitled to rely on
information, opinions, reports, or statements, including financial statements
and other financial data, if prepared or presented by:
<PAGE> 71
4
(i) One (1) or more officers or employees of the Corporation whom
the Director reasonably believes to be reliable and competent in the
matters presented;
(ii) Legal counsel, public accountants, or other persons as to
matters the Director reasonably believes are within such person's
professional or expert competence; or
(iii) A committee of the Board of which the Director is not a member
if the Director reasonably believes the Committee merits confidence;
but a Director is not acting in good faith if the Director has knowledge
concerning the matter in question that makes reliance otherwise permitted by
this Section 6.4 unwarranted. A Director may, in considering the best interests
of the Corporation, consider the effects of any action on shareholders,
employees, suppliers and customers of the Corporation, and communities in which
offices or other facilities of the Corporation are located, and any other
factors the Director considers pertinent.
A Director shall not be liable for any action taken as a Director,
or any failure to take any action, unless (a) the Director has breached or
failed to perform the duties of the Director's office in compliance with this
Section 6.4, and (b) the breach or failure to perform constitutes willful
misconduct or recklessness.
Section 6.5. Removal of Directors. Any one or more of the members of
the Board of Directors may be removed, with or without cause, only at a meeting
of the shareholders called expressly for that purpose, by the affirmative vote
of the holders of outstanding shares representing at least a majority of all the
votes then entitled to be cast at an election of Directors. No Director may be
removed except as provided in this Section 6.5.
ARTICLE VII
PROVISIONS FOR REGULATION OF BUSINESS
AND CONDUCT OF AFFAIRS OF CORPORATION
Section 7.1. Meetings of Shareholders. Meetings of the shareholders
of the Corporation shall be held at such time and at such place, either within
or without the State of Indiana, as may be stated in or fixed in accordance with
the By-Laws of the Corporation and specified in the respective notices or
waivers of notice of any such meetings.
Section 7.2. Special Meetings of Shareholders. Special meetings of
the shareholders, for any purpose or purposes, unless otherwise prescribed by
the Corporation Law, may be called at any time by the Board of Directors or the
person or persons authorized to do so by the By-Laws and shall be called by the
Board of Directors if the Secretary of the Corporation receives one (1) or more
written, dated and signed demands for a special meeting, describing in
reasonable detail the purpose or purposes for which it is to be held, from the
holders of shares representing at least twenty-five percent (25%) of all the
votes entitled to be cast on any issue
<PAGE> 72
5
proposed to be considered at the proposed special meeting. If the Secretary
receives one (1) or more proper written demands for a special meeting of
shareholders, the Board of Directors may set a record date for determining
shareholders entitled to make such demand.
Section 7.3. Meetings of Directors. Meetings of the Board of
Directors of the Corporation shall be held at such place, either within or
without the State of Indiana, as may be authorized by the ByLaws and specified
in the respective notices or waivers of notice of any such meetings or otherwise
specified by the Board of Directors. Unless the By-Laws provide otherwise (a)
regular meetings of the Board of Directors may be held without notice of the
date, time, place, or purpose of the meeting and (b) the notice for a special
meeting need not describe the purpose or purposes of the special meeting.
Section 7.4. Action Without Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or shareholders,
or of any committee of such Board, may be taken without a meeting, if the action
is taken by all members of the Board or all shareholders entitled to vote on the
action, or by all members of such committee, as the case may be. The action must
be evidenced by one (1) or more written consents describing the action taken,
signed by each Director, or all the shareholders entitled to vote on the action,
or by each member of such committee, as the case may be, and, in the case of
action by the Board of Directors or a committee thereof, included in the minutes
or filed with the corporate records reflecting the action taken or, in the case
of action by the shareholders, delivered to the Corporation for inclusion in the
minutes or filing with the corporate records. Action taken under this Section
7.4 is effective when the last director, shareholder or committee member, as the
case may be, signs the consent, unless the consent specifies a different prior
or subsequent effective date, in which case the action is effective on or as of
the specified date. Such consent shall have the same effect as a unanimous vote
of all members of the Board, or all shareholders, or all members of the
committee, as the case may be, and may be described as such in any document.
Section 7.5. By-Laws. The Board of Directors shall have the
exclusive power to make, alter, amend or repeal, or to waive provisions of, the
By-Laws of the Corporation by the affirmative vote of a majority of the entire
number of Directors at the time, except as expressly provided by the Corporation
Law. Any provisions for the regulation of the business and management of the
affairs of the Corporation not stated in these Articles of Incorporation may be
stated in the By-Laws. The Board of Directors may adopt Emergency By-Laws of the
Corporation and shall have the exclusive power (except as may otherwise be
provided therein) to make, alter, amend or repeal, or to waive provisions of,
the Emergency By-Laws by the affirmative vote of a majority of the entire number
of Directors at such time.
Section 7.6. Interest of Directors.
(a) A conflict of interest transaction is a transaction with the
Corporation in which a Director of the Corporation has a direct or
indirect interest. A conflict of interest transaction is not voidable by
the Corporation solely because of the Director's interest in the
transaction if any one (1) of the following is true:
(1) The material facts of the transaction and the Director's
interest were disclosed or known to the Board of Directors or a
committee
<PAGE> 73
6
of the Board of Directors and the Board of Directors or committee
authorized, approved, or ratified the transaction.
(2) The material facts of the transaction and the Director's
interest were disclosed or known to the shareholders entitled to
vote and they authorized, approved, or ratified the transaction.
(3) The transaction was fair to the Corporation.
(b) For purposes of this Section 7.6, a Director of the Corporation
has an indirect interest in a transaction if:
(1) Another entity in which the Director has a material
financial interest or in which the Director is a general partner is
a party to the transaction; or
(2) Another entity of which the Director is a director,
officer, or trustee is a party to the transaction and the
transaction is, or is required to be, considered by the Board of
Directors of the Corporation.
(c) For purposes of Section 7.6(a)(1) a conflict of interest
transaction is authorized, approved, or ratified if it receives the
affirmative vote of a majority of the Directors on the Board of Directors
(or on the committee) who have no direct or indirect interest in the
transaction, but a transaction may not be authorized, approved, or
ratified under this section by a single Director. If a majority of the
Directors who have no direct or indirect interest in the transaction vote
to authorize, approve, or ratify the transaction, a quorum shall be deemed
present for the purpose of taking action under this Section 7.6. The
presence of, or a vote cast by, a Director with a direct or indirect
interest in the transaction does not affect the validity of any action
taken under Section 7.6(a)(1), if the transaction is otherwise authorized,
approved, or ratified as provided in such subsection.
(d) For purposes of Section 7.6(a)(2), shares owned by or voted
under the control of a Director who has a direct or indirect interest in
the transaction, and shares owned by or voted under the control of an
entity described in Section 7.6(b), may be counted in such a vote of
shareholders to determine whether to authorize, approve or ratify a
conflict of interest transaction.
Section 7.7. Nonliability of Shareholders. Shareholders of the
Corporation are not personally liable for the acts or debts of the Corporation,
nor is private property of shareholders subject to the payment of corporate
debts.
Section 7.8. Indemnification of Officers, Directors and Other
Eligible Persons.
(a) The following provisions apply with respect to liability on the
part of a director, a member of any committee of the Board of Directors,
officer,
<PAGE> 74
7
employee or agent of the Corporation (collectively, "Corporate Persons,"
and individually, a "Corporate Person") for any loss or damage suffered on
account of any action taken or omitted to be taken by a Corporate Person:
(1) No Corporate Person shall be liable for any loss or damage
if, in taking or omitting to take any action causing such loss or
damage, either (i) such Corporate Person acted (x) in good faith,
(y) with the care an ordinarily prudent person in a like position
would have exercised under similar circumstances, and (z) in a
manner such Corporate Person reasonably believed was in the best
interests of the Corporation, or (ii) such Corporate Person's breach
of or failure to act in accordance with the standards of conduct set
forth in clause (a)(1)(i) above (the "Standards of Conduct") did not
constitute willful misconduct or recklessness.
(2) Any Corporate Person shall be fully protected, and shall
be deemed to have complied with the Standards of Conduct, in relying
in good faith, with respect to any information contained therein,
upon (i) corporate records, or (ii) information, opinions, reports
or statements (including financial statements and other financial
data) prepared or presented by (w) one or more other Corporate
Persons whom such Corporate Person reasonably believes to be
competent in the matters presented, (x) legal counsel, public
accountants or other persons as to matters that such Corporate
Person reasonably believes are within such person's professional or
expert competence, (y) a committee of the Board of Directors, of
which such Corporate Person is not a member, if such Corporate
Person reasonably believes such committee of the Board of Directors
merits confidence, or (z) the Board of Directors, if such Corporate
Person is not a Director and reasonably believes that the Board of
Directors merits confidence.
(b) The following provisions apply to the indemnification by the
Corporation of Corporate Persons and matters related thereto:
(1) The Corporation shall indemnify any person who was or is a
party to any threatened, pending or completed action, suit or
proceeding, whether civil or criminal, administrative or
investigative, formal or informal (an "Action"), by reason of the
fact that he is or was a Corporate Person of the Corporation or is
or was serving at the request of the Corporation as a Corporate
Person, partner, trustee or member in another authorized capacity
(collectively, an "Authorized Capacity") of or for another
corporation, unincorporated association, business trust, estate,
partnership, trust, joint venture, individual or other legal entity,
whether or not organized or formed for profit (collectively,
"Another Entity"), against expenses (including attorneys' fees)
("Expenses") and judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him in connection
with such Action, if such person (i) acted in good faith, (ii) acted
in a manner he reasonably believed (x) with respect to actions as a
Corporate Person of the Corporation, to be in the best interests of
the Corporation, or (y) with respect to actions in an Authorized
Capacity of or for Another Entity, was not opposed to the best
interests of the Corporation, and (iii) with respect to
<PAGE> 75
8
any criminal Action, either (x) had reasonable cause to believe his
conduct was lawful, or (y) had no reasonable cause to believe his
conduct was unlawful. The termination of any Action by judgment,
order, settlement, conviction, or upon a plea of nolo contendere of
its equivalent, shall not, of itself, be determinative that the
person did not meet the standards for indemnification set forth in
this Section 7.8(b)(1) (the "Indemnification Standards").
(2) To the extent that a person who is or was a Corporate
Person of the Corporation, or is or was serving at the request of
the Corporation in an Authorized Capacity of or for Another Entity,
has been successful on the merits or otherwise in the defense of any
Action referred to in Section 7.8(b)(1), or in the defense of any
claim, issue or matter in any such Action, the Corporation shall
indemnify him against Expenses actually and reasonably incurred by
him in connection therewith.
(3) Unless ordered by a court, any indemnification of any
person under Section 7.8(b)(1) shall be made by the Corporation only
as authorized in the specific case upon a determination that
indemnification of such person is proper in the circumstances
because he met the Indemnification Standards. Such determination
shall be made (i) by the Board of Directors, by a majority vote of a
quorum consisting of directors who are not at the time parties to
the Action involved ("Parties"); or (ii) if a quorum cannot be
obtained under the preceding clause (i), by a majority vote of a
committee duly designated by the Board of Directors (in which
designation directors who are Parties may participate), consisting
solely of two or more directors who are not at the time Parties; or
(iii) by written opinion of independent legal counsel (x) selected
by the Board of Directors or committee in the manner prescribed in
the preceding clauses (i) or (ii), respectively, or (y) if a quorum
cannot be obtained and a committee cannot be designated under the
preceding clauses (i) and (ii), respectively, selected by a majority
of the full Board of Directors, in which selection directors who are
Parties may participate; or (iv) by the shareholders who are not at
the time Parties, voting together as a single class.
(4) Expenses reasonably incurred in defending an Action by any
person who may be entitled to indemnification under Section
7.8(b)(1) may be paid by the Corporation in advance of the final
disposition of such Action if (i) such person furnishes the
Corporation with (x) a written affirmation of his good faith belief
that he has met, and (y) a written undertaking, executed personally
or on his behalf, to repay the advance (an "Undertaking") if it is
ultimately determined that he did not meet the Indemnification
Standards; and (ii) a determination is made, under the procedure set
forth in Section 7.8(b)(3), that the facts then known to those
making the determination would not preclude indemnification under
Section 7.8(b)(1) above. An Undertaking must be an unlimited general
obligation of the person making it, but need not be secured and may
be accepted by the Corporation without reference to such person's
financial ability to make repayment.
<PAGE> 76
9
(5) The indemnification provided in these Articles (i) shall
not be deemed exclusive of any other rights to which a person
seeking indemnification may be entitled under (v) any law, (w) the
By-Laws, (x) any resolution of the Board of Directors or of the
shareholders, (y) any other authorization, whenever adopted, after
notice, by a majority vote of all Voting Stock, or (z) the articles
of incorporation, code of by-laws or other governing documents, or
any resolution of or other authorization by the directors,
shareholders, partners, trustees, members, owners or governing body,
of Another Entity; (ii) shall inure to the benefit of the heirs,
executors and administrators of such person; and (iii) shall
continue as to any such person who has ceased to be a Corporate
Person of the Corporation or to be serving in an Authorized Capacity
for Another Entity.
(6) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a Corporate Person
of the Corporation, or is or was serving at the request of the
Corporation in an Authorized Capacity of or for Another Entity,
against any liability asserted against and incurred by him in any
such capacity, or arising out of his status as such, whether or not
the Corporation would have the power to indemnify him against such
liability under the provisions of this Section 7.8(b).
(7) For the purposes of this Section 7.8(b), references to
"the Corporation" include any constituent corporation absorbed in a
consolidation or merger (a "Constituent") as well as the resulting
or surviving corporation (the "Survivor"), such that any person who
is or was a Corporate Person of such a Constituent, or is or was
serving at the request of such Constituent in an Authorized Capacity
of or for Another Entity, shall stand in the same position under the
provisions of this Section 7.8(b) with respect to the Survivor as he
would if he had served the Survivor, or at its request, in the same
capacity.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. Amendment or Repeal. Except as otherwise expressly
provided for in these Articles of Incorporation, the Corporation shall be
deemed, for all purposes, to have reserved the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation to the extent
and in the manner now or hereafter permitted or prescribed by statute, and all
rights herein conferred upon shareholders are granted subject to such
reservation.
Section 8.2. Headings. The headings of the Articles and Sections of
these Articles of Incorporation have been inserted for convenience of reference
only and do not in any way define, limit, construe or describe the scope or
intent of any Article or Section hereof.
<PAGE> 77
EXHIBIT 6.11
Form of Company Affiliate Letter
Gentlemen:
The undersigned, a holder of shares of Common Stock, par value $1.00
per share ("Company Stock"), of Target Inc., an Indiana corporation (the
"Company"), will be entitled to receive in connection with the merger (the
"Merger") of the Company with Parent Acquisition Company, an Indiana
corporation, securities (the "Parent Securities") of Parent Company ("Parent")
into which the shares of Company Common Stock owned by the undersigned are
converted at the effective time of the Merger. The undersigned acknowledges that
the undersigned may be deemed an "affiliate" of the Company within the meaning
of Rule 145 ("Rule 145") promulgated under the Securities Act of 1933 (the
"Act"), although nothing contained herein should be construed as an admission of
such fact.
If in fact the undersigned were an affiliate under the Act, the
undersigned's ability to sell, assign or transfer the Parent Securities received
by the undersigned in exchange for any shares of Company Stock pursuant to the
Merger may be restricted unless such transaction is registered under the Act or
an exemption from such registration is available. The undersigned understands
that such exemptions are limited and the undersigned has obtained advice of
counsel as to the nature and conditions of such exemptions, including
information with respect to the applicability to the sale of such securities of
Rules 144 and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with the Company
that the undersigned will not sell, assign or transfer any of the Parent
Securities received by the undersigned in exchange for any shares of Company
Stock pursuant to the Merger except (i) pursuant to an effective registration
statement under the Act, (ii) in conformity with the volume and other
limitations of Rule 145 or (iii) in a transaction which, in the opinion of
counsel reasonably satisfactory to Parent or as described in a "no-action" or
interpretive letter from the Staff of the Securities and Exchange Commission
(the "SEC"), is not required to be registered under the Act.
In the event of a sale or other disposition by the undersigned of
Parent Securities pursuant to Rule 145, the undersigned will supply Parent with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex I hereto. The undersigned understands that Parent may instruct its
transfer agent to withhold the transfer of any Parent Securities disposed of by
the undersigned, but that upon receipt of such evidence of compliance the
transfer agent shall effectuate the transfer of the Parent Securities sold as
indicated in the letter.
The undersigned acknowledges and agrees that the following legend
will be placed on certificates representing Parent Securities received by the
undersigned in the Merger:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN
A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
OF
<PAGE> 78
2
1933 APPLIES AND MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY IN
COMPLIANCE WITH THE REQUIREMENTS OF RULE 145 OR PURSUANT TO A
REGISTRATION STATEMENT UNDER SAID ACT OR AN EXEMPTION FROM SUCH
REGISTRATION."
The undersigned also acknowledged and agrees that unless a sale or
transfer of the Parent Securities received by the undersigned in connection with
the Merger is made in conformity with the provisions of Rule 145 or pursuant to
a registration statement, Parent reserves the right to put the following legend
(or other appropriate legend) on the certificates issued to any transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
It is understood and agreed that such legends will be removed by delivery of
substitute certificates upon receipt of an opinion in form and substance
reasonably satisfactory to Parent from independent counsel reasonably
satisfactory to Parent or a "no-action" or interpretive letter from the Staff of
the SEC to the effect that such legends are not required for purposes of the
Act.
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Parent
Securities and (ii) the receipt by Parent of this letter is an inducement and a
condition to Parent's obligations to consummate the Merger.
Very truly yours,
Dated:
<PAGE> 79
ANNEX I
TO EXHIBIT 6.11
[Name] [Date]
On __________________ the undersigned sold the securities
("Securities") of Parent Company (the "Company") described below in the space
provided for that purpose (the "Securities"). The Securities were received by
the undersigned in connection with the merger of Parent Acquisition Company with
Target Inc.
Based upon the most recent report or statement filed by the Company
with the Securities and Exchange Commission, the Securities sold by the
undersigned were within the prescribed limitations set forth in paragraph (e) of
Rule 144 promulgated under the Securities Act of 1933, as amended (the "Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Act or in
transactions directly with a "market maker" as that term is defined in Section
3(a)(38) of the Securities Exchange Act of 1934, as amended. The undersigned
further represents that the undersigned has not solicited or arranged for the
solicitation of orders to buy the Securities, and that the undersigned has not
made any payment in connection with the offer or sale of the Securities to any
person other than to the broker who executed the order in respect of such sale.
Very truly yours,
[Space to be provided for description of securities]
<PAGE> 1
CONFIDENTIALITY AGREEMENT
In connection with considering a possible transaction (a "Transaction")
between our two companies (each party being hereinafter referred to,
collectively with its respective subsidiaries, affiliates and divisions, as a
"Company"), each Company (in its capacity as a provider of information hereunder
being referred to as a "Provider"), may make available to the other Company (in
its capacity as a recipient of information hereunder being referred to as a
"Recipient") from time to time certain information concerning its business,
financial condition, operations, assets and liabilities. As a condition to such
information being provided to each Recipient and its Recipient Representatives
(as hereinafter defined), each Recipient agrees to treat any information
concerning the Provider (whether prepared by the Provider, such Provider's
Representatives (as hereinafter defined), or otherwise and irrespective of the
form of communication) which is furnished hereunder to the Recipient or to such
Recipient's Representatives now or in the future by or on behalf of the Provider
(collectively referred to in this agreement as the "Confidential Information")
in accordance with the provisions of this agreement, and to take or abstain from
taking certain other actions hereinafter set forth. As used in this agreement, a
"Recipient's Representatives" or a "Provider's Representatives" shall include
the directors, officers, employees, agents, partners or advisors of such
Recipient or Provider (including, without limitation, attorneys, accountants,
consultants, bankers and financial advisors).
1. CONFIDENTIAL INFORMATION. The term "Confidential Information" also
shall be deemed to include all notes, analyses, compilations, studies,
interpretations or other documents prepared by either Recipient or such
Recipient's Representatives which contain, reflect or are based upon, in whole
or in part, the information furnished to such Recipient or such Recipient's
Representatives pursuant hereto. The term "Confidential Information" does not
include information which (i) is or becomes generally available to the public
other than as a result of a breach of this agreement by a Recipient or such
Recipient's Representatives, (ii) was within the Recipient's or such Recipient's
Representative's possession prior to its being furnished to the Recipient or
such Recipient's Representatives by or on behalf of the Provider; provided that
the source of such information was not known by the Recipient to be bound by a
confidentiality agreement with, or other contractual, legal or fiduciary
obligation of confidentiality to, the Provider or any other party in relation to
that information, or (iii) is or becomes available to the Recipient or such
Recipient's Representatives on a non-confidential basis from a source other than
the Provider or any of its Representatives, provided that such source is not
known by the Recipient to be bound by a confidentiality agreement with, or other
contractual, legal or fiduciary obligation of confidentiality to, the Provider
or any other party with respect to such information.
2. USE OF CONFIDENTIAL INFORMATION. Each Recipient agrees that such
Recipient and such Recipient's Representatives shall use the Confidential
Information solely for the purpose of evaluating a possible Transaction between
the Companies; that the Confidential Information will be kept confidential; and
that the Recipient will not disclose any Confidential Information in any manner
whatsoever; provided that any of such Confidential Information may be disclosed
to Recipient's Representatives to the extent of their need to know such
information for the sole purpose of assisting the Recipient in the evaluation of
a possible Transaction between the Companies and on the condition that such
Recipient's Representatives are informed by the Recipient of the confidential
nature of such information and that by receiving such information they are
agreeing to be bound by the confidentiality obligations in this agreement. In
any event, each Recipient agrees to be responsible for any breach of this letter
agreement by any of its Recipient's Representatives.
3. NON-DISCLOSURE OF DISCUSSIONS. In addition, each Recipient agrees
that, without the prior written consent of the Provider, such Recipient and such
Recipient's Representatives will not make any public announcement or public
statement concerning, or disclose to any other person, the fact that any
Confidential Information has been made available hereunder, that discussions or
negotiations are taking place concerning a possible Transaction involving the
Companies or any of the terms, conditions or other facts with respect thereto
(including the status hereof); provided that such Recipient may make such public
announcement, public statement or disclosure if in the opinion of such
Recipient's outside counsel or General Counsel, such public announcement, public
statement or disclosure is necessary to avoid committing a violation of law or
of any rule or regulation of any securities association, stock exchange or
national securities quotation system on which such Recipient's securities are
listed or trade. In such event, the Recipient shall use its best efforts to give
advance notice to the Provider and to consult with the Provider on timing and
content of any such public announcement or public statement or disclosure.
4. REQUIRED DISCLOSURE. In the event that either Recipient or any of such
Recipient's Representatives are requested or required (by oral questions,
interrogatories, requests for information or documents in legal proceedings,
<PAGE> 2
subpoena, civil investigative demand or other similar process) to disclose any
Confidential Information or any of the facts disclosure of which is prohibited
under paragraph (3) of this agreement, such Recipient shall provide the Provider
with prompt written notice of any such request or requirement so that the
Provider may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this agreement. If, in the absence of a
protective order or other remedy or the receipt of a waiver, the Recipient or
any of such Recipient's Representatives are nonetheless, in the opinion of the
Recipient's or (in the case of disclosure requested or required of a Recipient's
Representative) such Recipient's Representative's outside counsel or General
Counsel, legally compelled to disclose Evaluation Material or else stand liable
for contempt or suffer other censure or penalty, such Recipient or such
Recipient's Representatives may, without liability hereunder disclose only that
portion of the Confidential Information which such counsel advises is legally
required to be disclosed; provided that such Recipient shall exercise reasonable
efforts to preserve the confidentiality of the Confidential Information,
including, without limitation, by cooperating with the Provider to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded the Confidential Information.
5. TERMINATION OF DISCUSSIONS. If either Company decides that it does not
wish to proceed with discussions or negotiations relating to a Transaction with
the other, it will promptly notify the other of that decision. In that case, or
at any time upon the request of either party for any reason, each Company will
promptly deliver to the other all Confidential Information (and all copies
thereof) furnished to such Company in its capacity as a Recipient or such
Recipient's Representatives by or on behalf of the other Company in its capacity
as Provider pursuant hereto. In the event of such a decision, all other
Evaluation Material prepared by either Company in its capacity as a Recipient or
such Recipient's Representatives shall, at the Recipient's option, be destroyed
or returned and no copy thereof shall be retained and the Recipient shall
provide to the other Company a certificate of compliance with this sentence.
Notwithstanding the return or destruction of the Evaluation Material, each
Company in its capacity as a Recipient and such Recipient's Representatives will
continue to be bound by such Recipient's respective obligations of
confidentiality and other obligations hereunder for a period of five (5) years
from the date hereof.
6. STANDSTILL. For a period of three (3) years from the date hereof, each
Company agrees that neither it nor any of its affiliates (as defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) will (nor will it assist, provide or arrange financing to or for others
or encourage others to) directly or indirectly, acting alone or in concert with
others, unless specifically requested in writing in advance by the other
Company's Board of Directors, Chairman or Chief Executive Officer.
A. acquire or agree, offer, seek or propose to acquire, ownership
(including, but not limited to, beneficial ownership as defined in Rule
13d-3 under the Exchange Act) of more than 1% of any class of voting
securities issued by the other Company, or any rights or options to acquire
such ownership (including from a third party);
B. propose a merger, consolidation or similar transaction involving
the other Company;
C. offer, seek or propose to purchase, lease or otherwise acquire all
or a substantial portion of the assets of the other Company;
D. seek or propose to influence or control the management or policies
of the other Company or to obtain representation on the other Company's
Board of Directors, or solicit or participate in the solicitation of any
proxies or consents with respect to the securities of the other Company;
E. enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing;
or
F. seek or request permission to do any of the foregoing or seek any
permission to make any public announcement with respect to any of the
foregoing.
provided that (i) it is understood that the provisions of this paragraph shall
not prohibit the ongoing discussions continuing to be pursued by the management
of the respective Companies in accordance with the provisions of this agreement,
and (ii) if a Company enters into a definitive agreement with a third party
pursuant to which such third party will make a tender or exchange offer for, or
otherwise acquire (by merger, consolidation, purchase or otherwise) 50% or more
of the common stock or other equity interests, assets or earning power of such
other Company, then the other Company shall be permitted to contact privately
the chairman of the board of directors of such Company (or any person
2
<PAGE> 3
designated by such chairman) and submit to such chairman or other person an
offer to acquire Voting Securities or assets of such Company and/or a request to
negotiate with such Company with respect to such offer.
7. NONSOLICITATION. For a period of two (2) years from the date hereof,
each Company agrees that it will not directly or indirectly solicit to employ
any current employee of the other Company; provided, however, that the foregoing
shall not apply to (i) any such employee who has left the employment of the
other Company prior to the commencement of such solicitation, or (ii)
generalized searches for employees by use of advertisements in the media.
8. MISCELLANEOUS. Each Company agrees that unless and until a definitive
agreement between the parties with respect to any transaction has been executed
and delivered, neither Company will be under any legal obligation of any kind
whatsoever with respect to a transaction by virtue of this or any written or
oral expression with respect to such a transaction by any of our respective
Representatives except for the matters specifically agreed to in this agreement.
Each Company further acknowledges that neither Company shall have any obligation
to furnish Confidential Information to the other or to authorize or pursue with
the other any transaction. Each Company acknowledges and agrees that each
reserves the right, in it sole and absolute discretion, to reject any and all
proposals and to terminate discussions and negotiations with the other at any
time subject to the provisions set forth herein. The agreements set forth in
this agreement may be modified or waived only by a separate writing between the
parties hereto.
9. INJUNCTIVE RELIEF. It is further understood and agreed that money
damages would not be a sufficient remedy for any breach of this agreement by
either party or any of its Representatives and that the non-breaching party
shall be entitled to equitable relief, including injunction and specific
performance, as a remedy for any such breach. Such remedies shall not be deemed
to be the exclusive remedies for a breach of this letter agreement but shall be
in addition to all other remedies available at law or equity.
10. NO REPRESENTATION OR WARRANTY. Each Company understands and
acknowledges that neither Company, in its capacity as a Provider, nor such
Provider's Representatives, makes any representation or warranty, express or
implied, as to the accuracy or completeness of the Evaluation Material furnished
by or on behalf of such Provider and shall have no liability to the other
Company in its capacity as a Recipient or to any of such Recipient's
Representatives relating to or resulting from the use of the Evaluation Material
furnished to such Recipient or any errors therein or omissions therefrom. Only
those representations or warranties which are made in a final definitive
agreement regarding any transactions contemplated hereby, when, as and if
executed, and subject to such limitations and restrictions as may be specified
therein, will have any legal effect.
11. COMMONALITY OF INTEREST. To the extent that any Evaluation Material
may include materials subject to the attorney-client privilege, work product
doctrine or any other applicable privilege concerning pending or threatened
legal proceedings or governmental investigations, each Company understands and
agrees that the Companies have a commonality of interest with respect to such
matters and it is the desire, intention and mutual understanding of both
companies that the sharing of such material is not intended to, and shall not,
waive or diminish in any way the confidentiality of such material or its
continued protection under the attorney-client privilege, work product doctrine
or other applicable privilege. All Evaluation Material provided by either
Company that is entitled to protection under the attorney-client privilege, work
product doctrine or other applicable privilege shall remain entitled to such
protection under these privileges, this agreement, and under the joint defense
doctrine.
12. COMPLIANCE WITH SECURITIES LAWS. Each Company, in its capacity as a
Recipient, acknowledges and agrees that such Recipient is aware (and that such
Recipient's Representatives are aware or, upon receipt of any Evaluation
Material, will be advised by such Recipient) of the restrictions imposed by the
Unites States federal securities laws and other applicable foreign and domestic
laws on a person possessing material non-public information about a public
company and that such Recipient and such Recipient's Representatives will comply
with such laws.
13. NO WAIVER. Any forbearance or delay by either party in exercising any
right, power or privilege under the terms of this agreement shall not be
construed as a waiver thereof or of a right thereafter to enforce the same.
3
<PAGE> 4
14. NOTICES; CONSENTS. Any notice or consent called for by this agreement
shall be in writing or by means of an electronic communication method which
produces a written record, and shall be sent or transmitted to the respective
parties at the address shown below:
<TABLE>
<S> <C>
if to Morton: Morton International, Inc.
100 North Riverside Plaza
Chicago, Illinois 60606
Attention: Chief Executive Officer
if to RandH: Rohm and Haas Company
100 Independence Mall West
Philadelphia, Pennsylvania 19106
Attention: Chief Executive Officer
</TABLE>
15. SUCCESSORS AND ASSIGNS. This agreement shall inure to the benefit of
the parties hereto and shall be binding upon their respective successors and
assigns.
16. GOVERNING LAW. This agreement shall be governed by Illinois law,
without reference to its conflict of laws principles.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties have cause this agreement to be executed
and delivered by their duly authorized representatives, this 24th day of
November, 1998.
MORTON INTERNATIONAL, INC.
By: /s/ S. JAY STEWART
----------------------------------------
Name: S. Jay Stewart
Title: Chairman and Chief
Executive Officer
ROHM AND HAAS COMPANY
By: /s/ BRADLEY J. BELL
----------------------------------------
Name: Bradley J. Bell
Title: Vice President and Chief
Financial Officer
5
<PAGE> 1
EMPLOYMENT AGREEMENT
This Employment Agreement by and among Rohm and Haas Company,
a Delaware corporation ("Parent"), Morton International, Inc., an Indiana
corporation (the "Company") and S. Jay Stewart (the "Executive") is dated as of
the 31st day of January, 1999.
WHEREAS, the Company, Parent and Gershwin Acquisition Company,
an Indiana corporation and a wholly owned subsidiary of Parent ("Sub"), have
entered into an Agreement and Plan of Merger dated as of the 31st day of
January, 1999 (the "Merger Agreement"), pursuant to which Sub will merge with
and into the Company (the "Merger"), following which the Company will be a
wholly owned subsidiary of Parent; and
WHEREAS, the Executive and the Company are parties to an
Executive Employment Agreement dated as of April 1, 1994 (the "Current
Employment Agreement"); and
WHEREAS, it is acknowledged by the parties hereto that upon
either the consummation of the Offer (as defined in the Merger Agreement) or the
approval of the Merger by the shareholders of the Company, the Executive will
have "Good Reason" to terminate his employment pursuant to the Current
Employment Agreement; and
WHEREAS, the Company and Parent have determined that it is in
the best interests of their respective shareholders to set forth, and the
Executive has agreed to set forth, their mutual agreement as to the rights and
entitlements of the Executive under the Current Employment Agreement from and
after the Effective Time and to provide for the continuing availability to the
Company and Parent of the Executive's services and expertise, all on the terms
and conditions set forth below;
NOW, THEREFORE, it is hereby agreed as follows:
1. Effect of this Agreement; Continued Employment. (a)
Effective Time. This Agreement shall become effective at the Effective Time (as
defined in the Merger Agreement).
(b) Position and Duties. From and after the date on which this
Agreement becomes effective until the first anniversary thereof (the "Employment
Term"), the Executive shall serve as a member of the Board of Directors of
Parent (the "Board"), and Parent shall employ the Executive, and the Executive
shall serve as a Vice Chairman of the Board, reporting directly to the Chairman
of the Board and Chief Executive Officer of the Company and to the Board. The
Executive's primary duties and responsibilities shall be to work to ensure a
smooth transition and integration of the businesses of Parent and the Company,
with such other duties and responsibilities not inconsistent with his position
as may be assigned to him from time by the Chairman of the Board and Chief
Executive Officer of the Company and the Board.
(c) Full-Time Employment. During the Employment Term, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive shall devote reasonable attention and time during normal
business hours to the business and affairs of
<PAGE> 2
Parent and the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive under this Agreement, use the
Executive's reasonable best efforts to carry out such responsibilities
faithfully and efficiently. It shall not be considered a violation of the
foregoing for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement.
(d) Location. During the Employment Term, the Executive shall
be based at the Company's office in Chicago, Illinois, and shall be required to
be absent therefrom on travel status or otherwise only to the extent reasonably
necessary to discharge his duties hereunder.
2. Compensation. (a) Cash Compensation. During the Employment
Term, the Executive shall receive cash compensation, payable at such intervals
as Parent pays the base salary of its other senior executives, equal to
$1,950,000 on an annual basis (which sum represents the aggregate of (i) his
current annual base salary of $745,000, (ii) his target annual bonus under the
Company's 1999 fiscal year annual incentive plan of $540,000, and (iii) his
target long-term incentive plan award for the award cycle that ends at the end
of the Company's 1999 fiscal year of $665,000).
(b) Other Benefits. During the Employment Term: (i) the
Executive shall be entitled to participate in, and shall receive all benefits
under, savings and retirement plans, practices, policies and programs on the
same basis as other senior executives of Parent; and (ii) the Executive and/or
the Executive's family, as the case may be, shall be eligible for participation
in, and shall receive all benefits under, welfare benefit plans, practices,
policies and programs (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life insurance, group life
insurance, accidental death and travel accident insurance plans and programs) on
the same basis as other senior executives of Parent.
(c) Expenses. During the Employment Term, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses incurred
by him (in accordance with the policies and procedures established for the
senior executive officers of Parent) in performing services hereunder, provided
that the Executive properly accounts therefor in accordance with Parent policy.
(d) Vacations. During the Employment Term, the Executive shall
be entitled to the number of paid vacation days determined by Parent for its
senior executive officers, but not less than five weeks in any calendar year or
portion thereof during which the Executive is employed. The Executive shall also
be entitled to all paid holidays given by the Company to its senior executive
officers.
(e) Perquisites. During the Employment Period, the Executive
shall be entitled to continue to receive all perquisites that he is receiving
from the Company as of the date hereof.
-2-
<PAGE> 3
3. Termination of Employment. (a) Upon any termination of the
Executive's employment for any reason after the Effective Time (whether or not
during the Employment Term), the Executive (or the Executive's family or estate,
as applicable) shall be entitled to the payments and benefits set forth below in
this Section 3. The date of such termination of employment is hereinafter
referred to as the "Date of Termination."
(b) The Company shall pay to the Executive (or the Executive's
estate, as applicable), in a lump sum in cash within 30 days after the Date of
Termination, the product of (i) $2,185,000 (which represents the annualized
amount of cash severance, calculated based upon current compensation, to which
he is entitled under the Current Employment Agreement) times (ii) a fraction,
the numerator of which is the number of days from the Date of Termination
through and including September 30, 2003, and the denominator of which is 365.
(c) From the Date of Termination through and including
September 30, 2003, or such longer period as any plan, program, practice, or
policy may provide, Parent shall continue welfare and fringe benefits and
perquisites to the Executive and/or the Executive's family at least equal in
value to those that would have been provided in accordance with the plans,
programs, practices and policies described in clause (i) of Section 2(b) and in
Section 2(e) if the Executive's employment and the Employment Term had continued
through September 30, 2003. From and after October 1, 2003, the Executive and
his spouse shall be entitled to receive retiree medical benefits ("Retiree
Medical Benefits") for life at least equal in value to those in effect as of the
date hereof for senior executives of the Company who retire with full benefits.
Notwithstanding the foregoing, the Executive may elect for himself and his
family (or his surviving spouse may elect) to cease receiving medical benefits
pursuant to the first sentence of this Section 3(c) and begin receiving medical
benefits pursuant to the second sentence of this Section 3(c) at any time after
the Date of Termination and before September 30, 2003.
(d) Beginning immediately following the Date of Termination,
Parent shall provide the Executive and the Executive's beneficiaries with
supplemental pension benefits ("Contract Pension Benefits") such that the
monthly Contract Pension Benefits, plus the monthly pension benefits received by
them pursuant to all qualified and nonqualified defined benefit pension plans of
Parent and the Company, are not less than the monthly benefits set forth in
Schedule I hereto, computed in accordance with Schedule I. Although the Contract
Pension Benefits will begin immediately following the Date of Termination, they
shall not be subject to any actuarial reduction for early payment.
(e) To the extent not theretofore paid or provided, or
otherwise specified in this Agreement, the Company shall timely pay or provide
to the Executive any other amounts or benefits required to be paid or provided
or which the Executive is eligible to receive under any plan, program, policy or
practice or contract or agreement of Parent, the Company or their respective
affiliates, in accordance with the terms thereof.
(f) The Executive shall not be required to mitigate the amount
of any payment, benefit or perquisite provided for in this Section 3 by seeking
other employment or otherwise, nor shall the amount of any payment, benefit or
perquisite provided for in this Section 3 be
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<PAGE> 4
reduced by any compensation earned by the Executive as the result of employment
by another employer after the Date of Termination, or otherwise.
4. Unauthorized Disclosure; Inventions. (a) The Executive
shall not, without the written consent of the Board or a person authorized
thereby, use for his own purposes or disclose to any person, other than an
employee of Parent or the Company or a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by the Executive of
his duties hereunder, any confidential information obtained by him while in the
employ of Parent or the Company, including without limitation confidential
information with respect to any of Parent's or the Company's products,
improvements, formulas, designs or styles, processes, customers, methods of
distribution or methods of manufacture; provided, however, that confidential
information shall not include any information known generally to the public
(other than as a result of unauthorized disclosure by the Executive).
(b) (i) Any and all inventions made, developed or created by
the Executive (whether at the request or suggestion of Parent or the Company or
otherwise, whether alone or in conjunction with others, and whether during
regular hours of work or otherwise) during the Employment Term, which may be
directly or indirectly useful in, or relate to, the business of or tests being
carried out by Parent or the Company or any of its subsidiaries or affiliates,
will be promptly and fully disclosed by the Executive to an appropriate
executive officer of Parent and shall be Parent's exclusive property as against
the Executive, and the Executive will promptly deliver to an appropriate officer
of Parent all papers, drawings, models, data and other material relating to any
invention made, developed or created by him as aforesaid.
(ii) The Executive will, upon Parent's request and
without any payment therefor, execute any document necessary or advisable in the
opinion of Parent's counsel to direct issuance of patents to the Company with
respect to such inventions as are to be Parent's exclusive property as against
the Executive under this Section 4(b) or to vest in Parent title to such
inventions as against the Executive, the expense of securing any patent,
however, to be borne by Parent.
(c) The foregoing provisions of this Section 4 shall be
subject to and modified by any applicable law providing employee ownership of or
rights in inventions under certain circumstances, and shall be binding upon the
Executive's heirs, successors and legal representatives.
5. Certain Additional Payments. (a) Anything in this Agreement
to the contrary notwithstanding and except as set forth below, in the event it
shall be determined that any payment or distribution by Parent, the Company or
their respective affiliates to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 5) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"),
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<PAGE> 5
then the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 5(c), all
determinations required to be made under this Section 5, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by Ernst & Young LLP (the "Accounting Firm") which shall provide detailed
supporting calculations to Parent, the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by Parent or the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the Executive shall
appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by Parent. Any Gross-Up Payment, as determined pursuant to this
Section 5, shall be paid by Parent to the Executive within five days of the
receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon Parent, the Company and the Executive. As
a result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by Parent or the
Company should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that Parent exhausts its remedies
pursuant to Section 5(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by Parent or the Company to or for the benefit of the Executive.
(c) The Executive shall notify Parent in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
of the Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than ten business days after the Executive is informed in writing
of such claim and shall apprise Parent of the nature of such claim and the date
on which such claim is requested to be paid. The Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on which
it gives such notice to Parent (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If Parent notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) give Parent any information reasonably requested
by Parent relating to such claim,
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<PAGE> 6
(ii) take such action in connection with contesting
such claim as Parent shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by Parent,
(iii) cooperate with Parent in good faith in order
effectively to contest such claim, and
(iv) permit Parent to participate in any proceedings
relating to such claim;
provided, however, that Parent shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 5(c), Parent shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as Parent shall determine;
provided, however, that if Parent directs the Executive to pay such claim and
sue for a refund, Parent shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, Parent's control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and the Executive
shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by Parent pursuant to Section 5(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall promptly pay
to Parent the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by Parent pursuant to Section 5(c), a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and Parent does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
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<PAGE> 7
6. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of Parent shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b)This Agreement shall inure to the benefit of and be binding
upon Parent, the Company and their respective successors and assigns.
(c) Parent and the Company shall each require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of their respective businesses and/or assets to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that Parent or the Company (as applicable) would be required to perform
it if no such succession had taken place. As used in this Agreement, "Parent"
and the "Company" shall mean Parent and the Company, respectively, as
hereinbefore defined and any successor to their respective businesses and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
7. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
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<PAGE> 8
If to the Executive:
S. Jay Stewart
1086 Lake Road
Lake Forest, Illinois 60045
Facsimile: (847) 295-5338
If to Parent:
Rohm and Haas Company
100 Independence Mall West
Philadelphia, Pennsylvania 19106
Attention: Corporate Secretary
Facsimile: (215) 592-3227
with an additional copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: William E. Curbow, Esq.
Facsimile: (212) 455-2502
If to the Company:
Morton International, Inc.
100 North Riverside Plaza
Chicago, Illinois 60606
Attention: Corporate Secretary
Facsimile: (312) 807-2101
with an additional copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Eric S. Robinson, Esq.
Facsimile: (212) 403-2000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision (or
portion thereof) of this Agreement shall not affect the validity or
enforceability of any other provision (or portion thereof) of this Agreement.
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<PAGE> 9
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
(e) From and after the Effective Time, this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof, including without limitation the Current Employment Agreement.
(f) This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and said counterparts shall
constitute but one and the same instrument.
(g) The provisions of Sections 3, 4, 5, 6 and 7 of this
Agreement shall survive the end of the Employment Term, the termination of the
Executive's employment, and the termination of this Agreement for any reason,
except as specified in Section 7(h) below.
(h) This Agreement shall be null and void, ab initio, and of
no further effect if the Merger Agreement is terminated before the Effective
Time.
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<PAGE> 10
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from their respective Boards
of Directors, Parent and the Company have each caused these presents to be
executed in its name on its behalf, all as of the day and year first above
written.
/s/ S. Jay Stewart
----------------------------------------
S. Jay Stewart
MORTON INTERNATIONAL, INC.
By /s/ Christopher K. Julsrud
-------------------------------------
ROHM AND HAAS COMPANY
By /s/ J. Lawrence Wilson
-------------------------------------
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<PAGE> 1
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to the Employment Agreement by and between
Morton International, Inc., an Indiana corporation (the "Company"), and William
E. Johnston (the "Executive") dated as of March 22, 1990 (the "Employment
Agreement") is made by and among the Company, Rohm and Haas Company, a Delaware
corporation ("Parent") and the Executive and is dated as of the 31st day of
January, 1999.
WHEREAS, the Company, Parent and Gershwin Acquisition Corp.,
an Indiana corporation and a wholly owned subsidiary of Parent ("Sub"), have
entered into an Agreement and Plan of Merger dated as of the 31st day of
January, 1999 (the "Merger Agreement"), pursuant to which Sub will merge with
and into the Company (the "Merger"), following which the Company will be a
wholly owned subsidiary of Parent; and
WHEREAS, it is acknowledged by the parties hereto that upon
consummation of the Merger, the Executive will have "Good Reason" to terminate
his employment pursuant to the Employment Agreement; and
WHEREAS, the Company and Parent have determined that it is in
the best interests of their respective shareholders, and the Executive has
agreed, to provide for the continued employment of the Executive following the
Merger and to amend and clarify the Employment Agreement in certain respects as
set forth below;
NOW, THEREFORE, it is hereby agreed as follows:
1. In General. Capitalized terms used and not defined in this Amendment
shall have the meanings assigned to them in the Employment Agreement. It is
acknowledged and agreed that the Employment Period will have begun before the
Effective Time (as defined in the Merger Agreement) as a result of prior events
contemplated by the Merger Agreement.
2. New Position. As of the Effective Time, clause (A) of Section
4(a)((i) of the Employment Agreement shall be amended to read in its entirety as
follows:
the Executive shall serve as a member of the Executive Council
of Parent, with the title of Senior Vice President, and as
principal operating officer of Parent and the Company in
Chicago, Illinois, with such duties and responsibilities
commensurate with such position as may be assigned to him from
time to time by a Vice Chairman or the Chief Operating Officer
of Parent (it being understood that he will not have reporting
obligations to more than one of such persons at any one time),
and
3. Severance. At the Effective Time, the Executive shall be paid in a
lump sum in cash the amount described in Section 6(d)(i) of the Employment
Agreement, calculated if he had exercised his right to terminate his employment
for Good Reason at the Effective Time. In consideration of the foregoing
payment, the Executive shall cease to be entitled to receive the
<PAGE> 2
payment described in Section 6(d)(i) of the Employment Agreement upon the
subsequent termination of his employment for any reason. However, in the event
of the termination of the Executive's employment during the period of one year
following the Effective Time by Parent other than for Cause or Disability, or by
the Executive for Good Reason, the Executive shall be entitled to receive a lump
sum in cash within 30 days after the Date of Termination equal to the aggregate
of the following amounts: (a) the product of (i) the Multiplier (as defined
below) and (ii) the sum of (A) the Annual Base Salary, (B) the Highest Annual
Bonus and (C) the Greater Long-Term Bonus; and (b) all Accrued Obligations
(except to the extent previously paid); and (c) a lump-sum retirement benefit
equal to the difference between (I) the actuarial equivalent of the benefits
under the Retirement Plans which the Executive would receive if the Executive's
employment continued at the compensation level provided for in Sections 4(b)(i)
and 4(b)(ii) of the Employment Agreement for a period equal to one year times
the Multiplier, assuming for this purpose that all accrued benefits are fully
vested, and (II) the actuarial equivalent of the Executive's actual benefit
(paid or payable), if any, under the Retirement Plans; provided, that for
purposes of this sentence the term "Good Reason" shall only relate to events
occurring after the Effective Time and shall mean "Good Reason" as defined in
Section 5(c) of the Employment Agreement except that the reference in clause (i)
to Section 4(a) of the Employment Agreement shall be deemed to refer to said
Section 4(a) as amended by Section 2 of this Amendment, and the last two
sentences of said Section 5(c) shall be disregarded. The Executive shall also
remain entitled to receive the other payments and benefits provided for in the
Employment Agreement (other than Section 6(d)(i) thereof) in the event of a
termination of his employment during the Employment Period (it being
acknowledged that any such termination by the Executive will be for Good Reason
for such purposes). For purposes of this Section 3, the "Multiplier" shall mean
a fraction, the numerator of which is the number of days from the Date of
Termination through the first anniversary of the Effective Time, and the
denominator of which is 365.
4. Assumption by Parent. As of the Effective Time, Parent shall be
considered to have assumed the Employment Agreement and expressly agreed to
perform the Employment Agreement in the same manner and to the same extent as
the Company, as required by Section 11(c) of the Employment Agreement. To
effectuate the foregoing, as of the Effective Time: (a) all references to "the
Company" in Sections 3, 5, 9(b), 9(c) and 9(d) of the Employment Agreement shall
be deemed to refer to Parent instead of the Company; (b) all references to "the
Company" in Sections 6, 8, 9(a), 10, and 12(d) of the Employment Agreement shall
be deemed to refer to Parent as well as the Company; (c) all references to "the
Board" in Section 5(b) of the Employment Agreement shall be deemed to refer to
the Board of Directors of Parent; (d) the reference in Section 10(a) to "the
Chief Executive Officer" shall be deemed to refer to the Chief Executive Officer
of Parent; and (e) notices to Parent under the Employment Agreement shall be
given in accordance with Section 12(b) to Parent at the address provided for in
the Merger Agreement. It is acknowledged that from and after the Effective Time,
Parent shall be considered an "affiliated company" of the Company as that term
is used in the Employment Agreement.
5. Supplemental Executive Retirement Program. It is acknowledged and
agreed that in addition to his rights and entitlements pursuant to the
Employment Agreement, as amended hereby, the Executive is entitled to certain
supplemental retirement benefits (the "SERP
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<PAGE> 3
Benefits") from the Company pursuant to the Supplemental Executive Retirement
Program (the "SERP") set forth in the letter agreement dated February 16, 1982,
between P. Michael Phelps, on behalf of MortonNorwich, and the Executive, the
letter agreement dated April 26, 1984 between P. Michael Phelps, on behalf of
Morton Thiokol, Inc., and the Executive (the "1984 Letter") (which incorporates
by reference certain definitions set forth in the Executive Employment Contract
dated November 20, 1981 between Morton-Norwich Products, Inc. and the Executive
(the "Prior Employment Agreement")), and the memorandum entitled "SERP
Clarifications" dated March 7, 1989 from Morton Thiokol, Inc. to "Participants
in The Supplemental Executive Retirement Program ("SERP")." Without limiting any
of the Executive's rights under the SERP, it is acknowledged and agreed that
notwithstanding any provision of the Employment Agreement or the SERP, (i) the
Executive is not entitled to receive any benefits pursuant to the Prior
Employment Agreement (which remains in effect only to the extent that certain
provisions thereof are incorporated by reference to the 1984 Letter), (ii) the
Retirement Plans referred to in Section 6(d)(i)(C) of the Employment Agreement
shall not be considered to include the SERP, (iii) the consummation of the
transactions contemplated by the Merger Agreement will constitute a "change of
control" for purposes of the SERP, and (iv) upon a termination of the
Executive's employment following the Merger by the Executive for "Good Reason"
or by Parent without "Cause," or as a result of the Executive's Disability, in
each case as defined in the Employment Agreement, or upon the Executive's death
at any time after the beginning of the Employment Period (as defined in the
Employment Agreement) (whether or not during employment), the Executive (or in
the event of his death at a time when he is married, his surviving spouse) shall
have a vested, nonterminable right to the SERP Benefits provided for in Section
2 of the 1984 Letter.
6. Miscellaneous. (a) Except as specifically set forth in this
Amendment, the Employment Agreement and the SERP are hereby ratified and
confirmed without amendment.
(b) This Amendment may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.
(c) This Amendment shall be null and void, ab initio, and of no further
effect if the Merger Agreement is terminated before the consummation of the
Offer (as defined in the Merger Agreement).
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<PAGE> 4
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from their respective Boards
of Directors, Parent and the Company have each caused these presents to be
executed in its name on its behalf, all as of the day and year first above
written.
/s/ William E. Johnston
----------------------------------------
William E. Johnston
MORTON INTERNATIONAL, INC.
By /s/ Christopher K. Julsrud
-------------------------------------
ROHM AND HAAS COMPANY
By /s/ J. Lawrence Wilson
-------------------------------------
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