SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
| | Preliminary Proxy Statement |_| Confidential, for
Use of the Commission
|X| Definitive Proxy Statement Only (as permitted by
|_| Definitive Additional Materials Rule 14a-6(e)(2))
|_| Soliciting Material Pursuant
to Rule 14a-11(c) or Rule 14a-12
DEXTER CORPORATION
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(Name of Registrant as Specified In Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|_| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(a) Title of each class of securities to which transaction applies:
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(b) Aggregate number of securities to which transaction applies:
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(c) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(d) Proposed maximum aggregate value of transaction:
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(e) Total fee paid:
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|X| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
(1) Amount Previously Paid:_________________________________________
(2) Form, Schedule or Registration Statement No.:___________________
(3) Filing Party: __________________________________________________
(4) Date Filed: ____________________________________________________
As filed with the Commission on July 28, 2000
[DEXTER CORPORATION LOGO]
YOUR VOTE ON OUR PROPOSED NONWOVENS ASSET SALE IS VERY IMPORTANT
Dear Shareholder:
We are pleased to invite you to attend a special meeting of
shareholders of Dexter Corporation to be held at Dexter Corporation, Two Elm
Street, Windsor Locks, Connecticut, on August 30, 2000, at 12:00 noon, local
time.
At the meeting you will be asked to approve the sale of certain assets
used in Dexter's nonwovens business in accordance with the Asset Purchase
Agreement between Dexter and Ahlstrom Paper Group Oy, dated as of June 20,
2000. Ahlstrom has agreed to buy Dexter's nonwovens business segment for
$275,000,000 in cash. Although Dexter does not believe shareholder approval
is required, specifically at the request of Ahlstrom and for the avoidance
of any doubt and uncertainty on Ahlstrom's part concerning threatened
claims by International Specialty Products Inc., the transaction is subject
to the approval of Dexter's shareholders.
YOUR BOARD OF DIRECTORS HAS APPROVED THE PROPOSED NONWOVENS ASSET SALE
AND RECOMMENDS THAT YOU VOTE FOR THE PROPOSED NONWOVENS ASSET SALE AS
DESCRIBED IN THE ATTACHED MATERIALS.
Your vote is important, regardless of the number of shares you own.
PLEASE VOTE AS SOON AS POSSIBLE TO MAKE SURE THAT YOUR SHARES ARE
REPRESENTED AT THE SPECIAL MEETING. TO VOTE YOUR SHARES, PLEASE COMPLETE
AND RETURN THE ENCLOSED PROXY CARD. YOU ALSO MAY CAST YOUR VOTE IN PERSON
AT THE SPECIAL MEETING. If you have any questions or need assistance in
voting your shares, please call our proxy solicitor, MacKenzie Partners,
Inc. toll free at (800) 322-2885.
Sincerely,
K. Grahame Walker
Chairman and Chief Executive Officer
This proxy statement is dated July 28, 2000, and is first being mailed
to shareholders on or about July 28, 2000.
[DEXTER LOGO]
Dexter Corporation - One Elm Street - Windsor Locks, CT 06096-2334 -
Tel: 860.292.7675
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
AUGUST 30, 2000
A special meeting of shareholders of Dexter Corporation will be held at
Dexter Corporation, Two Elm Street, Windsor Locks, Connecticut, on August
30, 2000, at 12:00 noon, local time, for the following purposes:
1. To approve the sale of certain assets used in Dexter's nonwovens
business in accordance with the Asset Purchase Agreement between Dexter
and Ahlstrom Paper Group Oy, dated as of June 20, 2000, insofar as
Connecticut Business Corporation Act section 33-831 applies or may be
deemed to apply to the sale of the assets of the nonwovens business,
individually or taken together with other announced or contemplated
transactions by Dexter.
2. To transact such other business as may properly come before the special
meeting or any adjournment or postponement of the meeting.
Only shareholders of record at the close of business on July 24,
2000 will be entitled to vote at the special meeting. To vote your shares,
please complete and return the enclosed proxy card. You also may cast your
vote in person at the special meeting. Please vote promptly whether or not
you expect to attend the special meeting.
By order of the Board of Directors,
Bruce H. Beatt
Secretary
PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON
THE ENCLOSED PROXY CARD.
TABLE OF CONTENTS
Page
----
QUESTIONS AND ANSWERS ABOUT THE PROPOSED NONWOVENS ASSET SALE................1
SUMMARY TERM SHEET...........................................................3
The Companies............................................................3
Dexter Corporation.......................................................3
Ahlstrom Paper Group Oy..................................................3
Vote Required to Approve the Asset Sale..................................3
Our Recommendation to Shareholders.......................................3
Opinion of Financial Advisor.............................................3
Principal Conditions to the Nonwovens Asset Sale.........................4
Termination of the Nonwovens Asset Purchase Agreement....................4
Termination Fee; Expense Reimbursement...................................4
Regulatory Matters.......................................................5
Certain United States Federal Income Tax Consequences of the
Nonwovens Asset Sale...................................................5
Appraisal Rights.........................................................5
THE DEXTER SPECIAL MEETING...................................................6
When and Where the Special Meeting Will be Held..........................6
What Will be Voted Upon..................................................6
Voting Securities; Quorum................................................6
Vote Required for Approval...............................................6
Voting Your Shares and Changing Your Vote................................7
How Proxies Are Counted..................................................7
Cost of Solicitation.....................................................7
THE NONWOVENS ASSET SALE.....................................................8
The Companies............................................................8
Background of the Nonwovens Asset Sale...................................8
Opinion of Dexter's Financial Advisor...................................11
Accounting Treatment....................................................15
Certain United States Federal Income Tax Consequences of
the Nonwovens Asset Sale..............................................15
Antitrust...............................................................16
Other Regulatory Matters................................................17
Appraisal Rights........................................................17
THE NONWOVENS ASSET PURCHASE AGREEMENT......................................20
Form of Asset Sale......................................................20
Consideration for the Assets............................................20
Post Closing Adjustment.................................................20
Representations and Warranties..........................................21
Covenants in the Nonwovens Asset Purchase Agreement.....................22
Benefit Matters.........................................................25
Closing Conditions......................................................26
Tax Matters.............................................................27
Termination.............................................................27
Termination Fee; Expense Reimbursement..................................28
Indemnification.........................................................28
Amendment...............................................................28
Waiver of Compliance....................................................28
Assignment..............................................................29
BENEFICIAL OWNERSHIP OF STOCK...............................................30
OTHER MATTERS...............................................................32
PROPOSALS OF SHAREHOLDERS...................................................32
ANNEX A - ASSET PURCHASE AGREEMENT, DATED AS OF
June 20, 2000, BETWEEN DEXTER CORPORATION
AND AHLSTROM PAPER GROUP OY......................................A-1
ANNEX B - OPINION OF LEHMAN BROTHERS, INC..................................B-1
ANNEX C - CONNECTICUT BUSINESS CORPORATION ACT, SECTIONS 33-855 THROUGH
33-872 - DISSENTER'S RIGHTS......................................C-1
QUESTIONS AND ANSWERS ABOUT THE PROPOSED NONWOVENS ASSET SALE
Q: WHAT PROPOSAL WILL I BE VOTING ON AT THE
SPECIAL MEETING?
A: You will be asked to consider and vote upon a proposal to approve the
sale of certain assets used in Dexter's nonwovens business by Dexter
pursuant to the Asset Purchase Agreement, dated June 20, 2000 between
Dexter and Ahlstrom Paper Group Oy. The nonwovens asset purchase
agreement is attached to this proxy statement as Annex A.
Q: CAN I STILL SELL MY SHARES?
A: Neither the nonwovens asset sale nor the nonwovens asset purchase
agreement will affect your right to sell or otherwise transfer your
shares of Dexter common stock.
Q: WHAT VOTE IS REQUIRED TO APPROVE THE
NONWOVENS ASSET SALE?
A: Under section 33-831 of the Connecticut Business Corporation Act, the
sale by Dexter of "all, or substantially all" of its assets would
require approval by the affirmative vote of the holders of at least
two-thirds of the voting power of all outstanding shares of Dexter
common stock on the record date. Dexter does not believe that the
sale of the nonwovens assets to Ahlstrom, either alone or taken
together with other announced transactions, requires such shareholder
approval. Nonetheless, for the avoidance of doubt in light of the
uncertainties created by the litigation commenced by International
Specialty Products Inc. against Dexter, Ahlstrom has required, as a
condition to its obligation to consummate the transactions
contemplated by the nonwovens asset purchase agreement, shareholder
approval by the affirmative vote of the holders of at least two-
thirds of the voting power of all outstanding shares of Dexter common
stock on the record date. Accordingly, for this reason only, Dexter
is submitting the proposed transaction to the shareholder vote which
would be required if such provision of Connecticut law were deemed
applicable.
Q: WHO IS ENTITLED TO VOTE ON THE NONWOVENS ASSET SALE?
A: Only holders of record of Dexter common stock as of the close of
business on July 24, 2000 will be entitled to notice of and to
vote at the special meeting to approve the nonwovens asset sale.
Beneficial holders as of that date who are not holders of record will
only be allowed to vote in person at the special meeting if they
present a letter signed by the record holder indicating the number of
shares such beneficial holder is entitled to vote.
Q: WHEN AND WHERE IS THE SPECIAL MEETING?
A: The special meeting will be held on August 30, 2000, at 12:00 noon,
local time, at Dexter Corporation, Two Elm Street, Windsor Locks,
Connecticut.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on
how to vote. You should follow the directions provided by your broker
regarding how to instruct your broker to vote your shares.
Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. Just send in a written revocation or a later dated, signed proxy
card before the special meeting or simply attend the special meeting
and vote in person.
Q: WHAT DO I NEED TO DO NOW?
A: PLEASE VOTE YOUR SHARES AS SOON AS POSSIBLE, SO THAT YOUR SHARES MAY
BE REPRESENTED AT THE SPECIAL MEETING. You may vote by signing your
proxy card and mailing it in the enclosed return envelope, or you may
vote in person at the special meeting. Because a vote of two-thirds
of the outstanding Dexter shares is required to approve the asset
sale, your failure to vote is the same as your voting against the
asset sale.
Q: WHAT ARE CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE
NONWOVENS ASSET SALE?
A: The sale of the assets constituting the nonwovens business will be a
taxable transaction to Dexter and certain of its selling affiliates
for United States federal income tax purposes (as well as for state,
local and foreign tax purposes). In general, Dexter and certain of
its selling affiliates will recognize gains or losses on the sale of
the assets constituting the nonwovens business equal to the
difference, if any, between the amount realized by Dexter or the
selling affiliate from the sale of each asset less Dexter's or the
selling affiliate's, as the case may be, adjusted tax basis in each
such asset. The amount realized by Dexter or each selling affiliate,
as the case may be, from each sale will equal the sum of the amount
of money received by Dexter or each selling affiliate plus the amount
of any liabilities of Dexter and its selling affiliates that are
assumed by Ahlstrom in consideration for each such asset. The
nonwovens asset sale will not be a taxable transaction for United
States federal income tax purposes for the Dexter shareholders.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
A: If you have questions about the asset sale or the asset purchase
agreement you may call our proxy solicitor, MacKenzie Partners, Inc.
toll free at (800) 322-2885.
SUMMARY TERM SHEET
This section summarizes selected information about the proposed
nonwovens asset sale from this proxy statement and may not contain all of
the information that is important to you. To understand the nonwovens asset
sale fully, we strongly encourage you to read carefully this entire proxy
statement. We have included a copy of the nonwovens asset purchase
agreement in this proxy statement as Annex A.
THE COMPANIES
(See Page 8)
DEXTER CORPORATION
One Elm Street
Windsor Locks, CT 06096-2334
(860) 292-7675
Dexter Corporation is a global specialty materials supplier with
three operating segments: life sciences, nonwovens, and specialty polymers.
The company supplies specialty materials to the aerospace, electronics,
food packaging, and medical markets.
For additional information about Dexter and its business, see "The
Nonwovens Asset Sale--The Companies--Dexter Corporation."
AHLSTROM PAPER GROUP OY
Etalaesplanadi 14
FIN - 00101 Helsinki
Finland
Ahlstrom Paper Group Oy is a world leader in high value specialty
materials made from natural and man-made fibers for labeling, packaging,
medical, filtration, building, decorating and many other industrial
applications. With approximately 5,000 people in nearly 40 production sites
throughout Europe, the Americas and Asia, Group net sales were $1.14
billion in 1999.
For additional information about Ahlstrom and its business, see
"The Asset Sale - The Companies - Ahlstrom Paper Group Oy."
VOTE REQUIRED TO APPROVE THE ASSET SALE
(See Page 6)
Under section 33-831 of the Connecticut Business Corporation Act,
the sale by Dexter of "all, or substantially all" of its assets would
require approval by the affirmative vote of the holders of at least
two-thirds of the voting power of all outstanding shares of Dexter common
stock on the record date. Dexter does not believe that the sale of the
nonwovens assets to Ahlstrom, either alone or taken together with other
announced transactions, requires such shareholder approval. Nonetheless,
for the avoidance of doubt in light of the uncertainties created by the
litigation commenced by International Specialty Products Inc. against
Dexter, Ahlstrom has required, as a condition to its obligation to
consummate the transactions contemplated by the nonwovens asset purchase
agreement, shareholder approval by the affirmative vote of the holders of
at least two-thirds of the voting power of all outstanding shares of Dexter
common stock on the record date. Accordingly, for this reason only, Dexter
is submitting the proposed transaction to the shareholder vote which would
be required if such provision of Connecticut law were deemed applicable.
Each share of Dexter common stock is entitled to one vote. Dexter
directors and executive officers as a group own and are entitled to vote
approximately 1.33% of the outstanding shares of Dexter common stock. IF A
SHAREHOLDER DOES NOT VOTE AT THE SPECIAL MEETING, EITHER IN PERSON OR BY
PROXY, IT WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE ASSET SALE.
OUR RECOMMENDATION TO SHAREHOLDERS
(See Page 10)
The Dexter Board of Directors believes that the terms of the
nonwovens asset sale are fair to and in the best interests of Dexter and
its shareholders and recommends that you vote FOR the asset sale.
OPINION OF FINANCIAL ADVISOR
(See Page 11)
In connection with the nonwovens asset sale, the Dexter Board of
Directors received an opinion from Lehman Brothers Inc., its financial
advisor. THE OPINION OF THE FINANCIAL ADVISOR IS DIRECTED TO THE BOARD OF
DIRECTORS OF DEXTER AND IS NOT A RECOMMENDATION TO SHAREHOLDERS WITH
RESPECT TO ANY MATTER RELATING TO THE NONWOVENS ASSET SALE.
Dexter received a written opinion dated June 20, 2000, from its
financial advisor, Lehman Brothers Inc., to the effect that, as of the date
of its opinion, and based upon and subject to the matters described in such
opinion, the consideration of $275 million in cash, plus the assumption of
liabilities relating to the nonwovens business, to be received by Dexter
pursuant to the proposed nonwovens asset sale was fair from a financial
point of view to Dexter. We have included this opinion in this proxy
statement as Annex B. DEXTER URGES ITS SHAREHOLDERS TO READ THE OPINION OF
LEHMAN BROTHERS IN ITS ENTIRETY.
PRINCIPAL CONDITIONS TO THE NONWOVENS ASSET SALE
(See Page 26)
Completion of the nonwovens asset sale requires:
o approval of the nonwovens asset sale by Dexter shareholders;
o absence of any law or injunction preventing the nonwovens asset
sale;
o the expiration of any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976;
o the approval and clearance of any necessary filings with any
non-U.S. governmental entities;
o compliance in all material respects with all agreements and
obligations of each of Dexter and Ahlstrom that are required to be
complied with before the consummation of the asset sale;
o absence of breaches of representations and warranties contained in
the asset purchase agreement which have or are reasonably expected
to have a material adverse effect on Dexter or Ahlstrom;
o the timely filing and receipt of all permits, authorizations,
consents or approvals required for the consummation of the asset
sale, except to the extent the failure to receive any such permits,
authorizations, consents or approvals would not have a material
adverse effect on the nonwovens business;
o receipt of legal opinions from counsel to Ahlstrom and to Dexter,
as to certain corporate matters; and
o the assignment of specified contracts and leases to Ahlstrom.
Both Dexter and Ahlstrom can elect to waive certain conditions to
their own performance.
TERMINATION OF THE NONWOVENS ASSET PURCHASE AGREEMENT
(See Page 27)
Dexter and Ahlstrom may mutually agree to terminate the nonwovens
asset purchase agreement at any time before the time the nonwovens asset
sale becomes effective. In addition either company may terminate the asset
purchase agreement if specified events occur. These include:
o if the conditions set forth in the nonwovens asset purchase
agreement have not been satisfied or waived by October 31, 2000;
o if a statute, rule, regulation or executive order has been enacted,
prohibiting the consummation of the asset sale substantially on the
terms contemplated by the nonwovens asset purchase agreement;
o if an order, decree, ruling or injunction has been entered
permanently restraining, enjoining or prohibiting the consummation
of the asset sale substantially on the terms contemplated by the
asset purchase agreement, provided the terminating party has used
its reasonable best efforts to remove such order, decree, ruling or
injunction;
o if there has been a material violation or breach by the other party
of any agreement, representation or warranty contained in the asset
purchase agreement that has rendered the satisfaction of any
condition to the obligations of terminating party impossible and
such violation or breach has not been waived by the terminating
party; and
o if the Dexter shareholders vote against approval of the asset sale.
TERMINATION FEE; EXPENSE REIMBURSEMENT
(See Page 28)
The nonwovens asset purchase agreement requires Dexter to pay
Ahlstrom a termination fee of $8 million if prior to receipt of Dexter
shareholder approval a "specified Dexter acquisition proposal" is publicly
announced, the nonwovens asset purchase agreement is terminated and within
12 months of termination of the nonwovens asset purchase agreement Dexter
enters into an agreement for or completes an alternative transaction as a
result of which Dexter shareholders would be entitled to receive, or would
receive, aggregate consideration with a fair market value exceeding $45 per
share. A "specified Dexter acquisition proposal" means:
o an alternative transaction proposal involving Dexter which is
conditioned (or has the price payable depend upon) Dexter's
shareholders voting against granting shareholder approval to the
nonwovens asset sale; or
o any other alternative transaction involving Dexter, unless the
proposed acquiror agrees to use its best efforts to cause Dexter to
comply with its obligations under the nonwovens asset purchase
agreement and to vote all shares of Dexter common stock it acquired
and thereby becomes entitled to vote in favor of granting
shareholder approval of the nonwovens asset sale.
Upon termination of the nonwovens asset purchase agreement for any
reason (other than as a result of Ahlstrom's breach of the agreement),
Dexter will promptly reimburse Ahlstrom for its out-of-pocket cash expenses
incurred in connection with the nonwovens asset purchase agreement up to a
maximum of $2 million.
REGULATORY MATTERS
(See Page 16)
Ahlstrom and Dexter are under the obligation to make filings under
the competition laws of a number of foreign countries (including Germany)
where the companies have significant operations.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE NONWOVENS
ASSET SALE
(See Page 15)
The sale of the assets constituting the nonwovens business will be
a taxable transaction to Dexter and certain of its selling affiliates for
United States federal income tax purposes (as well as for state, local and
foreign tax purposes). In general, Dexter and certain of its selling
affiliates will recognize gains or losses on the sale of the assets
constituting the nonwovens business equal to the difference, if any,
between the amount realized by Dexter or the selling affiliates from the
sale of each asset less Dexter's or the selling affiliate's, as the case
may be, adjusted tax basis in each such asset. The amount realized by
Dexter or each selling affiliate, as the case may be, from each sale will
equal the sum of the amount of money received by Dexter or each selling
affiliate plus the amount of any liabilities of Dexter and its selling
affiliates that are assumed by Ahlstrom in consideration for each such
asset. The nonwovens asset sale will not be a taxable transaction for
United States federal income tax purposes for the Dexter shareholders.
APPRAISAL RIGHTS
(See Page 17)
If section 33-831 of the Connecticut Business Corporation Act
applies or were deemed to apply to the sale of the nonwovens assets, if
Dexter were to sell "all, or substantially all" of its assets, it would
trigger appraisal rights for holders of Dexter common stock. Dexter does
not believe that appraisal rights attach to this transaction, because it
does not believe that the sale of the nonwovens assets to Ahlstrom,
individually or taken together with other announced transactions by Dexter,
constitutes a sale of "all, or substantially all" of Dexter's assets under
Connecticut law. For additional information about the vote required to
approve the nonwovens asset sale, see "Summary Term Sheet - Vote Required
to Approve the Asset Sale." If the sale of the nonwovens assets to
Ahlstrom, individually or taken together with other announced transactions
by Dexter, were to constitute or be deemed to constitute a sale of "all, or
substantially all" of Dexter's assets under Connecticut law, then holders
of Dexter common stock would be entitled to appraisal rights under
Connecticut law upon compliance with certain procedures prescribed by
Connecticut law. For a description of the procedures a shareholder wishing
to exercise appraisal rights would be required to follow, see "The
Nonwovens Asset Sale - Approval Rights."
THE DEXTER SPECIAL MEETING
This proxy statement is being furnished in connection with the
solicitation of proxies from the holders of Dexter common stock by the
Dexter Board of Directors relating to the proposed nonwovens asset sale and
other matters to be voted upon at the special meeting and at any
adjournment or postponement of the meeting. Dexter mailed this proxy
statement to shareholders beginning July 28, 2000. You should read
this proxy statement carefully before voting your shares.
WHEN AND WHERE THE SPECIAL MEETING WILL BE HELD
The special meeting will be held at Dexter Corporation, Two Elm Street,
Windsor Locks, Connecticut, on August 30, 2000, starting at 12:00 noon, local
time.
WHAT WILL BE VOTED UPON
At the special meeting, you will be asked to consider and vote upon
the following items:
o the sale of certain assets used in Dexter's nonwovens
business in accordance with the Asset Purchase Agreement
between Dexter and Ahlstrom, dated as of June 20, 2000; and
o such other matters as may properly come before the special
meeting or any adjournment or postponement of the meeting.
VOTING SECURITIES; QUORUM
The only outstanding voting securities of Dexter are the shares of
its common stock, par value $1 per share, 23,200,967 of which were
outstanding as of July 24, 2000, and only shareholders of record at
the close of business on that date will be entitled to vote at the meeting.
Each share is entitled to one vote. Proxies may be solicited, without
additional compensation, by directors, officers or employees of Dexter by
mail, telephone, facsimile, telegram, in person or otherwise.
Under Connecticut law and Dexter's Bylaws, a majority of the number
of shares of stock issued and outstanding and entitled to vote at the
annual meeting must be present in person or by proxy to constitute a quorum
for the transaction of business.
VOTE REQUIRED FOR APPROVAL
Under section 33-831 of the Connecticut Business Corporation Act,
the sale by Dexter of "all, or substantially all" of its assets would
require approval by the affirmative vote of the holders of at least
two-thirds of the voting power of all outstanding shares of Dexter common
stock on the record date. Dexter does not believe that the sale of the
nonwovens assets to Ahlstrom, either alone or taken together with other
announced transactions, requires such shareholder approval. Nonetheless,
for the avoidance of doubt in light of the uncertainties created by the
litigation commenced by International Specialty Products Inc. against
Dexter, Ahlstrom has required, as a condition to its obligation to
consummate the transactions contemplated by the nonwovens asset purchase
agreement, shareholder approval by the affirmative vote of the holders of
at least two-thirds of the voting power of all outstanding shares of Dexter
common stock on the record date. Accordingly, for this reason only, Dexter
is submitting the proposed transaction to the shareholder vote which would
be required if such provision of Connecticut law were deemed applicable.
Each share of Dexter common stock is entitled to cast one vote. As
of the record date, the directors and executive officers of Dexter owned
and were entitled to vote 309,065 shares (or 1.33%) of Dexter common
stock.
Dexter reserves the right to adjourn the shareholder special
meeting for the further solicitation of proxies to obtain shareholder
approval by the affirmative vote of the holders of at least two-thirds of the
voting power of all outstanding shares of Dexter common stock on the record
date. However, no shares represented by a proxy voting against the asset
sale will be used to vote in favor of adjournment of such meeting for that
purpose.
VOTING YOUR SHARES AND CHANGING YOUR VOTE
VOTING YOUR SHARES
The Dexter Board is soliciting proxies from the Dexter
shareholders. When you deliver a valid proxy, the shares represented by
that proxy will be voted in accordance with your instructions. If you do
not either vote by proxy or attend the special meeting and vote in person,
it will have the same effect as a vote against the asset sale.
To grant your proxy by mail, please complete your proxy card, sign,
date and return it in the enclosed envelope. To be valid, a returned proxy
card must be signed and dated. If you attend the special meeting in person,
you may vote your shares by completing a ballot at the meeting.
CHANGING YOUR VOTE BY REVOKING YOUR PROXY
You may revoke your proxy at any time before the polls close at the
special meeting. You may revoke your proxy by delivering notice in writing
to the Secretary of Dexter, by granting a later-dated proxy or by appearing
in person and voting at the special meeting. You will not revoke your proxy
by attending the special meeting unless you complete a ballot.
HOW PROXIES ARE COUNTED
If you return a signed and dated proxy card but do not indicate how
the shares are to be voted, those shares represented by your proxy card
will be voted as recommended by the Dexter Board. A valid proxy also gives
the individuals named as proxies authority to vote in their discretion when
voting the shares on any other matters that are properly presented for
action at the special meeting. A properly executed proxy marked "ABSTAIN"
will not be voted. However, it will be counted to determine whether there
is a quorum present at the special meeting. Accordingly, since the
affirmative vote of a two-thirds of the shares outstanding and entitled to
vote at the special meeting is required to approve the nonwovens asset
sale, a proxy marked "ABSTAIN" will have the effect of a vote against the
asset sale. Broker non-votes (i.e., shares held by brokers or nominees
which are represented at a meeting but with respect to which the broker or
nominee is not empowered to vote on a particular proposal) will be counted
for purposes of determining whether there is a quorum at the special
meeting. The New York Stock Exchange rules do not permit brokers and
nominees to vote the shares that they hold beneficially either for or
against the proposal without specific instructions from the person who
beneficially owns those shares. Therefore, if your shares are held by a
broker or other nominee and you do not give them instructions on how to
vote your shares, this will have the same effect as voting against the
nonwovens asset sale.
COST OF SOLICITATION
Dexter will pay the cost of soliciting Dexter proxies. In addition
to solicitation by mail, telephone or other means, Dexter will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxy material to beneficial owners. Dexter will, upon
request, reimburse these institutions for their reasonable expenses. Dexter
has retained MacKenzie Partners, Inc. to aid in the solicitation of proxies
and to verify certain records related to the solicitation. MacKenzie will
receive reasonable and customary compensation for its services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection with its
services.
THE NONWOVENS ASSET SALE
THE COMPANIES
DEXTER CORPORATION
Dexter Corporation is a global specialty materials supplier with
three operating segments: life sciences, nonwovens, and specialty polymers.
The company supplies specialty materials to the aerospace, electronics,
food packaging, and medical markets.
Dexter has its principal executive offices at One Elm Street,
Windsor Locks, Connecticut 06096-2334 (telephone number: (860) 292-7675).
AHLSTROM PAPER GROUP OY
Ahlstrom Paper Group Oy is a world leader in high value specialty
materials made from natural and man- made fibers for labeling, packaging,
medical, filtration, building, decorating and many other industrial
applications. With approximately 5,000 people in nearly 40 production sites
throughout Europe, the Americas and Asia, Group net sales were $1.14
billion in 1999.
Ahlstrom has its principal executive offices at Etelaesplanadi 14,
FIN-00101 Helsinki, Finland.
BACKGROUND OF THE NONWOVENS ASSET SALE
In mid-December 1999, International Specialty Products Inc. began
a unilateral unsolicited effort to acquire control of Dexter. On
December 14, 1999, ISP sent a letter to Dexter proposing to acquire Dexter
for $45 per share in cash, subject to execution of a mutually acceptable
definitive acquisition agreement. ISP's proposal stated that ISP would
be willing to pay more if Dexter were to provide ISP with information that
justified an increased price. Following careful consideration of ISP's
$45 per share proposal with its financial and legal advisors, on December
23, 1999, the Dexter Board of Directors unanimously concluded that ISP's
proposal was both inadequate and contrary to the best interests of the
shareholders of Dexter. Accordingly, the Dexter Board rejected ISP's proposal.
On January 27, 2000, ISP announced its intention to present a
series of proposals at Dexter's 2000 Annual Meeting (including a slate of 3
nominees to replace Dexter's nominees for election to the Board, proposals
to increase the size of Dexter's Board and additional nominees to fill the
vacancies, and proposals with respect to Dexter's rights plan) and to
solicit proxies in favor of its proposals. Dexter believes these proposals
are designed to enable ISP to gain control of Dexter's Board of Directors
in order to facilitate a sale of Dexter to ISP for $45 per share.
On February 28, 2000, the Dexter Board of Directors authorized
management together with its financial advisor, Lehman Brothers, to explore
all strategic alternatives available to Dexter to maximize shareholder
value in the short term, including a merger or sale of the company, a
financial restructuring or a spin-off or sale of one or more of Dexter's
businesses. As part of this process, representatives of Lehman Brothers
contacted numerous third parties potentially interested in acquiring the
entire company or one or more of its constituent businesses. Among those
contacted was Ahlstrom.
On March 16, 2000, Dexter and Ahlstrom entered into a
confidentiality agreement pursuant to which Dexter agreed to provide
Ahlstrom with confidential information concerning Dexter. Shortly
thereafter, Lehman Brothers provided Ahlstrom with various due diligence
materials in order to enable Ahlstrom to make a preliminary indication of
interest. Ahlstrom and the other parties interested in participating in
Dexter's sale process were advised by Lehman Brothers that preliminary
indications of interest were to be submitted on March 24, 2000 and that
indications of interest for the purchase of Dexter as a whole would be
given preference to those contemplating the purchase of one more or more of
Dexter's businesses.
On March 24, 2000, Dexter received several indications of interest
in acquiring the entire company and also received multiple indications of
interest in Dexter's constituent businesses, including one from Ahlstrom
with respect to acquiring Dexter's Nonwoven Materials Business. In light of
the strong indications of interest in acquiring all of Dexter, Dexter
decided to devote its resources and attention to those bids, in the first
instance.
During the course of the next six weeks, Dexter and its advisors
worked with each of the prospective bidders for the whole company to
develop definitive acquisition proposals for Dexter as well as the
outstanding public minority shares of Life Technologies Inc. on mutually
acceptable terms and conditions. Except for ISP, these bidders were
principally life sciences-oriented companies that were interested in a
tax-free stock merger transaction. The decline in the public equity markets
in the weeks following March 24 adversely affected the trading prices of the
bidders' equity securities and, accordingly, the value of the consideration
they had offered. Principally, as a result of this development, on May
17, 2000, Dexter announced, among other things, that its Board of Directors
had authorized management to pursue the sale of Dexter's wholly owned
businesses -- nonwoven materials, electronic materials and adhesive &
coating systems. Immediately thereafter, Lehman Brothers re-contacted those
bidders for Dexter's wholly owned businesses that had submitted the
strongest indications of interest, including Ahlstrom.
During the course of the next four weeks, Ahlstrom and the other
prospective bidders conducted comprehensive due diligence investigations,
including meetings with management representatives. In addition, during the
first week of June, counsel to Dexter circulated forms of asset acquisition
agreements to Ahlstrom and the other prospective purchasers, including
Ahlstrom. Each interested party was requested to submit its final bid prior
to the close of business on June 9, 2000. The requested bid was to include
proposed changes to the form of asset acquisition agreement that had
previously been distributed to all prospective purchasers.
On June 10, 2000, the Dexter Board of Directors met telephonically
with members of management and its financial and legal advisors to review
and consider the bids received the prior evening. The Board authorized
management and its advisors to proceed as promptly as practicable
negotiating definitive acquisition agreements for the sale of Dexter's
wholly owned businesses.
Between June 13, 2000 and June 19, 2000, representatives of
Ahlstrom and its legal and financial advisors completed their remaining due
diligence investigation of the Nonwoven Materials Business and negotiated
the terms of a definitive acquisition agreement with representatives of
Dexter and its legal and financial advisors. Notwithstanding Dexter's
belief that no shareholder approval is required to complete the nonwovens
asset sale, during the course of the negotiations with Ahlstrom, Ahlstrom
required that the transaction be subject to the approval of Dexter's
shareholders in order to avoid any doubt and uncertainty on Ahlstrom's part
concerning threatened claims by ISP.
On June 18, 2000, the Dexter Board met with its legal and financial
advisors to review the status of negotiations with the various prospective
purchasers of Dexter's wholly owned businesses. At such meeting Lehman
Brothers reviewed with the Board the financial terms of the transactions
currently being negotiated, and Dexter's legal advisors summarized the
terms of the agreements that were under negotiation.
On June 19, 2000, the Dexter Board met telephonically. Dexter's
legal advisors updated the Board on the status of negotiations with the
various potential buyers, including Ahlstrom. In addition, Lehman Brothers
delivered its oral opinion, which was later confirmed in writing, to the
effect that, from a financial point of view and subject to the matters
discussed in its opinion, the consideration to be received by Dexter in the
nonwovens asset sale was fair to Dexter. The Dexter Board of Directors then
authorized the nonwovens asset sale subject to the satisfactory
finalization of a definitive asset purchase agreement.
During the evening of June 19, 2000 and the following day,
representatives of Dexter and Ahlstrom and their respective legal advisors
finalized the terms of a definitive asset purchase agreement.
On June 20, 2000, ISP announced its intention to commence a $45 per
share all cash tender offer for all shares of Dexter common stock not owned
by ISP. The Dexter Board of Directors reconvened late in the afternoon on
June 20. Dexter's legal advisors reviewed with the members of the Board the
terms of the acquisition agreements for the sale of the nonwoven materials
business and the electronic materials and adhesive systems business. In
addition, Lehman Brothers reconfirmed its opinion with respect to the
fairness of the Proposed Sale. Shortly thereafter, Dexter and Ahlstrom
executed and delivered the Asset Purchase Agreement, and Dexter announced,
among other things, that it entered into the nonwovens asset purchase
agreement with Ahlstrom.
REASONS FOR THE NONWOVENS ASSET SALE AND RECOMMENDATION OF THE DEXTER BOARD
THE DEXTER BOARD BELIEVES THAT THE NONWOVENS ASSET SALE IS FAIR TO
AND IN THE BEST INTERESTS OF DEXTER AND ITS SHAREHOLDERS AND RECOMMENDS TO
THE SHAREHOLDERS OF DEXTER THAT THEY VOTE FOR THE PROPOSED NONWOVENS ASSET
SALE.
The proposed nonwovens asset sale enables Dexter to deliver on its
commitment to maximize the value of Dexter's wholly owned businesses for
the benefit of all Dexter's shareholders. In reaching its decision, the
Dexter Board consulted with its financial and legal advisors, and
considered a variety of factors, including the following:
(1) The fact that over a period of four months Dexter solicited
indications of interest from a large number of potential
purchasers interested in acquiring either the entire company
or one or more of its constituent businesses in a process
designed to maximize shareholder value in the short term.
(2) The Dexter Board considered the improvements Ahlstrom had
made in the terms and conditions of the proposed nonwovens
asset sale as contemplated by the nonwovens asset purchase
agreement compared to the proposal it submitted on June 9,
including the increase in its purchase price for the
nonwovens business and the significant reduction in the
amount of the required escrow.
(3) The oral opinion of Lehman Brothers delivered at the June
19, 2000 meeting, and subsequently confirmed in writing as
of June 20, 2000, to the effect that, as of such date, and
based upon and subject to the matters set forth in its
opinion, from a financial point of view, the consideration
of $275 million in cash, plus the assumption of liabilities
relating to the nonwovens business, to be received by Dexter
pursuant to the nonwovens asset purchase agreement is fair
to Dexter.
(4) The uncertainty and instability for Dexter's business and
operations, employees, customers, suppliers and other
important constituencies created by ISP's actions in
connection with its unilateral attempt to seize control of
Dexter, including its proxy contest, commenced and
threatened litigation and announced intention to commence a
$45 per share cash tender offer for all Dexter shares,
subject to financing and numerous other conditions.
(5) The business, financial condition and recent results of
operations of the nonwovens business and Dexter as a whole.
(6) Ahlstrom's requirements (a) that the proposed nonwovens
asset sale be approved by the Dexter shareholders in order
to avoid any doubt and uncertainty on Ahlstrom's part
concerning threatened claims by ISP, and (b) that it receive
the protections afforded by the no solicitation, termination
fee and indemnity provisions.
(7) Ahlstrom's obligation to consummate the proposed nonwovens
asset sale contemplated by the nonwovens asset purchase
agreement is not subject to any financing contingencies.
(8) The anticipated distribution of the net proceeds from the
proposed nonwovens asset sale to the Dexter shareholders
either directly or in connection with a transaction
involving Life Technologies, Inc.
The foregoing discussion of the information and factors considered
by the Dexter Board is not exhaustive but does include all material factors
considered by the Dexter Board. The Dexter Board did not quantify or attach
any particular relative or specific weight to the various factors it
considered in reaching its determination that the Proposed Sale is fair to
and in the best interests of Dexter and its shareholders. Rather, the
Dexter Board viewed its position and recommendation as being based on the
totality of the information presented to and considered by it. In addition,
individual members of the Dexter Board may have given different weights to
different factors.
THE DEXTER BOARD RECOMMENDS THAT DEXTER SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE NONWOVENS ASSET SALE.
OPINION OF DEXTER'S FINANCIAL ADVISOR
On June 19, 2000, Lehman Brothers delivered its oral opinion to the
Dexter Board of Directors, subsequently confirmed in writing in an opinion
dated June 20, 2000, to the effect that, as of such date, and, based upon
and subject to certain matters stated therein, the consideration of $275
million in cash, plus the assumption of liabilities relating to the
nonwovens business, to be received by Dexter in the transaction was fair
from a financial point of view to Dexter.
THE FULL TEXT OF THE WRITTEN OPINION OF LEHMAN BROTHERS, DATED JUNE 20,
2000, IS INCLUDED AS ANNEX B TO THIS DOCUMENT. SHAREHOLDERS SHOULD READ
THIS OPINION FOR A DISCUSSION OF THE ASSUMPTIONS MADE, FACTORS CONSIDERED
AND LIMITATIONS UPON THE REVIEW UNDERTAKEN BY LEHMAN BROTHERS IN RENDERING
ITS OPINION. THE FOLLOWING IS A SUMMARY OF LEHMAN BROTHERS' OPINION AND THE
METHODOLOGY LEHMAN BROTHERS USED TO RENDER ITS FAIRNESS OPINION.
Lehman Brothers' advisory services and opinion were provided for
the information and assistance of the Dexter Board of Directors in
connection with its consideration of the transaction. The Lehman Brothers
opinion is not intended to be and does not constitute a recommendation to
any shareholder of Dexter as to how such shareholder should vote with
respect to the transaction. Lehman Brothers was not requested to opine as
to, and its opinion does not in any manner address, Dexter's underlying
business decision to proceed with or effect the transaction.
In arriving at its opinion, Lehman Brothers reviewed and analyzed:
o the nonwovens asset purchase agreement and the specific
terms of the transaction;
o publicly available information concerning Dexter, Ahlstrom
and the nonwovens business that Lehman Brothers believed
to be relevant to its analysis;
o financial and operating information with respect to the
business, operations and prospects of the nonwovens business
furnished to Lehman Brothers by Dexter, including, without
limitation, certain projections of future financial
performance of the nonwovens business prepared by the
management of Dexter and the nonwovens business;
o a comparison of the historical financial results and present
financial condition of the nonwovens business with those of
other companies that Lehman Brothers deemed relevant;
o a comparison of the financial terms of the transaction with
the financial terms of certain other transactions that
Lehman Brothers deemed relevant; and
o the results of Lehman Brothers' efforts to solicit
indications of interest and offers with respect to a
purchase of all or part of Dexter or the nonwovens business.
In arriving at its opinion, Lehman Brothers also considered the
impact of the unsolicited proposal from International Specialty Products to
acquire all of the outstanding shares of Dexter on efforts to solicit
potential buyers of the nonwovens business. In addition, Lehman Brothers
had discussions with the management of Dexter and the nonwovens business
concerning the business, operations, assets, financial condition and
prospects of the nonwovens business and undertook such other studies,
analyses and investigations as it deemed appropriate.
In arriving at its opinion, Lehman Brothers assumed and relied upon
the accuracy and completeness of the financial and other information used
by it without assuming any responsibility for independent verification of
such information and further relied upon the assurances of Dexter
management that they are not aware of any facts or circumstances that would
make such information inaccurate or misleading. With respect to the
financial projections of the nonwovens business, upon advice of Dexter,
Lehman Brothers assumed that such projections were reasonably prepared on a
basis reflecting the best currently available estimates and judgments of
the management of Dexter as to the future financial performance of the
nonwovens business and that the nonwovens business will perform
substantially in accordance with such projections. In arriving at its
opinion, Lehman Brothers did not conduct a physical inspection of the
properties and facilities of the nonwovens business and did not make or
obtain any evaluations or appraisals of the assets or liabilities of the
nonwovens business. Lehman Brothers' opinion necessarily was based upon
market, economic and other conditions as they existed on, and could be
evaluated as of, the date of its opinion letter.
In connection with rendering its opinion, Lehman Brothers performed
certain financial, comparative and other analyses as described below. The
preparation of a fairness opinion involves various determinations as to the
most appropriate and relevant methods of financial and comparative analysis
and the application of those methods to the particular circumstances, and,
therefore, such an opinion is not readily susceptible to summary
description. Furthermore, in arriving at its fairness opinion, Lehman
Brothers did not attribute any particular weight to any analysis or factor
considered by it, but rather made qualitative judgments as to the
significance and relevance of each analysis and factor. Accordingly, Lehman
Brothers believes that its analyses must be considered as a whole and that
considering any portion of such analyses and of the factors considered,
without considering all analyses and factors, could create a misleading or
incomplete view of the process underlying the opinion. In its analyses,
Lehman Brothers made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters,
many of which are beyond the control of Dexter or the nonwovens business.
Any estimates contained in the analyses are not necessarily indicative of
actual values or predictive of future results or values, which may be
significantly more or less favorable than as set forth therein. In
addition, analyses relating to the value of businesses do not purport to be
appraisals or to reflect the prices at which businesses actually may be
sold.
Valuation Analysis
Lehman Brothers prepared a valuation of the nonwovens business. In
determining valuation, Lehman Brothers used the following methodologies:
o discounted cash flow analysis;
o comparable company trading analysis;
o comparable transaction analysis;
o leveraged acquisition analysis; and
o affordability analysis.
Each of these methodologies was used to generate a reference value range
for the nonwovens business.
The various valuation methodologies noted above and the implied
values derived therefrom are included in the following table. This table
should be read together with the more detailed descriptions set forth
below. The table alone does not constitute a complete description of the
financial and comparative analyses. In particular, in applying the various
valuation methodologies to the particular business, operations and
prospects of the nonwovens business, and the particular circumstances of
the transaction, Lehman Brothers made qualitative judgments as to the
significance and relevance of each analysis and factor. In addition,
Lehman Brothers made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters,
many of which are beyond the control of Dexter or the nonwovens business.
Accordingly, the methodologies and the values derived therefrom as set
forth in the table must be considered as a whole and in the context of the
narrative description of the financial analyses, including the assumptions
underlying these analyses. Considering the implied values without
considering the narrative description of the financial analyses, including
the assumptions underlying these analyses, could create a misleading or
incomplete view of the process underlying, and conclusions represented by,
Lehman Brothers' opinion.
<TABLE>
<CAPTION>
VALUATION METHODOLOGY SUMMARY DESCRIPTION OF VALUATION Implied Value ($ in millions)
METHODOLOGY
------------------------------ -------------------------------- -----------------------------
<S> <C> <C>
DISCOUNTED CASH FLOW ANALYSIS Net present valuation of management $230 - $265
projections of projected after-tax
unlevered free cash flows based on
the nonwovens business financial
projections using selected discount
rates
COMPARABLE COMPANY TRADING Market valuation benchmark based on $220 - $265
ANALYSIS WITH PREMIUM the common stock trading multiples
of selected comparable companies
COMPARABLE TRANSACTION ANALYSIS Market valuation benchmark based on $250 - $305
consideration paid in selected comparable
transactions
LEVERAGED ACQUISITION ANALYSIS Measures price that would be attractive to $260 - $280
potential financial buyer based on current
market conditions
AFFORDABILITY ANALYSIS Measures price that would be neither $250 - $305
accretive nor dilutive to strategic
buyers' earnings in fiscal year 2001
CASH CONSIDERATION TO BE RECEIVED BY DEXTER IN THE TRANSACTION $275
</TABLE>
Discounted Cash Flow Analysis. The discounted cash flow analysis
provides a net present valuation of management projections of the
projected after-tax unlevered free cash flows based upon financial
projections for the nonwovens business. Utilizing such financial
forecasts, Lehman Brothers calculated a range of present values for the
nonwovens business using a range of after-tax discount rates from 11% to
13% and a terminal value based upon a range of multiples of estimated
earnings before interest, taxes, depreciation and amortization, which is
referred to as EBITDA, in 2004 from 4.0x to 5.0x. Based upon the midpoint
of the discount rates and the range of the terminal values, the range of
implied values of the nonwovens business was approximately $230 million to
approximately $265 million.
Comparable Company Trading Analysis. The comparable company trading
analysis provides a market valuation benchmark based on the common stock
trading multiples of selected comparable companies. For this analysis,
Lehman Brothers reviewed the public stock market trading multiples for
selected companies that Lehman Brothers deemed comparable to the nonwovens
business. These companies were:
o BBA Group PLC;
o Buckeye Technologies Inc.;
o P. H. Glatfelter Company;
o Lydall, Inc.; and
o Polymer Group, Inc.
Using publicly available information, Lehman Brothers calculated and
analyzed the common equity market value multiples of certain historical
and projected financial criteria (such as net income) and the enterprise
value multiples of certain historical and projected financial criteria
(such as revenues, EBITDA, and earnings before interest and taxes, which
is referred to as EBIT) as of June 15, 2000. Net income for the selected
companies was based on research analysts' estimates published by IBES, a
service reporting equity analyst estimates.
Using a 30 percent illustrative acquisition premium and trading
multiples of 5.5x to 6.5x the latest twelve months EBITDA of nonwovens
assets, excluding the cogeneration assets and 4.0x to 5.0x the latest
twelve months EBITDA of cogeneration assets, this methodology yielded
valuations for the nonwovens business that imply a value range of
approximately $220 to approximately $265 million.
Because of the inherent differences between the businesses,
operations, financial conditions and prospects of the nonwovens business
and the businesses, operations, financial conditions and prospects of the
companies included in the comparable company group, Lehman Brothers
believed that it was inappropriate to, and therefore did not, rely solely
on the quantitative results of the analysis, and accordingly, also made
qualitative judgments concerning differences between the financial and
operating characteristics of the nonwovens business and companies in the
comparable company group that would affect the public trading values of
the nonwovens business and such comparable companies.
Comparable Transaction Analysis. The comparable transaction analysis
provides a market benchmark based on the consideration paid in selected
comparable transactions. For this analysis, Lehman Brothers reviewed
publicly available information to determine the purchase prices and
multiples paid in certain transactions that were publicly announced since
May 26, 1995 involving target companies that were similar to the nonwovens
business in terms of business mix, product portfolio, and/or markets
served. These transactions and the months in which they were announced
were:
o Buckeye Technologies Inc.'s acquisition of the Walkisoft division
of UPM-KYMMENE (July 1999);
o BBA Group PLC's acquisition of the Veratec division of
International Paper Co. (April 1998);
o Polymer Group, Inc.'s acquisition of Dominion Textile, Inc.
(October 1997);
o Buckeye Technologies Inc.'s acquisition of Merfin International
Inc. (March 1997);
o Polymer Group, Inc.'s acquisition of Fitesa North America (July
1996); and
o Haefely Trench AG's acquisition of Holvis AG (May 1995).
Lehman Brothers calculated the transaction value of the relevant
transactions (calculated as the consideration offered for the common
equity and short- and long-term debt, and subtracting its cash and cash
equivalents), and applied it to certain historical financial criteria
(including sales, EBITDA and EBIT) of the acquired business for the latest
twelve months period.
The appropriate multiple range for nonwovens assets, excluding the
cogeneration assets, was determined to be 6.0x to 7.0x latest twelve
months EBITDA and the appropriate multiple range for cogeneration assets
was determined to be 4.0x to 5.0x 2000E EBITDA. This methodology yielded
valuations for the nonwovens business that imply values ranging from
approximately $250 million to approximately $305 million.
Because the market conditions, rationale and circumstances
surrounding each of the transactions analyzed were specific to each
transaction and because of the inherent differences between the
businesses, operations and prospects of the nonwovens business and the
acquired businesses analyzed, Lehman Brothers believed that it was
inappropriate to, and therefore did not, rely solely on the quantitative
results of the analysis and, accordingly, also made qualitative judgments
concerning differences between the characteristics of these transactions
and the transaction that would affect the acquisition values of the
nonwovens business and such acquired companies.
Leveraged Acquisition Analysis. The leveraged acquisition analysis
measures the price that would be attractive to a potential financial buyer
based upon current market conditions. For this analysis, Lehman Brothers
reviewed the financial projections of the nonwovens business and assumed
the following in performing this analysis:
o a capital structure comprised of approximately $230 million in
senior debt;
o an equity investment that would achieve a 20% to 30% rate of
return over a five year period; and
o an exit multiple of 5.0x to 6.0x projected 2004 EBITDA.
Based on these assumptions, the range of implied leveraged
acquisition prices for the nonwovens business was approximately $260
million to approximately $280 million.
Affordability Analysis. The affordability analysis measures the
theoretical price that would be neither accretive nor dilutive to
strategic buyers' earnings in fiscal year 2001. For this analysis, Lehman
Brothers reviewed the financial projections of the nonwovens business and
assumed the following in performing this analysis:
- tax deductible goodwill with a 20-year amortization period for
accounting purposes;
- $0 to $10 million in pretax synergies;
- 10% to 10.5% cost of debt; and
- an effective tax rate of 35%.
Based on these assumptions, the range of prices for the nonwovens business
was approximately $250 million to approximately $305 million.
Lehman Brothers is an internationally recognized investment banking
firm engaged in, among other things, the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive bids, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and
other purposes. The Dexter Board of Directors selected Lehman Brothers
because of its expertise, reputation and familiarity with Dexter and the
nonwovens business and because its investment banking professionals have
substantial experience in transactions comparable to the transaction.
Lehman Brothers has previously rendered certain financial advisory
and investment banking services to Dexter in connection with International
Specialty Products' proposal to acquire Dexter and in connection with
Dexter's pending sale of its specialty polymers business.
In the ordinary course of its business, Lehman Brothers may
actively trade in the debt and equity securities of Dexter for its own
account and for the accounts of its customers and, accordingly, may at any
time hold a long or short position in such securities.
ACCOUNTING TREATMENT
The proposed nonwovens asset sale is expected to be accounted for
as a discontinued business segment.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE NONWOVENS
ASSET SALE
The following is a summary of certain United States federal income
tax consequences to Dexter and Dexter's shareholders of the nonwovens asset
sale. This discussion is for general information only and is based on the
provisions of the Internal Revenue Code of 1986, as amended, Treasury
Department Regulations issued pursuant thereto and published rulings and
court decisions in effect as of the date hereof, all of which are subject
to change, possibly with retroactive effect. Tax consequences under state,
local and foreign laws are not addressed herein.
The sale of the assets constituting the nonwovens business will be
a taxable transaction to Dexter and certain of its selling affiliates for
United States federal income tax purposes (as well as for state, local and
foreign tax purposes). In general, Dexter and certain of its selling
affiliates will recognize gains or losses on the sale of the assets
constituting the nonwovens business equal to the difference, if any,
between the amount realized by Dexter or its selling affiliate, as the case
may be, from the sale of each asset less Dexter's or its selling
affiliate's, as the case may be, adjusted tax basis in each such asset. The
amount realized by Dexter or each selling affiliate, as the case may be,
from each sale will equal the sum of the amount of money received by Dexter
or each selling affiliate plus the amount of any liabilities of Dexter and
its selling affiliates that are assumed by Ahlstrom in consideration for
each such asset. Dexter and its selling affiliates expect to recognize
gains and incur taxes with respect to the sales of assets constituting the
nonwovens business.
The sale of the assets constituting the nonwovens business will not
be a taxable transaction for United States federal income tax purposes for
the Dexter shareholders.
ANTITRUST
DOMESTIC ANTITRUST COMPLIANCE
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the related rules, the asset sale may not be completed
until certain information has been furnished to the Antitrust Division of
the Department of Justice and the FTC and certain waiting period
requirements have been satisfied. On July 27, 2000 Dexter and Ahlstrom
received early termination of the applicable waiting period under the
Hart-Scott-Rodino Act.
The Antitrust Division frequently scrutinizes the legality under
the antitrust laws of transactions such as the asset sale. At any time
before or after consummation of the asset sale, the FTC or the Antitrust
Division could take such action under the antitrust laws as it deems
necessary or desirable in the public interest. Such action could include
seeking to enjoin the asset sale or seeking the divestiture of substantial
assets of Dexter, Ahlstrom or their respective subsidiaries. Private
parties and state attorneys general may also bring legal action under
federal or state antitrust laws under certain circumstances. While Dexter
believes that the nonwovens asset sale raises no material antitrust issues,
we can give no assurance that a challenge to the asset sale on antitrust
grounds will not be made or, if such a challenge is made, that it would be
unsuccessful.
FOREIGN ANTITRUST COMPLIANCE
The German Act Against Restraints of Competition prohibits Ahlstrom
and Dexter from completing the asset sale until the transaction has been
notified to and approved by the Federal Cartel Office. Upon receipt of the
notification, the Cartel Office conducts a preliminary review with a
maximum duration of one month. Upon conclusion of the preliminary review,
the Cartel Office may either approve the transaction or initiate an
in-depth review with a maximum duration of a total of four months from the
receipt of the notification. The Cartel Office will open the in-depth
review process if it deems it is necessary to determine whether the
transaction is compatible with the Act Against Restraints of Competition.
Ahlstrom and Dexter expect to jointly file the notification with the
Cartel Office on July 28, 2000. Dexter believes that the transaction will be
approved during the preliminary review phase. However, we can give no
assurance that the Cartel Office will not open an in-depth review to
further examine the Act Against Restraints of Competition.
OTHER REGULATORY MATTERS
Dexter and Ahlstrom conduct operations in a number of jurisdictions
where other regulatory filings or approvals, including antitrust filings in
other foreign countries, may be required or advisable in connection with
the completion of the nonwovens asset sale. Dexter and Ahlstrom are
currently in the process of reviewing whether other filings or approvals
may be required or desirable in these other jurisdictions. Some of these
filings may not be completed before the completion of the asset sale, and
some of these approvals, which are not as a matter of practice required to
be obtained before the effectiveness of the asset sale, may not be obtained
before the closing.
APPRAISAL RIGHTS
If section 33-831 of the Connecticut Business Corporation Act
applies or were deemed to apply to the sale of the nonwovens assets, if
Dexter were to sell "all, or substantially all" of its assets, it would
trigger appraisal rights for holders of Dexter common stock. Dexter does
not believe that appraisal rights attach to this transaction, because it
does not believe that the sale of the nonwovens assets to Ahlstrom,
individually or taken together with other announced transactions by Dexter,
constitutes a sale of "all, or substantially all" of Dexter's assets under
Connecticut law. For additional information about the vote required to
approve the nonwovens asset sale, see "The Dexter Special Meeting - Vote
Required for Approval." If the sale of the nonwovens assets to Ahlstrom,
individually or taken together with other announced transactions by Dexter,
were to constitute or be deemed to constitute a sale of "all, or
substantially all" of Dexter's assets under Connecticut law, then holders
of Dexter common stock would be entitled to appraisal rights under
Connecticut law upon compliance with certain procedures prescribed by
Connecticut law. Holders of Dexter common stock who would want to invoke
their appraisal rights if they are determined to be applicable to the sale
of the nonwovens assets should therefore follow the procedures described
below.
If the sale of the nonwovens assets, individually or taken together
with other announced transactions by Dexter, were to constitute or be
deemed to constitute a sale of "all, or substantially all" of Dexter's
assets under sections 33-855 through 33-872 of the Connecticut Business
Corporation Act you would have a right to dissent from the asset sale, and
can choose to be paid the fair value of your Dexter shares once the asset
sale is completed, provided you follow the procedures outlined in the
statute. The complete text of these sections is included in Annex C to this
proxy statement.
In the event appraisal rights are deemed applicable to the
nonwovens asset sale and if you wish to exercise your dissenters' rights of
appraisal or to preserve the right to do so, you should carefully review
Annex C and seek the advice of counsel. If you do not comply with the
deadlines and procedures specified in the Connecticut Business Corporation
Act, you may lose your dissenters' rights of appraisal. To exercise these
rights, you must satisfy each of the following conditions:
o you must not vote in favor of the asset sale; and
o you must deliver to the Secretary of Dexter, before
the vote on the asset sale at the special meeting, a
written notice of your intent to demand payment of
the fair value of your shares.
You must deliver the notice of intent even if you submit a proxy or
vote against the asset sale. Merely voting against, abstaining from voting
or failing to vote in favor of adoption of the asset sale will not
constitute a notice of intent to exercise dissenters' rights of appraisal
under the Connecticut Business Corporation Act.
If Dexter shareholders approve the asset sale at the special
meeting and you meet the requirements above and dissenters' rights of
appraisal are deemed applicable to the nonwovens asset sale, then Dexter
will send you, within ten days of the approval of the nonwovens asset sale,
a written dissenters' notice to be used to demand payment for your shares.
The dissenters' notice must:
o state where the payment demand must be sent and when
and where certificates for certificated shares must
be deposited;
o inform holders of uncertificated shares to what
extent transfer of the shares will be restricted
after the payment demand is received;
o supply a form for demanding payment that includes the
date of the first announcement to the news media or
to shareholders of the terms of the asset sale
agreement and require that each shareholder asserting
dissenters' rights certify whether or not he acquired
beneficial ownership of the shares before that date;
o set a date by which Dexter must receive the payment
demand, which may not be fewer than 30 nor more than
60 days after the written dissenters' notice is
delivered by Dexter; and
o be accompanied by a copy of Sections 33-855 through
33-872 of the Connecticut Business Corporation Act
(these are the sections that discuss dissenters'
rights).
Under Section 33-863(a) of the Connecticut Business Corporation
Act, if you receive a dissenters' notice and wish to exercise your
dissenters' rights of appraisal, you must:
o demand payment for your shares;
o certify that you acquired beneficial ownership of
your shares (generally, the right to vote or enter
into an arrangement or agreement for the purpose of
voting your shares, the right to acquire shares and
the right to dispose of shares) before the date of
the first announcement to the news media or to the
shareholders of the terms of the asset purchase
agreement as set forth in the dissenters' notice; and
o deposit the certificate or certificates representing
your shares in accordance with the terms of the
dissenters' notice.
If you are considering seeking dissenters' rights of appraisal, you
should be aware that the fair value of your shares as determined under the
applicable arovisions of the Connecticut Business Corporation Act could be
greater than, the same as or less than the asset sale consideration.
If appraisal rights are deemed applicable to the nonwovens asset
sale, after Dexter receives a valid, timely and complete payment demand, or
upon completion of the asset sale, Dexter will pay to each dissenting
shareholder the amount it estimates to be the fair value of the dissenting
shareholder's shares, plus accrued interest, as provided in Section
33-865(a) of the Connecticut Business Corporation Act. That payment will be
accompanied by:
o Dexter's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of
payment, an income statement for that year, a
statement of changes in shareholders' equity for that
year and the latest available interim financial
statements, if any;
o a statement of Dexter's estimate of the fair value of
the shares;
o an explanation of how the accrued interest was
calculated;
o a statement of the shareholders' right to demand
payment under Section 33-868 of the Connecticut
Business Corporation Act; and
o a copy of Sections 33-855 through 33-872 of the
Connecticut Business Corporation Act.
If the asset sale does not take place within 60 days after the date
set for demanding payment and depositing certificates representing
dissenting shareholders' shares, Dexter will return the deposited
certificates and release any transfer restrictions that may have been
imposed on uncertificated shares. If the asset sale is completed after the
return of the deposited shares and the release of transfer restrictions,
Dexter will send a new dissenters' notice and repeat the payment-demand
procedure.
Under Section 33-868 of the Connecticut Business Corporation Act,
you may send to Dexter your own estimate of the fair value of your shares
and the amount of any interest due, and demand payment of the difference
between your estimate and the amount paid, if any, by Dexter in the
following cases:
o if you believe that the amount paid by Dexter is less than
the fair value of your shares or that the interest due is
incorrectly calculated;
o if Dexter fails to make payment within 60 days after the
date set in the dissenters' notice for demanding payment
(except if the payment is withheld to holders of shares who
acquired the shares after the announcement of the asset
sale); or
o if the asset sale is not completed, and Dexter does not
return the deposited certificates or release any transfer
restrictions imposed on uncertificated shares within 60 days
after the date set in the dissenters' notice for demanding
payment.
If you do not demand payment of the difference between your
estimate of the fair value of your shares, plus interest, and the amount
paid by Dexter within 30 days after Dexter made or offered to make that
payment, you will lose your right to demand payment of any such difference.
Under Sections 33-871(a) and (b) of the Connecticut Business
Corporation Act, if your demand for payment of your estimate remains
unsettled, Dexter will commence a proceeding within 60 days after receipt
of your demand for payment and petition the Connecticut superior court for
the judicial district where Dexter's principal office is located to
determine the fair value of your shares and accrued interest. If Dexter
does not timely commence this proceeding, Dexter must pay you the unsettled
amount that you demanded.
If this proceeding takes place, Dexter will make all dissenting
shareholders whose demands remain unsettled (even if they are not residents
of Connecticut) parties to the proceeding, and all parties will be served
with a copy of the petition. The court may appoint appraisers who will
receive evidence and recommend a decision on the question of fair value. If
the court finds that the amount Dexter paid is less than the fair value of
a dissenting shareholder's shares, plus accrued interest, the court will
order Dexter to pay the difference to the dissenting shareholder.
The court will determine all costs of the proceeding, including the
reasonable compensation and expenses of court-appointed appraisers. Dexter
generally will pay these costs, but the court may order the dissenting
shareholders to pay some of them, in amounts the court finds equitable, if
the court finds that the shareholders acted arbitrarily, vexatiously or not
in good faith in demanding payment.
If you give notice of your intent to demand dissenters' rights for
your shares under the applicable provisions of the Connecticut Business
Corporation Act but fail to return the dissenters' notice or withdraw or
lose your right to demand payment, your shares will be converted into the
right to receive the cash consideration in the asset sale.
The foregoing is only a summary of the applicable provisions of the
Connecticut Business Corporation Act and is qualified in its entirety by
reference to the full text of such provisions, which is included in Annex C.
THE NONWOVENS ASSET PURCHASE AGREEMENT
We believe this summary describes the material terms of the asset
purchase agreement. However, we recommend that you read carefully the
complete agreement for the precise legal terms of the asset purchase
agreement and other information that may be important to you. The asset
purchase agreement is included in this proxy statement as Annex A.
FORM OF ASSET SALE
If all of the conditions to the asset sale are satisfied or waived
in accordance with the asset purchase agreement, Dexter will sell the
property and assets used in connection with Dexter's nonwovens business, as
described in the asset purchase agreement, and Ahlstrom will buy such
property and assets and assume the liabilities in connection with Dexter's
nonwovens business, as described in the asset purchase agreement.
CONSIDERATION FOR THE ASSETS
The aggregate consideration Dexter will receive from Ahlstrom for
the asset sale will consist of (i) the assumption by Ahlstrom of, and
indemnification of Dexter by Ahlstrom with respect to, the liabilities in
connection with Dexter's nonwovens business and (ii) the payment or
delivery by Ahlstrom to Dexter of $275 million in cash, of which $10
million shall be set aside in an escrow account (the net amount of which
shall payable nine months after the effective time), which amount shall be
subject to a post closing adjustment.
In the case of any contracts or leases in connection with the
nonwovens business which are not by their terms assignable or which require
the consent of a third party in connection with the transaction
contemplated by the asset purchase agreement, Dexter agrees to use
reasonable efforts to cause such assignment or to procure such consent. In
those cases where consents have not been obtained to the assignment of such
contracts or leases, Dexter will, at Ahlstrom's request, take all
reasonable steps to provide Ahlstrom with the benefit of such contracts or
leases, as if such contract or lease had been assigned to Ahlstrom. This
requirement will not affect the right of Ahlstrom not to consummate the
transactions contemplated by the asset purchase agreement if the conditions
to their obligations have not otherwise been fulfilled.
POST CLOSING ADJUSTMENT
Within 45 days following the effective time, Dexter will prepare
and deliver a balance sheet of the nonwovens business as of the closing
date - the preliminary closing date balance sheet - which will set forth
the net asset value of the nonwovens business, present the consolidated
financial position of the nonwovens business as of the closing date and be
in conformity with generally accepted accounting principles applied on a
basis consistent with the nonwovens balance sheet as of March 31, 2000 -
the nonwovens balance sheet - a copy of which is an exhibit to the asset
purchase agreement. The preliminary closing date balance sheet will be
accompanied by a report of Dexter's independent public accountants,
PricewaterhouseCoopers LLP. Ahlstrom will have a 15 day period within which
to object and to notify Dexter of any objections in writing. Any such
objections by Ahlstrom will be resolved according to procedures delineated
in the asset purchase agreement. The resulting balance sheet - the closing
date balance sheet - shall determine the post-closing adjustment of the
purchase price.
If the amount of the net asset value reflected in the closing date
balance sheet is less than the amount of the target net asset value
provided in the asset purchase agreement, then the purchase price will be
reduced by the amount of such deficit. If the amount of the net asset value
as reflected in the closing date balance sheet exceeds the amount of the
target net asset value, then the purchase price will be increased by the
amount of such excess. Any such post-closing adjustment will be paid by
wire transfer of immediately available funds within 2 business days after
the closing date balance sheet becomes final and binding on the parties. If
the post-closing adjustment exceeds $100,000, interest will be paid on the
amount of the adjustment from the closing date to the date of payment at
the rate prescribed by J.P. Morgan & Company Incorporated as its "prime
rate" on the closing date.
All amounts owed by any of the nonwovens subsidiaries to Dexter or
any of its subsidiaries or owed by Dexter or any of its subsidiaries to any
of the nonwovens subsidiaries will be fully settled between Dexter and
Ahlstrom within 30 days of the closing date. Dexter and Ahlstrom will each
be responsible for settling such amounts owed by their respective
subsidiaries.
REPRESENTATIONS AND WARRANTIES
In the asset purchase agreement, Dexter and Ahlstrom make
representations and warranties to each other about their respective
companies with respect to, among other things:
o their organization, existence, good standing, corporate
power, subsidiaries, and similar corporate matters;
o their authorization, execution, delivery and performance
under and the enforceability of the asset purchase agreement
and related matters;
o the absence of violations or defaults under their
certificates of incorporation and bylaws and laws and, in
the case of Dexter, certain other agreements as a result of
the contemplated transaction; and
o the absence of any brokerage fee in connection with the
transaction except with respect to Lehman Brothers Inc. in
the case of Dexter and Donaldson, Lufkin & Jenrette
Securities Corporation in the case of Ahlstrom.
In addition, Dexter makes representations and warranties in the
asset purchase agreement with respect to:
o the capitalization of each of the nonwovens subsidiaries;
o its equity investments which are nonwovens assets;
o the consistent preparation of nonwovens financial statements
in accordance with generally accepted accounting principles;
o the absence of undisclosed liabilities required to be
disclosed under generally accepted accounting principles;
o the absence of any material adverse effect or any condition
which could reasonably be expected to cause a material
adverse effect;
o good and valid title to all the nonwovens assets and good
and marketable title to all the nonwovens real property;
o the full force and effectiveness of and absence of default
under each listed contract and the absence of any default
under each listed lease relating to the nonwovens business;
o intellectual property matters;
o the absence of legal proceedings;
o employee benefit matters;
o the assets necessary to the nonwovens business;
o the validity and sufficiency of all governmental and other
third party permits necessary to operate the business of the
nonwovens business and that the nonwovens business is being
conducted in material compliance with all applicable laws of
governmental entities;
o the absence of any untrue statement of a material fact
contained in the representations and warranties and other
writings furnished by Dexter to Ahlstrom;
o the genuineness of notes and accounts receivable;
o tax matters;
o insurance matters; and
o environmental matters.
Ahlstrom also represents and warrants that it will have sufficient
cash resources to pay the purchase price.
COVENANTS IN THE NONWOVENS ASSET PURCHASE AGREEMENT
Conduct of Business by Dexter
Dexter has agreed that, prior to the effective time, it will not,
subject to certain exceptions, take certain actions without the prior
written consent of Ahlstrom, unless such actions are expressly permitted by
the asset purchase agreement, or are taken in the ordinary course of
business. Subject to certain exceptions, Dexter has agreed to the following
with respect to itself and, where applicable, its subsidiaries:
o Conduct of Operations. To conduct the nonwovens business
only in the ordinary and usual course of business consistent
with past practice, including to keep available the services
of the certain nonwovens employees who are directors,
managers or vice presidents, and to maintain significant
business relationships.
o Indebtedness. Not to permit the nonwovens business or any
nonwovens subsidiary to create or assume any debt.
o Prevention of Certain Events. Not to permit the nonwovens
business or any nonwovens subsidiary outside the ordinary
course of business, from increasing compensation to its
employees, pay any employee benefits not covered by an
existing plan, commit itself to additional employee benefit
plans or to amend or terminate any existing plans.
o Insurance. Not to permit the nonwovens business or any
nonwovens subsidiary to cancel or terminate any of its
insurance policies relating to the nonwovens assets or
nonwovens liabilities.
o Assets. Not to permit the nonwovens business or any
nonwovens subsidiary to sell any of the nonwovens assets
having a sales price in excess of $50,000 individually or in
the aggregate or encumbering any nonwovens assets.
o Intellectual Property. Not to permit the nonwovens business
or any nonwovens subsidiary to sell, transfer, license or
dispose of any of the nonwovens intellectual property.
o Contracts. Not to permit the nonwovens business or any
nonwovens subsidiary to enter into agreements or contracts
or terminate contracts relating to the nonwovens business.
o Capital Expenditures. Not to permit the nonwovens business
or any nonwovens subsidiary to make any capital expenditures
of $400,000 or more, other than is contemplated by the
Dexter capital plan, individually or in the aggregate.
o Governing Documents. Not to permit the nonwovens business or
any nonwovens subsidiary to amend its charter documents in a
way that adversely affects the transactions contemplated by
the asset purchase agreement.
o Accounting Methods. Not to permit the nonwovens business or
any nonwovens subsidiary to change the accounting principles
unless required by generally accepted accounting principles.
Current Information
Dexter has agreed that a Dexter representative will consult as
requested by Ahlstrom on a regular basis with one or more designated
representatives of Ahlstrom to discuss the general status of ongoing
operations of the nonwovens business during the period until the effective
time, and will promptly notify Ahlstrom of any actual or potential material
adverse effect or significant change in the normal course of business or
operations of the nonwovens business.
Access to Information
Dexter has agreed that, during the period until the effective time,
Dexter will give to Ahlstrom and its authorized representatives access to
and permission to inspect all plants and properties used in the nonwovens
business and to the nonwovens books and records, and will furnish Ahlstrom
with such financial information as Ahlstrom may reasonably request.
Ahlstrom has agreed to cause it employees, officers, directors,
representatives, consultants and advisors to maintain the terms of the
Confidentiality Agreement, dated March 16, 2000, between Dexter and
Ahlstrom.
Expenses
Dexter and Ahlstrom have agreed that, regardless of whether the
transactions contemplated by the asset purchase agreement are consummated,
all costs and expenses incurred in connection with the asset purchase
agreement and the transactions contemplated thereby will be paid by the
party incurring such costs and expenses, except that if the asset purchase
agreement is terminated for any reason other than a breach by Ahlstrom,
Dexter is to reimburse Ahlstrom for up to $2 million in out of pocket
expenses.
Reasonable Best Efforts
Dexter and Ahlstrom have agreed that each of them will act in good
faith and use reasonable best efforts to take or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by
the asset purchase agreement as soon as practicable.
Dexter and Ahlstrom have agreed to keep the other reasonably
apprized of the status of matters relating to the completion of the
transactions contemplated by the asset purchase agreement.
Further Assurances
Dexter and Ahlstrom have agreed, from time to time, at their own
expense, to execute and deliver documents reasonably requested by the other
party in order to more effectively consummate the transactions contemplated
by the asset purchase agreement.
Disclosure Supplements
Dexter has agreed that, during the period prior to the effective
time, Dexter will promptly supplement or amend the schedules to the asset
purchase agreement with respect to any matter arising which, if existing or
occurring at or prior to the date of the asset purchase agreement, would
have been required to be set forth on such schedules or which is necessary
to correct any information given by Dexter which has been rendered
inaccurate.
Public Announcements
Ahlstrom and Dexter agree not to make any public announcements or
respond to any press inquiry with respect to the asset purchase agreement
and the transactions contemplated thereby without first getting the other
party's approval.
Sales and Transfer Taxes and Fees
Dexter and Ahlstrom agree that all sales and transfer taxes and
related fees incurred in connection with the asset purchase agreement and
the transactions contemplated thereby (other than the sale of any of the
nonwovens assets by Dexter Specialty Materials Limited) will be borne
one-half by Dexter and one-half by Ahlstrom, and that any sales and
transfer taxes and related fees incurred in connection with the sale of any
of the nonwovens assets by Dexter Specialty Materials Limited will be borne
solely by Ahlstrom. Ahlstrom will file all necessary tax returns and other
documentation with respect to all such sales, transfer and recording taxes
and fees.
Noncompetition
Dexter agrees that for a period of 5 years from the closing date,
it will not, and will cause its affiliates not to, compete with the
nonwovens business anywhere in the world. Dexter also covenants that after
the closing date, it will not disclose any confidential information
relating to the nonwovens business. Other than general advertisements not
targeted at employees hired by Ahlstrom or its affiliates pursuant to the
asset purchase agreement, for a period of two years from the closing date
Dexter will not solicit the employment of any employees hired by Ahlstrom
or its affiliates.
No Solicitation
Dexter agrees, and agrees to cause its subsidiaries and the
officers, directors, agents and advisors of Dexter and its subsidiaries,
neither to initiate nor engage in any negotiations concerning any nonwovens
acquisition proposal, and to notify Ahlstrom within 24 hours of any such
proposals received by any of its representatives indicating the name of
such person and the material terms and conditions of any offers or
proposals. Neither Dexter's board nor any committee thereof will approve,
recommend or propose to recommend any nonwovens acquisition proposal, cause
Dexter to enter into any letter of intent, agreement in principle,
acquisition agreement, merger agreement or other similar agreements with
respect to any nonwovens acquisition proposal or withdraw or modify in a
manner adverse to Ahlstrom, or fail to make, the recommendation to Dexter's
shareholders that they vote in favor of shareholder approval.
Shareholder Approval
At the request of Ahlstrom and for the avoidance of doubt and
uncertainty on Ahlstrom's part concerning threatened claims against Dexter
and its board of directors, Dexter will take all action necessary to duly
convene a meeting of Dexter's shareholders in order to obtain shareholder
approval as promptly as is practicable.
Proxy Statement
Dexter has agreed to prepare and file the preliminary proxy
statement and other proxy solicitation materials and endeavor to promptly
respond to any comments of the SEC. Dexter has further agreed to provide
Ahlstrom with an opportunity to comment on any proposed filings.
BENEFIT MATTERS
At the effective time, each nonwovens employee employed by Dexter
in the nonwovens business will cease to be a Dexter employee and will be
offered employment by Ahlstrom. Until December 31, 2001, Ahlstrom will
provide such nonwovens employees with employee benefit arrangements no less
favorable than those in effect immediately before the asset sale, provided
that Ahlstrom will not continue benefits comparable to Dexter's post-
retirement welfare benefits referred to below.
Ahlstrom will give the nonwovens employees full credit for service
with Dexter or any subsidiary of Dexter prior to the effective time for
purposes of eligibility and vesting (but not for purposes of benefit
accrual). Ahlstrom will waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements under the medical and life insurance plans in which the
nonwovens employees may be eligible to participate. Ahlstrom will provide
credit for any co-payments and deductibles paid prior to the effective time
in satisfying any applicable deductible or out-of-pocket requirements.
Dexter will remain responsible for, and will indemnify and hold
Ahlstrom harmless against, any and all claims relating to or arising out of
any of its employee benefit plans existing prior to the effective time.
Ahlstrom will be responsible for any and all claims relating to or arising
out of any of Ahlstrom's employee benefit arrangements or obligations
thereunder accrued after the effective time.
Assumption of Plans
Effective as of the effective time, Ahlstrom will establish or
designate a defined contribution plan and trust intended to qualify under
Section 401(a) and Section 501(a) of the Code, respectively - the Ahlstrom
Savings Plan. As soon as practicable following the receipt by Dexter of a
favorable determination letter from the IRS regarding the qualified status
of the Ahlstrom Savings Plan and the receipt by Ahlstrom of a favorable
determination letter from the IRS regarding the qualified status of the
ESPRIT Plan, Dexter will transfer, in a lump sum, the cash value of the
account balances under the ESPRIT Plan in respect of nonwovens employees.
Upon such transfer, the Ahlstrom Savings Plan will assume liability to pay
benefits in the amounts so transferred, as such amounts may be increased or
decreased thereafter, in accordance with and subject to the provisions of
the Ahlstrom Savings Plan. Prior to the date of the transfer of the cash
value of account balances as contemplated by this paragraph, Dexter will
contribute to the trustee of the ESPRIT Plan an amount equal to 10% of the
aggregate Compensation (as defined in the ESPRIT Plan and prorated for such
portion of the ESPRIT Plan year preceding the effective time) of each
nonwovens employee who is a participant in the ESPRIT Plan as of
immediately prior to the effective time. Pending such transfer, the
nonwovens employees will have all of the same rights, features and options
with respect to their account balances in the ESPRIT Plan as active
employees under such plan(s) except for the right to additional
contributions. The parties will cooperate in the filing of the documents
required by the transfer of assets and liabilities. Notwithstanding
anything contained in the asset purchase agreement to the contrary, no such
transfer will take place until the 31st day following the filing of all
required Forms 5310-A in connection therewith, subject to confirmation that
this form is required to be filed.
Dexter will retain and be responsible for, and Dexter will
indemnify and hold harmless Ahlstrom against, any and all claims, losses,
damages, costs and expenses with respect to post-retirement welfare
benefits to which any nonwovens employee or any former employee of the
nonwovens business is currently entitled or may become entitled after the
effective time under the Dexter's post-retirement welfare benefit program.
Ahlstrom will provide such information as Dexter or its designee may
reasonably request, from time to time, in connection with the
administration of Dexter's post-retirement welfare benefit program.
Ahlstrom will assume all liabilities and obligations of Dexter with
respect to the nonwovens employees arising under (i) the Dexter Corporation
Special Severance Plan, (ii) the pay-to-stay arrangements and (iii) the
severance agreements to provide continuation of "Employee Benefits" that
are welfare benefits.
Dexter will be fully responsible for any benefits in the nature of
severance pay due to any nonwovens employee who does not accept an offer of
employment. The severance benefits provided by Ahlstrom to any nonwovens
employee whose employment with Ahlstrom is involuntarily terminated (other
than for cause) by Ahlstrom or an Ahlstrom subsidiary within twelve months
following the effective time will not be less favorable than the severance
benefits that a nonwovens employee would have been entitled to had his or
her employment been terminated by Dexter or a nonwovens subsidiary
immediately prior to the effective time, except in a case where the
nonwovens employee immediately prior to the effective time is either a
party to a severance agreement or a participant in the Dexter Corporation
Special Severance Plan.
To the extent that any obligations might arise under the Worker
Adjustment Retraining Notification Act ("WARN"), 29 U.S.C. Section 2101 et
seq., or under any similar provision of any federal, state, regional,
foreign, or local law, rule, or regulation (hereinafter referred to
collectively as "WARN Obligations") as a consequence of the transactions
contemplated by the asset purchase agreement, Dexter will be responsible
for any WARN Obligations arising as a result of any employment losses
occurring prior to the effective time, and Ahlstrom will be responsible for
any WARN Obligations arising as a result of any employment losses occurring
after the effective time.
CLOSING CONDITIONS
The nonwovens asset purchase agreement contains certain conditions
to the parties' obligations to complete the asset sale. The parties will
not be obligated to complete the asset sale unless at or before the time
the asset sale becomes effective:
o Hart-Scott-Rodino Act. Any waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, has expired or been terminated.
o Necessary Filings. Any necessary filings and permits, inside
the United States and with any governmental entities outside
the United States shall have been made, approved and
cleared.
o Legality. No law or government order prohibits the
consummation of the asset sale substantially on the terms of
the asset purchase agreement.
Dexter shall not be obligated to complete the nonwovens asset sale
unless:
o Representations and Warranties. The representations and
warranties of Ahlstrom contained in the asset purchase
agreement that are qualified by materiality or material
adverse effect are true and correct as of the time the asset
sale becomes effective (other than those which speak as of a
different date, which must be true and correct as of that
date).
o Agreements and Obligations. Ahlstrom has performed and
complied in all material respects with all agreements and
obligations required by the asset purchase agreement to be
performed and complied with by it on or prior to the closing
date.
o Certificate. Ahlstrom has furnished a certificate of an
executive officer of Ahlstrom to evidence compliance with
the conditions set forth in the asset purchase agreement.
o Legal Opinion. Dexter has received one or more opinions,
addressed to it and dated the closing date, from counsel to
Ahlstrom, reasonably satisfactory to Dexter.
Ahlstrom shall not be obligated to complete the asset sale unless:
o Representations and Warranties. The representations and
warranties of Dexter contained in the asset purchase
agreement that are qualified by materiality or material
adverse effect are true and correct as of the time the asset
sale becomes effective (other than those which speak as of a
different date, which must be true and correct as of that
date).
o Agreements and Obligations. Dexter has performed and
complied in all material respects with all agreements and
obligations required by the asset purchase agreement to be
performed and complied with by it on or prior to the closing
date.
o Certificate. Dexter has furnished a certificate of an
executive officer of Dexter to evidence compliance with the
conditions of the asset purchase agreement.
o Shareholder Approval. The nonwovens asset sale has been
approved by at least two-thirds of the voting power of all
outstanding shares of common stock of Dexter.
o Legal Opinion. Ahlstrom has received one or more opinions,
addressed to it and dated the closing date, from counsel to
Dexter, reasonably satisfactory to Ahlstrom.
o Assignment of Contract and Leases. Each of the nonwovens
contracts and leases will have been duly assigned or
otherwise transferred to Ahlstrom.
o FIRPTA Certificate. Dexter has delivered to Ahlstrom a
certificate in accordance with the Foreign Investment in
Real Property Tax Act.
TAX MATTERS
Ahlstrom has agreed to timely prepare and file all income tax
returns (other than any consolidated income tax returns) required to be
filed for the nonwovens subsidiaries after the effective time, and will pay
all income taxes due with respect to such returns. Dexter has agreed to
timely prepare and file all consolidated income tax returns of Dexter and
its affiliates with respect to the nonwovens business and all other income
tax returns with respect to the nonwovens business that are required to be
filed on or before the effective time, and will pay all income taxes due
with respect to such returns.
Dexter has agreed to indemnify Ahlstrom against all liability for
income taxes imposed in connection with the nonwovens assets or the
nonwovens business with respect to any taxable period prior to the
effective time, income taxes in connection with any business of Dexter
other than the nonwovens business, and income taxes incurred as a result of
any other transaction undertaken by Dexter, including the liquidation and
dissolution of Dexter. Dexter will not indemnify Ahlstrom for any taxes
included in the nonwovens liabilities and taken into account in preparing
the closing date balance sheet.
Dexter has agreed to indemnify Ahlstrom against all income taxes,
expenses or other losses arising out of the failure of Dexter to perform
any of the agreements it is required to perform. Ahlstrom agrees to
indemnify Dexter against all taxes, expenses or other losses arising out of
the failure by Ahlstrom to perform any of the agreements it is required to
perform.
TERMINATION
Dexter and Ahlstrom may mutually agree to terminate the asset
purchase agreement prior to the effective time the asset sale becomes
effective. In addition either company may terminate the asset purchase
agreement if specified events do not occur. These include:
o if the conditions set forth in the asset purchase agreement
have not been satisfied or waived by October 31, 2000;
o if a statute, rule, regulation or executive order has been
enacted, entered or promulgated prohibiting the consummation
of the asset sale substantially on the terms contemplated by
the asset purchase agreement;
o if an order, decree, ruling or injunction has been entered
permanently restraining, enjoining or prohibiting the
consummation of the asset sale substantially on the terms
contemplated by the asset purchase agreement, provided the
terminating party has used its reasonable best efforts to
remove such order, decree, ruling or injunction;
o if there has been a material violation or breach by the
other party of any agreement, representation or warranty
contained in the asset purchase agreement that has rendered
the satisfaction of any condition to the obligations of the
terminating party impossible and such violation or breach
has not been waived by the terminating party; and
o if the Dexter shareholders vote against approval of the
asset sale.
TERMINATION FEE; EXPENSE REIMBURSEMENT
Dexter will pay Ahlstrom a termination fee of $8 million if prior
to receipt of Dexter shareholder approval a "specified Dexter acquisition
proposal" is publicly announced, and after such announcement the nonwovens
asset purchase agreement is terminated, and, within twelve months of
termination of the nonwovens asset purchase agreement, Dexter enters into
an agreement for or completes an alternative transaction as a result of
which Dexter shareholders would be entitled to receive, or would receive,
aggregate consideration with a fair market value exceeding $45 per share.
Upon any termination of the nonwovens asset purchase agreement
(other than due to a breach by Ahlstrom) Dexter has agreed to promptly
reimburse Ahlstrom for its out-of-pocket expenses incurred in connection
with the nonwovens asset purchase agreement up to a maximum of $2 million.
INDEMNIFICATION
Dexter has agreed to indemnify Ahlstrom in the event of breach of
any of the representations, warranties or covenants of Dexter and its
subsidiaries contained in the asset purchase agreement or in any
certificate delivered by Dexter pursuant to the asset purchase agreement
from and against all resulting damages in excess of $250,000 in the
aggregate that Ahlstrom suffers, provided that any indemnity with respect
to income taxes will be governed by the tax provisions of the asset
purchase agreement. Dexter has also agreed to indemnify Ahlstrom for
certain environmental claims existing prior to the closing and relating to
the nonwovens business and certain non-income tax claims relating to the
nonwovens business for taxable periods or portions thereof ending on or
before the effective time.
Ahlstrom has agreed to indemnify Dexter in the event of breach of
any of the representations, warranties or covenants of Ahlstrom and its
subsidiaries contained in the asset purchase agreement or in any
certificate delivered by Ahlstrom pursuant to the asset purchase agreement
from and against all resulting damages in excess of $250,000 in the
aggregate that Dexter suffers.
The representations and warranties made in the nonwovens asset
purchase agreement survive for nine months after the time the nonwovens
asset sale becomes effective.
AMENDMENT
At any time before the asset sale becomes effective, the parties
may amend, modify or supplement the asset purchase agreement by mutual
written consent.
WAIVER OF COMPLIANCE
The failure of either of the parties to comply with its obligations
may be waived in writing by the party entitled to the benefits of such
obligation, provided, however, that such waiver will not constitute a
waiver of any subsequent failure.
ASSIGNMENT
The asset purchase agreement is assignable only with the prior
written consent of the other party, provided that Ahlstrom may assign its
rights to purchase the nonwovens assets to one or more of its wholly owned
subsidiaries.
BENEFICIAL OWNERSHIP OF STOCK
The following table sets forth information, as of May 15, 2000,
with respect to the beneficial ownership of shares of the common stock of
Dexter by (1) beneficial owners of more than five percent of Dexter common
stock, (2) each director and nominee for director of Dexter, (3) each of
the executive officers named in the summary compensation table in Dexter's
2000 proxy statement, and (4) all directors, nominees and executive
officers of Dexter as a group. Such beneficial ownership is reported in
accordance with the rules of the SEC, under which a person may be deemed to
be the beneficial owner of shares of such common stock if such person has
or shares the power to vote or dispose of such shares or has the right to
acquire beneficial ownership of such shares within 60 days (for example,
through the exercise of an option). Accordingly, the shares shown in the
table as beneficially owned by certain individuals may include shares owned
by certain members of their respective families. Because of such rules,
more than one person may be deemed to be the beneficial owner of the same
shares. The inclusion of the shares shown in the table is not necessarily
an admission of beneficial ownership of those shares by the person
indicated.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENTAGE OF
BENEFICIALLY COMMON STOCK
Shareholders: OWNED(1) OUTSTANDING(1)
------------ --------------
ISP OPCO Holdings Inc. and related entities,
<S> <C> <C>
1361 Alps Road, Wayne, New Jersey 07470................ 2,299,200 9.91(2)
FMR Corp., 82 Devonshire Street, Boston,
Massachusetts 02109 (Fidelity Managed Funds).......... 1,703,300 7.34(3)
Mary K. Coffin, c/o Dexter Corporation, One Elm Street,
Windsor Locks, Connecticut 06096....................... 1,290,000 5.56(4)
Directors, Nominees and Executive Officers:
K. Grahame Walker.......................................... 275,496 *
Kathleen Burdett........................................... 80,259 *
David G. Gordon............................................ 60,009 *
John D. Thompson........................................... 47,444 *
Bruce H. Beatt............................................. 43,845 *
Charles H. Curl............................................ 4,569 *
Henrietta Holsman Fore..................................... 5,995 *
Bernard M. Fox............................................. 5,388 *
Robert M. Furek............................................ 4,898 *
Martha Clark Goss.......................................... 4,471 *
Edgar G. Hotard............................................ 3,513 *
Peter G. Kelly............................................. 8,521 *
Jean-Francois Saglio....................................... 3,582 *
George M. Whitesides....................................... 4,573 *
All Directors, Nominees and Executive Officers
as a Group (22 persons).................................... 729,793 3.15%
----------
</TABLE>
(1) The shares reported above as beneficially owned by the following
persons include vested stock options granted under Dexter's stock
option plans. The shares reported above also include shares of
restricted stock issued to the following persons pursuant to the 1994
Long Term Incentive Plan (the "1994 Plan") and the 1999 Long Term
Incentive Plan ("the "1999 Plan") as more fully described above under
the heading "Long Term Incentive Plan -- Awards in Last Fiscal Year":
K. Grahame Walker -- 51,434; Kathleen Burdett -- 21,142; David G.
Gordon -- 11,460; John D. Thompson -- 14,976; Bruce H. Beatt -- 13,972;
and "All Directors, Nominees and Executive Officers as a Group" --
171,233. Shares of restricted stock issued pursuant to the 1994 Plan
and the 1999 Plan are subject to forfeiture, but may be voted by the
holders thereof unless and until forfeited. Percentages of common stock
of less than 1% are indicated by an asterisk.
(2) Share holding as of May 24, 2000, as reported on Amendment No. 13 to the
Schedule 13D filed by such shareholder.
(3) Share holdings as of December 31, 1999, as reported on the Schedule 13G
most recently filed by such shareholder.
(4) Of the 1,290,000 shares shown in the table as owned by Mary K. Coffin,
990,000 are held by Fleet Bank, N.A., trustee of a trust the
beneficiary of which is Dexter D. Coffin, Jr. Mary K. Coffin is a
trustee of this trust and shares the power to vote and dispose of
shares owned by the trust. The power to vote and dispose of the shares
owned by this trust is held by a majority of its three individual
trustees. The remaining shares shown in the table are held by Mary K.
Coffin through a living trust.
As of December 31, 1999, two of Dexter's directors beneficially
owned shares of common stock of Life Technologies, Inc., a Dexter
subsidiary. Peter G. Kelly owned 4,500 shares, which consists of 4,500
shares of common stock which Mr. Kelly may acquire upon the exercise of the
stock options. George M. Whitesides owned 4,650 shares, which consists of
150 shares of common stock owned by Dr. Whitesides and 4,500 shares of
common stock which Dr. Whitesides may acquire upon the exercise of stock
options. Mr. Kelly and Dr. Whitesides each own less than one percent of the
outstanding common stock of Life Technologies, Inc.
OTHER MATTERS
The Board of Directors of the Company is not aware of any matters,
other than the aforementioned matters, that will be presented for
consideration at the special meeting. If other matters properly come before
the special meeting, it is the intention of the persons named in the
enclosed proxy to vote thereon in accordance with their best judgment.
PROPOSALS OF SHAREHOLDERS
In order to be considered for inclusion in the Company's proxy
statement and form of proxy relating to next year's annual meeting of
shareholders, proposals of shareholders intended to be presented for action
at that meeting must be received at the principal executive offices of
Dexter Corporation, One Elm Street, Windsor Locks, Connecticut 06096-2334,
marked for the attention of the Secretary, by February 2, 2001.
Under the Company's Bylaws, notice of any other matter intended to
be presented by a shareholder for action at next year's annual meeting must
be addressed to the principal executive offices of Dexter Corporation, One
Elm Street, Windsor Locks, Connecticut 06096-2334, marked for the attention
of the Secretary, and must contain the information required by the Bylaws.
The notice must be received at the principal executive offices during the
period from February 25, 2001 through April 16, 2001, unless next year's
annual meeting is called for a date prior to April 16, 2001, in which case
notice must be received within fifteen days of when notice of the annual
meeting is given.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT TO VOTE ON THE ASSET SALE. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM
WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED
JULY 28, 2000. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN
THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND
THE MAILING OF THE PROXY STATEMENT TO SHAREHOLDERS SHALL NOT CREATE ANY
IMPLICATION TO THE CONTRARY.
By order of the Board of Directors,
Dexter Corporation
Bruce H. Beatt
Secretary
DEXTER CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY FOR THE SPECIAL MEETING TO BE HELD ON AUGUST 30, 2000.
K. Grahame Walker, George M. Whitesides and Bernard M. Fox, or any
of them, each with power of substitution, are hereby authorized to vote the
shares of the undersigned at the Special Meeting of Shareholders of Dexter
Corporation, to be held on Wednesday, August 30, 2000, at 12:00 noon, local
time, at Dexter Corporation, Two Elm Street, Windsor Locks, Connecticut,
and at any adjournment or postponement thereof, upon the matters set forth
in the Dexter Corporation Proxy Statement and upon such other matters as
may properly come before the Special Meeting, voting as specified on the
reverse side of this card with respect to the matters set forth in the
Proxy Statement, and voting in the discretion of the above-named persons on
such other matters as may properly come before the Special Meeting. If you
specify a different choice on the proxy card, your shares will be voted as
specified.
Signing and dating Dexter's proxy card will have the effect of
revoking any proxy card you signed on an earlier date, and will constitute
a revocation of all previously granted authority to vote for every proposal
included on such other proxy card.
PLEASE SIGN AND DATE THE REVERSE SIDE OF THIS PROXY CARD AND PROMPTLY
RETURN IT IN THE ENCLOSED ENVELOPE.
YOU MAY SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE
SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE WITH
THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PERSONS NAMED ABOVE AS PROXIES
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(continued on reverse side)
(Reverse Side)
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
DIRECTORS RECOMMEND A VOTE "FOR" PROPOSAL 1
PROPOSAL 1: APPROVAL OF THE NONWOVENS ASSET SALE
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
I plan to attend the meeting. [ ]
SIGNATURE(S):
___________________________ Date: ______________, 2000
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, give full title as such. If signing on behalf of a corporation,
sign the full corporate name by authorized officer. The signer hereby
revokes all proxies heretofore given by the signer to vote at the Special
Meeting of Shareholders of Dexter Corporation and any adjournment or
postponement thereof.
ANNEX A
ASSET PURCHASE AGREEMENT
BETWEEN
DEXTER CORPORATION
AND
AHLSTROM PAPER GROUP OY
Dated as of June 20, 2000
ARTICLE I
CERTAIN DEFINITIONS
1.1 "affiliate"......................................................1
1.2 "APBO"...........................................................1
1.3 "Authorizations".................................................1
1.4 "Bill of Sale"...................................................1
1.5 "business day"...................................................2
1.6 "Buyer Savings Plan".............................................2
1.7 "Closing"........................................................2
1.8 "Closing Date"...................................................2
1.9 "Code"...........................................................2
1.10 "Consolidated Income Tax Returns"................................2
1.11 "Consideration"..................................................2
1.12 "Damages"........................................................2
1.13 "Department of Justice"..........................................2
1.14 "Dexter Acquisition Proposal"....................................2
1.15 "Dexter Acquisition Transaction".................................2
1.16 "Draft Allocation"...............................................3
1.17 "Effective Time".................................................3
1.18 "Environmental Claim"............................................3
1.19 "Environmental Law"..............................................3
1.20 "Environmental Permits"..........................................3
1.21 "ERISA"..........................................................3
1.22 "ERISA Affiliate"................................................3
1.23 "Escrow Amount"..................................................3
1.24 "Excluded Assets"................................................3
1.25 "Excluded Liabilities"...........................................3
1.26 "Final Allocation"...............................................3
1.27 "Foreign Acquisition Agreement"..................................3
1.28 "Foreign Nonwovens Subsidiaries".................................4
1.29 "FTC"............................................................4
1.30 "GAAP"...........................................................4
1.31 "Governmental Entity"............................................4
1.32 "Hazardous Materials"............................................4
1.33 "Indebtedness"...................................................4
1.34 "Independent Accountants"........................................4
1.35 "Intercompany Accounts"..........................................4
1.36 "Law"............................................................4
1.37 "Lien"...........................................................4
1.38 "Material Adverse Effect"........................................4
1.39 "Net Asset Value"................................................4
1.40 "Nonwovens Acquisition Proposal".................................4
1.41 "Nonwovens Assets"...............................................5
1.42 "Nonwovens Balance Sheet"........................................5
1.43 "Nonwovens Bank Accounts"........................................6
1.44 "Nonwovens Books and Records"....................................6
1.45 "Nonwovens Business".............................................6
1.46 "Nonwovens Contracts"............................................6
1.47 "Nonwovens Employees"............................................6
1.48 "Nonwovens Financial Statements".................................6
1.49 "Nonwovens Intellectual Property"................................6
1.50 "Nonwovens Intellectual Property Licenses".......................7
1.51 "Nonwovens Inventory"............................................7
1.52 "Nonwovens Leases"...............................................7
1.53 "Nonwovens Liabilities"..........................................7
1.54 "Nonwovens Real Properties"......................................8
1.55 "Nonwovens Subject Subsidiaries".................................8
1.56 "Nonwovens Subsidiaries".........................................8
1.57 "Permitted Exceptions"...........................................8
1.58 "person".........................................................8
1.59 "Plans"..........................................................8
1.60 "Preliminary Closing Date Balance Sheet".........................8
1.61 "Potential Grow-In Employees"....................................8
1.62 "Proxy Materials"................................................8
1.63 "Purchase Price".................................................9
1.64 "Shareholder Approval"...........................................9
1.65 "Specified Dexter Acquisition Proposal"..........................9
1.66 "subsidiary".....................................................9
1.67 "Target Net Asset Value".........................................9
1.68 "Tax Indemnified Party"..........................................9
1.69 "Tax Indemnifying Party".........................................9
1.70 "Tax Third Party Claim"..........................................9
1.71 "Taxes"..........................................................9
1.72 "Transferred Employees"..........................................9
1.73 "Undertaking and Indemnity Agreement"............................9
1.74 "Vested Eligible Employees"......................................9
1.75 "WARN"...........................................................9
1.76 "WARN Obligations"...............................................9
ARTICLE II
THE CLOSING
2.1 Time and Place of Closing.......................................10
2.2 Purchase and Sale of the Nonwovens Assets.......................10
2.3 Consideration for the Assets; Nonassignable Contracts and
Leases..........................................................10
2.4 Deliveries by the Seller........................................11
2.5 Delivery by the Buyer...........................................12
2.6 Post-Closing Adjustment.........................................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
3.1 Organization; Qualification.....................................14
3.2 Capital Stock...................................................14
3.3 Equity Investments..............................................15
3.4 Authority Relative to this Agreement............................15
3.5 No Violation....................................................15
3.6 Financial Statements............................................16
3.7 Absence of Undisclosed Liabilities..............................16
3.8 Absence of Certain Changes or Events............................17
3.9 Title and Related Matters.......................................17
3.10 Contracts.......................................................17
3.11 Leases..........................................................18
3.12 Intellectual Property...........................................18
3.13 Legal Proceedings, etc..........................................19
3.14 Employee Benefit Plans; ERISA...................................19
3.15 Assets Necessary to Business....................................21
3.16 Governmental Authorizations and Regulations.....................21
3.17 Disclosure......................................................21
3.18 Accounts Receivable.............................................21
3.19 Taxes...........................................................21
3.20 Insurance.......................................................22
3.21 Environmental Matters...........................................22
3.22 Brokers.........................................................23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
4.1 Organization....................................................23
4.2 Authority Relative to this Agreement............................23
4.3 No Violation....................................................24
4.4 Financing.......................................................24
4.5 Brokers.........................................................24
ARTICLE V
COVENANTS OF THE PARTIES
5.1 Conduct of Business of the Seller...............................24
5.2 Current Information.............................................26
5.3 Access to Information...........................................26
5.4 Expenses........................................................27
5.5 Reasonable Best Efforts.........................................27
5.6 Further Assurances..............................................27
5.7 Disclosure Supplements..........................................28
5.8 Public Announcements............................................28
5.9 Sales and Transfer Taxes and Fees...............................28
5.10 Noncompetition..................................................28
5.11 No Solicitation.................................................29
5.12 Shareholder Approval............................................29
5.13 Proxy Statement.................................................30
ARTICLE VI
SELLER EMPLOYEES
6.1 Employment......................................................31
6.2 Assumption of Plans.............................................32
ARTICLE VII
CLOSING CONDITIONS
7.1 Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby................................33
7.2 Conditions to the Obligations of the Seller to Effect the
Transactions Contemplated Hereby................................34
7.3 Conditions to the Obligations of the Buyer to Effect the
Transactions Contemplated Hereby................................34
7.4 Certificates....................................................35
ARTICLE VIII
CERTAIN TAX MATTERS
8.1 Tax Matters.....................................................35
8.2 Indemnity for Taxes.............................................37
8.3 Other Tax Matters...............................................39
ARTICLE IX
TERMINATION AND ABANDONMENT
9.1 Termination.....................................................39
9.2 Procedure and Effect of Termination.............................40
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Delivery of Schedules...........................................41
10.2 Amendment and Modification......................................41
10.3 Waiver of Compliance; Consents..................................41
10.4 No Third Party Beneficiary Rights...............................41
10.5 Notices.........................................................41
10.6 Assignment......................................................42
10.7 Designated Subsidiary...........................................43
10.8 Governing Law...................................................43
10.9 Counterparts....................................................43
10.10 Interpretation..................................................43
10.11 Entire Agreement................................................43
10.12 Severability....................................................43
ARTICLE XI
SURVIVAL
11.1 Survival........................................................44
11.2 Indemnification Provisions for the Benefit of the Buyer.........44
11.3 Indemnification Provisions for the Benefit of the Seller........45
11.4 Matters Involving Third Parties.................................45
11.5 Statements as Representations...................................46
11.6 Limitation on Indemnification...................................46
Exhibit A Form of Undertaking and Indemnity Agreement....................A-1
Exhibit B Form of Company Bill of Sale...................................B-1
Exhibit C Nonwovens Balance Sheet........................................C-1
Exhibit D Escrow Agreement...............................................D-1
Exhibit E FIRPTA Certification...........................................E-1
Exhibit F Opinion of Counsel to Seller...................................F-1
Exhibit G Opinion of Counsel to Buyer....................................G-1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of June 20, 2000 (the
"Agreement"), between Dexter Corporation, a Connecticut corporation (the
"Seller"), and Ahlstrom Paper Group Oy, a Finland corporation (the
"Buyer").
WHEREAS, the Seller is in the business of manufacturing and
marketing of long-fiber, wet-formed and hydroentangled products, primarily
for use in the food packaging, medical and hygiene markets through an
unincorporated division of Seller and the Nonwovens Subsidiaries;
WHEREAS, the Buyer wishes to acquire from the Seller
substantially all of the Nonwovens Assets;
WHEREAS, the Seller is willing to transfer the Nonwovens Assets
(other than the Nonwovens Assets owned or held by the Nonwovens Subject
Subsidiaries, the capital stock of which is being transferred directly or
indirectly by the Seller to the Buyer) to the Buyer in exchange for the
assumption by the Buyer of the Nonwovens Liabilities and the payment to the
Seller by the Buyer of the Purchase Price;
WHEREAS, following the execution and delivery of this
Agreement, each of the Foreign Nonwovens Subsidiaries (other than any which
are Nonwovens Subject Subsidiaries) will enter into one or more Foreign
Acquisition Agreements on or prior to the Closing Date with Buyer or one or
more of Buyer's wholly-owned subsidiaries collectively providing for the
purchase or acquisition, directly or indirectly, of all Nonwovens Assets
held by the Foreign Nonwovens Subsidiaries (other than any which are
Nonwovens Subject Subsidiaries) and assumption, directly or indirectly, of
all Nonwovens Liabilities of the Foreign Nonwovens Subsidiaries (other than
any which are Nonwovens Subject Subsidiaries).
NOW, THEREFORE, in consideration of the foregoing premises and
the respective representations, warranties, covenants, agreements and
conditions hereinafter set forth, and intending to be legally bound hereby,
the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement each of the following terms shall
have the following meaning:
1.1 "affiliate" shall have the meaning ascribed thereto in
Section 10.10.
1.2 "APBO" shall have the meaning ascribed thereto in Section
6.2(b).
1.3 "Authorizations" shall have the meaning ascribed thereto in
Section 3.16(a).
1.4 "Bill of Sale" shall have the meaning ascribed thereto in
Section 2.4(c).
1.5 "business day" shall have the meaning ascribed thereto in
Section 10.10.
1.6 "Buyer Savings Plan" shall have the meaning ascribed
thereto in Section 6.2(a).
1.7 "Closing" shall mean the consummation of the transactions
contemplated by Article II of this Agreement in accordance with the terms
and upon the conditions set forth in Article II.
1.8 "Closing Date" shall mean the fifth business day following
the later to occur of (i) the expiration or termination of all waiting
periods, including any extensions thereof, if any, which are applicable to
the transactions contemplated by this Agreement pursuant to Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act") and (ii) the satisfaction
of all of the conditions to each party's obligations hereunder or the
waiver thereof by the party entitled to the benefit thereof; or such other
date as the parties hereto agree upon in writing.
1.9 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.10 "Consolidated Income Tax Returns" shall mean (i) a
consolidated United States federal income Tax return within the meaning of
Section 1501 of the Code and the Treasury Regulations under Section 1502 of
the Code and (ii) any other combined, joint, consolidated or unitary income
Tax return, report and form required to be filed with any tax authority,
other than any Tax return, report or form that includes only the Nonwovens
Subject Subsidiaries.
1.11 "Consideration" shall have the meaning ascribed thereto in
Section 2.3(a).
1.12 "Damages" shall mean all losses, amounts paid in
settlement, claims, damages, liabilities, judgments and reasonable
out-of-pocket costs (including costs of investigation or enforcement) and
expenses (including, reasonable attorneys' fees and expenses).
1.13 "Department of Justice" shall have the meaning ascribed
thereto in Section 5.5(a).
1.14 "Dexter Acquisition Proposal" shall mean a written
proposal for the acquisition of Seller as an entirety (whether by way of
merger, consolidation, share exchange, tender offer or otherwise) and shall
include any tender or exchange offer to Seller's shareholders which
proposes to acquire at least a majority of the outstanding shares of the
Seller.
1.15 "Dexter Acquisition Transaction" shall mean any business
combination transaction in which (w) the Seller (or its successor pursuant
to a transaction that does not constitute a Dexter Acquisition Transaction)
is merged with or into another corporation and all of the outstanding
shares of the Seller (or such successor) are purchased or acquired (unless
the shareholders of the Seller receive, with respect to their shares,
shares of the survivor or its ultimate parent corporation that constitute a
majority of the shares thereof then outstanding) or (x) at least a majority
of the outstanding shares of the Seller (or such successor) are purchased
or acquired in a tender offer or exchange offer or (y) all or substantially
all of the assets of Dexter are sold or disposed of and the outstanding
shares of the Seller (or such successor) redeemed or liquidated or
substantially all of the assets are otherwise distributed to shareholders,
or (z) any similar transaction.
1.16 "Draft Allocation" shall have the meaning ascribed thereto
in Section 8.1(e).
1.17 "Effective Time" shall mean 11:59 p.m. New York City time
on the Closing Date at which time the Closing and all transactions
contemplated thereby shall be deemed to have occurred simultaneously;
provided that the Closing has actually occurred.
1.18 "Environmental Claim" shall have the meaning ascribed
thereto in Section 3.21(d).
1.19 "Environmental Law" shall have the meaning ascribed
thereto in Section 3.21(d).
1.20 "Environmental Permits" shall have the meaning ascribed
thereto in Section 3.21(a).
1.21 "ERISA" shall have the meaning ascribed thereto in Section
3.14(a).
1.22 "ERISA Affiliate" shall have the meaning ascribed thereto
in Section 3.14(a).
1.23 "Escrow Amount" shall have the meaning ascribed thereto in
Section 2.5(a).
1.24 "Excluded Assets" shall mean (i) cash and cash equivalents
(other than cash and cash equivalents of the Nonwovens Subject
Subsidiaries); (ii) all contracts of insurance (except with respect to
insurance proceeds regarding the Nonwovens Assets); (iii) all rights to all
refunds or credits of Taxes levied or imposed upon, or in connection with,
the Nonwovens Assets or the Nonwovens Business with respect to any taxable
period or portion thereof that ends on or before the Effective Time, except
to the extent that any such refunds or credits are taken into account in
preparing the Closing Date Balance Sheet; (iv) those contracts, agreements,
leases and other assets listed in Schedule 1.24(iv); and (v) all property
and assets of the Nonwovens Business that are not used or held for use in
connection with, necessary for, or material to the business and operations
of the Nonwovens Business except as set forth on Schedule 1.24(v).
1.25 "Excluded Liabilities" shall mean all claims, obligations
and liabilities of the Seller and its subsidiaries of any kind, known or
unknown, which are not Nonwovens Liabilities.
1.26 "Final Allocation" shall have the meaning ascribed thereto
in Section 8.1(e).
1.27 "Foreign Acquisition Agreement" shall mean one or more
purchase agreements relating to the transfer of assets by one or more of
the Foreign Nonwovens Subsidiaries in form and substance reasonably
satisfactory to Buyer and Seller intended to reflect the economic terms
hereof and the allocation between the parties of rights, duties and
obligations as provided herein including with respect to employee benefits
and pension matters.
1.28 "Foreign Nonwovens Subsidiaries" shall mean the Nonwovens
Subsidiaries listed on Schedule 1.28.
1.29 "FTC" shall have the meaning ascribed thereto in Section
5.5(a).
1.30 "GAAP" shall mean United States generally accepted
accounting principles.
1.31 "Governmental Entity" shall have the meaning ascribed
thereto in Section 3.5.
1.32 "Hazardous Materials" shall have the meaning ascribed
thereto in Section 3.21(d).
1.33 "Indebtedness" as to any person shall mean, without
duplication, (i) all indebtedness (including principal and accrued
interest) of such person for borrowed money or for the deferred purchase
price of property or services (including long-term debt and short-term
debt), (ii) all drafts drawn under letters of credit issued for the account
of such person and (iii) the aggregate amount required to be capitalized
under leases under which such person is the lessee.
1.34 "Independent Accountants" shall have the meaning ascribed
thereto in Section 2.6(a)(iv).
1.35 "Intercompany Accounts" shall have the meaning set forth
in Section 2.6(f).
1.36 "Law" shall have the meaning ascribed thereto in Section
3.5.
1.37 "Lien" shall have the meaning ascribed thereto in Section
3.3(b).
1.38 "Material Adverse Effect" shall mean any state of facts,
event, change or effect having a material adverse effect on the condition
(financial or otherwise), business, prospects or results of operations of
the Nonwovens Business.
1.39 "Net Asset Value" shall have the meaning ascribed thereto
in Section 2.6(d).
1.40 "Nonwovens Acquisition Proposal" shall mean a purchase or
other acquisition (including by way of merger, consolidation, stock
purchase, asset purchase or share exchange) of a material portion of the
Nonwovens Assets outside the ordinary course of Seller's business, or any
substantially similar transaction, or any inquiry or indication of interest
with respect to any of the foregoing; in each case other than the
transactions contemplated by this Agreement.
1.41 "Nonwovens Assets" shall mean:
(a) all of the property and assets used or held for use in
connection with, necessary for, or material to the business and operations
of the Nonwovens Business, whether or not reflected in the Nonwovens
Balance Sheet, including, without limitation, the Nonwovens Real
Properties, the Nonwovens Intellectual Property, the Nonwovens Inventory,
plants, machinery (a list of any machinery exceeding $250,000 in book value
is set forth on Schedule 1.41(a)), equipment, tools, supplies, spare parts,
furniture, fixtures, computer software and hardware, leasehold
improvements, motor vehicles, accounts and notes receivable (including
intercompany receivables and notes) and prepaid expenses (and including all
items which would be included on the Nonwovens Balance Sheet except for the
fact that such items are fully depreciated or expensed), plus all items of
a nature customarily carried as assets in the accounts of the Nonwovens
Business which have been or will be acquired in the ordinary course of the
Nonwovens Business consistent with past practice between the date of the
Nonwovens Balance Sheet and the Effective Time, less any items which have
been or will be disposed of or consumed in the ordinary course of the
Nonwovens Business consistent with past practice between the date of the
Nonwovens Balance Sheet and the Effective Time;
(b) the Nonwovens Bank Accounts;
(c) the Nonwovens Books and Records (except as otherwise
provided in the Foreign Transfer Agreements to be entered into with respect
to the Foreign Nonwovens Subsidiaries);
(d) the Nonwovens Contracts;
(e) the Nonwovens Leases;
(f) all of the outstanding capital stock of the Nonwovens
Subject Subsidiaries; and
(g) all rights, claims and privileges of the Seller and
its subsidiaries (including rights to recovery under all insurance policies
of the Seller to the extent they relate to the Nonwovens Assets or the
Nonwovens Liabilities which are in effect prior to the Effective Time and
which are not being assigned to the Buyer hereunder) and all rights to all
refunds or credits of Taxes levied or imposed upon, or in connection with,
the Nonwovens Assets or the Nonwovens Business with respect to any taxable
period or portion thereof that ends on or before the Effective Time, to the
extent such refunds or credits are taken into account in preparing the
Closing Date Balance Sheet.
Notwithstanding the foregoing, the Nonwovens Assets shall not mean or
include the Excluded Assets.
1.42 "Nonwovens Balance Sheet" shall have the meaning ascribed
thereto in Section 3.6.
1.43 "Nonwovens Bank Accounts" shall mean all of the bank
accounts of the Seller and its subsidiaries utilized for the Nonwovens
Business which are listed on Schedule 1.43.
1.44 "Nonwovens Books and Records" shall mean all of the books
and records of the Seller and its subsidiaries relating to the operations
of the Nonwovens Business, including, without limitation, all books and
records relating to the employees, the purchase of materials, supplies and
services, financial, accounting, Tax (other than any combined, joint,
consolidated or unitary Tax return information) and operations matters,
product engineering, research and development, manufacture and sale of
products and dealings with customers of the Nonwovens Business. As used
herein, books and records shall include all computerized books and records
and other computerized storage media and the software used in connection
therewith.
1.45 "Nonwovens Business" shall mean the unincorporated
division of the Seller and the Nonwovens Subsidiaries comprising the
nonwovens materials business (including its cogeneration facility) which
focuses on the proprietary formulation, manufacture and marketing of
long-fiber, wet-formed, and hydroentangled products, primarily for use in
the food packaging, medical, and hygiene markets.
1.46 "Nonwovens Contracts" shall mean all right, title and
interest of Seller or any of its affiliates (except for Nonwovens
Subsidiaries other than Nonwovens Subject Subsidiaries) to all contracts,
agreements and commitments of the Seller and its subsidiaries relating to,
necessary for or material to the Nonwovens Business, including, without
limitation, (a) the contracts, agreements and commitments listed in
Schedule 3.10(a) referred to in Section 3.10(a), and (b) all contracts,
agreements and commitments of the Seller relating to, necessary for or
material to the Nonwovens Business which are entered into between the date
of this Agreement and the Effective Time and expressly permitted by this
Agreement, excluding, however, all contracts, agreements and commitments
which (1) expire in accordance with their terms prior to the Effective Time
or are terminated in the ordinary course of the Nonwovens Business or (2)
are listed in Schedule 1.46.
1.47 "Nonwovens Employees" shall have the meaning ascribed
thereto in Section 6.1(a).
1.48 "Nonwovens Financial Statements" shall have the meaning
ascribed thereto in Section 3.6.
1.49 "Nonwovens Intellectual Property" shall mean all (a)
inventions (whether patentable or unpatentable and whether or not reduced
to practice), improvements thereto, and patents, patent applications,
inventor's certificates, and patent disclosures, together with reissuances,
continuations, continuations-in-part, revisions, extensions and
reexaminations thereof; (b) trademarks (including the name "Dexter",
subject to a perpetual royalty-free license for use in the Specialty
Polymers Business and subject to a perpetual, royalty-free non-transferable
license to the Dexter Corporation to use the name in connection with its
affairs outside the Nonwovens Business), service marks, brand names,
certification marks, trade dress, logos, trade names, assumed names,
corporate names and other indications of origin, including, without
limitation, translations, adaptations, derivations, and combinations
thereof; (c) original works of authorship, copyrights and moral rights; (d)
trade secrets and confidential business information (including, without
limitation, ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
technical data, designs, discoveries, drawings, specifications, customer
and supplier lists, pricing and cost information, and business and
marketing plans and proposals); (e) computer software, including, without
limitation, programs, applications, source and object codes, data bases,
data, models, algorithms, tables and documentation related to the
foregoing, (f) rights in confidentiality and licensing agreements with
regard to any of the foregoing; (g) legal claims and defenses related to
any of the foregoing; (h) other similar tangible or intangible intellectual
proprietary or proprietary rights, information and technology and copies
and tangible embodiments thereof (in whatever form or medium); (i) all
applications to register, registrations, and renewals or extensions of the
foregoing; and (j) the goodwill associated with each of the foregoing, that
are used in, relate to, are necessary for or are material to the operation
of the Nonwovens Business including, without limitation, (i) all items
listed in Schedule 3.12(a) referred to in Section 3.12(a) and (ii) all such
items which are acquired or developed for use primarily in the business of
the Nonwovens Business between the date of this Agreement and the Effective
Time, excluding, however, all such items which expire in the ordinary
course of the Nonwovens Business prior to the Effective Time.
1.50 "Nonwovens Intellectual Property Licenses" shall have the
meaning ascribed thereto in Section 3.12(a).
1.51 "Nonwovens Inventory" shall mean all inventories owned by
the Seller or its subsidiaries relating to, necessary for or material to
the Nonwovens Business or the Nonwovens Assets, wherever located, including
all packaging, finished goods, raw materials, supplies, work in process,
spare parts and other miscellaneous items of tangible property normally
considered part of "inventory" under GAAP, consistently applied.
1.52 "Nonwovens Leases" shall mean (a) all leases of the Seller
and its subsidiaries (as well as the sub-leases listed on Schedule 1.52)
relating to, necessary for, or material to the Nonwovens Business (whether
entered into as lessor or lessee) listed in Schedule 3.11 referred to in
Section 3.11, and (b) all leases of the Seller and its subsidiaries
relating to the Nonwovens Business that are entered into between the date
of this Agreement and the Effective Time and expressly permitted by this
Agreement, excluding, however, all leases which will expire in accordance
with their terms prior to the Effective Time.
1.53 "Nonwovens Liabilities" shall mean:
(a) all of the non-interest bearing current liabilities of
the Seller and its subsidiaries (including, to the extent reflected on the
Closing Date Balance Sheet, (i) income Taxes of the Nonwovens Subject
Subsidiaries with respect to any taxable period or portion thereof that
ends on or before the Effective Time and (ii) non-income Taxes levied or
imposed upon, or in connection with, the Nonwovens Assets or the Nonwovens
Business with respect to any taxable period or portion thereof that ends on
or before the Effective Time, but excluding all other Taxes) which have not
been or will not be satisfied or discharged at or prior to the Effective
Time;
(b) all of the obligations and liabilities to perform
under the Nonwovens Leases and the Nonwovens Contracts (except to the
extent such Nonwovens Contracts are not transferred to the Buyer);
(c) all claims and liabilities arising after the Effective
Time out of the Nonwovens Assets; and
(d) the obligations and liabilities being assumed by the
Buyer pursuant to Article VI.
1.54 "Nonwovens Real Properties" shall mean all of the real
properties of the Seller and its subsidiaries relating to, necessary for or
material to the Nonwovens Business which are listed in Schedule 3.9
referred to in Section 3.9.
1.55 "Nonwovens Subject Subsidiaries" shall mean the
subsidiaries listed on Schedule 1.55.
1.56 "Nonwovens Subsidiaries" shall mean the subsidiaries
listed on Schedule 1.56.
1.57 "Permitted Exceptions" shall mean (i) those exceptions to
title to the Nonwovens Assets listed in Schedule 3.9 referred to in Section
3.9; (ii) Liens that secure debt on the Nonwovens Balance Sheet or which
are otherwise reflected in the Nonwovens Balance Sheet with respect to
which no default exists; (iii) Liens securing all or a portion of the
purchase price of a Nonwovens Asset which arose in connection with the
purchase of such Nonwovens Asset after the date of the Nonwovens Balance
Sheet and which purchase price remains owing; (iv) statutory Liens for
Taxes not yet due or delinquent or the validity of which is being contested
in good faith by appropriate proceedings; (v) carriers', warehousemen's,
mechanics' and materialmen's and other similar Liens arising in the
ordinary course of the Nonwovens Business consistent with past practice for
sums not yet due and payable or delinquent or the validity of which is
being contested in good faith by appropriate proceedings; (vi) all
exceptions, restrictions, easements, rights of way and encumbrances set
forth in the title insurance policies listed in Schedule 3.20 referred to
in Section 3.20; and (vii) other Liens that are not material in amount or
do not materially detract from the value of or materially impair the use of
the property affected by such Lien.
1.58 "person" shall have the meaning ascribed thereto in
Section 10.10.
1.59 "Plans" shall have the meaning ascribed thereto in Section
3.14(a).
1.60 "Preliminary Closing Date Balance Sheet" shall have the
meaning ascribed thereto in Section 2.6(a)(i).
1.61 "Potential Grow-In Employees" shall have the meaning
ascribed thereto in Section 6.2(b).
1.62 "Proxy Materials" shall have the meaning ascribed thereto
in Section 5.13(a).
1.63 "Purchase Price" shall have the meaning ascribed thereto
in Section 2.3(a)(ii).
1.64 "Shareholder Approval" shall have the meaning ascribed to
it in Section 7.3.
1.65 "Specified Dexter Acquisition Proposal" shall mean (a) any
Dexter Acquisition Proposal which is conditioned on (or has the price
payable depend upon) Seller's shareholders voting against Shareholder
Approval or (b) any other Dexter Acquisition Transaction unless the
proposed acquiror agrees to use its best efforts to cause Seller to comply
with its obligations under this Agreement and to vote all shares of Seller
common stock it acquires and thereby becomes entitled to vote in favor of
Shareholder Approval.
1.66 "subsidiary" shall have the meaning ascribed thereto in
Section 10.10.
1.67 "Target Net Asset Value" shall have the meaning ascribed
thereto in Section 2.6(d).
1.68 "Tax Indemnified Party" shall have the meaning ascribed
thereto in Section 8.2(e).
1.69 "Tax Indemnifying Party" shall have the meaning ascribed
thereto in Section 8.2(e).
1.70 "Tax Third Party Claim" shall have the meaning ascribed
thereto in Section 8.2(e).
1.71 "Taxes" shall mean all taxes, however denominated,
including any interest, penalties or additions to tax that may become
payable in respect thereof, imposed by any government, which taxes shall
include without limitation, all income and withholding taxes, franchise
taxes, payroll and employee withholding taxes, gross receipt taxes,
occupation taxes, real and personal property taxes, ad valorem taxes, stamp
taxes, transfer taxes, workers' compensation taxes and other obligations of
the same or a similar nature; and "Tax" shall mean any one of the
foregoing.
1.72 "Transferred Employees" shall have the meaning ascribed
thereto in Section 6.1(a).
1.73 "Undertaking and Indemnity Agreement" shall have the
meaning ascribed thereto in Section 2.3(a).
1.74 "Vested Eligible Employees" shall have the meaning
ascribed thereto in Section 6.2(b).
1.75 "WARN" shall have the meaning ascribed thereto in Section
6.2(e).
1.76 "WARN Obligations" shall have the meaning ascribed thereto
in Section 6.2(e).
ARTICLE II
THE CLOSING
2.1 Time and Place of Closing. Subject to the terms and
conditions of this Article II, the Closing will take place at the offices
of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York,
New York, at 9:30 A.M. (local time) on the Closing Date or at such other
place or time or both as the parties may agree.
2.2 Purchase and Sale of the Nonwovens Assets. Subject to the
terms and conditions of this Agreement (or, with respect to any condition
not satisfied, the waiver thereof by the party for whose benefit the
condition exists), the Seller will sell, convey, assign, transfer and
deliver, or cause to be sold, conveyed, assigned, transferred and
delivered, all of its direct or indirect right, title and interest at the
Effective Time in and to the Nonwovens Assets (other than the Nonwovens
Assets owned or held by the Nonwovens Subject Subsidiaries, the capital
stock of which is being transferred directly or indirectly by the Seller to
the Buyer), and the Buyer will purchase, acquire, accept and pay for, as
hereinafter provided, the Nonwovens Assets (other than the Nonwovens Assets
owned or held by Nonwovens Subject Subsidiaries, the capital stock of which
is being transferred directly or indirectly by the Seller to the Buyer) and
will assume the Nonwovens Liabilities.
2.3 Consideration for the Assets; Nonassignable Contracts and
Leases.
(a) The aggregate consideration (the "Consideration") for
the Nonwovens Assets (including the Nonwovens Assets owned or held by
Nonwovens Subsidiaries) shall consist of (i) the assumption by the Buyer of
the Nonwovens Liabilities and the indemnification of the Seller by the
Buyer with respect to the Nonwovens Liabilities, in each case pursuant to
an Undertaking and Indemnity Agreement substantially in the form of Exhibit
A to this Agreement (the "Undertaking and Indemnity Agreement"), and (ii)
payment or delivery of the Purchase Price by the Buyer to the Seller. The
portion of the Consideration constituting the purchase price (the "Purchase
Price") shall be an amount in cash equal to $275,000,000. The Purchase
Price shall be subject to the adjustment set forth in Section 2.6.
(b) In the case of any Nonwovens Contracts or Nonwovens
Leases, or any contracts to which a Nonwovens Subject Subsidiary is a party
on the Closing which are not by their terms assignable or which require the
consent of a third party in connection with this transaction, the Seller
agrees to use reasonable efforts to cause such assignment or to procure
such consent. In those cases where consents have not been obtained to the
sale, conveyance, assignment or delivery to the Buyers of any Nonwovens
Contracts or Nonwovens Leases (collectively, "Non-Conveyed Contracts"), the
Seller shall, at the Buyer's request, take all reasonable steps and actions
to provide Buyers with the benefit of such Non-Conveyed Contracts
(including, but not limited to, (i) enforcing, at the request and expense
of the Buyer, any rights of the Seller arising with respect thereto
(including, without limitation, the right to terminate in accordance with
the terms thereof upon the advice of the Buyer) or (ii) permitting the
Buyers to enforce any rights arising with respect thereto) as if such
Non-Conveyed Contracts had been sold, conveyed, assigned and delivered to
the Buyers). The provisions of this Section 2.3(b) shall not affect the
right of the Buyers not to consummate the transactions contemplated by this
Agreement if the conditions to their obligations hereunder contained in
Sections 7.1(d) and 7.3(f) have not otherwise been fulfilled.
2.4 Deliveries by the Seller. At the Closing, the Seller shall
deliver or cause to be delivered the following to the Buyer (as well as any
other deliveries required by Foreign Transfer Agreement):
(a) Stock certificates representing all of the shares of
capital stock of each of the Nonwovens Subject Subsidiaries, in each case
accompanied by stock powers duly executed in blank or duly executed
instruments of transfer.
(b) Special warranty deeds, in recordable form, with
respect to the Nonwovens Real Properties owned by the Seller or any of its
subsidiaries (other than the Nonwovens Subject Subsidiaries).
(c) A duly executed bill of sale substantially in the form
of Exhibit B to this Agreement (the "Bill of Sale"), together with such
other appropriate instruments of transfer as the Buyer may reasonably
request, transferring to the Buyer all of the personal and intangible
property owned or held by the Seller as of the Effective Time which is
included in the Nonwovens Assets (other than the Nonwovens Assets owned or
held by Nonwovens Subject Subsidiaries).
(d) Duly executed instruments of assignment (including any
required consents thereto) of the Nonwovens Leases to which the Seller or
any of its subsidiaries (other than the Nonwovens Subject Subsidiaries) is
a party, in recordable form if and to the extent necessary with respect to
those relating to real property or interests therein.
(e) Duly executed instruments of assignment (including any
required consents thereto) of the Nonwovens Contracts to which the Seller
or any of its subsidiaries (other than the Nonwovens Subject Subsidiaries)
is a party.
(f) Duly executed instruments of assignment or transfer of
the Nonwovens Intellectual Property owned or held by the Seller or any of
its subsidiaries (other than the Nonwovens Subject Subsidiaries), in form
suitable for recording in the appropriate office or bureau, and the
original certificates, if available, of such Nonwovens Intellectual
Property together with any powers of attorney necessary to make the
conveyance effective.
(g) Duly executed instruments of assignment of the
Nonwovens Bank Accounts of the Seller or any of its subsidiaries (other
than the Nonwovens Subject Subsidiaries).
(h) Copies of any consents set forth on Schedule 2.4(h)
obtained as contemplated by Sections 7.1(d) and 7.3(f).
(i) The Undertaking and Indemnity Agreement duly executed
by the Seller.
(j) The Foreign Acquisition Agreements duly executed by
the relevant Foreign Nonwovens Subsidiaries.
(k) Such other and further instruments of conveyance,
assignment and transfer as the Buyer may reasonably request for the more
effective conveyance and transfer of any of the Nonwovens Assets.
(l) The certificates contemplated by Sections 7.3 and 7.4.
2.5 Delivery by the Buyer. At the Closing, the Buyer shall
deliver the following to the Seller:
(a) The Purchase Price, less $10,000,000 (the "Escrow
Amount"), the net amount of which shall be payable nine months after the
Closing Date (subject to the terms set forth in the form of escrow
agreement attached as Exhibit D hereto) by (i) the wire transfer of
immediately available funds to a bank account designated in writing by the
Seller at least two business days prior to the Closing Date in any bank in
the continental United States or (ii) such means as are otherwise agreed in
writing upon by the Buyer and the Seller.
(b) Copies of any consents obtained as contemplated by
Sections 5.5(a)(i) and 7.1(d).
(c) The Undertaking and Indemnity Agreement duly executed
by the Buyer.
(d) The Foreign Acquisition Agreements duly executed by
the Buyer or one or more of its wholly owned subsidiaries.
(e) The certificates contemplated by Sections 7.2 and 7.4.
2.6 Post-Closing Adjustment.
(a) (i) Within 45 days following the Effective Time, the
Seller shall prepare or cause to be prepared and deliver a balance sheet of
the Nonwovens Business as of the Closing Date (the " Preliminary Closing
Date Balance Sheet") which shall set forth the Net Asset Value of the
Nonwovens Business. The Preliminary Closing Date Balance Sheet will present
fairly and truly the consolidated financial position of the Nonwovens
Business as of the Closing Date and will be in conformity with GAAP applied
on a basis consistent with the Nonwovens Balance Sheet, except as otherwise
specified in Schedule 2.6(a)(i) or in this Section 2.6(a), including,
without limitation, using the same account classifications, useful lives
and depreciation/amortization schedules for depreciable/amortizable assets,
closing procedures and levels of materiality.
(ii) The Preliminary Closing Date Balance Sheet shall
be accompanied by a report of PricewaterhouseCoopers LLP, independent
public accountants, substantially in the form attached as Schedule
2.6(a)(ii).
(iii) Upon receipt of the Preliminary Closing Date
Balance Sheet, the Buyer and its certified public accountants shall have
the right during the succeeding 15-day period to review, at the Buyer's
expense, the Preliminary Closing Date Balance Sheet and to examine and
review all records and work papers and other supporting documents used to
prepare such Preliminary Closing Date Balance Sheet. The Buyer shall notify
the Seller, in writing (including, but not limited to, by fax or e-mail),
on or before the last day of the 15-day period, of any objections to the
Preliminary Closing Date Balance Sheet, setting forth a reasonably specific
description of the Buyer's objections and the dollar amount of each
objection. If the Buyer does not deliver such notice within such 15-day
period, the Preliminary Closing Date Balance Sheet shall be deemed to have
been accepted by the Buyer.
(iv) If the Buyer objects to the Preliminary Closing
Date Balance Sheet, the Seller and the Buyer shall attempt to resolve any
such objections applying the principles set forth in Section 2.6(a)(i)
within 10 business days of the Seller's receipt of the Buyer's objections.
If the Seller and the Buyer are unable to resolve the matter within such 10
business day period, they shall jointly appoint an impartial
internationally recognized independent certified public accounting firm
(the "Independent Accountants") mutually acceptable to the Buyer and the
Seller (or, if they cannot agree on a mutually acceptable firm, they shall
cause their respective accounting firms to select such firm) within 2 days
of the end of such 10 business day period. The Seller and the Buyer shall
provide to the Independent Accountants full cooperation. The Independent
Accountants shall be instructed to reach their conclusion regarding the
dispute within 10 Business Days. The Preliminary Closing Date Balance Sheet
after the acceptance thereof by the Buyer or the resolution of all disputes
in connection therewith is referred to herein as the "Closing Date Balance
Sheet."
(v) All fees payable to the Independent Accountants in
connection with the resolution of any objections raised to the Preliminary
Closing Date Balance Sheet shall be divided equally between the Buyer and
the Seller.
(b) If the amount of the Net Asset Value as reflected in
the Closing Date Balance Sheet is less than the amount of the Target Net
Asset Value, then the Purchase Price shall be reduced by the amount of such
deficit. Any adjustments in the Purchase Price pursuant to this Section
2.6(b) shall be paid by the Seller by wire transfer of immediately
available funds to an account designated in writing by the Buyer. Any
payments required pursuant to this Section 2.6(b) shall be made within 2
business days after the Closing Date Balance Sheet becomes final and
binding on the parties.
(c) If the amount of the Net Asset Value as reflected in
the Closing Date Balance Sheet exceeds the amount of the Target Net Asset
Value, then the Purchase Price shall be increased by the amount of such
excess. Any adjustments in the Purchase Price pursuant to this Section
2.6(c) shall be paid by the Buyer by wire transfer of immediately available
funds to an account designated in writing by the Seller. Any payments
required pursuant to this Section 2.6(c) shall be made within 2 business
days after the Closing Date Balance Sheet becomes final and binding on the
parties.
(d) For purposes of this Section 2.6, "Net Asset Value"
shall mean the amount set forth for the line item "Net Equity" in the
Closing Date Balance Sheet; and "Target Net Asset Value" shall equal
$199,715,000 as reflected as "Net Equity" on the Nonwoven Balance Sheet.
(e) If the adjustment in the Purchase Price pursuant to
Section 2.6(b) or Section 2.6(c) exceeds $100,000, interest shall be paid
on the amount of the adjustment from the Closing Date to the date of
payment at the rate prescribed by J.P. Morgan & Company Incorporated as its
"prime rate" on the Closing Date.
(f) All Intercompany Accounts will be fully settled
between the Seller and the Buyer within 30 days of the Closing Date. The
Seller and the Buyer shall each be responsible for settling such
Intercompany Accounts with their respective subsidiaries. For purposes of
this Section 2.6, "Intercompany Accounts" shall mean all amounts,
regardless of their nature, that are (a) owed by any of the Nonwovens
Subsidiaries to the Seller or any other subsidiary of the Seller, other
than another of the Nonwovens Subsidiaries, or (b) owed by the Seller or
any subsidiary of the Seller, other than one of the Nonwovens Subsidiaries,
to any of the Nonwovens Subsidiaries.
(g) Unless otherwise required by Law, the parties shall
treat any adjustment made pursuant to Section 2.6(b) or Section 2.6(c) as
an adjustment to the Purchase Price for federal, state and local income Tax
purposes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as follows:
3.1 Organization; Qualification.
(a) Each of the Seller and the Nonwovens Subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as now being conducted.
(b) Each of the Seller and the Nonwovens Subsidiaries is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except in those jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not, individually or in the aggregate,
have a Material Adverse Effect.
(c) The Seller has heretofore made available to the Buyer
complete and correct copies of the Certificate of Incorporation and By-laws
(or other similar charter, by-law or other organizational documents), as
currently in effect, of the Seller and each of the Nonwovens Subsidiaries.
3.2 Capital Stock. The authorized, issued and outstanding
capital stock of each of the Nonwovens Subject Subsidiaries is set forth in
Schedule 1.55. All the outstanding shares of capital stock of each of the
Nonwovens Subject Subsidiaries are duly authorized, validly issued, fully
paid and non-assessable. Except for the transactions contemplated by this
Agreement, (1) there are no shares of capital stock of any of the Nonwovens
Subject Subsidiaries authorized or as of the date of this Agreement issued
or outstanding, (2) there are no authorized or outstanding options,
warrants, calls, preemptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Nonwovens Subject Subsidiaries
obligating any Nonwovens Subject Subsidiary to issue, transfer or sell or
cause to be issued, transferred or sold any shares of capital stock or
other equity interest in it or any other Nonwovens Subsidiary or securities
convertible into or exchangeable for such shares or equity interests, or
obligating any Nonwovens Subject Subsidiary to grant, extend or enter into
any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment, and (3) there are no outstanding contractual
obligations of any Nonwovens Subject Subsidiary to repurchase, redeem or
otherwise acquire any capital stock of any of the Nonwovens Subject
Subsidiaries or to provide funds to make any investment (in the form of a
loan, capital contribution or otherwise) in any other entity.
3.3 Equity Investments.
(a) Schedule 3.3(a) sets forth: (i) the name of each
corporation, partnership, joint venture or other entity (other than the
Nonwovens Subject Subsidiaries) in which the Seller has, or pursuant to any
agreement has the right to acquire by any means, directly or indirectly, an
equity interest or investment and which, in each case, is a Nonwovens
Asset; (ii) in the case of each of such person described in the foregoing
clause (i), either (x) a listing of the relevant agreement or agreements
pursuant to which the Seller has acquired such right or such interest or
investment or (y) (A) the jurisdiction of incorporation and (B) the
authorized and outstanding capitalization thereof and the percentage of
each class of voting capital stock owned, directly or indirectly, by the
Seller.
(b) Except as set forth in Schedule 3.3(b), the Seller's
interest in each of the persons listed on Schedule 3.3(a) which are stated
to be owned directly or indirectly by the Seller (except for directors'
qualifying shares, if any, which the Seller will cause to be transferred at
the Effective Time to nominees of the Buyer), will, after giving effect to
the transactions contemplated hereby, be owned by the Buyer, directly or
indirectly, in each case; free and clear of all liens, pledges, charges,
security interests and other encumbrances (each a "Lien").
3.4 Authority Relative to this Agreement. The Seller has the
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of
the Seller and no other corporate proceedings on the part of the Seller are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Seller and constitutes, assuming this Agreement
constitutes a legal, valid, binding and enforceable agreement of the Buyer,
a legal, valid and binding agreement of the Seller, enforceable against it
in accordance with its terms.
3.5 No Violation. Except for the filings, permits,
authorizations, consents and approvals set forth in Schedule 3.5 or as may
be required under the applicable requirements of the HSR Act or the
competition laws or regulations of the European Union or any foreign
supranational authority in any jurisdiction in which the Seller or the
Buyer (directly or through subsidiaries, in each case) has material assets
or conducts material operations, none of the execution, delivery or
performance of this Agreement by the Seller, the consummation by the Seller
of the transactions contemplated hereby or compliance by the Seller with
any of the provisions hereof will (i) conflict with or result in any breach
of any provision of the certificate of incorporation, bylaws or similar
organizational documents of the Seller or any of the Nonwovens
Subsidiaries, (ii) require any filing with, or permit, authorization,
consent or approval of, any federal, regional, state, municipal or local
court, arbitrator, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, including federal,
state, local or municipal government or their regulatory authorities and
agencies, whether U.S. or foreign (a " Governmental Entity"), (iii) result
in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, or result in the creation
of a Lien on any Nonwovens Asset pursuant to, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Seller
or any of its subsidiaries is a party or by which any of them or any of
their properties or assets may be bound, or (iv) violate any order, writ,
injunction, decree, judgment, permit, license, ordinance, law, statute,
rule or regulation ("Law") applicable to the Seller, any of the Nonwovens
Subsidiaries or any of the Nonwovens Assets, excluding from the foregoing
clauses (ii), (iii) and (iv) such filings, permits, authorizations,
consents, approvals, violations, breaches, defaults or Liens which are not
individually or in the aggregate likely to have a Material Adverse Effect.
3.6 Financial Statements. The Seller has previously furnished
to the Buyer (i) an unaudited consolidated balance sheet and statement of
income of the Nonwovens Business for the fiscal year ended December 31,
1999, and (ii) an unaudited consolidated balance sheet and statement of
income of the Nonwovens Business as of March 31, 2000, and for the year to
date period then ended. The financial statement referred to in Section
3.6(i) and Section 3.6(ii) are hereinafter referred to herein as the
"Nonwovens Financial Statements" and the unaudited consolidated balance
sheet of the Nonwovens Business as of March 31, 2000, a copy of which is
attached hereto as Exhibit C, is referred to herein as the "Nonwovens
Balance Sheet." Except as set forth in Schedule 3.6, the Nonwovens
Financial Statements and the Nonwovens Balance Sheet have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each balance
sheet included therein presents fairly and truly the financial position of
the Nonwovens Business as of the date thereof, and each statement of income
included therein presents fairly the results of operations of the Nonwovens
Business for the respective periods therein set forth, except that the
interim financial statements are subject to normal recurring year-end
adjustments and are in a condensed presentation format and do not contain
footnotes.
3.7 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 3.7, the Seller has no liability or obligation (whether absolute,
accrued, contingent or otherwise), that is a Nonwovens Liability, and no
Nonwovens Subsidiary has any liability or obligation (whether absolute,
accrued, contingent or otherwise), in each case of a nature required by
GAAP to be reflected or reserved against in a balance sheet or disclosed in
the notes thereto, except such liabilities, obligations or contingencies
(i) that are adequately accrued or reserved against in the Nonwovens
Balance Sheet or reflected in the notes thereto, (ii) which were incurred
after the date of the Nonwovens Balance Sheet in the ordinary course of the
Nonwovens Business consistent with past practice or (iii) which
individually or in the aggregate do not exceed U.S.$200,000.
3.8 Absence of Certain Changes or Events. Except as set forth
in Schedule 3.8 or as otherwise contemplated by this Agreement, since the
date of the Nonwovens Balance Sheet, there has not been: (a) any Material
Adverse Effect; or (b) any state of facts, event, change or condition which
could reasonably be expected to cause a Material Adverse Effect. For the
avoidance of doubt, any state of facts, event, change or condition which
could reasonably be expected to materially impair the value of (i) any of
the manufacturing plants of the Nonwovens Business or (ii) the cogeneration
plant located in Windsor Locks, Connecticut shall constitute a Material
Adverse Effect for purposes of this Section 3.8 as of any relevant date.
3.9 Title and Related Matters. Except as set forth in Schedule
3.9 and subject to other Permitted Exceptions: (a) the Seller or a
Nonwovens Subsidiary has, and immediately after the Effective Time, the
Buyer or a Nonwovens Subject Subsidiary will have, good and valid, legal
and beneficial title to, or a valid leasehold or contractual interest in,
free and clear of all Liens, all of the Nonwovens Assets (other than the
Nonwovens Real Properties); and (b) the Seller or a Nonwovens Subject
Subsidiary has, and immediately after the Effective Time, the Buyer or a
Nonwovens Subject Subsidiary will have, good and marketable, legal and
beneficial title (such as any reputable title insurance company licensed to
do business in the jurisdiction in which such Nonwovens Real Property is
located will approve and insure subject only to Permitted Exceptions) to
all of the Nonwovens Real Properties. Schedule 3.9 contains (x) a complete
and correct list of all Nonwovens Real Properties and (y) a complete and
correct list of each title insurance policy insuring title to any of the
Nonwovens Real Properties.
3.10 Contracts.
(a) Schedule 3.10(a) sets forth a complete and correct
list of each Nonwovens Contract which, as of the date hereof, (i) is a
collective bargaining agreement or any agreement that contains any
severance pay liabilities or obligations; (ii) is an employment or
consulting agreement or contract with an employee or individual consultant
or a consulting agreement or contract with a consulting firm or other
organization (other than employment agreements that are created as a matter
of Law); (iii) is an agreement or contract containing any covenant limiting
the freedom of the Seller or any of its subsidiaries to engage in any line
of business or compete with any person; (iv) provides for aggregate future
payments of more than $250,000; (v) provides for aggregate future payments
in excess of $100,000, has a term exceeding one year and which may not be
cancelled upon 90 or fewer days' notice without any liability, penalty or
premium (other than a nominal fee or charge); (vi) is a sales
representative agreement; (vii) is Indebtedness; or (viii) is material to
the business, operations or financial condition of the Nonwovens Business
taken as a whole; provided that Schedule 3.10(a) does not list any
Nonwovens Contract for the purchase or sale of goods or services entered
into in the ordinary course of the Nonwovens Business which may be
cancelled on 90 or fewer days' notice without any liability, penalty or
premium (other than a nominal cancellation fee or charge).
(b) Except as set forth in Schedule 3.10(b), (i) each
Nonwovens Contract is in full force and effect, and (ii) there is not, with
respect to the Nonwovens Contracts, any existing default, or event of
default, or event which with or without due notice or lapse of time or both
would constitute a default or event of default, on the part of the Seller
or any Nonwovens Subsidiary or to the best knowledge of the Seller any
other party thereto, except where the failure to be in full force and
effect or where such default or event of default could not reasonably be
expected to have a Material Adverse Effect.
3.11 Leases. Schedule 3.11 sets forth a complete and correct
list of each Nonwovens Lease which (i) relates to real property; (ii)
provides for aggregate future payments of more than $250,000; (iii)
provides for aggregate future payments in excess of $100,000, has a term
exceeding one year and which may not be cancelled upon 90 or fewer days'
notice without any liability, penalty or premium (other than a nominal
cancellation fee or charge); or (iv) is material to the business,
operations or financial condition of the Nonwovens Business taken as a
whole. Except as set forth in Schedule 3.11, there is not, with respect to
the Nonwovens Leases, any existing default, or event of default, or event
which with or without due notice or lapse of time or both would constitute
a default or an event of default, on the part of the Seller or any
Nonwovens Subsidiary or, to the best knowledge of the Seller, any other
party thereto, except for such defaults or events of default which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect. At the Effective Time, the Nonwovens Leases will
be valid, binding and enforceable by the Buyer, one of its subsidiaries
designated pursuant to Section 10.6 as the assignee thereof or a Nonwovens
Subject Subsidiary in accordance with their respective terms, except for
those Nonwovens Leases as to which the failure to be valid, binding and
enforceable could not reasonably be expected to have a Material Adverse
Effect.
3.12 Intellectual Property.
(a) Nonwovens Intellectual Property. Schedule 3.12(a) sets
forth a complete and accurate list of all registrations and applications to
register the patents, trademarks, trade names, service marks, copyrights,
copyright registrations, as well as all material, unregistered trademarks,
and any software and applications (other than shrink-wrapped software) that
are included in the Nonwovens Intellectual Property and a complete and
accurate list of all material agreements under which any such Nonwovens
Intellectual Property is licensed to Seller, in the case of Nonwovens
Intellectual Property not owned by Seller, or by Seller to a third party
(collectively, the "Nonwovens Intellectual Property Licenses"), indicating
the parties to such agreement.
(b) Validity of Nonwovens Intellectual Property. Except as
set forth on Schedule 3.12(b), (i) with respect to Nonwovens Intellectual
Property, owned by Seller, Seller has good and valid title free and clean
of all liens and (ii) with respect to all Nonwovens Intellectual Property
held by Seller under license, Seller has the right to use such Nonwovens
Intellectual Property, free from any lien.
(c) Securing and Protection of Nonwovens Intellectual
Property. Except as set forth on Schedule 3.12(c), to the extent that any
material Nonwovens Intellectual Property is required to be registered with
any governmental authority, such Nonwovens Intellectual Property has been
duly registered with, filed in or issued by, as the case may be, the United
States Patent and Trademark Office, United States Copyright Office or such
other filing offices, domestic or foreign. Seller has taken such actions
and, to Seller's knowledge, no other actions will be required to be taken
within the 180-day period commencing at the Closing Date, to ensure full
protection under any applicable laws or regulations, and such
registrations, filings, issuances and other actions remain in full force
and effect, in each case, to the extent related to Nonwovens Business.
Seller has a policy to secure, and, with respect to any material Nonwovens
Intellectual Property, has secured, from all consultants, contractors and
employees who contribute or have contributed to the creation or the
development of Nonwovens Intellectual Property valid written assignments by
such persons to Seller of the rights to such contribution Seller does not
already own by operation of law. Seller has taken reasonable steps to
protect and preserve the confidentiality of all of its trade secrets. To
Seller's knowledge, there are no unauthorized uses, disclosures or
infringements of any part of Nonwovens Intellectual Property, and all use
by or disclosure to any Person of trade secrets that comprise any part of
Nonwovens Intellectual Property has been pursuant to the terms of a written
agreement with such Person, and all use by Seller of trade secrets owned by
another Person has been pursuant to the terms of a written agreement with
such Person or is otherwise lawful.
(d) No Infringement. Except as disclosed in Schedule
3.12(d), to the knowledge of the Seller, (i) the activities, products and
services of Seller in connection with Nonwovens Business, including,
without limitation, Nonwovens Intellectual Property, do not infringe upon
or otherwise violate, the intellectual property of any other Person or
entity; (ii) as of the date hereof, there are no claims or suits pending,
nor has there been notice provided or any claims threatened, alleging that
Seller or any of its activities, products or services in connection with
Nonwovens Business infringe upon or constitute the unauthorized use of any
other Person's or entity's intellectual property, or challenging Seller's
ownership of, right to use, or the validity or enforceability or
effectiveness of any license relating to any Nonwovens Intellectual
Property, (iii) none of Nonwovens Intellectual Property is being infringed
or violated or otherwise used or available for use by any other Person
(except pursuant to Nonwovens Intellectual Property Licenses), and (iv) the
consummation of this Agreement will not result in the loss of any Nonwovens
Intellectual Property and, following the consummation of this Agreement, no
party will have any rights to Nonwovens Intellectual Property except
pursuant to Nonwovens Intellectual Property Licenses.
3.13 Legal Proceedings, etc. Except as set forth in Schedule
3.13 and except for matters involving only monetary recovery in which the
damages sought to be imposed do not exceed $50,000 individually or $500,000
in the aggregate, there are no legal, administrative, arbitration or other
proceedings or investigations pending or threatened in writing against the
Nonwovens Business or the Nonwovens Assets nor are there any governmental
legal proceedings pending which challenge the legality of this Agreement or
the transactions contemplated hereby.
3.14 Employee Benefit Plans; ERISA.
(a) Schedule 3.14(a) contains a complete and correct list
of each deferred compensation, incentive compensation or equity
compensation plan; "welfare" plan, fund or program (within the meaning of
section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended (" ERISA")); "pension" plan, fund or program (within the meaning of
section 3(2) of ERISA); each employment, termination or severance agreement
(other than employment agreements that are created as a matter of Law); and
each other material employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to
or required to be contributed to by the Seller or by any trade or business
(other than Plans of the foreign Nonwovens Subsidiaries maintained or
required by applicable Law), whether or not incorporated (an " ERISA
Affiliate"), that together with the Seller would be deemed a " single
employer" within the meaning of section 4001(b) of ERISA, for the benefit
of any employee or former employee employed in the Nonwovens Business (the
"Plans").
(b) No Plan is or has been subject to Title IV or Section
302 of ERISA or Section 412 of the Code. Neither the Seller nor any ERISA
Affiliate has incurred any unsatisfied liability under Title IV of ERISA or
Section 412 of the Code.
(c) Each Plan has been operated and administered in
accordance with its terms and applicable law in all material respects,
including but not limited to ERISA and the Code, and each Plan intended to
be "qualified" within the meaning of section 401(a) of the Code is so
qualified and the trusts maintained thereunder are exempt from taxation
under section 501(a) of the Code.
(d) Schedule 3.14(d) sets forth each Plan under which as a
result of the consummation of the transactions contemplated by this
Agreement, either alone or in combination with another event, (A) any
current or former employee or officer of the Seller or any ERISA Affiliate
may become entitled to severance pay or any other payment which is a
Nonwovens Liability, except as expressly provided in this Agreement, or (B)
any compensation due any such employee or officer from the Nonwovens
Business may be increased or the time of payment or vesting may become
accelerated.
(e) Except as disclosed in Schedule 3.14(e), there are no
pending, or to the best knowledge of the Seller, threatened claims by or on
behalf of any Plan, by any employee or beneficiary covered under any such
Plan, or otherwise involving any such Plan (other than routine claims for
benefits). With respect to each Plan, all payments due from the Seller or
any of its subsidiaries have been timely made and all amounts properly
accrued to date or as of the Closing Date as liabilities of the Seller
which have not been paid, have been and will be properly recorded on the
Closing Date Balance Sheet.
(f) Except as set forth in Schedule 3.14(f), Seller has
not disseminated in writing or otherwise broadly or generally notified
current or former employees of the Nonwovens Business of any intent or
commitment (whether or not legally binding) to create or implement any
additional plans, funds, programs, agreements or arrangements for the
benefit of any current or former employees of the Nonwovens Business or to
materially amend, modify or terminate any existing Plan.
(g) Except as set forth on Schedule 3.14(g), the Seller is
not party to any collective bargaining agreements. There are no labor
unions or other organizations representing, purporting to represent or
attempting to represent, any employee of the Seller. There is not pending,
or, to the best knowledge of Seller, threatened any labor dispute, strike,
work stoppage or other concerted labor activity against the Seller
involving the employees in the Nonwovens Business. During the three (3)
year period preceding the date hereof, there have been no organizing
activities conducted by any labor organization or work council or the like
with respect to any employee in the Nonwovens Business. Neither the Seller
nor any subsidiary has committed any unfair labor practices or violated in
any material respect any applicable employment laws, regulations,
ordinances, rules, orders or decrees in connection with the operation of
the respective businesses of the Seller and there is not pending or, to the
best knowledge of the Seller, threatened charge, complaint, investigation
or proceeding against the Seller by or before the National Labor Relations
Board, the Department of Labor, the Equal Employment Opportunity
Commission, the Occupational Health and Safety Administration or any
comparable state or municipal agency by or on behalf of any employee or
class of employees or by or before any governmental agency relating to a
purported violation of any applicable employment laws, regulations,
ordinances, rules, orders or decrees.
3.15 Assets Necessary to Business. Except as set forth in
Schedule 3.15 and except for the Excluded Assets, the Nonwovens Assets
constitute all the assets and properties used or held for use in connection
with, necessary for, or material to the business and operations of the
Nonwovens Business as presently conducted.
3.16 Governmental Authorizations and Regulations.
(a) All governmental and other third party permits
(including occupancy permits), licenses, franchises, permits,
registrations, approvals and other authorizations or consents held by the
Seller and its subsidiaries to operate the business of the Nonwovens
Business (herein collectively called "Authorizations") are valid and
sufficient to conduct the Nonwovens Business conducted by them in the
manner presently being conducted, except where the failure to hold such
Authorizations would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) Except as set forth in Schedule 3.16(b), the Nonwovens
Business is being conducted in material compliance with all applicable Laws
of all Governmental Entities relating to the operation, conduct or
ownership of the Nonwovens Business (provided that no representation or
warranty is made in this Section 3.16(b) with respect to Environmental
Laws).
3.17 Disclosure. The representations and warranties by the
Seller in this Agreement and the statements contained in the schedules,
certificates, due diligence materials (including written financial
information) and other writings furnished and to be furnished by or on
behalf of the Seller to the Buyer pursuant to this Agreement, when
considered as a whole and giving effect to any supplements or amendments
thereof prior to the time of signing on the date hereof, do not and will
not contain any untrue statement of a material fact and do not and will not
omit to state any material fact necessary to make the statements herein or
therein not misleading, it being understood that as used in this Section
3.17 "material" means material to the Nonwovens Business.
3.18 Accounts Receivable. Except as provided in a reserve for
doubtful accounts in Nonwovens Financial Statements, the notes and accounts
receivable included in the Nonwovens Assets are genuine and collectible and
represent the legal, valid and binding obligation of the obligor thereon,
enforceable in accordance with their terms, subject to any applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally.
3.19 Taxes. Except as and to the extent shown in Schedule 3.19,
the Seller has or will have timely filed all returns of income Taxes and
all material returns of other Taxes required to be filed by it with respect
to the Nonwovens Business and the Nonwovens Assets on or prior to the
Effective Time, and has timely and fully paid or provided for all Taxes
shown to be due on such returns, except such as are being contested in good
faith by appropriate proceedings. Except as and to the extent shown in
Schedule 3.19, all deficiencies for Taxes asserted or assessments made as a
result of such examinations have been fully paid, settled or fully
reflected on the books of the Seller. Except as set forth in Schedule 3.19,
neither the United States Internal Revenue Service, nor any other taxing
authority or agency, whether domestic or foreign has asserted in writing
or, to the best knowledge of the Seller, is threatening to assert any
material deficiency or claim for additional Taxes against the Nonwovens
Business or the Nonwovens Assets. Except as set forth in Schedule 3.19, the
Seller has not granted any waiver of any statute of limitations with
respect to, or any extension of a period for the assessment of, any Tax in
respect of the Nonwovens Business.
3.20 Insurance. Schedule 3.20 contains a complete and correct
description of all policies of property, fire and casualty, product
liability, workers' compensation and other forms of insurance owned or held
by the Seller and the Nonwovens Subsidiaries covering the Nonwovens
Business or the Nonwovens Assets. The coverage provided under such policies
of insurance is reasonable in scope and amount in light of the risks
attendant to the business and activities of the Nonwovens Business.
3.21 Environmental Matters.
(a) Each of the Seller and its subsidiaries has obtained
all licenses, permits, authorizations, approvals and consents from
Governmental Entities which are required under any applicable Environmental
Law and necessary for it to carry on the Nonwovens Business as now
conducted ("Environmental Permits"), except for such failures to have
Environmental Permits which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect. Each of such
Environmental Permits is in full force and effect, and each of the Seller
and its subsidiaries is in substantial compliance with the terms and
conditions of all such Environmental Permits and with all applicable
Environmental Laws, except for such failures to be in full force and effect
or to be in compliance which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect.
(b) There are no Environmental Claims with respect to the
Nonwovens Business pending, or to the best knowledge of the Seller,
threatened, against the Seller or any of its subsidiaries, or, to the best
knowledge of the Seller, any person whose liability for any such
Environmental Claim the Seller or any of its subsidiaries has or may have
retained or assumed either contractually or by operation of law, except for
Environmental Claims identified on Schedule 3.21(b) or that individually or
in the aggregate, would have a Material Adverse Effect.
(c) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the emission, discharge, release or threatened release of any
Hazardous Material, that would form the basis of any Environmental Claim
relating to the Nonwovens Business against the Seller or any of its
subsidiaries, or for which the Seller or any of its subsidiaries is liable
and that is included in the Nonwovens Liabilities except for such
liabilities which, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect.
(d) As used in this Agreement:
(1) "Environmental Claim" means any claim, action,
lawsuit or proceeding by any person which seeks to impose liability
(including, without limitation, liability for investigatory costs, cleanup
costs, governmental response costs, natural resources, damages, property
damages, personal injuries or penalties) pursuant to Environmental Law or
which arises arising out of, is based on or results from the presence, or
release or threatened release, of any Hazardous Materials at any location,
whether or not owned or operated by the Seller or any of its subsidiaries.
(2) "Environmental Law" means any law (including,
without limitation, common law, statute, code, order, judgment, decision,
rule, ordinance, regulation, standard or requirement) of any Governmental
Entity, or any binding agreement with any Governmental Entity, relating to
(a) the environment or natural resources, including without limitation, the
pollution, contamination, cleanup, preservation, protection, or reclamation
thereof; (b) workplace health or safety; (c) any emission, discharge,
release or threatened release of Hazardous Materials, or (d) the health,
safety or environmental aspects of the presence, handling, use,
manufacture, distribution, treatment, storage, disposal, or recycling of or
exposure to Hazardous Materials.
(3) "Hazardous Materials" means any pollutant,
chemical, waste, or toxic or hazardous substance, material or agent,
including, without limitation, any petroleum or petroleum products,
pesticides, radioactive materials or asbestos-containing material.
3.22 Brokers. Except for Lehman Brothers Inc., no broker,
finder or investment banker is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Seller, that
is or will be payable by the Seller. The Seller is solely responsible for
all fees and expenses of Lehman Brothers Inc. payable in connection with
the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
4.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted, except where the failure to be in good standing or to have
such power and authority would not have a Material Adverse Effect on the
ability of the Buyer to consummate the transactions contemplated by this
Agreement.
4.2 Authority Relative to this Agreement. The Buyer has the
corporate power and authority to execute and deliver this Agreement and the
Undertaking and Indemnity Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the Undertaking and Indemnity Agreement and the consummation
of the transactions contemplated hereby and thereby have been duly and
validly authorized by the Board of Directors of the Buyer and no other
corporate proceedings on the part of the Buyer are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Buyer and
constitutes a valid and binding agreement of the Buyer, enforceable against
the Buyer in accordance with its terms. The Undertaking and Indemnity
Agreement will be, upon the due and valid execution and delivery thereof, a
valid and binding agreement of the Buyer, enforceable against the Buyer in
accordance with its terms.
4.3 No Violation. Except for the filings, permits,
authorizations, consents and approvals set forth in Schedule 4.3 or as may
be required under the applicable requirements of the HSR Act or the
competition laws or regulations of the European Union or any foreign
supranational authority in any jurisdiction in which the Seller or the
Buyer (directly or through subsidiaries, in each case) has material assets
or conducts material operations and any applicable "bulk sales" laws, none
of the execution, delivery or performance of this Agreement or the
Undertaking and Indemnity Agreement by the Buyer, the consummation by the
Buyer of the transactions contemplated hereby or compliance by the Buyer
with any of the provisions hereof will (i) conflict with or result in any
breach of any provision of the certificate of incorporation, bylaws or
similar organizational documents of the Buyer or any of its subsidiaries,
(ii) require any filing with, or permit, authorization, consent or approval
of, any Governmental Entity, or (iii) violate any order, writ, injunction,
decree, judgment, permit, license, ordinance, law, statute, rule or
regulation applicable to the Buyer, any of its subsidiaries or any of their
properties or assets.
4.4 Financing. At or prior to the Closing Date, the Buyer will
have sufficient cash resources available to pay the Purchase Price.
4.5 Brokers. Except for Donaldson, Lufkin & Jenrette Securities
Corporation, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement. The Buyer is solely
responsible for all fees and expenses of Donaldson, Lufkin & Jenrette
Securities Corporation payable in connection with the transactions
contemplated in this Agreement.
ARTICLE V
COVENANTS OF THE PARTIES
5.1 Conduct of Business of the Seller. Except as otherwise
contemplated by this Agreement, during the period from the date of this
Agreement to the Effective Time, the Seller will, and will cause the
Nonwovens Subsidiaries to, (1) conduct the Nonwovens Business only in the
ordinary and usual course of business consistent with past practice, (2)
use its reasonable best efforts to preserve intact all rights, privileges,
franchises and other authority adequate for the conduct of the Nonwovens
Business as currently conducted, (3) keep available the services of the
Nonwovens Employees who are directors, managers or vice presidents, and (4)
use its best efforts to maintain satisfactory relationships with licensors,
licensees, suppliers, contractors, distributors, customers and others
having significant business relationships with the Nonwovens Business.
Without limiting the generality of the foregoing and, except as otherwise
expressly provided in this Agreement, prior to the Effective Time without
the prior written consent of the Buyer which will not be unreasonably
withheld or delayed the Seller will not permit either the Nonwovens
Business or any Nonwovens Subsidiary to:
(a) (i) create, incur or assume any long-term debt
(including obligations in respect of capital leases), or, except in the
ordinary course consistent with past practice of the Nonwovens Business
under existing lines of credit, create, incur or assume any short-term debt
if, in either such case, such long-term debt or short-term debt, would
constitute a Nonwovens Liability; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person if such assumption,
guarantee, endorsement or other liability would constitute a Nonwovens
Liability; provided that the Nonwovens Subsidiaries may endorse negotiable
instruments in the ordinary course of the Nonwovens Business consistent
with past practice;
(b) (i) increase in any manner the compensation of any of
the Nonwovens Employees, except such increases as are granted in the
ordinary course of the Nonwovens Business in accordance with its customary
practices (which shall include normal periodic performance reviews and
related compensation and benefit increases but not any general
across-the-board increases); (ii) pay or agree to pay any pension,
retirement allowance or other employee benefit not required by any existing
Plan; or (iii) commit itself to any additional Plans or, except as
otherwise expressly required or permitted by Article VI, to amend or
terminate any of such Plans or any of such agreements in existence on the
date hereof;
(c) permit any of its current insurance (or reinsurance)
policies to be cancelled or terminated or any of the coverage thereunder to
lapse if such policy covers Nonwovens Assets or insures risks,
contingencies or liabilities which could result in a Nonwovens Liability,
unless simultaneously with such termination, cancellation or lapse,
replacement policies providing coverage equal to or greater than the
coverage remaining under those cancelled, terminated or lapsed are in full
force and effect (it being understood that there shall be no obligation to
extend such insurance policies after the Effective Time);
(d) except in the ordinary course of the Nonwovens
Business consistent with past practice, (i) sell, transfer, or otherwise
dispose of or agree to sell, transfer, or otherwise dispose of, any
Nonwovens Assets which have a sales price in excess of $50,000,
individually or in the aggregate, or (ii) mortgage, pledge or otherwise
encumber any Nonwovens Assets except for such mortgages or encumbrances
which constitute Permitted Exceptions;
(e) sell, transfer, license or otherwise dispose of, or
agree to sell, transfer, license or otherwise dispose of any of the
Nonwovens Intellectual Property;
(f) enter into any agreements, commitments or contracts
relating to the Nonwovens Business, except agreements, commitments or
contracts made in the ordinary course of the Nonwovens Business consistent
with past practice;
(g) voluntarily consent to the termination of, or
terminate by its own actions, any Nonwovens Contract or Nonwovens Lease by
any other party thereto, or voluntarily withdraw any application for any
Nonwovens Intellectual Property;
(h) make any capital expenditures of $400,000 or more
other than as contemplated by the Dexter Nonwovens Capital Plan, a copy of
which is attached as Schedule 5.1(h), individually or in the aggregate,
without the prior written consent of the Buyer;
(i) amend its charter documents in a manner that adversely
affects the transactions contemplated hereby;
(j) change the accounting principles used in connection
with the Nonwovens Business unless required by GAAP; and
(k) enter into any agreement, contract, commitment,
understanding undertaking or arrangement to do any of the foregoing.
Notwithstanding the provisions of the Section 5.1, nothing in
this Agreement shall be construed or interpreted to prevent the Seller or
any Nonwovens Subsidiary from (i) paying or making regular or special
dividends or other distributions consisting of cash, marketable securities
or property that is not a Nonwovens Asset or any combination thereof; (ii)
making, accepting or settling intercompany loans or advances or (iii)
engaging in any other transaction incident to the normal cash management
procedures of the Seller and its subsidiaries, including short-term
investments in time-deposits, certificates or deposit and banker's
acceptances made in the ordinary course of the Nonwovens Business.
5.2 Current Information
(a) Between the date of this Agreement and the Effective
Time the Seller will cause one or more of its designated representatives to
consult as requested by the Buyer on a regular basis with one or more
designated representatives of the Buyer and to discuss the general status
of ongoing operations of the Nonwovens Business.
(b) The Seller will promptly notify the Buyer of any
actual or potential Material Adverse Effect or any significant change in
the normal course of business or in the operations of the Nonwovens
Business and of any material complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any
Governmental Entity, in each case involving the Nonwovens Business, and
will keep the Buyer informed of such events and permit the Buyer's
representatives access to all materials prepared in connection therewith.
5.3 Access to Information.
(a) Between the date of this Agreement and the Effective
Time the Seller will (i) give the Buyer and its authorized representatives
access at reasonable times and upon reasonable notice to all plants,
offices, warehouses and other facilities and properties used in the
Nonwovens Business and to the Nonwovens Books and Records, (ii) permit the
Buyer to make such inspection thereof as the Buyer may reasonably request,
and (iii) cause its officers to furnish the Buyer with such financial and
operating data and other information with respect to the Nonwovens Business
as the Buyer may from time to time reasonably request.
(b) Between the date of this Agreement and the Effective
Time the Buyer will hold and will cause its officers, directors, employees,
representatives, consultants and advisors to hold in strict confidence in
accordance with the terms of the Confidentiality Agreement, dated March 16,
2000, between the Buyer and the Seller, all documents and information
furnished to the Buyer by or on behalf of the Seller in connection with the
transactions contemplated by this Agreement. If the transactions
contemplated by this Agreement are not consummated, such confidence shall
be maintained in accordance with such Confidentiality Agreement.
(c) No investigation pursuant to this Section 5.3 shall
affect any representations and warranties of the parties herein or the
conditions to the obligations of the parties hereto.
5.4 Expenses. Except as otherwise provided by this Agreement,
whether or not the transactions contemplated hereby are consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby will be paid by the party incurring such
costs and expenses.
5.5 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement
and applicable Law, each of the parties shall act in good faith and use
reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this
Agreement as soon as practicable. Without limiting the foregoing, the
parties as to (i) and (ii) below, and Seller as to (iii) shall, and shall
cause their respective subsidiaries, and use reasonable best efforts to
cause their (and their respective subsidiaries') directors, officers,
employees, agents, attorneys, accountants and representatives, to (i)
obtain all consents, approvals, waivers, licenses, permits, authorizations,
registrations, qualifications or other permissions or actions by, and give
all necessary notices to, and make all filings with and applications and
submissions to, any Governmental Entity (including promptly filing with the
United States Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice (the "Department of
Justice") pursuant to the HSR Act all requisite documents and notifications
in connection with the transactions contemplated by this Agreement) or
other person necessary in connection with the consummation of the
transactions contemplated by this Agreement as soon as reasonably
practicable; (ii) provide all such information concerning such party, its
subsidiaries and its officers, directors, employees, partners and
affiliates as may be necessary or reasonably requested in connection with
any of the foregoing including (i) herein; and (iii) avoid the entry of, or
have vacated or terminated, any injunction, decree, order, or judgment that
would restrain, prevent, or delay the consummation of the transactions
contemplated hereby.
(b) The Seller and the Buyer shall keep the other
reasonably apprised of the status of matters relating to the completion of
the transactions contemplated hereby, including promptly furnishing the
other with copies of notices or other communications received by either of
them or by any of their respective subsidiaries, from any third party
and/or any Governmental Entity with respect to the transactions
contemplated by this Agreement.
5.6 Further Assurances. From time to time, without further
consideration, the Seller will, at its own expense, execute and deliver
such documents to the Buyer as the Buyer may reasonably request in order
more effectively to consummate the transactions contemplated hereby and to
vest in the Buyer or a Nonwovens Subsidiary title to the Nonwovens Assets
(including, without limitation, assistance in the reduction to possession
of any thereof). From time to time, without further consideration, the
Buyer will, at its own expense, execute and deliver such documents as the
Seller may reasonably request in order more effectively to consummate the
transactions contemplated hereby and to perfect the assumption by the Buyer
of the Nonwovens Liabilities.
5.7 Disclosure Supplements. From time to time after the date of
this Agreement and prior to the Effective Time, the Seller will promptly
supplement or amend the schedules referred to in Article III with respect
to any matter hereafter arising which, if existing or occurring at or prior
to the date of this Agreement, would have been required to be set forth or
described in a schedule or which is necessary to correct any information in
a schedule or in any representation and warranty of the Seller that has
been rendered inaccurate thereby. From time to time after the date of this
Agreement and prior to the Effective Time, the Buyer will promptly
supplement or amend the schedules referred to in Article IV with respect to
any matter hereafter arising which, if existing or occurring at or prior to
the date of this Agreement, would have been required to be set forth or
described in a schedule or which is necessary to correct any information so
previously disclosed or in any representation and warranty of the Buyer
which has been rendered inaccurate thereby. For purposes of determining the
accuracy of the representations and warranties of the Seller contained in
Article III and the accuracy of the representations and warranties of the
Buyer contained in Article IV in order to determine the fulfillment of the
conditions set forth in Sections 7.3(a) and 7.2(a), respectively, the
schedules delivered by the Seller and the schedules delivered by the Buyer
shall be deemed to include only that information contained therein on the
date of this Agreement and shall be deemed to exclude any information
contained in any subsequent supplement or amendment thereto.
5.8 Public Announcements. The Buyer and the Seller agree that
neither one of them will issue any press release or otherwise make any
public statement or respond to any press inquiry with respect to this
Agreement or the transactions contemplated hereby without the other party's
prior written consent, except for such press releases or public statements
as may be required by applicable law or the rules of any stock exchange on
which such party's securities are listed, in which case the other party
shall nonetheless be consulted prior to the issuance of any such press
release or public statement.
5.9 Sales and Transfer Taxes and Fees. The parties agree that
all sales and transfer Taxes and related fees (including all real estate,
patent and trademark transfer Taxes and recording fees, if any) incurred in
connection with (i) this Agreement and the transactions contemplated hereby
(other than the sale of any of the Nonwovens Assets by Dexter Specialty
Materials Limited) will be borne one-half by the Seller and one-half by the
Buyer and (ii) the sale of any of the Nonwovens Assets by Dexter Specialty
Materials Limited will be borne solely by the Buyer. The parties also agree
that the Buyer will file all necessary Tax returns and other documentation
with respect to all such sales, transfer and recording Taxes and fees
(including, without limitation, reseller or other certificates of the Buyer
reasonably requested by the Seller), and, if required by applicable Law,
the Seller will join in the execution of any such Tax returns or other
documentation.
5.10 Noncompetition. (a) The Seller agrees that for a period of
five years from the Closing Date, it will not, and will cause its
affiliates not to, directly or indirectly, own, manage, operate, control,
or participate in the ownership, management, operation or control of, or be
connected in any manner with any person that competes with the Nonwovens
Business anywhere in the world.
(b) The Seller agrees, covenants and acknowledges that
from and after the Closing Date, it will not disclose, give, sell, use or
otherwise divulge any confidential information relating to the Nonwovens
Business.
(c) Other than pursuant to a general advertisement not
targeted or directed at employees hired by the Buyer or its affiliates
pursuant to this Agreement, neither Seller nor any of its affiliates shall
for a period of two (2) years from the Closing Date solicit the employment
of, or induce any person to engage in such solicitation, of any employees
hired by the Buyer or its affiliates pursuant to this Agreement.
(d) It is the desire and intent of the parties to this
Agreement that the provisions of this Section 5.10 shall be enforced to the
fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. If any particular
provisions or portion of this Section 5.10 shall be adjudicated to be
invalid or unenforceable, this Section shall be deemed amended to delete
therefrom such provision or portion adjudicated to be invalid or
unenforceable, such amendment to apply only with respect to the operation
of such Section in the particular jurisdiction in which such adjudication
is made.
(e) The Seller recognizes and acknowledges that the
performance of the obligations under this Section 5.10 are special, unique
and extraordinary in character, and that in the event of a breach by the
Seller or its affiliates or their respective employees, officers, directors
or advisors of the terms and conditions of this Section 5.10, the Buyer
shall be entitled to enforce the specific performance thereof by the Seller
or its affiliates or to enjoin the Seller or its affiliates or their
respective employees, officers, directors or advisors from violating the
provisions of this Section 5.10.
5.11 No Solicitation.
(a) The Seller shall not, and shall cause its subsidiaries
and the officers, directors, agents and advisors of the Seller and its
subsidiaries not to, initiate, solicit or encourage inquiries or proposals
with respect to, or engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with, any person
relating to, any Nonwovens Acquisition Proposal. The Seller shall notify
the Buyer promptly, but in any event within 24 hours, of any such
inquiries, proposals, or offers received by, any such information requested
from, or any such discussions or negotiations sought to be initiated or
continued with, any of its representatives indicating, in connection with
such notice, the name of such Person and the material terms and conditions
of any proposals or offers. The Seller shall immediately cease and cause to
be terminated any activities, discussions or negotiations conducted prior
to the date of this Agreement with any parties other than the Buyer with
respect to any Nonwovens Acquisition Proposal.
(b) Neither the Seller's Board nor any committee thereof
shall (i) approve or recommend, or propose to approve or recommend, any
Nonwovens Acquisition Proposal (other than this Agreement as the same may
be amended from time to time), (ii) cause the Seller or any of its
Subsidiaries to enter into any letter of intent, agreement in principle,
acquisition agreement, merger agreement or other similar agreement with
respect to any Nonwovens Acquisition Proposal (other than this Agreement as
the same may be amended from time to time), or withdraw or modify, in a
manner adverse to the Buyer, or fail to make, the recommendation to
Seller's shareholders that they vote in favor of Shareholder Approval.
5.12 Shareholder Approval. Specifically at the request of the
Buyer and for the avoidance of doubt and uncertainty on the Buyer's part
concerning threatened claims against the Seller and its Board of Directors
arising out of a transaction such as that contemplated by this Agreement,
Seller shall take all action necessary or appropriate to duly convene a
meeting of Seller's shareholders (or to amend the agenda for Seller's
previous noticed Annual Meeting of Shareholders) in order to seek and to
obtain the Shareholder Approval as promptly as practicable. The Board of
Directors shall at all times recommend such approval and shall take all
reasonable action necessary or appropriate to solicit such approval.
5.13 Proxy Statement.
(a) The Seller shall promptly prepare and file with the
SEC in preliminary form the proxy information and other proxy solicitation
materials of the Seller (the "Proxy Materials") in connection with the
solicitation of proxies necessary to obtain the Shareholder Approval. The
Seller will endeavor to promptly respond to any comments of the SEC staff
and to file, and mail to shareholders, the Proxy Materials as soon as
reasonably practicable after all such comments are resolved. The Buyer
shall cooperate with the Seller in the preparation of the Proxy Materials.
Prior to filing the preliminary Proxy Materials, any response to the SEC
staff comments, the final Proxy Materials, and any amendment or supplement,
the Seller shall give the Buyer reasonable opportunity to comment on the
proposed filing.
(b) The Seller represents, warrants and agrees that the
Proxy Statement, as it may be amended or supplemented, will not, at the
date of mailing to shareholders of the Proxy Statement or any amendment or
supplement, and at the time of the Shareholder Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading. If, at any time prior to the Shareholder Meeting, the Seller
becomes aware of any information that would cause any of the statements in
the Proxy Statement to be false or misleading with respect to any material
fact, or to omit any material fact necessary to make the statements
contained therein not false and misleading, it shall promptly so inform the
Buyer and take the necessary steps to amend or supplement the Proxy
Statement. Notwithstanding the foregoing, the Seller makes no
representation or warranty with respect to any information supplied by or
on behalf of the Buyer expressly for inclusion in the Proxy Statement. The
Seller represents, warrants and agrees that the Proxy Statement will comply
as to form in all material respects with the Securities Exchange Act of
1934 and the rules and regulations thereunder.
(c) The Buyer represents, warrants and agrees that none of
the information supplied by it or on its behalf expressly for inclusion in
the Proxy Statement will, at the date of mailing of the Proxy Statement or
any amendment or supplement, contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein not misleading. If the Buyer shall become aware, prior to the
Shareholder Meeting, that any information so furnished by it would cause
any of the statements with respect to Buyer in the Proxy Statement to be
false or misleading with respect to any material fact, or to omit to state
any material fact necessary to make such statements not false or
misleading, it will promptly so advise the Seller.
ARTICLE VI
SELLER EMPLOYEES
6.1 Employment.
(a) Effective as of the Effective Time, each employee of
the Seller employed in the Nonwovens Business immediately prior to the
Effective Time (the "Nonwovens Employees") shall cease to be an employee of
the Seller and the Buyer shall offer or cause to be offered employment, on
an at-will basis, to all Nonwovens Employees. Effective as of the Effective
Time and until December 31, 2001 and subject to Section 6.2(b), the Buyer
shall cause the Nonwovens Employees, as a group, who accept and commence
employment with the Buyer or a subsidiary of the Buyer as of the Effective
Time (the "Transferred Employees") to be provided with employee benefit
arrangements that shall, in the aggregate, be no less favorable than as
provided by the Seller to such Transferred Employees, as a group,
immediately prior to the Effective Time, provided that Buyer shall in no
event be required to continue or offer benefits comparable to Seller's
post-retirement welfare benefits referred to in Section 6.2(b).
(b) The Buyer shall cause the Transferred Employees to be
given full credit for all service with the Seller or any subsidiary of the
Seller prior to the Effective Time for purposes of eligibility and vesting
(but not for purposes of benefit accrual) under any employee benefit plans
or arrangements of the Buyer or any subsidiary of the Buyer in which such
Transferred Employees participate from and after the Effective Time, to the
same extent such service was recognized by the Seller or any subsidiary of
the Seller under a corresponding Plan of Seller immediately prior to the
Effective Time. Neither the Buyer nor any subsidiary of the Buyer shall
require any Transferred Employee to undergo a physical examination or
provide other proof of insurability as a condition to initial eligibility
to participate in the medical and life insurance plans of Buyer, in
connection with the transfer of employment. The Buyer shall, or shall cause
a subsidiary of the Buyer to, (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation
and coverage requirements applicable to Transferred Employees under the
medical and life insurance plans in which such employees may be eligible to
participate after the Effective Time in connection with the transfer of
employment to Buyer, other than limitations or waiting periods that are
already in effect with respect to such employees and that have not been
satisfied as of the Effective Time under any welfare plan of the Seller or
any subsidiary of the Seller in which Transferred Employees participate
immediately prior to the Effective Time, and (ii) provide each Transferred
Employee with credit for any co-payments and deductibles paid prior to the
Effective Time in satisfying any applicable deductible or out-of-pocket
requirements for the year in which the Effective Time occurs under any
welfare plans in which such employees are eligible to participate after the
Effective Time, as if those deductibles or co-payments had been paid under
the welfare plans in which such employees are eligible to participate after
the Effective Time.
(c) Subject to Section 6.2, the Seller shall remain
responsible for, and shall indemnify and hold harmless the Buyer against,
any and all claims, losses, damages, costs and expenses and other
liabilities (other than those constituting Nonwovens Liabilities) relating
to or arising out of any of its employee benefit plans, programs,
agreements or arrangements or obligations thereunder accrued and related to
circumstances existing prior to the Effective Time. Subject to Section 6.2,
Buyer shall be responsible for, and shall indemnify and hold harmless the
Seller against, any and all claims, losses, damages, costs and expenses and
other liabilities relating to or arising out of any of the Buyer's employee
benefit arrangements or obligations thereunder accrued after the Effective
Time.
6.2 Assumption of Plans.
(a) Effective as of the Effective Time, the Buyer shall
establish or designate a defined contribution plan and trust intended to
qualify under Section 401(a) and Section 501(a) of the Code (the "Buyer
Savings Plan"). As soon as practicable following the receipt by Seller of a
favorable determination letter from the Internal Revenue Service (the
"IRS") regarding the qualified status of the Buyer Savings Plan and the
receipt by Buyer of a favorable determination letter from the IRS regarding
the qualified status of the ESPRIT Plan, the Seller shall direct the
trustee of the ESPRIT Plan to transfer, to the trustee of the Buyer Savings
Plan, as of the Effective Time, in a lump sum, the cash value of the
account balances under the ESPRIT Plan in respect of Transferred Employees.
Upon such transfer, the Buyer Savings Plan shall assume liability to pay
benefits in the amounts so transferred, as such amounts may be increased or
decreased thereafter, in accordance with and subject to the provisions of
the Buyer Savings Plan. Prior to the date of the transfer of the cash value
of account balances as contemplated by this Section 6.2(a), the Seller
shall contribute to the trustee of the ESPRIT Plan an amount equal to 10%
of the aggregate Compensation (as defined in the ESPRIT Plan and prorated
for such portion of the ESPRIT Plan year preceding the Effective Time) of
each Transferred Employee who is a participant in the ESPRIT Plan as of
immediately prior to the Effective Time. Pending such transfer, the
Transferred Employees shall have all of the same rights, features and
options with respect to their account balances in the ESPRIT Plan as active
employees under such plan(s) except for the right to additional
contributions. The parties shall cooperate in the filing of the documents
required by the transfer of assets and liabilities described herein.
Notwithstanding anything contained herein to the contrary, no such transfer
shall take place until the 31st day following the filing of all required
Forms 5310-A in connection therewith. Subject to confirmation that this
form is required to be filed.
(b) The Seller shall retain and be responsible for, and
the Seller shall indemnify and hold harmless Buyer against, any and all
claims, losses, damages, costs and expenses with respect to post-retirement
welfare benefits to which any Transferred Employee or any former employee
of the Nonwovens Business is currently entitled or may become entitled
after the Effective Time under the Seller's post-retirement welfare benefit
program. The Buyer shall provide such information as the Seller or its
designee may reasonably request, from time to time, in connection with the
administration of the Seller's post-retirement welfare benefit program.
(c) The Buyer shall assume all liabilities and obligations
of the Seller with respect to the Nonwovens Employees arising under (i) the
Dexter Corporation Special Severance Plan (as such plan has been modified
by employee communications described in Schedule 6.2(c)(i)), except for the
liabilities arising under Sections 2(e) and 2(f) of such plan, (ii) the
pay-to-stay arrangements described in Schedule 6.2(c)(ii) and (iii) the
severance agreements (described in Schedule 6.2(c)(iii)) to provide
continuation of "Employee Benefits" that are welfare benefits as described
in Section 4(a)(ii) of the severance agreements.
(d) The Seller shall be fully responsible for any benefits
in the nature of severance pay due to any Nonwovens Employee who does not
accept an offer of employment described in section 6.1(a) hereof. The
severance benefits provided by the Buyer to any Transferred Employee whose
employment with the Buyer is involuntarily terminated (other than for
cause) by the Buyer or a Buyer subsidiary within twelve months following
the Effective Time shall not be less favorable than the severance benefits
that a Nonwovens Employee would have been entitled to had his or her
employment been terminated by the Seller or a Nonwovens Subsidiary (as the
case may be) immediately prior to the Effective Time. The preceding
sentence shall not apply to any Nonwovens Employee who immediately prior to
the Effective Time, is (i) a party to a severance agreement described in
Section 6.2(c) or (ii) a participant in the Dexter Corporation Special
Severance Plan.
(e) To the extent that any obligations might arise under
the Worker Adjustment Retraining Notification Act ("WARN"), 29 U.S.C.
Section 2101 et seq., or under any similar provision of any federal, state,
regional, foreign, or local law, rule, or regulation (hereinafter referred
to collectively as "WARN Obligations") as a consequence of the transactions
contemplated by this Agreement, the Seller shall be responsible for any
WARN Obligations arising as a result of any employment losses occurring
prior to the Effective Time, and the Buyer shall be responsible for any
WARN Obligations arising as a result of any employment losses occurring
after the Effective Time.
ARTICLE VII
CLOSING CONDITIONS
7.1 Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby. The respective obligations of each party
to effect the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions:
(a) To the extent required by applicable law, each of the
Seller and the Buyer and any other person (as defined in the HSR Act)
required in connection with the transactions contemplated hereby to file a
Notification and Report Form for Certain Mergers and Acquisitions with the
Department of Justice and the FTC pursuant to the HSR Act shall have made
such filing and all applicable waiting periods with respect to each such
filing (including any extensions thereof) shall have expired or been
terminated.
(b) To the extent required by applicable law, each of the
Seller and the Buyer and any other person required in connection with the
transactions contemplated hereby to file all necessary filings with any
Governmental Entity outside the U.S. and such Governmental Entities outside
the U.S. shall have approved or cleared such filing and all such approvals
or clearances shall have been received.
(c) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits the consummation of the
transactions contemplated hereby substantially on the terms contemplated
hereby or has the effect of making the acquisition of the Nonwovens
Business by the Buyer or any of its affiliates illegal.
(d) The Seller and the Buyer, respectively, shall have
timely made all filings and obtained all permits, authorizations, consents
or approvals required in connection with the consummation of the
transactions contemplated by this Agreement, except to the extent that the
failure to obtain any such permits, authorizations, consents or approvals
would not have a Material Adverse Effect.
7.2 Conditions to the Obligations of the Seller to Effect the
Transactions Contemplated Hereby. The obligations of the Seller to effect
the transactions contemplated hereby shall be further subject to the
fulfillment at or prior to the Effective Time of the following conditions,
any one or more of which may be waived by the Seller:
(a) All of the representations or warranties of the Buyer
set forth in the Agreement that are qualified by materiality or Material
Adverse Effect shall be true and correct, and all of the representations
and warranties of the Buyer set forth in the Agreement that are not so
qualified shall be true and correct in all material respects, in each case,
as if such representations or warranties were made on and of the date
hereof and as of the Effective Time (except to the extent such
representations and warranties speak as of a specific date or as of the
date hereof, in which case such representations and warranties shall be so
true and correct or true and correct in all material respects, as the case
may be, as of such specific date or as of the date hereof, respectively).
(b) The Buyer shall have performed and complied in all
material respects with all agreements and obligations required by this
Agreement to be performed and complied with by it on or prior to the
Closing Date.
(c) The Buyer shall have furnished a certificate of an
executive officer of the Buyer to evidence compliance with the conditions
set forth in Sections 7.2(a) and (b) of this Agreement.
(d) The Seller shall have received one or more opinions,
addressed to it and dated the Closing Date, from counsel to the Buyer,
reasonably satisfactory to the Seller, covering the matters set forth on
Exhibit G hereto.
7.3 Conditions to the Obligations of the Buyer to Effect the
Transactions Contemplated Hereby. The obligations of the Buyer to effect
the transactions contemplated hereby shall be further subject to the
fulfillment at or prior to the Effective Time of the following conditions,
any one or more of which may be waived by the Buyer:
(a) All of the representations or warranties of the Seller
set forth in the Agreement that are qualified by materiality or Material
Adverse Effect shall be true and correct in all respects, and all of the
representations and warranties of the Seller set forth in the Agreement
that are not so qualified shall be true and correct in all material
respects, in each case, as if such representations or warranties were made
on and as of the date hereof and as of the Effective Time (except to the
extent such representations and warranties speak as of a specific date or
as of the date hereof, in which case such representations and warranties
shall be so true and correct or true and correct in all material respects,
as the case may be, as of such specific date or as of the date hereof,
respectively).
(b) The Seller shall have performed and complied in all
material respects with all agreements and obligations required by this
Agreement to be performed and complied with by it on or prior to the
Closing Date.
(c) The Seller shall have furnished a certificate of an
executive officer of the Seller to evidence compliance with the conditions
set forth in Sections 7.3(a) and (b) of this Agreement.
(d) The sale of the Nonwovens Assets in accordance with
this Agreement, shall have been approved by at least two-thirds of the
voting power of all outstanding shares of common stock of the Seller
("Shareholder Approval").
(e) The Buyer shall have received one or more opinions,
addressed to it and dated the Closing Date, from counsel to the Seller,
reasonably satisfactory to the Seller, covering the matters set forth on
Exhibit F hereto.
(f) Each of the Nonwovens Contracts and Leases listed in
Schedule 7.3(f) attached hereto or entered into by the Seller or any
Nonwovens Subject Subsidiary after the date of this Agreement shall have
been duly assigned or otherwise transferred to the applicable Buyer as
required hereunder.
(g) The Seller shall have delivered to the Buyer a FIRPTA
Certificate substantially in the form of Exhibit E hereto.
7.4 Certificates. Each of the parties hereto will furnish to
the other party such certificates of such party's officers or others and
such other documents to evidence fulfillment of the conditions set forth in
this Article VII as the other party may reasonably request.
ARTICLE VIII
CERTAIN TAX MATTERS
8.1 Tax Matters.
(a) The Buyer shall timely prepare and file (or cause such
preparation and filing) with the appropriate authorities all income Tax
returns, reports and forms (other than any Consolidated Income Tax Returns)
for the Nonwovens Subject Subsidiaries that are required to be filed after
the date of the Effective Time ("Buyer Returns"), and will pay (or cause to
be paid) all income Taxes due with respect to such Buyer Returns. The Buyer
shall make available to the Seller any Buyer Returns and related workpapers
with respect to any taxable period that ends on or before, or includes, the
date of the Effective Time for Seller's review and comment at least twenty
(20) business days prior to the respective due dates of such Buyer Returns.
Such Buyer Returns shall be subject to Seller's approval, such approval not
to be unreasonably withheld, before the applicable Buyer Return is filed
with the appropriate authority. The Seller shall timely prepare and file
(or cause such preparation and filing) with the appropriate authorities (i)
all Consolidated Income Tax Returns of the Seller and its Affiliates with
respect to the Nonwovens Business and the Nonwovens Assets, and (ii) all
other income Tax returns, reports and forms for the Nonwovens Subsidiaries
other than the Nonwovens Subject Subsidiaries and (iii) all other income
Tax returns, reports and forms with respect to the Nonwovens Business and
the Nonwovens Assets that are required to be filed on or before the date of
the Effective Time, and will pay (or cause to be paid) all income Taxes due
with respect to such returns, reports and forms.
(b) The Buyer shall timely prepare and file (or cause such
preparation and filing) with the appropriate authorities all non-income Tax
returns, reports and forms that are required to be filed after the date of
the Effective Time (subject to any applicable extensions) with respect to
the Nonwovens Business and the Nonwovens Assets when such returns, reports
and forms are due and will pay (or cause to be paid) all non-income Taxes
due with respect to such returns, reports and forms.
(c) The Seller and the Buyer shall reasonably cooperate in
preparing and filing all Tax returns, reports and forms required to be
filed with respect to Taxes levied or imposed upon, or in connection with,
the Nonwovens Business or the Nonwovens Assets, and in resolving all
disputes and audits with respect thereto, including by maintaining and
making available to each other all records (other than the Nonwovens Books
and Records, which shall be governed by Section 8.1(d) hereof) reasonably
necessary in connection therewith. The Buyer shall prepare (or cause such
preparation) within 90 days of the Effective Time, usual and customary
Nonwovens Subject Subsidiaries' consolidated and controlled foreign
corporation Tax return reporting packages with respect to the taxable
period beginning January 1, 2000 and ending as of the Effective Time.
(d) For a period of six years after the Closing Date, the
Seller and its representatives shall have reasonable access to the
Nonwovens Books and Records transferred to the Buyer hereunder (including,
without limitation, the right to make extracts thereof) to the extent that
the Nonwovens Books and Records relate to Taxes and to the extent that such
access may reasonably be required by the Seller in connection with matters
relating to or affected by the operation of the Nonwovens Business and the
Nonwovens Assets prior to the Closing Date. Such access shall be afforded
by the Buyer upon receipt of reasonable advance notice and during normal
business hours. The Seller shall be solely responsible for any reasonable
out-of-pocket costs or expenses incurred by it pursuant to this Section
8.1(d). If the Buyer shall desire to dispose of any of such books and
records prior to the expiration of such six-year period, the Buyer shall,
prior to such disposition, give the Seller a reasonable opportunity, at the
Seller's expense, to segregate and remove such books and records as the
Seller may select. In addition to the foregoing, the parties agree to
cooperate with each other with respect to the defense of any claims or
litigation relating to Taxes pertaining to the Nonwovens Business and the
Nonwovens Assets, provided that the party requesting such cooperation shall
reimburse the other party for the other party's reasonable out-of-pocket
costs and expenses of furnishing such cooperation.
(e) Not later than 15 days prior to the Effective Time,
the Buyer shall prepare (or cause to be prepared) and submit to the Seller
for the Seller's review and approval, which shall not be unreasonably
withheld, a draft allocation of the Purchase Price and the Nonwovens
Liabilities among the Nonwovens Assets, including the capital stock of the
Nonwovens Subsidiaries, to be purchased hereunder, which allocation shall
be reflected in Schedule 8.1(e) (the "Draft Allocation"). The Draft
Allocation shall be revised and finalized by the parties in conjunction
with the post-closing adjustment pursuant to Section 2.6 (the "Final
Allocation"). The Draft Allocation and the Final Allocation shall be made
in accordance with Section 1060 of the Code and applicable Treasury
regulations as well as under any analogous provisions of foreign Law. Each
of the Seller and the Buyer shall (i) be bound by the Final Allocation for
purposes of determining any Taxes, (ii) prepare and file, and cause its
affiliates to prepare and file, its Tax returns on a basis consistent with
the Final Allocation and (iii) take no position, and cause its affiliates
to take no position, inconsistent with the Final Allocation on any
applicable Tax return, in any proceeding before any taxing authority or
otherwise. In the event that the Final Allocation is disputed by any taxing
authority, the party receiving notice of the dispute shall promptly notify
the other party hereto concerning resolution of the dispute.
(f) The Buyer shall not (i) make an election to treat any
of the Nonwovens Subject Subsidiaries as a disregarded entity (or as a
partnership) for federal, state or local income Tax purposes for any period
in which the Seller wholly owns, directly or indirectly, the Nonwovens
Subsidiaries, (ii) make any dividend or other distributions to shareholders
from any of the Nonwovens Subsidiaries at any time on or after the
Effective Time until January 1, 2001, or (iii) make an election under
Section 338(g) of the Code and the Treasury regulations promulgated
thereunder with respect to the acquisition of any of the Nonwovens Subject
Subsidiaries without the prior written consent of the Seller.
(g) The Seller and the Buyer agree that the Buyer has
purchased substantially all the property used in the Nonwovens Business in
the United States, and in connection therewith, the Buyer shall employ
individuals who immediately before the Effective Time were employed in such
trade or business by the Seller. Accordingly, pursuant to Rev. Proc. 96-60,
1996-2 C.B. 399, the Buyer shall furnish a United States Internal Revenue
Service Form W-2 to each employee employed by the Buyer who had been
employed by the Seller, disclosing all wages and other compensation paid
for such calendar year, and taxes withheld therefrom, and the Seller shall
be relieved of the responsibility to do so.
8.2 Indemnity for Taxes.
(a) The Seller hereby agrees to indemnify the Buyer and
the Nonwovens Business against and hold them harmless, on an after-Tax
basis, from all liability for (i) income Taxes levied or imposed upon, or
in connection with, the Nonwovens Assets or the Nonwovens Business with
respect to any taxable period or portion thereof ending on or before the
Effective Time, (ii) income Taxes levied or imposed upon, or in connection
with, any business of the Seller other than the Nonwovens Business, and
(iii) income Taxes incurred as a result of any other transaction undertaken
by the Seller, including without limitation the liquidation and dissolution
of the Seller; provided, however, that the Seller shall not indemnify the
Buyer for any such Taxes included in the Nonwovens Liabilities and taken
into account in preparing the Closing Date Balance Sheet.
(b) (i) The Seller agrees to indemnify the Buyer and the
Nonwovens Business against and hold them harmless, on an after-Tax basis,
from all income Taxes, expenses or other losses arising out of the failure
of the Seller to perform any of the agreements it is required to perform
under Section 8.1 and (ii) the Buyer agrees to indemnify the Seller and
hold it harmless, on an after-Tax basis, from all Taxes, expenses or other
losses arising out of the failure by the Buyer to perform any of the
agreements it is required to perform under Section 8.1.
(c) The Buyer and the Seller agree to treat any payment
under this Section 8.2 as an adjustment to the Purchase Price.
(d) The respective indemnification obligations of the
Seller and the Buyer pursuant to this Section 8.2 shall terminate ninety
(90) days following the expiration of the period of limitations applicable
to the related Tax.
(e) A party seeking indemnification provided for under
this Section 8.2 (a "Tax Indemnified Party") in respect of Taxes, arising
out of or involving a claim or demand made by any persons, firm,
governmental authority or corporation against such party (a "Tax Third
Party Claim") must notify the party from whom such indemnification is
sought (the "Tax Indemnifying Party") in writing of the Tax Third Party
Claim as promptly as possible but in no event later than 30 days after
receipt by the Tax Indemnified Party of written notice of the Tax Third
Party Claim; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the
extent the Tax Indemnifying Party shall have been actually prejudiced as a
result of such failure (except that the Tax Indemnifying Party shall not be
liable for any expenses incurred during the period in which the Tax
Indemnified Party failed to give such notice). Thereafter, the Tax
Indemnified Party shall deliver to the Tax Indemnifying Party, as promptly
as possible but in no event later than 30 days after the Tax Indemnified
Party's receipt thereof, copies of all notices and documents (including
court papers) received by the Tax Indemnified Party, relating to the Tax
Third Party Claim.
If a Tax Third Party Claim is made against the Tax Indemnified
Party, the Tax Indemnifying Party will be entitled to participate in the
defense thereof and to assume the defense thereof with counsel or other tax
advisors selected by the Tax Indemnifying Party and satisfactory to the Tax
Indemnified Party provided, however, that the Tax Indemnifying Party shall
not be entitled to assume the defense of any such contest unless the Tax
Indemnifying Party at its option has either provided bond or other security
for its obligations under this Section 8.2 satisfactory to the Tax
Indemnified Party or paid the Tax Third Party Claim. If the Tax
Indemnifying Party assumes such defense, the Tax Indemnifying Party will
not be liable to the Tax Indemnified Party for legal or other expenses
subsequently incurred by the Tax Indemnified Party in connection with the
defense thereof. If the Tax Indemnifying Party assumes such defense, the
Tax Indemnified Party shall have the right to participate in the defense
thereof and to employ counsel or other tax advisors at its own expense
separate from the counsel or other tax advisors employed by the Tax
Indemnifying Party. The Tax Indemnifying Party shall be liable for all
reasonable fees and expenses of counsel or other tax advisors employed by
the Tax Indemnified Party for any period subsequent to the date the Tax
Indemnified Party notifies the Tax Indemnifying Party pursuant to this
Section 8.2(e) and during which the Tax Indemnifying Party has not assumed
the defense thereof. Whether or not the Tax Indemnifying Party chooses to
defend or prosecute any Tax Third Party Claim, all of the parties hereto
shall reasonably cooperate in the defense or prosecution thereof. Such
cooperation shall include the provision to the Tax Indemnifying Party of
records and information which are reasonably relevant to such Tax Third
Party Claim, and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. Whether or not the Tax Indemnifying Party shall have assumed the
defense of a Tax Third Party Claim, the Tax Indemnified Party shall not
admit any liability with respect to, or settle, compromise or discharge,
such Tax Third Party Claim without the Tax Indemnifying Party's prior
written consent, which consent shall not be unreasonably withheld.
(f) Without the prior written consent of the Buyer, which
consent shall not be unreasonably withheld, if a Material Adverse Effect on
the liability for Taxes of the Buyer with respect to or arising from the
Nonwovens Business or Nonwovens Assets will result therefrom, neither the
Seller nor any of its affiliates shall make or change any election, change
an accounting period, adopt or change any accounting method, file any
amended Tax return or report, enter into any closing agreement, settle any
Tax claim or assessment relating to the Nonwovens Business or the Nonwovens
Assets, surrender any right to claim a refund of Taxes or consent to any
extension or waiver of the limitations period applicable to any Tax claim
or assessment relating to any of the Nonwovens Business or the Nonwovens
Assets.
(g) If a Tax Indemnified Party receives a refund or credit
with respect to Taxes for which it would have been indemnified under this
Section 8.2, the Tax Indemnified Party shall pay over such refund or credit
to the Tax Indemnifying Party; provided, however, that the amount of such
refund or credit which the Tax Indemnified Party is required to pay over to
the Tax Indemnifying Party shall be computed on an after-Tax basis.
8.3 Other Tax Matters.
(a) The Seller hereby agrees to provide to the Buyer a
certificate that, as of the Closing Date, the Seller is not a foreign
person within the meaning of section 1445 of the Code and the Treasury
regulations thereunder, such certificate to be substantially in the form
attached as Exhibit E hereto. If such certificate or a statement is not
delivered to the Buyer, the Buyer shall be entitled to withhold 10% of the
Purchase Price as required by section 1445 of the Code.
(b) For Tax purposes, the Seller and the Buyer hereby
agree to treat the transactions contemplated by this Agreement as (i) a
sale of the Nonwovens Assets (other than the Nonwovens Assets owned or held
by the Nonwovens Subject Subsidiaries, the capital stock of which is being
transferred directly or indirectly by the Seller to the Buyer) and (ii) a
sale of all of the stock of the Nonwovens Subject Subsidiaries, and not to
take any position for Tax purposes that is inconsistent with such
treatment, unless required by law.
ARTICLE IX
TERMINATION AND ABANDONMENT
9.1 Termination. Subject to the parties' obligations as
provided in Section 5.5, this Agreement may be terminated at any time prior
to the Effective Time:
(a) by mutual consent of the Seller and the Buyer;
(b) by the Seller or the Buyer (i) at any time after
October 31, 2000 if the conditions set forth in Article VII shall not have
been satisfied or waived; (ii) a statute, rule, regulation or executive
order shall have been enacted, entered or promulgated prohibiting the
consummation of the transactions contemplated by this Agreement
substantially on the terms contemplated hereby; or (iii) an order, decree,
ruling or injunction shall have been entered permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement substantially on the terms contemplated
hereby and such order, decree, ruling or injunction shall have become final
and non-appealable; provided, that the party seeking to terminate this
Agreement pursuant to this Section 9.1(b)(iii) shall have used its
reasonable efforts to remove such order, decree, ruling or injunction and
shall not be in violation of Section 5.5;
(c) by the Buyer, if there has been a material violation
or breach by the Seller of any agreement, representation or warranty
contained in this Agreement that has rendered the satisfaction of any
condition to the obligations of the Buyer impossible and such violation or
breach has not been waived by the Buyer;
(d) by the Seller, if there has been a material violation
or breach by the Buyer of any agreement, representation or warranty
contained in this Agreement that has rendered the satisfaction of any
condition to the obligations of the Seller impossible and such violation or
breach has not been waived by the Seller; or
(e) by either the Buyer or the Seller if the Seller has
held the meeting of shareholders at which the Shareholder Approval is
requested and the Shareholder Approval shall not have been obtained.
9.2 Procedure and Effect of Termination. In the event of
termination of this Agreement and abandonment of the transactions
contemplated hereby by either or both of the parties pursuant to Section
9.1, written notice thereof shall forthwith be given to the other party and
this Agreement shall terminate and the transactions contemplated hereby
shall be abandoned, without further action by either of the parties hereto.
If this Agreement is terminated as provided herein:
(a) upon request therefor, each party will redeliver all
documents, work papers and other material of any other party relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing the same;
(b) each party hereto will use its best efforts to prevent
disclosure to third persons of all information received by either party
with respect to the business of the other party or its subsidiaries (other
than information which is a matter of public knowledge or which has
heretofore been or is hereafter published in any publication for public
distribution or filed as public information with any Governmental Entity)
except (i) as may be required by Law; and (ii) as is permitted by this
Agreement;
(c) neither party hereto shall have any liability or
further obligation to the other party to this Agreement pursuant to this
Agreement except as stated in this Section 9.2 and in Sections 5.3(b) and
5.4, provided that nothing herein shall relieve any party from liability
for its willful breach of this Agreement;
(d) upon any termination of this Agreement other than
pursuant to Section 9.1(d) and upon request by the Buyer, the Seller shall
promptly reimburse the Buyer for its out-of-pocket cash expenses
(including, without limitation, fees and expenses of accountants, counsel,
investment bankers and consultants and all travel-related expenses)
incurred in connection with this Agreement and the transactions
contemplated hereby (whether incurred prior to or subsequent to the
execution of this Agreement); provided that the Seller shall in no event be
responsible for more than $2 million in respect of this paragraph (d); and
(e) if after the date hereof and prior to Shareholder
Approval a Specified Dexter Acquisition Proposal is publicly disclosed (or
any previously made Dexter Acquisition Proposal is renewed in such a manner
as to constitute a Specified Dexter Acquisition Proposal) and this
Agreement is subsequently terminated pursuant to Section 9.1(b) or Section
9.1(e), and if within 12 months following such termination Seller either
enters into a definitive agreement providing for, or consummates, a Dexter
Acquisition Transaction as a result of which shareholders of the Seller
would be entitled to receive (in the case of a definitive agreement), or
receive, aggregate average consideration with a fair market value per share
exceeding $45 (appropriately adjusted for stock splits, stock dividends,
recapitalizations or similar transactions and taking into account any
extraordinary dividends or amounts paid in issuer tender offers or other
extraordinary amounts received with respect to Seller shares after the date
hereof), then within 2 business days following such event the Seller shall
pay the Buyer a fee of $8 million, less any amounts paid or payable
pursuant to paragraph (d) above.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Delivery of Schedules. The schedules required to be
delivered pursuant to this Agreement are being delivered simultaneously
with the execution and delivery of this Agreement.
10.2 Amendment and Modification. Subject to applicable Law,
this Agreement may be amended, modified or supplemented only by written
agreement of the Seller and the Buyer at any time prior to the Effective
Time with respect to any of the terms contained herein.
10.3 Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of either of the parties to comply
with any obligation, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of a party, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 10.3.
10.4 No Third Party Beneficiary Rights. This Agreement is not
intended to and shall not be construed to give any person (other than the
parties to this Agreement) any interest or rights (including, without
limitation, any third party beneficiary rights) with respect to or in
connection with any agreement or provision contained herein or contemplated
hereby.
10.5 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or
mailed by registered or certified mail (return receipt requested), postage
prepaid, telecopied (and which is confirmed) or sent by reputable courier
(providing proof of delivery) to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice,
provided that notices of a change of address shall be effective only upon
receipt thereof):
(a) if to the Seller, to
Dexter Corporation
One Elm Street
Windsor Locks, Connecticut 06096-2334
Attention: General Counsel
Telecopy: (860) 292-7669
with a copy to
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Telecopy: (212) 735-2000
Attention: J. Michael Schell, Esq.
Margaret L. Wolff, Esq.
(b) if to the Buyer, to
Ahlstrom Paper Group, Oy
P.O. Box 329
Etelaesplanadi 14
FIN - 00101 Helsinki
Finland
Telecopy: 011-358-9-503-9789
Attention: Legal Department -
Gustav Adlercreutz, Esq.
with a copy to
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Telecopy: (212) 255-3999
Attention: Richard S. Lincer, Esq.
10.6 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by either of the parties hereto without the prior written
consent of the other party, nor is this Agreement intended to confer upon
any other person except the parties hereto any rights or remedies
hereunder; provided, however, that the Buyer may assign its rights to
purchase the Nonwovens Assets to one or more of its wholly owned
subsidiaries, as provided in Section 10.7.
10.7 Designated Subsidiary. Anything in this Agreement to the
contrary notwithstanding, the Seller agrees that the Buyer may cause one or
more of its wholly owned subsidiaries designated by the Buyer to carry out
all or part of the transactions contemplated by this Agreement; provided,
however, that no such designation shall affect or diminish the liability of
the Buyer under this Agreement.
10.8 Governing Law. This Agreement shall be governed by the
laws of the State of New York (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law) as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies.
10.9 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.10 Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are
not part of the agreement of the parties and shall not in any way affect
the meaning or interpretation of this Agreement. As used in this Agreement:
(i) the term "person" shall mean an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof; (ii) the term "subsidiary"
when used in reference to any person shall mean any other corporation of
which outstanding securities having ordinary voting power to elect a
majority of the Board of Directors of such other corporation are owned
directly or indirectly by such person; (iii) the term "affiliate" shall
mean a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control
with, the person specified; and (iv) the term "business day" means a day on
which banking institutions in New York, New York are authorized or
obligated by law or executive order to close.
10.11 Entire Agreement. This Agreement, including the exhibits
hereto and the documents, schedules, certificates and instruments referred
to herein, and the Confidentiality Agreement, dated March 16, 2000 between
the Buyer and the Seller, embodies the entire agreement and understanding
of the parties hereto in respect of the transactions contemplated by this
Agreement. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth
or referred to herein or therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such
transactions.
10.12 Severability. If for any reason any term or provision of
this Agreement is held to be invalid or unenforceable, all other valid
terms and provisions hereof shall remain in full force and effect, and all
of the terms and provisions of this Agreement shall be deemed to be
severable in nature. If for any reason any term or provision containing a
restriction set forth herein is held to cover an area or to be for a length
of time which is unreasonable, or in any other way is construed to be too
broad or to any extent invalid, such term or provision shall not be
determined to be null, void and of no effect, but to the extent the same is
or would be valid or enforceable under applicable law, any court of
competent jurisdiction shall construe and interpret or reform this
Agreement to provide for a restriction having the maximum enforceable area,
time period and other provisions (not greater than those contained herein)
as shall be valid and enforceable under applicable Law.
ARTICLE XI
SURVIVAL
11.1 Survival. All of the representations and warranties
contained in this Agreement or in any certificates delivered pursuant to
this Agreement will survive the Closing and continue in full force and
effect until 9 months after the Closing (the "Survival Period"). If any
claim (including any Tax Claim or Environmental Claim) is made in writing
during the Survival Period, the representations and warranties shall
survive thereafter solely for purposes of resolving such claim. The
parties' respective obligations with respect to covenants, Nonwovens
Liabilities and Excluded Liabilities shall not be subject to any Survival
Period.
11.2 Indemnification Provisions for the Benefit of the Buyer.
(a) In the event of the breach (or in the event a third
party alleges facts that, if true, would mean that there has been a breach)
of any of the representations, warranties or covenants of the Seller, any
of the Nonwovens Subsidiaries or any other subsidiary of the Seller,
contained in this Agreement or in any certificate delivered by the Seller
pursuant to this Agreement and provided that the Buyer makes a written
claim for indemnification pursuant hereto within the applicable survival
period, then the Seller agrees to defend, indemnify and hold harmless the
Buyer from and against all Damages the Buyer suffers resulting from,
arising from, arising out of, relating to, in the nature of or caused by
such event; provided, however, that the Seller shall have no liability with
respect to any Damages pursuant to this Section 11.2(a) unless and until
the aggregate of all claims for Damages hereunder and under Section 11.2(b)
exceeds $250,000 and shall thereafter be liable only for the amount of
Damages in excess of $250,000 in the aggregate; provided, further, that any
indemnity with respect to income Taxes (including the survival period with
respect thereto) shall be governed solely by Section 8.2.
(b) The Seller agrees to defend, indemnify, and hold
harmless the Buyer from and against all Damages the Buyer suffers, to the
extent (except as provided in (iv) below) arising from or relating to acts,
omissions, conditions or circumstances occurring or existing prior to or as
of the Closing, and whether or not disclosed in Schedule 3.21(b) or
otherwise, for:
(i) any Environmental Claim with respect to the
Nonwovens Business;
(ii) any notification, investigation, monitoring, or
remediation of, or other response to, any emission, discharge,
release or threatened release, or presence in the environment of
Hazardous Material, whether on-site or off-site, with respect to the
Nonwovens Business, to the extent required pursuant to Environmental
Law in effect as of the Closing but specifically excluding (y) any
such activities required to maintain compliance with a permit or
other Environmental Law with which the Seller was in compliance prior
to and as of the Closing, or (z) any baseline investigation or
similar investigative activity required after the Closing in
connection with application for an IPPC or other permit in the
ordinary course of business;
(iii) any failure of the Seller or its subsidiaries or
the Nonwovens Business to comply, on or prior to the Closing, with
any applicable Environmental Law or Environmental Permit, including
without limitation Damages relating to any fines and penalties and to
any action necessary to enable the Nonwovens Business to come into
compliance based on the nature of the operations of the Nonwovens
Business as of the Closing with applicable Environmental Laws in
effect as of the Closing; and
(iv) non-income Taxes levied or imposed upon, or in
connection with, the Nonwovens Assets or the Nonwovens Business
(including the Nonwovens Subsidiaries) with respect to any taxable
period or portion thereof that ends on or before the Effective Time,
to the extent that such non-income Taxes arise after the Effective
Time or were otherwise not reflected on the Closing Date Balance
Sheet (a "Tax Claim").
The Seller shall have no obligation to defend, indemnify or hold harmless
the Buyer pursuant to this Section 11.2(b) unless and to the extent that
the Buyer makes a written claim for indemnification from the Seller within
9 months from the Closing; provided, however, that the Seller shall have no
liability with respect to any Damages pursuant to this Section 11.2 unless
and until the aggregate of all claims for Damages hereunder and under
Section 11.2(a) exceeds $250,000 and shall thereafter be liable only for
(x) the amount of Damages in excess of $250,000 in the aggregate and (y) in
the case of Damages of the type described in clause (i), (ii) and (iii)
above, 75% of such excess.
(c) The parties shall promptly agree on the amount of the
escrow to be retained for the satisfaction of any claim presented by Buyer
to Seller in accordance with the terms of this indemnity. In the event the
parties cannot agree within 30 days after presentation of a claim of the
type described in clause (i), (ii) or (iii) of Section 11.2(b), the parties
shall mutually appoint a qualified environmental consultant to make such
determination. In the event that the parties cannot agree upon a
consultant, each party shall appoint its own consultant, and those
consultants shall jointly appoint a third consultant, who shall then make
such determination. In the event the appointed consultants shall fail to
agree, the dispute shall be subject to final and binding arbitration in New
York, New York under and in accordance with the rules of Conciliation and
Arbitration of the International Chamber of Commerce's International Court
of Arbitration (the "ICC") then in effect.
11.3 Indemnification Provisions for the Benefit of the Seller.
In the event the Buyer breaches (or in the event any third party alleges
facts that, if true, would mean the Buyer has breached) any of its
representations and warranties contained in this Agreement or in any
certificate delivered by the Buyer pursuant to this Agreement and provided
that the Seller makes a written claim for indemnification against the Buyer
pursuant hereto within the applicable survival period, then Purchaser
agrees to defend, indemnify, and hold harmless the Seller and the Nonwovens
Subsidiaries from and against the entirety of any Damages that the Seller
and the Nonwovens Subsidiaries suffer resulting from, arising out of,
relating to, in the nature of or caused by such event; provided, however,
that the Seller shall have no liability with respect to any Damages
pursuant to this Section 11.3 unless and until the aggregate of all claims
for Damages hereunder exceeds $250,000 and shall thereafter be liable only
for the amount of Damages in excess of $250,000 in the aggregate.
11.4 Matters Involving Third Parties. If any third party
notifies any party hereto (the "Indemnified Party") in writing of the
assertion, or threatened assertion, of any claim with respect to which
indemnification is reasonably likely to be claimed by the Indemnified Party
against any other party hereto (the "Indemnifying Party") under this
Article XI (the "Third Party Claim"), then the Indemnified Party will
notify the Indemnifying Party thereof promptly after receiving such written
notice from the aforesaid third party; provided that no delay on the part
of the Indemnified Party in notifying the Indemnifying Party will relieve
the Indemnifying Party from any obligation hereunder unless, and then
solely to the extent that, the Indemnifying Party is prejudiced thereby.
The Indemnified Party may (through counsel reasonably satisfactory to the
Indemnifying Party) participate at its own expense in (but not control) the
Third Party Claim if it notifies the Indemnifying Party in writing of its
intention so to participate on or before the tenth (10th) day following the
date on which notice of such Third Party Claim was given to the
Indemnifying Party. The Indemnified Party shall cooperate fully in the
defense of the Third Party Claim as and to the extent reasonably requested
by the Indemnifying Party (such cooperation shall include the retention
and, upon the request of the Indemnifying Party, the provision to such
party of records and information which are reasonably relevant to such
claim or demand and making himself or his employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder.
11.5 Statements as Representations. All statements contained
herein or in any schedule or certificate delivered pursuant to this
Agreement shall be deemed representations and warranties as such term is
used in this Agreement.
11.6 Limitation on Indemnification. Notwithstanding anything
contained in this Agreement or the escrow agreement to be entered into
between the Buyer and the Seller in the form attached as Exhibit D to the
contrary, in no event shall the Seller be required to indemnify any person
pursuant to Section 11.2 or the Escrow Agreement for any Damages exceeding
the Escrow Amount.
IN WITNESS WHEREOF, the Seller and the Buyer have caused this
Agreement to be signed by their respective duly authorized officers as of
the date first above written.
AHLSTROM PAPER GROUP OY
By: /s/ Gustav Adlercreutz
------------------------------
Name: Gustav Adlercreutz
Title: General Counsel
By: /s/ Jukka Moisio
------------------------------
Name: Jukka Moisio
Title: Chief Financial Officer
DEXTER CORPORATION
By: /s/ K. Grahame Walker
------------------------------
Name: K. Grahame Walker
Title: Chairman and CEO
ANNEX B
LEHMAN BROTHERS
June 20, 2000
Board of Directors
Dexter Corporation
1 Elm Street
Windsor Locks, CT 06096
Members of the Board:
We understand that Dexter Corporation ("Dexter" or the "Company")
intends to sell its Nonwoven Materials Division ("Nonwovens") to Ahlstrom
Paper Group Oy ("Ahlstrom") for a price of $275 million in cash plus the
assumption of liabilities relating to the Nonwovens business (the "Proposed
Transaction"). The terms and conditions of the Proposed Transaction are set
forth in the Asset Purchase Agreement dated June 20, 2000 (the "Purchase
Agreement") between the Company and Ahlstrom.
We have been requested by the Board of Directors of the Company to
render our opinion with respect to the fairness, from a financial point of
view, to the Company of the consideration to be received by the Company in
the Proposed Transaction. We have not been requested to opine as to, and
our opinion does not in any manner address, the Company's underlying
business decision to proceed with or effect the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the
Purchase Agreement and the specific terms of the Proposed Transaction; (2)
publicly available information concerning the Company, Ahlstrom and
Nonwovens that we believe to be relevant to our analysis; (3) financial and
operating information with respect to the business, operations and
prospects of Nonwovens furnished to us by the Company, including, without
limitation, certain projections of future financial performance of
Nonwovens prepared by the management of the Company and Nonwovens; (4) a
comparison of the historical financial results and present financial
condition of Nonwovens with those of other companies that we deemed
relevant; (5) a comparison of the financial terms of the Proposed
Transaction with the financial terms of certain other transactions that we
deemed relevant; and (6) the results of our efforts to solicit indications
of interest and offers with respect to a purchase of all or part of the
Company or Nonwovens. In arriving at our opinion, we also considered the
impact of the unsolicited proposal from International Specialty Products
Inc. to acquire all of the outstanding shares of Dexter on efforts to
solicit potential buyers of Nonwovens. In addition, we have had discussions
with the management of the Company and Nonwovens concerning the business,
operations, assets, financial condition and prospects of Nonwovens and have
undertaken such other studies, analyses and investigations as we deemed
appropriate.
In arriving at our opinion, we have assumed and relied upon the
accuracy and completeness of the financial and other information used by us
without assuming any responsibility for independent verification of such
information and have further relied upon the assurances of management of
the Company that they are not aware of any facts or circumstances that
would make such information inaccurate or misleading. With respect to the
financial projections of Nonwovens, upon advice of the Company we have
assumed that such projections have been reasonably prepared on a basis
reflecting the best currently available estimates and judgments of the
management of the Company as to the future financial performance of
Nonwovens and that Nonwovens will perform substantially in accordance with
such projections. In arriving at our opinion, we have not conducted a
physical inspection of the properties and facilities of Nonwovens and have
not made or obtained any evaluations or appraisals of the assets or
liabilities of Nonwovens. Our opinion necessarily is based upon market,
economic and other conditions as they exist on, and can be evaluated as of,
the date of this letter.
Based upon and subject to the foregoing, we are of the opinion as
of the date hereof that, from a financial point of view, the consideration
to be received by the Company pursuant to the Proposed Transaction is fair
to the Company.
We have acted as financial advisor to the Company in connection
with the Proposed Transaction. The Company has agreed to indemnify us for
certain liabilities that may arise out of the rendering of this opinion. In
the ordinary course of our business, we may actively trade in the debt and
equity securities of the Company for our own account and for the accounts
of our customers and, accordingly, may at any time hold a long or short
position in such securities.
This opinion is for the use and benefit of the Board of Directors
of the Company and is rendered to the Board of Directors in connection with
its consideration of the Proposed Transaction. This opinion is not intended
to be and does not constitute a recommendation to any stockholder of the
Company as to how such Stockholder should vote with respect to the Proposed
Transaction.
Very truly yours,
LEHMAN BROTHERS
ANNEX C
CONNECTICUT BUSINESS CORPORATION ACT
PART XIII. DISSENTERS' RIGHTS
(A) RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
33-855 DEFINITIONS.--As used in sections 33-855 to 33-872, inclusive:
(1) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 33-856 and who exercises that right when
and in the manner required by sections 33-860 to 33-868, inclusive.
(3) "Fair value", with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the
corporate action to which the dissenter objects, excluding any
appreciation or depreciation in anticipation of the corporate action.
(4) "Interest" means interest from the effective date of the
corporate action until the date of payment, at the average rate
currently paid by the corporation on its principal bank loans or, if
none, at a rate that is fair and equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on
file with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
33-856 RIGHT TO DISSENT.--(a) A shareholder is entitled to dissent
from, and obtain payment of the fair value of his shares in the event of,
any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party (A) if shareholder approval is required for the merger by section
33-817 or the certificate of incorporation and the shareholder is
entitled to vote on the merger or (B) if the corporation is a
subsidiary that is merged with its parent under section 33-818;
(2) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be
acquired, if the shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially
all, of the property of the corporation other than in the usual and
regular course of business, if the shareholder is entitled to vote on
the sale or exchange, including a sale in dissolution, but not
including a sale pursuant to court order or a sale for cash pursuant to
a plan by which all or substantially all of the net proceeds of the
sale will be distributed to the shareholders within one year after the
date of sale;
(4) An amendment of the certificate of incorporation that
materially and adversely affects rights in respect of a dissenter's
shares because it: (A) Alters or abolishes a preferential right of the
shares; (B) creates, alters or abolishes a right in respect of
redemption, including a provision respecting a sinking fund for the
redemption or repurchase, of the shares; (C) alters or abolishes a
preemptive right of the holder of the shares to acquire shares or other
securities; (D) excludes or limits the right of the shares to vote on
any matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights; or (E) reduces the number of shares owned by the shareholder to
a fraction of a share if the fractional share so created is to be
acquired for cash under section 33-668; or
(5) Any corporate action taken pursuant to a shareholder vote to
the extent the certificate of incorporation, bylaws or a resolution of
the board of directors provides that voting or nonvoting shareholders
are entitled to dissent and obtain payment for their shares.
33-857 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.--(a) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection
are determined as if the shares as to which he dissents and his other
shares were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if: (1) He submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and (2) he does so with
respect to all shares of which he is the beneficial shareholder or over
which he has power to direct the vote.
33-858, 33-859 [Reserved for future use.]
(B) PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
33-860 NOTICE OF DISSENTERS' RIGHTS.--(a) If proposed corporate action
creating dissenters' rights under section 33-856 is submitted to a vote at
a shareholders' meeting, the meeting notice shall state that shareholders
are or may be entitled to assert dissenters' rights under sections 33-855
to 33- 872, inclusive, and be accompanied by a copy of said sections.
(b) If corporate action creating dissenters' rights under section
33-856 is taken without a vote of shareholders, the corporation shall
notify in writing all shareholders entitled to assert dissenters' rights
that the action was taken and send them the dissenters' notice described in
section 33-862.
33-861 NOTICE OF INTENT TO DEMAND PAYMENT.--(a) If proposed corporate
action creating dissenters' rights under section 33-856 is submitted to a
vote at a shareholders' meeting, a shareholder who wishes to assert
dissenters' rights (1) shall deliver to the corporation before the vote is
taken written notice of his intent to demand payment for his shares if the
proposed action is effectuated and (2) shall not vote his shares in favor
of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection
(a) of this section is not entitled to payment for his shares under
sections 33-855 to 33-872, inclusive.
33-862 DISSENTERS' NOTICE.--(a) If proposed corporate action creating
dissenters' rights under section 33-856 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice to all
shareholders who satisfied the requirements of section 33-861.
(b) The dissenters' notice shall be sent no later than ten days after
the corporate action was taken and shall:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer
of the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of
the first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he acquired beneficial ownership
of the shares before that date;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty nor more than sixty days
after the date the subsection (a) of this section notice is delivered; and
(5) Be accompanied by a copy of sections 33-855 to 33-872, inclusive.
33-863 DUTY TO DEMAND PAYMENT.--(a) A shareholder sent a dissenters'
notice described in section 33-862 must demand payment, certify whether he
acquired beneficial ownership of the shares before the date required to be
set forth in the dissenters' notice pursuant to subdivision (3) of
subsection (b) of said section and deposit his certificates in accordance
with the terms of the notice.
(b) The shareholder who demands payment and deposits his share
certificates under subsection (a) of this section retains all other rights
of a shareholder until these rights are cancelled or modified by the taking
of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for his shares under sections 33-855 to
33-872, inclusive.
33-864 SHARE RESTRICTIONS.--(a) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their
payment is received until the proposed corporate action is taken or the
restrictions released under section 33-866.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate
action.
33-865 PAYMENT.--(a) Except as provided in section 33-867, as soon as
the proposed corporate action is taken, or upon receipt of a payment
demand, the corporation shall pay each dissenter who complied with section
33-863 the amount the corporation estimates to be the fair value of his
shares plus accrued interest.
(b) The payment shall be accompanied by: (1) The corporation's balance
sheet as of the end of a fiscal year ending not more than sixteen months
before the date of payment, an income statement for that year, a statement
of changes in shareholders' equity for that year and the latest available
interim financial statements, if any; (2) a statement of the corporation's
estimate of the fair value of the shares; (3) an explanation of how the
interest was calculated; (4) a statement of the dissenter's right to demand
payment under section 33-868; and (5) a copy of sections 33-855 to 33-872,
inclusive.
33-866 FAILURE TO TAKE ACTION.--(a) If the corporation does not take
the proposed action within sixty days after the date set for demanding
payment and depositing share certificates, the corporation shall return the
deposited certificates and release the transfer restrictions imposed on
uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under section 33-862 and repeat the payment demand
procedure.
33-867 AFTER-ACQUIRED SHARES.--(a) A corporation may elect to withhold
payment required by section 33-865 from a dissenter unless he was the
beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a) of this section, after taking the proposed corporate action,
it shall estimate the fair value of the shares, plus accrued interest, and
shall pay this amount to each dissenter who agrees to accept it in full
satisfaction of his demand. The corporation shall send with its offer a
statement of its estimate of the fair value of the shares, an explanation
of how the interest was calculated and a statement of the dissenter's right
to demand payment under section 33-868.
33-868 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR
OFFER.--(a) A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and
demand payment of his estimate, less any payment under section 33- 865, or
reject the corporation's offer under section 33-867 and demand payment of
the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount paid under section 33-865 or
offered under section 33-867 is less than the fair value of his shares
or that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under section 33-865 within
sixty days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within sixty days after
the date set for demanding payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under
subsection (a) of this section within thirty days after the corporation
made or offered payment for his shares.
33-869, 33-870 [Reserved for future use.]
(C) JUDICIAL APPRAISAL OF SHARES
33-871 COURT ACTION.--(a) If a demand for payment under section 33-868
remains unsettled, the corporation shall commence a proceeding within sixty
days after receiving the payment demand and petition the court to determine
the fair value of the shares and accrued interest. If the corporation does
not commence the proceeding within the sixty-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the superior court
for the judicial district where a corporation's principal office or, if
none in this state, its registered office is located. If the corporation is
a foreign corporation without a registered office in this state, it shall
commence the proceeding in the superior court for the judicial district
where the registered office of the domestic corporation merged with or
whose shares were acquired by the foreign corporation was located.
(c) The corporation shall make all dissenters, whether or not residents
of this state, whose demands remain unsettled parties to the proceeding as
in an action against their shares and all parties must be served with a
copy of the petition. Nonresidents may be served by registered or certified
mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this section is plenary and exclusive. The court
may appoint one or more persons as appraisers to receive evidence and
recommend decision on the question of fair value. The appraisers have the
powers described in the order appointing them, or in any amendment to it.
The dissenters are entitled to the same discovery rights as parties in
other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to
judgment (1) for the amount, if any, by which the court finds the fair
value of his shares, plus interest, exceeds the amount paid by the
corporation, or (2) for the fair value, plus accrued interest, of his
after-acquired shares for which the corporation elected to withhold payment
under section 33-867.
33-872 COURT COSTS AND COUNSEL FEES.--(a) The court in an appraisal
proceeding commenced under section 33-871 shall determine all costs of the
proceeding, including the reason able compensation and expenses of
appraisers appointed by the court. The court shall assess the costs against
the corporation, except that the court may assess costs against all or some
of the dissenters, in amounts the court finds equitable, to the extent the
court finds the dissenters acted arbitrarily, vexatiously or not in good
faith in demanding payment under section 33-868.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of sections 33-860 to 33-868, inclusive; or (2) against either
the corporation or a dissenter, in favor of any other party, if the court
finds that the party against whom the fees and expenses are assessed acted
arbitrarily, vexatiously or not in good faith with respect to the rights
provided by sections 33-855 to 33-872, inclusive.
(c) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and
that the fees for those services should not be assessed against the
corporation, the court may award to these counsel reasonable fees to be
paid out of the amounts awarded the dissenters who were benefited.
