<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section
14(d)(1) of the Securities Exchange Act of 1934
Furon Company
(Name of Subject Company)
FCY ACQUISITION CORPORATION
NORTON COMPANY
COMPAGNIE DE SAINT-GOBAIN
(Bidders)
Common Stock, without par value
(Title of Class of Securities)
----------------
361106107
(Cusip Number)
John R. Mesher, Esq.
Saint-Gobain Corporation
750 E. Swedesford Road
Valley Forge, PA 19482-0101
Telephone: (610) 341-7108
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications on Behalf of Bidders)
Copies to:
Carole Schiffman, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4256
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Transaction valuation* Amount of filing fee**
- ---------------------------------------------------------------------------------
<S> <C>
$471,979,423.50 $94,396
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Estimated solely for the purpose of determining the registration fee. Based
upon $25.50 cash per share for 18,508,997 shares as of September 22, 1999.
** The amount of the filing fee, calculated in accordance with Rule 0-11 under
the Securities Exchange Act of 1934, as amended, equals 1/50 of one percent
of the aggregate of the cash offered by the bidders.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CUSIP No. 361106107
- --------------------------------------------------------------------------------
1. Names of Reporting Persons S.S. or I.R.S.
Identification Nos. of Above Persons
FCY Acquisition Corporation
I.R.S. Employer Identification No. 23-3015144
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
AF
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to [_]
Items 2(e) or 2(f)
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
California
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
243,954*
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes [_]
Certain Shares
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
1%
- --------------------------------------------------------------------------------
10. Type of Reporting Person
CO
- --------------------------------------------------------------------------------
*See footnote on page 4.
2
<PAGE>
CUSIP No. 361106107
- --------------------------------------------------------------------------------
1. Names of Reporting Persons S.S. or I.R.S.
Identification Nos. of Above Persons
Norton Company
I.R.S. Employer Identification No. 04-1680390
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
AF
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
[_]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Massachusetts
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
243,954*
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes [_]
Certain Shares
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
1%
- --------------------------------------------------------------------------------
10. Type of Reporting Person
CO
- --------------------------------------------------------------------------------
*See footnote on page 4.
3
<PAGE>
CUSIP No. 361106107
- --------------------------------------------------------------------------------
1. Names of Reporting Persons S.S. or I.R.S.
Identification Nos. of Above Persons
Compagnie de Saint-Gobain
S.S. and I.R.S. Employer Identification No. N/A
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
WC
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
[_]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
France
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
243,954*
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes [_]
Certain Shares
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
1%
- --------------------------------------------------------------------------------
10. Type of Reporting Person
HC, CO
- --------------------------------------------------------------------------------
*On September 18, 1999, FCY Acquisition Corporation (the "Purchaser")
entered into a Shareholder Agreement with the Chairman, President and Chief
Executive Officer of Furon Company (the "Company") (such individual, the
"Shareholder"), pursuant to which the Shareholder has unconditionally agreed to
tender into the Offer (as hereinafter defined), and not to withdraw therefrom,
the shares of Common Stock, without par value (the "Shares") of the Company
that he owned on September 18, 1999 (comprising 243,954 Shares), as well as any
other Shares that he thereafter acquires, including upon the exercise of stock
options. In addition, the Shareholder has granted an irrevocable proxy for the
benefit of the Purchaser with respect to the Shares subject to the Shareholder
Agreement to vote such Shares under certain circumstances. The Purchaser's
right to vote the Shares subject to the Shareholder Agreement is reflected in
Rows 7 and 9 in each of the tables above. A copy of the Shareholder Agreement
is described more fully in Section 10 of the Offer to Purchase dated September
24, 1999 (the "Offer to Purchase") attached hereto as Exhibit (a)(1).
4
<PAGE>
Item l. Security and Subject Company
(a) The name of the subject company is Furon Company, a California
corporation (the "Company"), and the address of its principal executive offices
is 29982 Ivy Glenn Drive, Laguna Niguel, California, 92677-2044.
(b) This Statement relates to the offer by FCY Acquisition Corporation, a
California corporation ("Purchaser"), and an indirect wholly owned subsidiary
of Norton Company, a Massachusetts corporation ("Parent"), which is an indirect
wholly owned subsidiary of Compagnie de Saint-Gobain, a French corporation
("Saint-Gobain"), to purchase all outstanding shares of common stock, without
par value (including the associated preferred share purchase rights, the
"Shares"), of the Company at $25.50 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer to Purchase (the
"Offer to Purchase") and in the related Letter of Transmittal, copies of which
are attached hereto as Exhibits (a)(l) and (a)(2), respectively (which are
herein collectively referred to as the "Offer"). The information set forth in
the introduction to the Offer to Purchase (the "Introduction") is incorporated
herein by reference.
(c) The information set forth in Section 6 "Price Range of Shares;
Dividends" of the Offer to Purchase is incorporated herein by reference.
Item 2. Identity and Background.
(a)-(d), (g) This Statement is filed by Purchaser, Parent and Saint-Gobain.
The information set forth in the Introduction, Section 8 "Certain Information
Concerning Purchaser, Parent and Saint-Gobain" and Schedule I of the Offer to
Purchase is incorporated herein by reference.
(e)-(f) None of Saint-Gobain, Parent, Purchaser, nor, to the best knowledge
of Saint-Gobain, Parent and Purchaser, any of the persons listed in Schedule I
of the Offer to Purchase, has during the last five years (i) been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company.
(a)-(b) The information set forth in the Introduction and Section l0
"Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company" of the Offer to Purchase is incorporated herein by reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a) The information set forth in Section 9 "Source and Amount of Funds" of
the Offer to Purchase is incorporated herein by reference.
(b)-(c) Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a)-(e) The information set forth in the Introduction and Section 11
"Purpose of the Offer; Plans for the Company" of the Offer to Purchase is
incorporated herein by reference.
(f)-(g) The information set forth in Section 12 "Effect of the Offer on the
Market for the Shares; Stock Exchange Listing(s); Registration Under the
Exchange Act" of the Offer to Purchase is incorporated herein by reference.
5
<PAGE>
Item 6. Interest in Securities of the Subject Company.
(a)-(b) The information set forth in the Introduction, Section 10
"Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company" and Schedule I of the Offer to Purchase is incorporated herein by
reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities.
The information set forth in the Introduction, Section 10 "Background of the
Offer; Past Contacts, Transactions or Negotiations with the Company" and
Schedule I of the Offer to Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in Section 17 "Fees and Expenses" of the Offer to
Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders.
The information set forth in Section 8 "Certain Information Concerning
Purchaser, Parent and Saint-Gobain" of the Offer to Purchase is incorporated
herein by reference.
Item 10. Additional Information.
(a) None.
(b)-(c) The information set forth in Section 16 "Certain Legal Matters;
Regulatory Approvals" of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 12 "Effect of the Offer on the
Market for the Shares; Stock Exchange Listing(s); Registration under the
Exchange Act" of the Offer to Purchase is incorporated herein by reference.
(e) The information set forth in the Introduction and Section 16 "Certain
Legal Matters; Regulatory Approvals" of the Offer to Purchase is incorporated
herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference in its entirety.
Item 11. Material to be Filed as Exhibits.
(a)(l) Offer to Purchase dated September 24, 1999.
(a)(2) Letter of Transmittal (including Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9).
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Text of joint press release issued in the United States by the
Company and Parent dated September 19, 1999.
(a)(7) Text of press release issued in France by Saint-Gobain dated
September 20, 1999.
6
<PAGE>
(a)(8) Summary advertisement as published in The Wall Street Journal on
September 24, 1999.
(b) Not applicable.
(c)(1) Agreement and Plan of Merger dated as of September 18, 1999 among
the Company, Parent and Purchaser.
(c)(2) Stock Option Agreement dated as of September 18, 1999 among the
Company, Parent and Purchaser.
(c)(3) Shareholder Agreement dated as of September 18, 1999 between
Purchaser and J. Michael Hagan.
(c)(4) Reciprocal Confidentiality Agreement dated as of May 27, 1999
between the Company and Saint-Gobain Industrial Ceramics, Inc., a
wholly owned subsidiary of Parent.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
7
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: September 24, 1999
FCY ACQUISITION CORPORATION
/s/ George B. Amoss
By: _________________________________
Name: George B. Amoss
Title:Vice President
NORTON COMPANY
/s/ George B. Amoss
By: _________________________________
Name: George B. Amoss
Title:Vice President
COMPAGNIE DE SAINT-GOBAIN
/s/ Gianpaolo Caccini
By: _________________________________
Name: Gianpaolo Caccini
Title:Senior Vice President
8
<PAGE>
EXHIBITS INDEX
<TABLE>
<CAPTION>
Exhibit
Number Title
------- -----
<C> <S>
(a)(1) Offer to Purchase dated September 24, 1999.
(a)(2) Letter of Transmittal (including Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9).
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) Text of joint press release issued in the United States by the Company
and Parent dated September 19, 1999.
(a)(7) Text of press release issued in France by Saint-Gobain dated September
20, 1999.
(a)(8) Summary advertisement as published in The Wall Street Journal on
September 24, 1999.
(c)(1) Agreement and Plan of Merger dated as of September 18, 1999 among the
Company, Parent and Purchaser.
(c)(2) Stock Option Agreement dated as of September 18, 1999 among the
Company, Parent and Purchaser.
(c)(3) Shareholder Agreement dated as of September 18, 1999 between Purchaser
and J. Michael Hagan.
(c)(4) Reciprocal Confidentiality Agreement dated as of May 27, 1999 between
the Company and Saint-Gobain Industrial Ceramics, Inc., a wholly owned
subsidiary of Parent.
</TABLE>
<PAGE>
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Furon Company
at
$25.50 Net Per Share
by
FCY Acquisition Corporation
an indirect wholly owned subsidiary of
Norton Company
an indirect wholly owned subsidiary of
Compagnie de Saint-Gobain
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, OCTOBER 22, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES OF COMMON STOCK WITHOUT PAR VALUE (INCLUDING THE ASSOCIATED PREFERRED
SHARE PURCHASE RIGHTS; COLLECTIVELY, THE "SHARES") OF FURON COMPANY (THE
"COMPANY") WHICH, TOGETHER WITH THE SHARES THEN OWNED BY FCY ACQUISITION
CORPORATION ("PURCHASER"), NORTON COMPANY ("PARENT") AND COMPAGNIE DE SAINT-
GOBAIN ("SAINT-GOBAIN"), WOULD REPRESENT AT LEAST NINETY PERCENT (90%) OF THE
TOTAL NUMBER OF OUTSTANDING SHARES AND (2) ANY WAITING PERIOD UNDER THE HART-
SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 AND UNDER ANY APPLICABLE LAWS
OF ITALY OR GERMANY REGULATING COMPETITION, ANTITRUST, INVESTMENT OR EXCHANGE
CONTROLS HAVING EXPIRED OR BEEN TERMINATED.
IN THE EVENT THAT MORE THAN 50% AND LESS THAN 90% OF THE SHARES THEN
OUTSTANDING ARE TENDERED PURSUANT TO THE OFFER AND NOT WITHDRAWN, PURCHASER
WILL, UNDER CERTAIN CIRCUMSTANCES DESCRIBED BELOW, EITHER EXERCISE THE TOP-UP
STOCK OPTION DESCRIBED HEREIN OR REDUCE THE NUMBER OF SHARES SUBJECT TO THE
OFFER TO A NUMBER EQUAL TO 49.99% OF THE SHARES THEN OUTSTANDING.
---------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE STOCK OPTION AGREEMENT, THE SHAREHOLDER AGREEMENT, THE OFFER AND
THE MERGER (EACH AS DEFINED BELOW), AND DETERMINED THAT THE TERMS OF THE OFFER
AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
SHAREHOLDERS, AND HAS RECOMMENDED ACCEPTANCE OF THE OFFER AND APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT BY THE COMPANY'S SHAREHOLDERS (IF SUCH
APPROVAL IS REQUIRED BY APPLICABLE LAW).
ACCORDINGLY, THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS
THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES OF
COMMON STOCK PURSUANT TO THE OFFER.
---------------
Any shareholder desiring to tender Shares should either (1) complete and
sign the Letter of Transmittal (or facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and deliver it with the
certificate(s) representing tendered Shares and all other required documents to
the Depositary or tender such Shares pursuant to the procedures for book-entry
transfer set forth in Section 3 or (2) request his or her broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
him or her. A shareholder having Shares registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
person if he or she desires to tender such Shares.
Any shareholder who desires to tender Shares and cannot deliver such Shares
and all other required documents to the Depositary by the expiration of the
Offer or who cannot comply with the procedures for book-entry transfer on a
timely basis must tender such Shares pursuant to the guaranteed delivery
procedure set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent, brokers, dealers,
commercial banks or trust companies.
---------------
The Dealer Manager for the Offer is:
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10020
(212) 632-6717
September 24, 1999
<PAGE>
----------------
TABLE OF CONTENTS
----------------
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1. Terms of the Offer; Proration; Expiration Date..................... 3
2. Acceptance for Payment and Payment................................. 5
3. Procedure for Tendering Shares..................................... 6
4. Withdrawal Rights.................................................. 8
5. Certain Tax Considerations......................................... 9
6. Price Range of Shares; Dividends................................... 10
7. Certain Information Concerning the Company......................... 10
8. Certain Information Concerning Purchaser, Parent and Saint-Gobain.. 12
9. Source and Amount of Funds......................................... 15
Background of the Offer; Past Contacts, Transactions or
10. Negotiations with the Company...................................... 15
11. Purpose of the Offer; Plans for the Company........................ 31
12. Effect of the Offer on the Market for the Shares; Stock Exchange
Listing(s);
Registration under the Exchange Act................................ 33
13. Dividends and Distributions........................................ 34
14. Extension of Tender Period; Termination; Amendment................. 35
15. Certain Conditions of the Offer.................................... 36
16. Certain Legal Matters; Regulatory Approvals........................ 38
17. Fees and Expenses.................................................. 41
18. Miscellaneous...................................................... 42
</TABLE>
Schedule I--Directors and Executive Officers of Saint-Gobain, Parent and
Purchaser
<PAGE>
INTRODUCTION
To the Holders of Common Stock of
Furon Company:
FCY Acquisition Corporation, a California corporation ("Purchaser") and an
indirect wholly owned subsidiary of Norton Company, a Massachusetts corporation
("Parent") which is an indirect wholly owned subsidiary of Compagnie de Saint-
Gobain, a French corporation ("Saint-Gobain"), hereby offers to purchase all
outstanding shares of Common Stock (the "Common Stock"), without par value, of
Furon Company, a California corporation (the "Company"), and the associated
preferred share purchase rights (the "Rights"; and together with the Common
Stock, the "Shares") issued pursuant to the Rights Agreement dated as of April
30, 1999, between the Company and The Bank of New York, as Rights Agent (the
"Rights Agreement"), at $25.50 per Share (such price, or such higher price per
Share as may be paid in the Offer, being referred to herein as the "Offer
Price"), net to the seller in cash, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which together constitute the "Offer"). Tendering shareholders
will not be obligated to pay brokerage fees or commissions or, except as set
forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the
purchase of Shares pursuant to the Offer. Purchaser will pay all charges and
expenses of Lazard Freres & Co. LLC (the "Dealer Manager" or "Lazard Freres"),
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") and Georgeson &
Company Inc. (the "Information Agent") incurred in connection with the Offer
and the Merger (as defined below). See Section 17.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in Section
1 below) a number of Shares which, together with Shares then owned by
Purchaser, Parent and Saint-Gobain, would represent at least ninety percent
(90%) of the total number of outstanding Shares (the "Minimum Condition") and
(2) any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (the "HSR Act") and under any applicable laws of Italy or Germany
regulating competition, antitrust, investment or exchange controls (the
"Antitrust Laws") having expired or been terminated.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE STOCK OPTION AGREEMENT, THE SHAREHOLDER AGREEMENT, THE OFFER AND
THE MERGER (EACH AS DEFINED BELOW), AND DETERMINED THAT THE TERMS OF THE OFFER
AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
SHAREHOLDERS, AND HAS RECOMMENDED ACCEPTANCE OF THE OFFER AND APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT BY THE COMPANY'S SHAREHOLDERS (IF SUCH
APPROVAL IS REQUIRED BY APPLICABLE LAW).
ACCORDINGLY, THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS
THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES OF
COMMON STOCK PURSUANT TO THE OFFER.
LEHMAN BROTHERS, FINANCIAL ADVISOR TO THE COMPANY, HAS DELIVERED TO THE
BOARD OF DIRECTORS OF THE COMPANY ITS WRITTEN OPINION TO THE EFFECT THAT, AS OF
SEPTEMBER 17, 1999, AND BASED UPON AND SUBJECT TO THE MATTERS SET FORTH
THEREIN, THE $25.50 IN CASH TO BE PAID IN THE OFFER AND THE MERGER IS FAIR FROM
A FINANCIAL POINT OF VIEW TO THE HOLDERS OF SHARES. THE FULL TEXT OF THE
WRITTEN OPINION OF LEHMAN BROTHERS CONTAINING THE ASSUMPTIONS MADE, THE MATTERS
CONSIDERED AND THE SCOPE OF THE REVIEW UNDERTAKEN IN RENDERING SUCH OPINION AS
WELL AS THE LIMITATIONS OF SUCH OPINION IS INCLUDED WITH THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9, WHICH IS BEING MAILED
TO SHAREHOLDERS CONCURRENTLY HEREWITH. SHAREHOLDERS ARE URGED TO READ THE FULL
TEXT OF SUCH OPINION IN CONJUNCTION WITH THIS OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of September 18, 1999 (the "Merger Agreement") among the Company, Parent and
Purchaser. The Merger Agreement provides,
1
<PAGE>
among other things, that as soon as practicable after the consummation of the
Offer, and in accordance with the applicable provisions of the California
General Corporation Law (the "CGCL"), Purchaser will be merged with and into
the Company (the "Merger"), with the Company continuing as the surviving
corporation (the "Surviving Corporation"). Thereupon, each outstanding Share
(other than Dissenting Shares (as hereinafter defined), Shares held by the
Company as treasury stock and Shares owned by Parent, Purchaser or Saint-Gobain
or any of their subsidiaries or any subsidiary of the Company) will be
converted into and represent the right to receive $25.50 in cash or any higher
price per Share that may be paid in the Offer, without interest. See Section
11.
According to the Company, as of September 22, 1999, there were outstanding
18,508,997 Shares and options to purchase an aggregate of 1,996,709 Shares.
Accordingly, Purchaser believes that (i) the initial Minimum Condition would be
satisfied if approximately 16,658,097 Shares (constituting 90% of all
outstanding Shares) are validly tendered pursuant to the Offer and not
withdrawn and (ii) the Minimum Condition, if reduced to the Revised Minimum
Number in accordance with the Merger Agreement, would be satisfied if
approximately 9,252,638 Shares (constituting 49.99% of all outstanding Shares)
are validly tendered pursuant to the Offer and not withdrawn (in each case
assuming that no options to purchase Shares are exercised prior to the
Expiration Date).
The purpose of the Offer is to acquire for cash as many outstanding Shares
as possible as a first step in acquiring the entire equity interest in the
Company. The Merger Agreement provides that, in the event the Minimum Condition
is not satisfied on any scheduled Expiration Date (as defined in Section 1) of
the Offer, Purchaser may, without the consent of the Company (i) extend the
Offer; (ii) amend the Offer to waive the Minimum Condition in contemplation of
the exercise of the Top-Up Stock Option (as defined below) (to the extent the
Top-Up Stock Option is exercisable at such time); or (iii) amend the Offer to
provide that, in the event (A) the Minimum Condition is not satisfied at the
next scheduled Expiration Date of the Offer (without giving effect to the
exercise of the Top-Up Stock Option (as defined below)) and (B) the number of
Shares tendered pursuant to the Offer and not withdrawn as of such next
scheduled Expiration Date, when taken together with Shares owned directly or
indirectly by Parent and Saint-Gobain, is more than 50% of the then outstanding
Shares, Purchaser will (x) reduce the Minimum Condition to the Revised Minimum
Number (defined below), (y) reduce the number of Shares subject to the Offer to
a number of Shares that, when added to the Shares then owned directly or
indirectly by Parent and Saint-Gobain, will equal 49.99% of the Shares then
outstanding (the "Revised Minimum Number") and (z) if a number of Shares
greater than the Revised Minimum Number is tendered into the Offer and not
withdrawn, purchase, on a pro rata basis, the Revised Minimum Number of Shares.
In the event that (a) the number of Shares tendered pursuant to the Offer and
not withdrawn as of such next scheduled expiration date, taken together with
the number of Shares owned directly or indirectly by Parent and Saint-Gobain,
is more than 50% of the then outstanding Shares, (b) all conditions to the
Offer other than the Minimum Condition shall have been satisfied and (c) Shares
have not been accepted for payment by Purchaser prior to November 10, 1999,
Purchaser shall be required to take either the action contemplated by clause
(ii) or the action contemplated by clause (iii) above.
If all of the conditions to the Offer are not satisfied or waived on any
scheduled Expiration Date of the Offer and subject to the immediately preceding
sentence, Purchaser will either (i) extend the Offer (but not later than
November 10, 1999) until such conditions are satisfied or waived or (ii)
exercise its rights described in clause (ii) or (iii) of the immediately
preceding paragraph, if applicable; provided that (w) such conditions are
reasonably capable of being satisfied, (x) the Company exercises its reasonable
best efforts to cause such conditions to be satisfied, (y) an Acquisition
Proposal (as defined below) shall not have been publicly announced and not
withdrawn as of such scheduled expiration date and (z) the Company is in
compliance with all of its covenants in the Merger Agreement.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger Agreement
by the requisite vote of the shareholders of the Company, if required by the
CGCL. Under the CGCL, if Purchaser acquires, pursuant to the Offer, the Stock
Option Agreement, the Shareholder Agreement or otherwise, at least 90% of the
Shares then outstanding, it will be able to effect the Merger without a vote of
the shareholders. In such event, Parent, Purchaser and the Company
2
<PAGE>
have agreed in the Merger Agreement to take, subject to the satisfaction or (to
the extent permitted under the Merger Agreement) waiver of the conditions set
forth in the Merger Agreement, all necessary and appropriate action to cause
the Merger to be effective as soon as practicable after the acceptance for
payment and purchase of Shares pursuant to the Offer, without a meeting of
shareholders of the Company, in accordance with Section 1110 of the CGCL. Under
the CGCL, the Merger consideration paid to the shareholders of the Company may
not be cash if Purchaser, Parent and Saint-Gobain own, directly or indirectly,
more than 50% but less than 90% of the then outstanding Shares, unless either
all the shareholders of the Company consent or the Commissioner of Corporations
of the State of California approves, after a hearing, the terms and conditions
of the Merger and the fairness thereof. If, pursuant to the Offer, the Stock
Option Agreement, the Shareholder Agreement or otherwise, Purchaser does not
acquire Shares that, taken together with Shares owned by Parent and Saint-
Gobain, represent at least 90% of the Shares then outstanding as of any
scheduled Expiration Date of the Offer, and Purchaser instead amends the Offer
to reduce the number of shares subject to the Offer to the Revised Minimum
Number (as described above), then Purchaser, together with Parent and Saint-
Gobain, would own upon consummation of the Offer 49.99% of the Shares then
outstanding, and would thereafter solicit the approval of the Merger and the
Merger Agreement by a vote of the shareholders of the Company. Under such
circumstances, a significantly longer period of time will be required to effect
the Merger. For a description of the conditions set forth in the Merger
Agreement and the CGCL as it relates to this transaction, see Sections 10, 11
and 15.
Concurrently with the execution of the Merger Agreement, and as a condition
and inducement to Parent's and Purchaser's entering into the Merger Agreement,
the Company entered into a Stock Option Agreement dated as of September 18,
1999 (the "Stock Option Agreement") with Parent and Purchaser. Pursuant to the
Stock Option Agreement, the Company granted to Purchaser an irrevocable option
(the "Top-Up Stock Option") to purchase that number of Shares (the "Top-Up
Option Shares") equal to the number of Shares that, when added to the number of
Shares owned by Purchaser, Parent and Saint-Gobain immediately following
consummation of the Offer, will constitute 90% of the Shares then outstanding
(assuming the issuance of the Top-Up Option Shares) at a purchase price per
Top-Up Option Share equal to the Offer Price, subject to the terms and
conditions set forth in the Stock Option Agreement, including, without
limitation, that the Top-Up Stock Option shall not be exercisable if the number
of Shares that would otherwise be issued thereunder would exceed the number of
authorized Shares available for issuance. If the Top-Up Stock Option is
exercised by Purchaser (resulting in Purchaser, Parent and Saint-Gobain owning
90% or more of the Shares then outstanding), Purchaser will be able to effect a
short-form Merger under the CGCL, subject to the terms and conditions of the
Merger Agreement. For a description of the Stock Option Agreement, see Section
10.
Concurrently with the execution of the Merger Agreement, and as a condition
and inducement to Parent's and Purchaser's entering into the Merger Agreement,
J. Michael Hagan, Chairman and Chief Executive Officer of the Company has
entered into a Shareholder Agreement with Purchaser dated as of September 18,
1999 (the "Shareholder Agreement") pursuant to which, among other things, Mr.
Hagan has agreed to tender his Shares in the Offer. For a description of the
Shareholder Agreement, see Section 10.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
1. Terms of the Offer; Proration; Expiration Date. Upon the terms and
subject to the conditions of the Offer (including if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), and
subject to reduction in the number of Shares subject to the Offer to a number
equal to the Revised Minimum Number, Purchaser will accept for payment and pay
for all Shares validly tendered on or prior to the Expiration Date (as defined
below) and not properly withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 midnight, New York City time, on Friday, October
22, 1999, unless and until Purchaser, in accordance with the terms of the
Merger Agreement, extends the period of time during which the Offer is open, in
which event the term "Expiration Date" will mean the latest time and date at
which the Offer, as so extended by Purchaser, will expire.
3
<PAGE>
The Offer is subject to certain conditions set forth in Section 15,
including satisfaction of the Minimum Condition, expiration or termination of
the waiting period applicable to Purchaser's acquisition of Shares pursuant to
the Offer under the HSR Act and the Antitrust Laws. The Merger Agreement
provides that no change or waiver may be made, without the prior written
consent of the Company, that waives the Minimum Condition (other than in
contemplation of the exercise of the Top-Up Option), changes the form of
consideration to be paid, decreases the price per Share or the number of Shares
sought in the Offer, imposes conditions to the Offer in addition to those set
forth in Section 15, or is otherwise materially adverse to the holders of the
Shares.
The Merger Agreement provides that, notwithstanding the foregoing, without
the consent of the Company, Purchaser will have the right to extend the Offer
(i) on two occasions for not more than ten business days on each occasion if,
at the scheduled or extended Expiration Date of the Offer, any of the
conditions to the Offer shall not have been satisfied or waived, until such
conditions are satisfied or waived or (ii) for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange
Commission (the "Commission") or the staff thereof applicable to the Offer or
any period required by applicable law. If all of the conditions to the Offer
are not satisfied or waived on any scheduled Expiration Date of the Offer,
subject to the following paragraph, Purchaser will either (i) extend the Offer
until such conditions are satisfied or waived (but not beyond November 10,
1999) or (ii) exercise its rights, if applicable, pursuant to clauses (ii) or
(iii) described in the immediately following paragraph; provided that (w) such
conditions are reasonably capable of being satisfied, (x) the Company exercises
its reasonable best efforts to cause such conditions to be satisfied, (y) an
Acquisition Proposal (as defined below) shall not have been publicly announced
and not withdrawn as of such scheduled expiration date and (z) the Company is
in compliance with all of its covenants in the Merger Agreement.
In the event the Minimum Condition is not satisfied on any scheduled
Expiration Date of the Offer, Purchaser may, without the consent of the Company
(i) extend the Offer pursuant to the above paragraph; (ii) amend the Offer to
waive the Minimum Condition in contemplation of the exercise of the Top-Up
Stock Option (to the extent the Top-Up Stock Option is exercisable at such
time); or (iii) amend the Offer to provide that, in the event (A) the Minimum
Condition is not satisfied at the next scheduled Expiration Date (without
giving effect to the exercise of the Top-Up Stock Option) and (B) the number of
Shares tendered pursuant to the Offer and not withdrawn as of such next
scheduled Expiration Date, when taken together with Shares owned directly or
indirectly by Parent and Saint-Gobain, is more than 50% of the then outstanding
Shares, Purchaser will (x) reduce the Minimum Condition to the Revised Minimum
Number, (y) reduce the number of Shares subject to the Offer to a number of
Shares that, when added to the Shares then owned directly or indirectly by
Parent and Saint-Gobain, will equal the Revised Minimum Number and (z) if a
number of Shares greater than the Revised Minimum Number is tendered into the
Offer and not withdrawn, purchase, on a pro rata basis, the Revised Minimum
Number of Shares. In the event that (a) the number of Shares tendered pursuant
to the Offer and not withdrawn as of such next scheduled expiration date, taken
together with the number of Shares owned directly or indirectly by Parent and
Saint-Gobain, is more than 50% of the then outstanding Shares, (b) all
conditions to the Offer other than the Minimum Condition shall have been
satisfied and (c) Shares have not been accepted for payment by Purchaser prior
to November 10, 1999, Purchaser shall be required to take either the action
contemplated by clause (ii) or the action contemplated by clause (iii) above.
In addition to Purchaser's rights to extend and amend the Offer subject to
the provisions of the Merger Agreement, Purchaser (i) will not be required to
accept for payment or, subject to any applicable rules and regulations of the
Commission, pay for, and may delay the acceptance for payment of, or payment
for, any tendered Shares and (ii) may terminate the Offer or amend the Offer as
to any Shares not then paid for, if any of the conditions specified in Section
15 exists. Purchaser acknowledges that (a) Rule 14e-1(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), requires Purchaser to
pay the consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer and (b) Purchaser may not delay
acceptance for payment of, or payment for (except as provided in clause (i) of
the first sentence of this paragraph), any Shares upon the occurrences of any
of the conditions specified in Section 15 without extending the period of time
during which the Offer is open.
4
<PAGE>
Purchaser is required to give oral or written notice of any extension,
delay, termination or amendment of the Offer to the Depositary. Any such
extension, delay, termination or amendment will also be followed as promptly as
practicable by public announcement thereof, such announcement in the case of an
extension to be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that material changes be promptly disseminated to shareholders in
a manner reasonably designed to inform them of such changes) and without
limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser will have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a
press release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules 14d-
4(c), 14d-6(d) and 14e-1(d) under the Exchange Act.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to increase or decrease the number of Shares
being sought or to increase or decrease the Offer Price (which would require
the Company's consent), such increase or decrease in the number of Shares being
sought or such increase or decrease in the Offer Price will be applicable to
all shareholders whose Shares are accepted for payment pursuant to the Offer.
If at the time notice of any such increase or decrease in the number of Shares
being sought or such increase or decrease in the Offer Price is first
published, sent or given to holders of such Shares, the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day
from and including the date that such notice is first so published, sent or
given, the Offer will be extended at least until the expiration of such ten
business day period. For purposes of the Offer, a "business day" means any day,
other than a Saturday, Sunday or a federal holiday, and consists of the time
period from 12:01 a.m. through midnight, New York City time.
Under no circumstances will interest on the Offer Price for the Shares be
paid, regardless of any extension of the Offer or delay in making such payment.
During any extension of the Offer, all Shares previously tendered and not
withdrawn will remain tendered pursuant to the Offer, subject to the rights of
a tendering shareholder to withdraw his Shares. See Section 4.
If proration is required as a result of any reduction in the number of
Shares subject to the Offer to a number equal to the Revised Minimum Number,
then, because of the difficulty of determining precisely the number of Shares
validly tendered and not withdrawn, Purchaser would not expect to announce the
final results of proration until approximately seven New York Stock Exchange
("NYSE") trading days after the Expiration Date. Preliminary results of
proration will be announced by press release as promptly as practicable after
the Expiration Date. Holders of Shares may obtain such preliminary information
from the Depositary and may also be able to obtain such preliminary information
from their brokers. Purchaser will not pay for any Shares accepted for payment
pursuant to the Offer until the final proration factor is known.
The Company has provided Purchaser with the Company's shareholder lists and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares and will be furnished to brokers,
banks and similar persons whose names, or the names of whose nominees, appear
on the shareholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2. Acceptance for Payment and Payment. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), and subject to
reduction in the number of Shares subject to the Offer to a number equal to the
Revised Minimum Number, Purchaser will accept for payment, and will pay for,
all Shares validly tendered on or prior to the Expiration Date and not properly
withdrawn as soon as practicable after Purchaser is legally permitted to do so
under applicable law. The obligation of Purchaser to consummate the Offer and
to accept for payment,
5
<PAGE>
and to pay for, all Shares validly tendered and not properly withdrawn will be
subject to the satisfaction of the Minimum Condition and the satisfaction or
waiver of the other conditions to the Offer set forth in Section 15. Subject to
applicable rules and regulations of the Commission and to the terms and
conditions of the Merger Agreement, Purchaser expressly reserves the right to
delay acceptance for payment of, or payment for, Shares pending receipt of any
regulatory approvals specified in Section 16 or in order to comply in whole or
in part with any other applicable law.
For purposes of the Offer, Purchaser shall be deemed to have accepted for
payment tendered Shares when, as and if Purchaser gives oral or written notice
to the Depositary of its acceptance of the tenders of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price with the Depositary, which will act as agent for the
tendering shareholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering shareholders. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of certificates for such Shares (or of a
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in Section 3)), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other required documents. For a description of the procedure
for tendering Shares pursuant to the Offer, see Section 3. Accordingly, payment
may be made to tendering shareholders at different times if delivery of the
Shares and other required documents occur at different times. Under no
circumstances will interest be paid by Purchaser on the consideration paid for
Shares pursuant to the Offer, regardless of any delay in making such payment.
If Purchaser increases the consideration to be paid for Shares pursuant to
the Offer, Purchaser will pay such increased consideration for all Shares
purchased pursuant to the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer or prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted for more Shares than are tendered,
certificates for such unpurchased or untendered Shares will be returned (or, in
the case of Shares tendered by book-entry transfer, such Shares will be
credited to an account maintained at the Book-Entry Transfer Facility), without
expense to the tendering shareholder, as promptly as practicable following the
expiration or termination of the Offer.
3. Procedure for Tendering Shares. To tender Shares pursuant to the Offer,
either (a) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of
Transmittal must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase and either (i) certificates
for the Shares to be tendered must be received by the Depositary at one of such
addresses or (ii) such Shares must be delivered pursuant to the procedures for
book-entry transfer described below (and a confirmation of such delivery
received by the Depositary including an Agent's Message (as defined below) if
the tendering shareholder has not delivered a Letter of Transmittal), in each
case by the Expiration Date, or (b) the guaranteed delivery procedure described
below must be complied with. The term "Agent's Message" means a message,
transmitted by the Book-Entry Transfer Facility (as hereinafter defined) to and
received by the Depositary and forming a part of a book-entry confirmation
which states that such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering the Shares which are the subject of such book-entry confirmation that
such participant has received and agrees to be bound by the terms of the Letter
of Transmittal and that Purchaser may enforce such agreement against such
participant.
Book Entry Delivery. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer, and any financial institution that is a
participant in the system of the Book-Entry Transfer Facility may make a book-
entry
6
<PAGE>
delivery of Shares by causing such Book-Entry Transfer Facility to transfer
such Shares into the Depositary's account in accordance with the procedures of
such Book-Entry Transfer Facility. However, although delivery of Shares may be
effected through book-entry transfer at the Book-Entry Transfer Facility, the
Letter of Transmittal (or facsimile thereof) properly completed and duly
executed together with any required signature guarantees or an Agent's Message
and any other required documents must, in any case, be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase by the Expiration Date, or the guaranteed delivery procedure described
below must be complied with. Delivery of the Letter of Transmittal and any
other required documents to the Book-Entry Transfer Facility does not
constitute delivery to the Depositary.
Signature Guarantees. Except as otherwise provided below, all signatures on
a Letter of Transmittal must be guaranteed by a financial institution
(including most banks, savings and loan associations and brokerage houses)
which is a member of a recognized Medallion Program approved by The Securities
Transfer Association Inc., including the Securities Transfer Agents Medallion
Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York
Stock Exchange, Inc. Medallion Signature Program (MSP) (an "Eligible
Institution"). Signatures on a Letter of Transmittal need not be guaranteed (a)
if the Letter of Transmittal is signed by the registered holder of the Shares
tendered therewith and such holder has not completed the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on
the Letter of Transmittal or (b) if such Shares are tendered for the account of
an Eligible Institution. If the certificate for Shares is registered in the
name of a person other than the signer of the Letter of Transmittal, or if
payment is to be made, or certificates for Shares not tendered or accepted for
payment are to be issued, in the name of a person other than the registered
holder(s), then the tendered certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear on the certificates, with the signature(s) on the
certificates or stock powers guaranteed by an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and cannot deliver certificate(s) representing such Shares and all
other required documents to the Depositary by the Expiration Date, or such
shareholder cannot complete the procedure for delivery by book-entry transfer
on a timely basis, such Shares may nevertheless be tendered if all of the
following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by Purchaser is received by the
Depositary (as provided below) by the Expiration Date; and
(iii) the certificates for such Shares (or a confirmation of a book-
entry transfer of such Shares into the Depositary's account at the Book-
Entry Transfer Facility), together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantee (or, in the case of a book-entry transfer, an Agent's
Message) and any other documents required by the Letter of Transmittal, are
received by the Depositary within three NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram or facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in such Notice.
The method of delivery of Shares and all other required documents, including
delivery through the Book-Entry Transfer Facility, is at the option and risk of
the tendering shareholder and the delivery will be deemed made only when
actually received by the Depositary (including, in the case of a book-entry
transfer, by a timely confirmation). If delivery is sent by mail, registered
mail with return receipt requested, properly insured, is recommended. In all
cases, sufficient time should be allowed to ensure timely delivery.
7
<PAGE>
Under the federal income tax laws, the Depositary will be required to
withhold 31% of the amount of any payments made to certain shareholders
pursuant to the Offer. In order to avoid such backup withholding, each
tendering shareholder must provide the Depositary with such shareholder's
correct taxpayer identification number and certify that such shareholder is not
subject to such backup withholding by completing the Substitute Form W-9
included in the Letter of Transmittal. If a shareholder is a non-resident alien
or foreign entity not subject to back-up withholding, the shareholder must give
the Depositary a completed Form W-8 Certificate of Foreign Status prior to
receipt of any payment.
By executing a Letter of Transmittal, a tendering shareholder irrevocably
appoints designees of Purchaser as such shareholder's proxies, each with full
power of substitution, in the manner set forth in the Letter of Transmittal, to
the full extent of such shareholder's rights with respect to the Shares
tendered by such shareholder and accepted for payment by Purchaser (and with
respect to any and all other Shares or other securities issued or issuable in
respect of such Shares on or after September 18, 1999). All such proxies shall
be irrevocable and coupled with an interest in the tendered Shares. Such
appointment is effective only upon the acceptance for payment of such Shares by
Purchaser. Upon such acceptance for payment, all prior proxies and consents
granted by such shareholder with respect to such Shares and other securities
will, without further action, be revoked, and no subsequent proxies may be
given nor subsequent written consents executed by such shareholder (and, if
given or executed, will not be deemed to be effective) with respect thereto.
Such designees of Purchaser will be empowered to exercise all voting and other
rights of such shareholder as they, in their sole discretion, may deem proper
at any annual, special or adjourned meeting of the Company's shareholders, by
written consent or otherwise. Purchaser reserves the right to require that, in
order for Shares to be validly tendered, immediately upon Purchaser's
acceptance for payment of such Shares, Purchaser is able to exercise full
voting rights with respect to such Shares and other securities (including
voting at any meeting of shareholders then scheduled or acting by written
consent without a meeting).
The tender of Shares pursuant to any one of the procedures described above
will constitute the tendering shareholder's acceptance of the Offer, as well as
the tendering shareholder's representation and warranty that (a) such
shareholder owns the Shares being tendered within the meaning of Rule 14e-4
promulgated under the Exchange Act, (b) the tender of such Shares complies with
Rule 14e-4 and (c) such shareholder has the full power and authority to tender
and assign the Shares tendered, as specified in the Letter of Transmittal.
Purchaser's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the tendering shareholder and
Purchaser upon the terms and subject to the conditions of the Offer.
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by Purchaser, in its sole discretion, which determination
shall be final and binding. Purchaser reserves the absolute right to reject any
or all tenders of Shares determined by it not to be in proper form or the
acceptance for payment of or payment for which may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right to
waive any defect or irregularity in any tender of Shares of any particular
shareholder, whether or not similar defects or irregularities are waived in the
case of other shareholders. No tender of Shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived.
None of Purchaser, the Dealer Manager, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will
be final and binding.
4. Withdrawal Rights. Tenders of Shares made pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date. Thereafter, such tenders
are irrevocable, except that they may be withdrawn after November 23, 1999
unless theretofore accepted for payment as provided in this Offer to Purchase.
If Purchaser extends the period of time during which the Offer is open, is
delayed in accepting for payment or paying for Shares or is unable to accept
for payment or pay for Shares pursuant to the Offer for any reason, then,
without
8
<PAGE>
prejudice to Purchaser's rights under the Offer, the Depositary may, on behalf
of Purchaser, retain all Shares tendered, and such Shares may not be withdrawn
except as otherwise provided in this Section 4.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase and must specify the name
of the person who tendered the Shares to be withdrawn and the number of Shares
to be withdrawn and the name of the registered holder of Shares, if different
from that of the person who tendered such Shares. If the Shares to be withdrawn
have been delivered to the Depositary, a signed notice of withdrawal with
(except in the case of Shares tendered by an Eligible Institution) signatures
guaranteed by an Eligible Institution must be submitted prior to the release of
such Shares. In addition, such notice must specify, in the case of Shares
tendered by delivery of certificates, the name of the registered holder (if
different from that of the tendering shareholder) and the serial numbers shown
on the particular certificates evidencing the Shares to be withdrawn or, in the
case of Shares tendered by book-entry transfer, the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares. Withdrawals of Shares may not be rescinded, and Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
which determination shall be final and binding. None of Purchaser, the Dealer
Manager, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5. Certain Tax Considerations. Sales of Shares by shareholders of the
Company pursuant to the Offer will be taxable transactions for federal income
tax purposes and may also be taxable transactions under applicable state and
local and other tax laws.
In general, a shareholder will recognize gain or loss equal to the
difference between the tax basis of his or her Shares and the amount of cash
received in exchange therefor. Such gain or loss will be capital gain or loss
if the Shares are capital assets in the hands of the shareholder and will be
long-term gain or loss if the holding period for the Shares is more than one
year as of the date of the sale of such Shares.
The foregoing discussion may not apply to shareholders who acquired their
Shares pursuant to the exercise of stock options or other compensation
arrangements with the Company or who are not citizens or residents of the
United States or who are otherwise subject to special tax treatment under the
Internal Revenue Code of 1986, as amended (the "Code").
The federal income tax discussion set forth above is included for general
information only and is based upon present law. Due to the individual nature of
tax consequences, shareholders are urged to consult their tax advisors as to
the specific tax consequences to them of the Offer, including the effects of
applicable state, local or other tax laws.
9
<PAGE>
6. Price Range of Shares; Dividends. The Shares are listed and traded on the
NYSE under the symbol "FCY". The following table sets forth for the periods
indicated the high and low closing sales prices per Share on the NYSE Composite
Tape and the cash dividends paid per Share, as reported in the Company's Annual
Report on Form 10-K for the fiscal year ended January 30, 1999 (the "Company
10-K") with respect to the fiscal years ended January 31, 1998 and January 30,
1999, and thereafter as reported in the Company's Quarterly Report on Form 10-Q
for the quarter ended July 31, 1999 (the "Company 10-Q") and in published
financial sources:
<TABLE>
<CAPTION>
High Low Dividends
------- ------- ---------
<S> <C> <C> <C>
Year ended January 31, 1998
First Quarter........................................ $12.250 $10.000 $0.03
Second Quarter....................................... 15.813 11.250 0.03
Third Quarter........................................ 21.688 15.063 0.03
Fourth Quarter....................................... 21.313 17.250 0.03
Year ended January 30, 1999
First Quarter........................................ $25.375 $16.875 $0.03
Second Quarter....................................... 20.875 14.813 0.03
Third Quarter........................................ 18.625 12.813 0.03
Fourth Quarter....................................... 17.875 13.063 0.03
Current fiscal year
First Quarter........................................ $17.875 $11.688 $0.03
Second Quarter....................................... 19.380 16.438 0.03
Third Quarter (through September 17, 1999)........... 18.063 15.188 N/M
</TABLE>
On September 23, 1999, the last full day of trading prior to the
commencement of the Offer, the reported closing sales price per Share on the
NYSE Composite Tape was $25.00. On September 17, 1999, the last full day of
trading prior to the public announcement of the transactions contemplated by
the Merger Agreement, the reported closing sales price per Share on the NYSE
Composite Tape was $16.3125.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. Certain Information Concerning the Company. The Company is a California
corporation with its principal executive offices located at 29982 Ivy Glenn
Drive, Laguna Niguel, California 92677.
According to the Company 10-K, the Company is a leading designer, developer
and manufacturer of highly engineered products made primarily from specially
formulated high performance polymer materials.
The following selected consolidated financial data relating to the Company
and its subsidiaries has been taken or derived from the audited financial
statements contained in the Company 10-K and the unaudited financial statements
contained in the Company 10-Q. More comprehensive financial information is
included in such 10-K and 10-Q and the other documents filed by the Company
with the Commission, and the financial data set forth below is qualified in its
entirety by reference to such reports and other documents including the
financial statements contained therein. Such reports and other documents may be
examined and copies may be obtained from the offices of the Commission in the
manner set forth below.
10
<PAGE>
FURON COMPANY
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Six Months Ended Year Ended
------------------- -----------------------------------
July 31, August 1, January 30, January 31, February 1,
1999 1998 1999 1998 1997
-------- --------- ----------- ----------- -----------
(unaudited)
(In thousands, except per Share data)
<S> <C> <C> <C> <C> <C>
Consolidated Statements
of Operations Data
Net Sales............... $238,658 $244,851 $493,475 $485,631 $390,105
Cost of sales........... 162,334 167,388 338,885 329,325 281,581
-------- -------- -------- -------- --------
Gross profit............ 76,324 77,463 154,590 156,306 108,524
Selling, general and
administrative
expenses............... 54,249 56,832 113,219 115,555 84,325
Write-off of acquired
in-process research and
development............ -- -- -- -- 53,700
Nonrecurring charges and
facilities
rationalization........ -- -- (417) (660) 4,329
Other (income) expense.. (1,678) (2,109) (3,546) (1,114) (4,265)
Interest expense, net... 5,867 6,194 12,318 10,788 2,669
-------- -------- -------- -------- --------
Income (loss) before
income taxes........... 17,886 16,546 33,016 31,737 (32,234)
Provision for income
taxes.................. 4,919 5,212 10,400 9,997 7,517
-------- -------- -------- -------- --------
Net income (loss)....... $ 12,967 $ 11,334 $ 22,616 $ 21,740 $(39,751)
======== ======== ======== ======== ========
Basic income (loss) per
share.................. $ 0.71 $ 0.63 $ 1.25 $ 1.22 $ (2.24)
======== ======== ======== ======== ========
Diluted income (loss)
per share.............. $ 0.70 $ 0.61 $ 1.22 $ 1.16 $ (2.24)
======== ======== ======== ======== ========
Cash dividends per
share.................. $ 0.06 $ 0.06 $ 0.12 $ 0.12 $ 0.12
</TABLE>
<TABLE>
<CAPTION>
July 31, January 30, January 31,
1999 1999 1998
----------- ----------- -----------
(unaudited)
(In thousands)
<S> <C> <C> <C>
Consolidated Balance Sheet Data
Working capital.......................... $ 90,693 $ 85,523 $ 72,444
Total assets............................. 353,828 366,420 346,349
Long-term debt, net of current portion... 132,374 144,707 148,657
Deferred income taxes and other long-term
liabilities............................. 45,578 46,469 42,621
Shareholders' equity..................... 115,912 104,607 81,139
</TABLE>
Except as otherwise set forth in this Offer to Purchase, the information
concerning the Company contained herein has been furnished by the Company or
has been taken from or is based upon reports and other documents on file with
the Commission or otherwise publicly available. Although none of Purchaser,
Parent or Saint-Gobain has any knowledge that would indicate that any
statements contained herein based upon such reports and documents are untrue,
none of Purchaser, Parent, Saint-Gobain or the Dealer Manager takes any
responsibility for the accuracy, validity or completeness of the information
contained in such reports and other documents or for any failure by the Company
to disclose events that may have occurred and may affect the significance or
accuracy of any such information but that are unknown to Purchaser, Parent,
Saint-Gobain or the Dealer Manager.
The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files periodic reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. The Company is required to disclose in such proxy statements
certain information, as of particular dates, concerning the Company's directors
and officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of
11
<PAGE>
such persons in transactions with the Company. Such reports, proxy statements
and other information may be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and should also be available for inspection and
copying at the regional offices of the Commission in New York (Seven World
Trade Center, 13th Floor, New York, New York 10048) and Chicago (Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661). Such
material may also be obtained from the Commission's web site at
http://www.sec.gov. Copies of such material should be obtainable by mail, upon
payment of the Commission's customary charges, by writing to the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
material should also be available for inspection at the offices of the NYSE, 20
Broad Street, New York, New York 10005.
In the course of the discussions between representatives of Parent and the
Company (see Section 10), certain projections of future operating performance
for the remainder of the Company's fiscal year ending on January 29, 2000 were
furnished to Parent's representatives. According to the Company, net sales,
gross margin and earnings before interest and taxes are projected for fiscal
year 2000 to be $490.5 million, $159.0 million and $49.9 million, respectively
(which projected numbers were revised from projections provided earlier that
day of $504.0 million, $163.0 million and $56.0 million, respectively). These
projections were provided without any written assumptions. They were not
prepared with a view to public disclosure or compliance with published
guidelines of the Commission or the guidelines established by the American
Institute of Certified Public Accountants regarding projections, and are
included in this Offer to Purchase only because they were provided to Parent.
None of Parent, Purchaser, Saint-Gobain, the Company, any of their financial
advisors or the Dealer Manager assumes any responsibility for the accuracy or
validity of these projections. While presented with numerical specificity,
these projections are based upon a variety of assumptions relating to the
businesses of the Company which may not be realized and are subject to
significant risks, uncertainties and contingencies, many of which are beyond
the control of the Company. For a more complete discussion of risk factors,
please refer to the "Risk Factors" section of the Company 10-K. There can be no
assurance that the projections will be realized, and actual results may vary
materially from those shown. None of the Company, Parent, Purchaser or Saint-
Gobain intends to update, revise or correct such projections if they become
inaccurate. All projections and forward-looking statements attributable to the
Company, Parent, Purchaser or Saint-Gobain or persons acting on their behalf
are expressly qualified in their entirety by the cautionary statements
contained in the "Risk Factors" section in the Company 10-K.
8. Certain Information Concerning Purchaser, Parent and Saint-
Gobain. Purchaser is a newly incorporated California corporation and an
indirect wholly owned subsidiary of Parent organized to acquire the Company.
The principal executive offices of Purchaser are located at 150 Dey Road,
Wayne, New Jersey, 07470. Purchaser has not conducted any business other than
in connection with the Offer and the Merger since its incorporation on
September 15, 1999. Until immediately prior to the time Purchaser purchases
Shares pursuant to the Offer, it is not anticipated that Purchaser will have
any significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer or the Merger. Because Purchaser is a newly formed corporation and
has minimal assets and capitalization, no meaningful financial information
regarding Purchaser is available.
Parent is a Massachusetts corporation and an indirect wholly owned
subsidiary of Saint-Gobain, with principal executive offices located at One New
Bond Street, Worcester, Massachusetts 01615-0008. The principal business of
Parent is the manufacture of abrasives and the production of technologically
advanced ceramics, plastics and chemical process products. The Parent's
performance plastics business unit processes high performance plastics which
are formed into flexible foams, bearings, flexible tubing, radomes, pressure
sensitive tapes, labware fittings, sealants and films.
Saint-Gobain, a French corporation, is a publicly owned holding company
whose shares are listed for trading on the monthly settlement market of the
Paris Stock Exchange and on the principal European stock exchanges. Its
principal executive office is located at Les Miroirs, 18 avenue d'Alsace, 92400
Courbevoie, France (Postal Address: Les Miroirs, 92096 Paris La Defense Cedex).
Saint-Gobain has worldwide interests in businesses involving the manufacture of
flat glass, insulation and reinforcements, pipe, glass containers, industrial
ceramics and abrasives and the manufacture and distribution of building
materials.
12
<PAGE>
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of Purchaser, Parent and Saint-Gobain are set forth in
Schedule I hereto and incorporated herein by reference.
None of Saint-Gobain, Parent or Purchaser is subject to the informational
requirements of the Exchange Act and in accordance therewith does not file
periodic reports, proxy statements or other information with the Commission
relating to its business, financial condition or other matters.
Because the only consideration in the Offer and Merger is cash, and in view
of the relatively small amount of consideration payable in relation to the
financial capability of Saint-Gobain and its affiliates, Purchaser believes the
financial condition of Saint-Gobain, Parent, Purchaser and their affiliates is
not material to a decision by a holder of Shares whether to sell, tender or
hold Shares pursuant to the Offer. The following selected consolidated
financial information relating to Saint-Gobain and its subsidiaries, taken or
derived from the audited consolidated financial statements of Saint-Gobain
contained in Saint-Gobain's Annual Report for the year ended December 31, 1998
(the "Annual Report"), is provided for supplemental information purposes only
and is neither intended nor required to comply with the requirements of the
Exchange Act. More comprehensive financial information (including the notes to
Saint-Gobain's financial statements) is included in such Annual Report, and the
financial data set forth is qualified in its entirety by reference to such
Annual Report and other documents including the financial statements and
related notes contained in the Annual Report. These documents may be obtained
from Saint-Gobain at the address listed above. The following information was
prepared in accordance with the French law concerning consolidated financial
statements dated January 3, 1985 and the related decree dated February 17,
1986. The accounting principles applied are also in accordance with
international accounting principles formulated by the International Accounting
Standards Committee with the exception of IAS 22 standard (revised in 1993) on
the amortization period of goodwill, whose application has been deferred
awaiting the acceptance by IOSCO of the complete body of IAS standards. These
principles, as applied to Saint-Gobain and its subsidiaries, are not materially
different from the accounting principles generally accepted in the United
States ("US GAAP"). There are, however, several differences between the
accounting standards applied by Saint-Gobain and its affiliates and US GAAP
with respect to certain matters, including translation, recognition and
measurement criteria. Parent believes that these differences are not material
to a decision by a shareholder of the Company whether to sell, tender or hold
Shares pursuant to the Offer.
13
<PAGE>
The consolidated financial statements of Saint-Gobain and its subsidiaries
are published in Euros.
SAINT-GOBAIN AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1998(1)
in U.S.
Dollars 1998 1997 1996
------- ------------ ------------ ------------
(In Millions)
<S> <C> <C> <C> <C>
Income Statement Data:
Net sales...................... $20,002 (Euro)17,821 (Euro)16,324 (Euro)13,931
Operating income............... 1,993 1,776 1,593 1,434
Net income..................... 1,231 1,097 858 659
Balance Sheet Data:
Current assets................. $ 9,566 (Euro) 8,149 (Euro) 7,554 (Euro) 7,099
Total assets................... 26,039 22,182 20,693 19,202
Long-term debt (including
current portion).............. 3,553 3,027 2,576 1,894
Net equity of the group........ 10,295 8,770 8,414 7,219
</TABLE>
- --------
(1) Balance sheet items have been translated into U.S. dollars using year-end
exchange rates. Income Statement items have been translated using average
exchange rates for the relevant year.
On July 23, 1999, Saint-Gobain announced its operating results for the first
six months of 1999, including sales of (Euro)10.960 billion ($11.922 billion),
operating income of (Euro)1.115 billion ($1.213 billion) and net income of
(Euro)882 million ($959 million). (Euros have been translated into U.S. dollars
on the basis of the average noon buying rate of $1.0878 from January 1, 1999 to
June 30, 1999.)
The following table sets forth, for the periods and dates indicated, certain
information concerning the exchange rate for Euros into U.S. dollars based upon
the noon buying rate in New York City for cable transfers in foreign currencies
as determined by publicly available sources (the "noon buying rate"):
<TABLE>
<CAPTION>
At Year End Average Rate High Low
----------- ------------ ------- -------
<S> <C> <C> <C> <C>
1996.................................. $1.2545 $1.2520 $1.2890 $1.2228
1997.................................. 1.0980 1.1301 1.2530 1.0482
1998.................................. 1.1739 1.1224 1.2262 1.0725
1999 (through September 23, 1999)..... 1.0415 1.0754 1.1812 1.0139
</TABLE>
In fiscal year 1998, Parent had net sales of approximately $1.480 billion.
At December 31, 1998, Parent had $1.913 billion in total assets, $430 million
in total current assets and $1.036 billion in total stockholder's equity.
Parent's financial statements are prepared in accordance with US GAAP.
Except as described in this Offer to Purchase, (i) none of Parent,
Purchaser, Saint-Gobain or, to the best knowledge of Parent, Purchaser and
Saint-Gobain, any of the persons listed in Schedule I to this Offer to Purchase
or any associate or majority-owned subsidiary of Parent, Purchaser, Saint-
Gobain or any of the persons so listed beneficially owns or has any right to
acquire, directly or indirectly, any Shares and (ii) none of Parent, Purchaser,
Saint-Gobain or, to the best knowledge of Parent, Purchaser and Saint-Gobain,
any of the persons or entities referred to above or any director, executive
officer or subsidiary of any of the foregoing has effected any transaction in
the Shares during the past 60 days.
Except as described in this Offer to Purchase, none of Parent, Purchaser,
Saint-Gobain or, to the best knowledge of Parent, Purchaser and Saint-Gobain,
any of the persons listed in Schedule I hereto, has any
14
<PAGE>
contract, arrangement, understanding or relationship with any other person with
respect to any securities of the Company, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
voting of such securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees of profits,
guarantees against loss, division of profits or loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, since
February 4, 1996, none of Parent, Purchaser, Saint-Gobain or, to the best
knowledge of Parent, Purchaser and Saint-Gobain, any of the persons listed in
Schedule I hereto, has had any business relationship or transaction with the
Company or any of its executive officers, directors, or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
February 4, 1996, there have been no contracts, negotiations or transactions
between Parent, Purchaser, Saint-Gobain or any of their subsidiaries or, to the
best knowledge of Parent, Purchaser and Saint-Gobain, any of the persons listed
in Schedule I hereto, on the one hand, and the Company or its affiliates, on
the other hand, concerning a merger, consolidation or acquisition, tender offer
or other acquisition of securities, an election of directors or a sale or other
transfer of a material amount of assets.
9. Source and Amount of Funds. The total amount of funds required by
Purchaser to purchase Shares pursuant to the Offer (excluding any amounts
required to extinguish outstanding options) and to pay related fees and
expenses is estimated to be approximately $476 million. Purchaser will fund
such amount through funds received from Parent. Parent will obtain such funds
from Saint-Gobain and Saint-Gobain's affiliates. Saint-Gobain will obtain such
funds from internally generated funds or existing resources.
10. Background of the Offer; Past Contacts, Transactions or Negotiations
with the Company. Interested in expanding its high performance plastics
business, Saint-Gobain had retained Lazard Freres as its investment banker in
1998 to undertake an analysis of the Company. The Offer and Merger represent
the culmination of a series of negotiations between Saint-Gobain and the
Company that began at Saint-Gobain's initiation in the fall of 1998.
On November 24, 1998, Mr. Philippe Crouzet, President of the Industrial
Ceramics Division of Saint-Gobain, Mr. Robert C. Ayotte, President and Chief
Executive Officer of Saint-Gobain Industrial Ceramics, Inc., and Mr. Gerard
Walsh, President and Chief Operating Officer of Norton Performance Plastics
Corporation, met with Mr. J. Michael Hagan, the Company's Chairman and Chief
Executive Officer, and Mr. Terrence Noonan, who was then the Company's
Director, President and Chief Operating Officer, at the Company's headquarters
in Laguna Niguel, California. At the meeting, the representatives from each
company exchanged general industry and company information, including an
introduction of their businesses and an explanation of their current and future
growth strategies.
From the end of 1998 to early 1999, Saint-Gobain, together with Lazard
Freres, analyzed the Company, its activities and its prospects as a potential
acquisition candidate. On March 12, 1999, Mr. Crouzet renewed contact with Mr.
Hagan and suggested that the two representatives arrange to meet at some point
in the near future.
On April 20, 1999, Mr. Gianpaolo Caccini, Saint-Gobain Corporation's
President and Chief Executive Officer, met with Mr. Crouzet, Mr. Ayotte and Mr.
Hagan in New York City. The three representatives from Saint-Gobain indicated
to Mr. Hagan a strong interest in developing Saint-Gobain's commercial
performance plastics business and discussed the opportunities available to
their respective companies which could result from a possible business
combination.
In conjunction with these discussions, on April 20, 1999, Mr. Crouzet
delivered to Mr. Hagan a letter indicating that Saint-Gobain would be prepared
to purchase all of the outstanding shares of the Company at a price of $21.00
per share in cash, subject to the completion of legal and business due
diligence, satisfactory definitive documentation and the receipt of the
necessary approvals and consents.
15
<PAGE>
On April 22, 1999, Mr. Crouzet and Mr. Hagan spoke by telephone. Mr. Hagan
agreed that, based on potential synergies, a combination of Saint-Gobain and
the Company would enhance the value and competitive ability of each entity. Mr.
Hagan expressed the view, however, that Saint-Gobain's proposed price of $21.00
per share was unsatisfactory.
On April 29, 1999, Mr. Crouzet met with Mr. Hagan at Saint-Gobain's
headquarters in Paris, France. The two representatives had further discussions
regarding Saint-Gobain's proposal, addressing in particular the methodology
which Saint-Gobain used to arrive at its proposed price. At the end of this
discussion, Mr. Jean-Louis Beffa, the Chairman and Chief Executive Officer of
Saint-Gobain, joined the meeting. After receiving an update of the current
status of the negotiations, Mr. Beffa expressed his interest in pursuing a
transaction with the Company.
On May 5, 1999, Lazard Freres and Lehman Brothers, financial advisor to the
Company, met to discuss their respective views regarding a potential
transaction involving Saint-Gobain and the Company. During May of 1999, Lazard
Freres and Lehman Brothers had several discussions regarding a proposed
transaction. To encourage free discussion and more accurate analysis, on May
27, 1999, the parties negotiated and executed the Confidentiality Agreement.
On June 9, 1999, Mr. Crouzet and Mr. Hagan met in Chicago. Both
representatives discussed the feasibility of synergies that could be achieved
through a combination of the two companies. Mr. Hagan provided preliminary oral
financial forecasts for the remaining part of the Company's current fiscal
year. The Saint-Gobain representative indicated that Saint-Gobain was still
interested in pursuing a business combination at a price of $21.00 per share,
but that Saint-Gobain would further consider the possible synergies that had
been discussed at the meeting.
Throughout June and early July, Mr. Crouzet and Mr. Hagan continued their
discussions by telephone. By letter dated July 26, 1999, Saint-Gobain delivered
a proposal to the Company setting forth Saint-Gobain's interest in acquiring
all of the outstanding shares of the Company at a price of $26.00 per share in
cash, subject to the completion of legal and business due diligence,
satisfactory definitive documentation and the receipt of the necessary
approvals and consents.
On August 4, 1999, the Company's Board of Directors met to discuss the
recent proposal from Saint-Gobain. At the meeting, Mr. Hagan reviewed for the
Board his prior discussions with Saint-Gobain. Mr. Hagan then asked the
Company's legal advisors, O'Melveny & Myers LLP, to review for the Board its
legal responsibilities in considering the unsolicited indication of interest.
The Board also was presented information by the Company's financial advisors,
Lehman Brothers, evaluating the indication of interest, and reviewing the
trading performance of the Company's stock and its prospects for the future.
The Board authorized Mr. Hagan to continue discussions with Saint-Gobain to see
if a higher price could be obtained.
On August 5, 1999, Mr. Hagan telephoned Mr. Crouzet to advise him of the
Board's reaction to Saint-Gobain's proposal. Mr. Hagan informed the
representatives of Saint-Gobain that the Board was interested in pursuing the
transaction, and agreed that it would be prepared to recommend such a
transaction to its shareholders if Saint-Gobain could offer a higher price per
share.
On August 13, 1999, Lazard Freres forwarded a legal due diligence request
list prepared by Saint-Gobain to the Company's financial advisor. On August 17,
1999, a conference call with Donald Bradley, the Company's General Counsel, the
Company's outside counsel and Lehman Brothers, Saint-Gobain's outside counsel
and Lazard Freres and representatives of Saint-Gobain was held to discuss the
due diligence information requested, and the nature of the information that
would be available.
On August 19 and 20, 1999, a presentation by the Company's management in
Newport Beach, California was attended by representatives of Saint-Gobain,
including Mr. Crouzet, Mr. Ayotte, Mr. Walsh, Mr. Roland Lazard, Vice President
and Chief Financial Officer of Saint-Gobain's Industrial Ceramics Division, Mr.
George B. Amoss, Vice President, Finance of Saint-Gobain Corporation, and Mr.
John R. Mesher, Vice President,
16
<PAGE>
General Counsel and Secretary of Saint-Gobain Corporation, representatives of
the Company including Mr. Hagan and Mr. Monty A. Houdeshell, Vice President and
Chief Financial Officer of the Company, and representatives from Lazard Freres
and Lehman Brothers. At the presentation, the Company disclosed its results for
its second fiscal quarter and revised financial forecasts for the remainder of
its fiscal year ending in January 2000. Since the second quarter results and
the full-year forecasts were below the preliminary oral forecasts previously
discussed with Saint-Gobain, Mr. Crouzet announced that Saint-Gobain may need
to revise its proposal and lower its offering price accordingly.
On August 23, 1999, representatives of Saint-Gobain and its counsel, Davis
Polk & Wardwell, commenced business and legal due diligence at the offices of
O'Melveny & Myers LLP, counsel for the Company, in Newport Beach, California.
On August 24, 1999, Mr. Crouzet sent a letter to Mr. Hagan reiterating
Saint-Gobain's continued interest in entering into a transaction with the
Company. The letter indicated that Saint-Gobain was re-evaluating the price it
would be willing to offer for the Company, and stated that a specific revised
price would be communicated to Mr. Hagan no later than August 27, 1999.
On August 24, 1999, the Company's Board of Directors held its regularly
scheduled board meeting. At that meeting, management of the Company reviewed
the strategic plans for the Company, and the Board was advised that the second
half of the year was expected to be stronger than the first half, although
lower than the estimates discussed with Saint-Gobain in June. The Board was
advised of the continued interest of Saint-Gobain in a business combination
with the Company and discussed the revised financial forecasts that had been
provided to Saint-Gobain.
On August 26, 1999, Mr. Crouzet communicated Saint-Gobain's revised proposal
to acquire the Company for $25.00 per share to Mr. Hagan by telephone and faxed
a letter addressed to the Company communicating the same. Drafts of the merger
agreement, stock option agreement and shareholder agreement to be executed in
connection with the proposed business combination were delivered to
representatives of the Company the following day.
From August 27 to September 6, 1999, Mr. Crouzet and Mr. Hagan, and their
respective investment banker and financial adviser, spoke on several occasions
and continued to negotiate the terms of the proposed transaction.
After consulting with Lazard Freres, on September 6, 1999, Mr. Crouzet
telephoned Mr. Hagan and stated that Saint-Gobain was prepared to offer $25.50
per share, subject to the completion of legal and business due diligence,
satisfactory definitive documentation and the receipt of the necessary
approvals and consents.
The Company's Board met on September 9, 1999 to consider the revised
proposal. At the meeting, Mr. Hagan reviewed the discussions between the
parties. Lehman Brothers reviewed the proposal and again provided the Board
advice regarding how the proposal compared to other transactions, and what the
offer represented in terms of market premiums to the Company's shareholders and
how those premiums compared to other transactions. The Company's legal counsel
reviewed for the Board the terms of the proposed contract. The Board indicated
that management should continue discussions to see if an acceptable merger
agreement could be reached. Lehman Brothers indicated that it was prepared to
deliver a fairness opinion to the Board at the $25.50 per share price.
Following the Company's Board meeting, detailed negotiations commenced
between representatives of the Company and Saint-Gobain, culminating in
agreement on the terms of the Merger Agreement, the Stock Option Agreement and
the Shareholder Agreement.
On September 17, 1999, the Company's Board met to discuss the proposal and
the draft merger agreement which had been provided to the Board in advance of
the meeting. Mr. Hagan reviewed the course of the discussions and negotiations
with Saint-Gobain. Lehman Brothers reviewed the Offer, and indicated that they
17
<PAGE>
would be in a position to deliver an opinion to the Board regarding the
fairness, from a financial point of view, to the Company's shareholders should
the Board decide to go forward. Lehman Brothers delivered that written opinion
to the Board at the conclusion of the meeting. O'Melveny & Myers reviewed the
outstanding issues under the draft merger agreement, and the Board unanimously
determined that the Merger is fair to, and in the best interests of, the
Company and its shareholders and approved the form of the Merger Agreement and
the Stock Option Agreement (and the transactions and agreements contemplated
therein), subject to satisfactory resolution of the outstanding issues, and
recommended that the holders of Shares tender their Shares pursuant to the
Offer and vote in favor of approval and adoption of the Merger Agreement.
The parties continued to negotiate the terms of the Merger Agreement (and
the related agreements) on September 17 and 18, 1999, and, on September 18,
1999, representatives of the Company, Parent and Purchaser executed the Merger
Agreement and the Stock Option Agreement and Mr. Hagan and the Purchaser
executed the Shareholder Agreement.
On September 19, 1999, Parent and the Company issued a joint press release
in the United States announcing the Offer. On September 20, 1999, Saint-Gobain
issued a press release in France announcing the Offer.
The Merger Agreement
The following is a summary of certain provisions of the Merger Agreement, a
copy of which is filed as an exhibit to the Tender Offer Statement on Schedule
14D-1 filed by Parent, Purchaser and Saint-Gobain pursuant to Rule 14d-3 of the
General Rules and Regulations under the Exchange Act with the Commission in
connection with the Offer (together with any amendments, supplements,
schedules, annexes and exhibits thereto, the "Schedule 14D-1"). Such summary is
qualified in its entirety by reference to the Merger Agreement.
The Offer. The Merger Agreement provides for the making of the Offer by
Purchaser. The obligation of Purchaser to accept for payment and pay for Shares
tendered pursuant to the Offer is subject to the satisfaction of the Minimum
Condition and certain other conditions that are described in Section 15.
Purchaser has agreed that, without the prior written consent of the Company, no
change in the Offer may be made which waives the Minimum Condition (other than
in contemplation of the exercise of the Top-Up Option), changes the form of
consideration to be paid, decreases the price per Share or the number of Shares
sought in the Offer, imposes conditions to the Offer in addition to those
described in Section 15 or is otherwise materially adverse to the holders of
the Shares.
The Merger Agreement provides that, notwithstanding the foregoing, without
the consent of the Company, Purchaser will have the right to extend the Offer
(i) from time to time if, at the scheduled or extended Expiration Date of the
Offer, any of the conditions to the Offer shall not have been satisfied or
waived, until such conditions are satisfied or waived; provided that Purchaser
may extend the Offer on not more than two occasions and for not more than ten
business days on each such occasion or (ii) for any period required by any
rule, regulation, interpretation or position of the Commission or the staff
thereof applicable to the Offer or any period required by applicable law. If
all of the conditions to the Offer are not satisfied or waived on any scheduled
Expiration Date of the Offer, subject to the immediately following paragraph,
Purchaser will either (i) extend the Offer from time to time until such
conditions are satisfied or waived (but not beyond November 10, 1999) or (ii)
exercise its rights, if applicable, described in clause (ii) or (iii) of the
immediately following paragraph; provided that (w) such conditions are
reasonably capable of being satisfied, (x) the Company exercises its reasonable
best efforts to cause such conditions to be satisfied, (y) an Acquisition
Proposal (as defined below) shall not have been publicly announced and not
withdrawn as of such scheduled expiration date and (z) the Company is in
compliance with all of its covenants in the Merger Agreement.
In the event the Minimum Condition is not satisfied on any scheduled
Expiration Date of the Offer, Purchaser may, without the consent of the Company
(i) extend the Offer pursuant to the above paragraph; (ii)
18
<PAGE>
amend the Offer to waive the Minimum Condition in contemplation of the exercise
of the Top-Up Stock Option (to the extent the Top-Up Stock Option is
exercisable at such time) or (iii) amend the Offer to provide that, in the
event (A) the Minimum Condition is not satisfied at the next scheduled
Expiration Date (without giving effect to the exercise of the Top-Up Stock
Option) and (B) the number of Shares tendered pursuant to the Offer and not
withdrawn as of such next scheduled Expiration Date, when taken together with
the Shares owned directly or indirectly by Parent and Saint-Gobain, is more
than 50% of the then outstanding Shares, Purchaser will (x) reduce the Minimum
Condition to the Revised Minimum Number, (y) reduce the number of Shares
subject to the Offer to a number of Shares that, when added to the Shares then
owned directly or indirectly by Parent and Saint-Gobain, will equal the Revised
Minimum Number and (z) if a number of Shares greater than the Revised Minimum
Number is tendered into the Offer and not withdrawn, purchase, on a pro rata
basis, the Revised Minimum Number of Shares. In the event that (a) the number
of Shares tendered pursuant to the Offer and not withdrawn as of such next
scheduled expiration date, taken together with the number of Shares owned
directly or indirectly by Parent and Saint-Gobain, is more than 50% of the then
outstanding Shares, (b) all conditions to the Offer other than the Minimum
Condition shall have been satisfied and (c) Shares have not been accepted for
payment by Purchaser prior to November 10, 1999, Purchaser shall be required to
take either the action contemplated by clause (ii) or the action contemplated
by clause (iii) above. If Purchaser purchases a number of Shares equal to the
Revised Minimum Number, then without the prior written consent of Purchaser, at
any time prior to the termination of the Merger Agreement, the Company may not
take any action whatsoever (including, without limitation, the redemption of
any Shares) which would have the effect of increasing the percentage of Shares
owned by Purchaser, Parent and Saint-Gobain in excess of the Revised Minimum
Number.
Company Action. The Merger Agreement states that the Board of Directors has
(i) unanimously determined that the Merger Agreement, the Stock Option
Agreement and the transactions contemplated thereby, including the Offer and
the Merger, are fair to and in the best interests of the Company's
shareholders, (ii) unanimously approved and adopted the Merger Agreement, the
Stock Option Agreement, the Shareholder Agreement and the transactions
contemplated thereby, including the Offer and the Merger, in accordance with
the requirements of the CGCL and (iii) unanimously resolved to recommend
acceptance of the Offer and approval and adoption of the Merger Agreement and
the Merger by the Company's shareholders. This recommendation of the Company's
Board of Directors may be withdrawn, modified or amended only if (i) the
Company has complied with the terms of the non-solicitation provisions in the
Merger Agreement, including, without limitation, the requirement that it notify
Parent promptly after its receipt of any Acquisition Proposal (as defined
below), (ii) a Superior Proposal (as defined below) is pending at the time the
Company's Board of Directors determines to take any such action, (iii) the
Company's Board of Directors determines in good faith by a majority vote, on
the basis of the advice of its outside legal counsel, that, consistent with its
fiduciary duties under applicable law, it must take such action and (iv) the
Company shall have delivered to Parent four business days' prior written notice
advising Parent that it intends to take such action. For purposes of the Merger
Agreement, "Acquisition Proposal" means an inquiry, offer or proposal regarding
any of the following involving the Company or any of its subsidiaries: (w) any
merger, consolidation, share exchange, recapitalization, business combination
or other similar transaction, (x) any sale, lease, exchange, transfer or other
disposition of all or substantially all the assets of the Company and its
subsidiaries, taken as a whole, in a single transaction or series of related
transactions, or (y) any tender offer or exchange offer for 25% or more of the
outstanding Shares or the filing of a registration statement under the
Securities Act of 1933 (the "Securities Act") in connection therewith. An
"Acquisition Proposal" shall not be deemed to include the continuing process to
sell the Company's subsidiary located in Rugby, England (the "Subsidiary
Sale"). For purposes of the Merger Agreement, "Superior Proposal" means any
bona fide, unsolicited written Acquisition Proposal for 50% or more of the
outstanding Shares on terms that the Board of Directors of the Company
determines in good faith by a majority vote is more favorable and provides
greater value to the Company's shareholders than as provided under the Merger
Agreement, and such decision is made on the basis of the advice of a financial
advisor of nationally recognized reputation and takes into account all the
terms and conditions of the Acquisition Proposal, including any break-up fees,
expense reimbursement provisions and conditions to closing.
19
<PAGE>
Directors. The Merger Agreement provides that promptly following the
purchase of and payment for a number of Shares that satisfies the Minimum
Condition (as such number may be reduced to the Revised Minimum Number as
described above), Parent may designate the number of directors, rounded up to
the next whole number, on the Company's Board of Directors that equals the
product of (i) the total number of directors on the Board of Directors (giving
effect to the election of any additional directors pursuant to this paragraph)
and (ii) the percentage that the number of Shares beneficially owned by Parent
and Saint-Gobain (including Shares accepted for payment) bears to the total
number of Shares outstanding (provided that if Purchaser has accepted for
payment the Revised Minimum Number of Shares in the Offer, such number of
directors shall be rounded up to the next whole number plus one to give Parent
at least a majority of the members of the Company's Board of Directors), and
the Company shall take all action within its power to cause Parent's designees
to be elected or appointed to the Company's Board of Directors, including,
without limitation, increasing the number of directors, and seeking and
accepting resignations of its incumbent directors. At such time, the Company
will also use its reasonable best efforts to cause individual directors
designated by Parent to constitute the number of members, rounded up to the
next whole number, on (x) each committee of the Company's Board of Directors
other than any committee of such Board established to take action under the
Merger Agreement or the Stock Option Agreement and (y) each board of directors
of each subsidiary of the Company (and each committee thereof) that represents
the same percentage as such individuals represent on the Board of Directors of
the Company. Notwithstanding the foregoing, in the event that Parent's
designees are to be appointed or elected to the Company's Board of Directors,
until the Effective Time, such Board of Directors shall have at least three
directors who were directors on September 18, 1999 and who are not officers of
the Company (the "Continuing Directors"); provided that in the event that the
number of Continuing Directors shall be reduced below three for any reason
whatsoever, any remaining Continuing Directors (or Continuing Director, if
there shall be only one remaining) shall be entitled to designate persons to
fill such vacancies who shall be deemed to be Continuing Directors for purposes
of the Merger Agreement. Until the Effective Time, the approval of the
Continuing Directors shall be required to authorize any termination of the
Merger Agreement by the Company, any amendment of the Merger Agreement
requiring action by the Board of Directors, any amendment of the articles of
incorporation or bylaws of the Company, any extension of time for performance
of any obligation or action under the Merger Agreement by Parent or Purchaser,
any waiver of compliance with any of the agreements or conditions contained
herein for the benefit of the Company and any material transaction with Parent,
Purchaser or any affiliate thereof unless such transaction is on terms no less
favorable to the Company than the Company would obtain in a similar transaction
with an unrelated third party.
The Merger. The Merger Agreement provides that, following the purchase of
Shares pursuant to the Offer, the approval of the Merger Agreement by the
shareholders of the Company (if required by the CGCL) and the satisfaction or
waiver of the other conditions to the Merger, Purchaser will be merged with and
into the Company, in accordance with the CGCL, whereupon the separate existence
of Purchaser shall cease and the Company shall be the Surviving Corporation.
The Merger shall become effective at such time as an Agreement of Merger among
the Company, Purchaser and Parent (together with the officers' certificates
required by CGCL, the "California Merger Agreement") is filed with the
California Secretary of State or at such later time as is specified in the
California Merger Agreement (the "Effective Time"). As a result of the Merger,
all of the rights, privileges, powers and franchises of the Company and
Purchaser shall vest in the Surviving Corporation, and all restrictions,
disabilities, liabilities and obligations of the Company and Purchaser shall
become the restrictions, disabilities, liabilities and obligations of the
Surviving Corporation, all as provided under the CGCL.
Conversion of Shares. The Merger Agreement provides that at the Effective
Time, (i) each Share outstanding immediately prior to the Effective Time shall,
except as otherwise provided in clause (ii) below and except for Shares held by
any holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal for such Shares in accordance with
Chapter 13 of the CGCL ("Dissenting Shares"), be converted into the right to
receive $25.50 in cash or any higher price per Share that may be paid pursuant
to the Offer, without interest (the "Merger Consideration"); (ii) each Share
held by the Company as treasury stock or each Share held by Saint-Gobain,
Parent or any subsidiary of Saint-Gobain or Parent
20
<PAGE>
immediately prior to the Effective Time shall be canceled, and no payment shall
be made with respect thereto and (iii) each share of common stock of Purchaser
outstanding immediately prior to the Effective Time shall be converted into and
become one share of common stock of the Surviving Corporation with the same
rights, powers and privileges as the shares so converted and shall constitute
the only outstanding shares of capital stock of the Surviving Corporation. The
Surviving Corporation will, thereupon, become an indirect, wholly owned
subsidiary of Parent.
Stock Options. The Merger Agreement provides that at or immediately prior to
the Effective Time, each outstanding stock option issued by the Company to
purchase Shares, whether or not vested or exercisable, will be canceled, and
the Company will pay each holder of any such option at or promptly after the
Effective Time for each such option surrendered an amount in cash determined by
multiplying (i) the excess, if any, of the Merger Consideration over the
applicable exercise price of such option by (ii) the number of Shares such
holder could have purchased (assuming full vesting of all options) had such
holder exercised such option in full immediately prior to the Effective Time.
Such payment shall be reduced by applicable withholding taxes.
Prior to the Effective Time, the Company will take all actions (including,
if appropriate, amending the terms of any option plan or arrangement) that are
within its power to give effect to the transactions contemplated by the
immediately preceding paragraph.
Employee Stock Purchase Plan. The Merger Agreement provides that after the
date thereof, no new offering period shall commence under the Company's
Employee Stock Purchase Plan (the "ESPP"). As of the Effective Time, the ESPP
shall be terminated. The Company will pay each participant in any current
offering period under such Plan in cash at the Effective Time, in cancellation
of all rights under such Plan, an amount determined by multiplying (i) the
Merger Consideration per Share by (ii) the number of Shares such participant
could have purchased under the ESPP based on his or her account balance under
such Plan immediately prior to the Effective Time (such payment to be reduced
by applicable withholding taxes); provided that with respect to any fractional
shares, the foregoing shall not apply and the balance of each account
attributable to such fractional shares shall be returned to the participant in
cash.
Prior to the Effective Time, the Company will take all actions (including,
if appropriate, amending the terms of the ESPP or obtaining participant
consents) that are necessary to give effect to the transactions contemplated by
the immediately preceding paragraph.
Restricted Stock Units. The Merger Agreement provides that at or immediately
prior to the Effective Time, each outstanding restricted stock unit (including
deferred stock units and deferred shares) issued by the Company, whether or not
vested or transferable, will be canceled, and the Company will pay each holder
of any such restricted stock unit at or promptly after the Effective Time the
Merger Consideration for each unit surrendered. Prior to the Effective Time,
the Company shall take all actions (including, if appropriate, amending the
terms of any incentive compensation plan or arrangement) that are necessary to
give effect to the transactions contemplated by this paragraph.
Surviving Corporation. The Merger Agreement provides that the articles of
incorporation and bylaws of Purchaser in effect at the Effective Time will be
the articles of incorporation and bylaws, respectively, of the Surviving
Corporation until amended in accordance with applicable law, except that the
name of the Surviving Corporation shall be Furon Company. The Merger Agreement
also provides that the directors of Purchaser at the Effective Time will be the
directors of the Surviving Corporation and the officers of the Company at the
Effective Time will be the officers of the Surviving Corporation.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties, including
representations by the Company with respect to its corporate existence and
power, corporate authorizations, governmental authorizations, non-
contravention, capitalization, subsidiaries, Commission filings, financial
statements, disclosure documents, absence of certain changes, no undisclosed
21
<PAGE>
material liabilities, litigation, material contracts, taxes, employee benefits,
compliance with laws and court orders, finders' fees, environmental matters,
title to real properties, insurance coverage, labor matters, intellectual
property and anti-takeover statutes. Certain representations and warranties in
the Merger Agreement contain exceptions for matters that would or could, as the
case may be, not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company, Parent or the Medical
Device Products Business (as defined below), as the case may be. The Merger
Agreement provides that "Material Adverse Effect" means, with respect to any
person, a material adverse effect (other than an effect that impacts the
person's industry generally) on the financial condition, business or results of
operations of such person and its subsidiaries, taken as a whole. For purposes
of the Merger Agreement, "Medical Device Products Business" means the medical
device products business currently conducted by the Company and its
subsidiaries, including Medex, Inc.
Additionally, the Company has represented that it has taken all action
necessary to render the Rights issued pursuant to the terms of the Rights
Agreement inapplicable to the Merger Agreement, the Stock Option Agreement, the
Shareholder Agreement, the Offer, the Merger and any other transaction
contemplated thereby.
Interim Agreements of the Company. Pursuant to the Merger Agreement, the
Company has agreed that, during the period from the date of the Merger
Agreement to the Effective Time, the Company and its subsidiaries will conduct
their business in the ordinary course consistent with past practice and will
use commercially reasonable efforts to preserve intact their business
organizations and relationships with third parties and to keep available the
services of their present officers and employees. Pursuant to the Merger
Agreement, without limiting the generality of the foregoing, from the date of
the Merger Agreement until the Effective Time, the Company will not and will
not permit any of its subsidiaries to: (a) adopt or propose any change in the
Company's articles of incorporation or bylaws; (b) merge or consolidate with
any other person or acquire a material amount of stock or assets of any other
person; (c) except for the Subsidiary Sale, sell, lease, license or otherwise
dispose of any material subsidiary or material amount of assets, securities or
property except (i) pursuant to existing contracts or commitments and (ii) in
the ordinary course consistent with past practice; (d) (i) take any action that
would make any representation and warranty of the Company under the Merger
Agreement that is qualified by materiality or Material Adverse Effect
inaccurate in any respect at, or as of any time prior to, the Effective Time,
(ii) take any action that would make any representation or warranty of the
Company under the Merger Agreement that is not so qualified to be inaccurate in
any material respect at, or as of any time prior to, the Effective Time or
(iii) omit to take any action necessary to prevent any such representation or
warranty from being inaccurate in any respect or material respect, as the case
may be, at any such time; (e) issue, sell, pledge, dispose of or encumber, or
authorize the issuance, sale, pledge, disposition or encumbrance of, any shares
of capital stock of any class, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of capital stock, or any
other ownership interest of the Company, any of its subsidiaries or affiliates
(except for the issuance of Shares pursuant to the exercise of options, which
options are outstanding on the date of the Merger Agreement and the issuance of
Shares as required under the Company's employee stock purchase plan); (f)(i)
declare, set aside, make or pay any dividend or other distribution (whether in
cash, stock or property of any combination thereof) in respect of its capital
stock, except for the payment of quarterly cash dividends on the Shares not in
excess of $0.03 per Share with usual record and payment dates in accordance
with past dividend practice and except that any wholly owned subsidiary of the
Company may declare and pay a dividend to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) except for the Notes Offer (as defined below),
repurchase, redeem or otherwise acquire any of its securities or any securities
of its subsidiaries, or propose to do any of the foregoing; (g) sell, transfer,
license, sublicense or otherwise dispose of any material intellectual property
rights (other than in the ordinary course of business consistent with past
practice) or amend or modify any existing agreements with respect to any
material intellectual property rights or intellectual property rights of a
third party; (h)(i) except as expressly permitted, incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations of any
other person (other than (x) for an amount not exceeding $10,000,000 in the
aggregate and
22
<PAGE>
(y) for a term not greater than one year in duration), or make any loans,
advances, or capital contributions to, or investments in, any other person
(other than to any wholly owned subsidiary of the Company or customary loans or
advances to employees in the ordinary course of business consistent with past
practice), (ii) enter into or amend any contract or agreement other than in the
ordinary course of business consistent with past practice, (iii) authorize or
make any capital expenditures or purchases of fixed assets that are not
currently budgeted and that in the aggregate exceeds $1,000,000, (iv) terminate
any material contract of the Company or amend in any material respect any such
contract or (v) enter into or amend any contract, agreement, commitment or
arrangement to effect any of the matters prohibited under this clause (h); (i)
take any action, other than as required by generally accepted accounting
principles, to change accounting policies or procedures or cash maintenance
policies or procedures (including, without limitation, procedures with respect
to revenue recognition, capitalization of development costs, payments of
accounts payable and collection of accounts receivable); (j) make any tax
election not required by law and inconsistent with past practice or settle or
compromise any tax liability, except to the extent the amount of any such
settlement or compromise has been reserved for on the consolidated financial
statements contained in certain of the Company's documents filed with the
Commission, or would not have a Material Adverse Effect; (k) pay, discharge,
settle, or satisfy any lawsuits, claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business
consistent with past practice of liabilities reflected or reserved against in
the consolidated balance sheet of the Company as of July 31, 1999, or incurred
in the ordinary course of business consistent with past practice or other
payments, discharges or satisfactions which in the aggregate do not exceed
$1,000,000, or waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any of
its subsidiaries is a party; (l) (i) except as described in "Other Agreements
of Parent, Purchaser and the Company" below, adopt or amend any bonus, profit
sharing, compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment or employee benefit plan,
agreement, trust, plan, fund or other arrangement for the benefit and welfare
of any director, officer or employee, (ii) increase in any manner the
compensation or fringe benefits of any director, officer or employee (except
for increases in the ordinary course of business consistent with past practice
and that, in the aggregate, do not result in a material increase in benefits or
compensation expense to the Company) or (iii) pay any benefit not required by
any currently existing plan or arrangement (including, without limitation, the
granting of stock options or stock appreciation rights or the removal of
existing restrictions in any benefit plans or agreements); and (m) agree or
commit to do any of the foregoing.
Other Agreements of Parent, Purchaser and the Company. In the Merger
Agreement, the Company has agreed that the Company, its subsidiaries and their
respective officers, directors, employees, investment bankers, attorneys,
accountants, consultants or other agents or advisors shall not directly or
indirectly, (i) take any action to solicit, initiate, facilitate or encourage
the submission of any Acquisition Proposal, (ii) engage in discussions or
negotiations with, or disclose any nonpublic information relating to the
Company or any of its subsidiaries or afford access to the properties, books or
records of the Company or any of its subsidiaries to, any person who the
Company has reason to believe may be considering making, or has made, an
Acquisition Proposal or any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
or (iii) grant any waiver or release under any standstill or similar agreement
with respect to any class of equity securities of the Company. The Company will
notify Parent or Parent's outside legal counsel promptly (but in no event later
than 36 hours) after receipt by the Company (or any of its advisors) of any
Acquisition Proposal, any indication that any person is considering making an
Acquisition Proposal or any request for nonpublic information relating to the
Company or any of its subsidiaries or for access to the properties, books or
records of the Company or any of its subsidiaries by any person who the Company
has reason to believe may be considering making, or has made, an Acquisition
Proposal and the Company will keep Parent fully informed of the status and
details of any such Acquisition Proposal, indication or request (including, any
material changes to the terms thereof).
Notwithstanding the foregoing, the Company may negotiate or otherwise engage
in substantive discussions with, and furnish nonpublic information to, any
person who delivers a Superior Proposal if (i) the Company has
23
<PAGE>
complied with the preceding paragraph, including, without limitation, the
requirement that it notify Parent promptly after its receipt of any Acquisition
Proposal, (ii) the Board of Directors of the Company determines in good faith
by a majority vote, on the basis of advice from its outside legal counsel, that
consistent with its fiduciary duties under applicable law, it must take such
action, (iii) such person executes a confidentiality agreement with terms no
less favorable to the Company than those contained in the Confidentiality
Agreement described below, (iv) the Company shall have delivered to Parent four
business days' prior written notice advising Parent that it intends to take
such action and (v) the Offer shall not have closed.
Between the date of the Merger Agreement and the Effective Time and subject
to applicable law and the Confidentiality Agreement described below, the
Company will (i) give Parent, its counsel, financial advisors, auditors and
other authorized representatives full access to the offices, properties, books
and records of the Company and its subsidiaries, (ii) furnish to Parent, its
counsel, financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such persons may
reasonably request and (iii) instruct the employees, counsel, financial
advisors, auditors and other authorized representatives of the Company and its
subsidiaries to cooperate with Parent in its investigation of the Company and
its subsidiaries.
Pursuant to the Merger Agreement, the Company has agreed to cause a meeting
of its shareholders (the "Company Shareholder Meeting") to be duly called and
held as soon as reasonably practicable after consummation of the Offer for the
purpose of voting on the approval and adoption of the Merger Agreement and the
Merger, unless the CGCL does not require a vote of shareholders of the Company
for consummation of the Merger. The Merger Agreement provides that the Company
will (i) promptly prepare and file with the Commission, will use its best
efforts to have cleared by the Commission and will thereafter mail to its
shareholders as promptly as practicable the proxy or information statement of
the Company in connection with the Merger and all other proxy materials for
such meeting, (ii) use its best efforts to obtain the necessary approvals by
its shareholders of the Merger Agreement and the transactions contemplated
thereby and (iii) otherwise comply with all legal requirements applicable to
such meeting. Subject to their fiduciary duties as advised by outside counsel
to the Company, the Board of Directors will recommend approval and adoption of
the Merger Agreement and the transactions contemplated thereby by the Company's
shareholders.
Until the Effective Time or, if earlier, the date of termination of the
Merger Agreement in accordance with its terms, as soon as practicable but in no
event later than 30 days after the end of each month beginning with August, the
Company shall deliver to Parent unaudited consolidated financial information
for such month and the corresponding month of the preceding year as prepared by
the Company's management for its own internal purposes.
For six years after the Effective Time, the Surviving Corporation will
indemnify and hold harmless the present and former officers and directors of
the Company in respect of acts or omissions occurring at or prior to the
Effective Time to the fullest extent permitted by the CGCL or any other
applicable laws or provided under the Company's articles of incorporation and
bylaws in effect on the date of the Merger Agreement; provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law. For six years after the Effective Time, the Surviving
Corporation will provide officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the Effective Time covering
each such person currently covered by the Company's officers' and directors'
liability insurance policy on terms with respect to coverage and amount no less
favorable than those of such policy in effect on the date of the Merger
Agreement.
The Merger Agreement provides that Parent and Purchaser will honor (i) all
employment, severance or similar contractual or benefit plan arrangements in
accordance with their terms in existence on September 18, 1999 and (ii) all
legally imposed obligations relating to employment matters. The Merger
Agreement states that it is the current intention of Parent and Purchaser to
cause the Surviving Corporation to provide benefits to employees of the Company
and its subsidiaries that are no less favorable in the aggregate to such
employees
24
<PAGE>
than those in effect on September 18, 1999; provided that the foregoing shall
not limit or restrict the right of the Surviving Corporation or its
subsidiaries to terminate the employment of such employees or subsequently to
modify the benefits or other terms of employment of such employees, to the
extent permitted by applicable law.
The Merger Agreement provides that until the end of calendar year 2000
Parent will cause the Surviving Corporation to continue to maintain the
Company's existing compensation, severance, welfare and pension benefit plans,
programs and arrangements (other than any stock based plans, programs and
arrangements), to the extent disclosed to Parent prior to September 18, 1999,
for the benefit of current and former employees of the Company and its
subsidiaries (subject to modification as may be required by applicable law or
to maintain the tax exempt status of any such plan which is intended to be
qualified under Section 401(a) of the Code); provided that (i) nothing in the
Merger Agreement prohibits Parent from replacing any such existing plan,
program or arrangement with a plan, program or arrangement which Parent
reasonably believes will provide such employees with benefits which are not
materially less favorable in the aggregate than the benefits that would have
been provided under such existing plan, program or arrangement and (ii) nothing
in the Merger Agreement obligates Parent to provide such employees with any
stock based compensation (including stock options or stock appreciation rights)
after the Effective Time. The Merger Agreement also provides that the Company
and Parent will (i) amend the Furon Employee Stock Ownership Plan and the Furon
Employees Profit Sharing Retirement Plan to eliminate the requirement that a
participant (other than any such participant who voluntarily terminated his or
her employment) be employed on the last day of the current plan year to be
entitled to an allocation of contributions thereunder and (ii) keep in effect
the Furon Company Severance Pay Plan (the "Severance Plan") (or a plan
providing benefits at least equal to the benefits under the Severance Plan) for
a period of at least one year following the Effective Time, and amend the
Severance Plan to eliminate certain conditions to the receipt of benefits. The
Merger Agreement provides all service credited to each employee by the Company
through the Effective Time will be recognized by Parent for purposes of
eligibility and vesting under any employee benefit plan provided by the
Surviving Corporation or Parent for the benefit of such employee. Pursuant to
the Merger Agreement, the Company and Parent have agreed to take such actions
as are necessary or appropriate (i) to provide that lease payments under the
Employee Paid Closed-End Auto Lease Program may continue to be paid by
terminated employees through the end of the lease term in effect at the time of
termination, to assign such leases to such employees, to pay to each such
employee a lump sum cash amount intended to cover the payment of insurance and
maintenance of the automobile through the end of the applicable lease term and,
if any such lease cannot be transferred to the employee, to provide the
employee the option at the end of the lease term to buy-out, refinance or
terminate the lease and (ii) for any employee party to a Change of Control
Agreement with the Company to continue to pay the employee's club dues through
the end of the one year period following the employee's termination of
employment, and provide the option to purchase the membership at the expiration
of such one year term.
The Merger Agreement provides that the Company and Parent will use their
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 under applicable
laws and regulations to consummate the transactions contemplated by the Merger
Agreement and the Stock Option Agreement. Notwithstanding the foregoing, no
provision of the Merger Agreement shall require Parent, its affiliates or the
Company to consent to any restriction, limitation, or obligation with respect
to the businesses of Parent, its affiliates or the Company or any sale or
disposition of any assets of Parent, its affiliates or the Company which is
reasonably expected to result in, directly or indirectly, a reduction in
aggregate revenues of Parent and its affiliates (including the Company) on an
annualized basis in excess of $50,000,000 (a "De Minimus Restriction").
Notes Offer and Consent Solicitation. The Merger Agreement provides that the
Company will as promptly as practicable, but in no event later than ten
business days following the public announcement of the Merger Agreement,
commence a consent solicitation and an offer (the "Notes Offer") to purchase
all of the Company's 8.125% Senior Subordinated Notes (the "Notes") with one or
more dealer managers selected by the Company and reasonably acceptable to
Parent. Pursuant to the Merger Agreement, the Company will commence the Notes
Offer by preparing and mailing to the holders of the Notes an offer to purchase
and
25
<PAGE>
consent solicitation statement, together with the related letter of transmittal
and other documents (the "Notes Offer Documents"), the terms of which
(including any amendments or supplements thereto) in each case will be in form
and substance satisfactory to Parent. The Notes Offer will be subject to (i)
the condition that the Company receive consents from holders of not less than
75 % in aggregate principal amount of the Notes outstanding (excluding for such
purposes any Notes held by the Company and its affiliates) to certain
amendments to be set forth in the Notes Offer Documents to the indenture
relating to the Notes, (ii) the condition that the Merger will have been
consummated and (iii) the condition that the trustee has executed a
supplemental amendment to the indenture relating to the Notes, and other
customary conditions satisfactory to Parent; provided that no such condition
may be waived prior to the Effective Time without Parent's consent. The Notes
Offer will initially expire 20 business days after the date of its
commencement; provided that, unless the Merger Agreement is terminated in
accordance with its terms, in which case the Notes Offer (whether or not
previously extended in accordance with the terms hereof) will expire on such
date of termination, the Company may agree to extend the expiration date of the
Notes Offer from time to time. The Company will not, without the prior written
consent of Parent, change, waive or impose additional conditions to the Notes
Offer. The completion of the Notes Offer is not a condition to the consummation
of the Offer or the Merger. Parent has agreed to reimburse the Company for all
reasonably documented out-of-pocket expenses incurred in connection with the
Notes Offer promptly following the termination of the Merger Agreement under
certain circumstances.
Conditions to the Merger. The obligations of each of Parent, Purchaser and
the Company to consummate the Merger are subject to the satisfaction of certain
conditions, including: (a) if required by the CGCL, the Merger Agreement shall
have been approved and adopted by the shareholders of the Company; (b) any
applicable waiting period under the HSR Act and any Antitrust Laws shall have
expired or been terminated; (c) no provision of any applicable law or
regulation and no judgment, injunction, order or decree shall prohibit the
consummation of the Merger and (d) Purchaser will have purchased Shares
pursuant to the Offer.
The obligations of Parent and Purchaser to consummate the Merger are subject
to the satisfaction of the following further conditions: (a)(i) the Company
will have performed in all material respects all of its obligations under the
Merger Agreement required to be performed by it at or prior to the Effective
Time, (ii) the representations and warranties of the Company contained in the
Merger Agreement and in any certificate or other writing delivered by the
Company pursuant thereto, disregarding all qualifications and exceptions
contained therein relating to materiality or Material Adverse Effect, shall be
true and correct in all material respects with only such exceptions as would
not, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on the Company at and as of the date of the Merger Agreement as
if made at and as of such time and at and as of the Effective Time as if made
at and as of such time and (iii) Parent will have received a certificate signed
by an executive officer of the Company to the foregoing effect; and
(b) there shall not be instituted or pending any action, investigation or
proceeding by any government or governmental authority or agency, domestic or
foreign, or by any other person, before any court or governmental authority or
agency, domestic or foreign, (i) challenging the acquisition by Parent,
Purchaser or any of their respective affiliates of any Shares, seeking to
restrain or prohibit the making or consummation of the Merger or the
performance of any of the other transactions contemplated by the Merger
Agreement or the Stock Option Agreement or seeking to require the Company,
Parent, Purchaser or any of their respective affiliates to pay any damages
related to the Merger or the other transactions contemplated by the Merger
Agreement and the Stock Option Agreement that are material in relation to the
Company taken as a whole, (ii) seeking to impose limitations on the ability of
Purchaser, or to render Purchaser unable to accept for payment, pay for or
purchase some or all of the Shares, (iii) seeking to restrain or prohibit
Parent's ownership or operation (or that of its affiliates) of all or any
portion of the business or assets of the Company and its subsidiaries or of
Parent and its affiliates, or to compel Parent or any of its affiliates to
dispose of or hold separate all or any portion of the business or assets of the
Company and its subsidiaries or of Parent and its affiliates, other than any
such restraint, prohibition or disposition that is a De Minimus Restriction,
(iv) seeking to impose limitations on the ability of Parent, Purchaser or any
of Parent's other affiliates effectively to exercise
26
<PAGE>
full rights of ownership of the Shares, including, without limitation, the
right to vote any Shares acquired or owned by Parent, Purchaser or any of
Parent's other affiliates on all matters properly presented to the Company's
shareholders, (v) seeking to require divestiture by Parent, Purchaser or any of
Parent's other affiliates of any Shares, other than any such divestiture that
is a De Minimus Restriction or (vi) that otherwise is reasonably likely to have
a Material Adverse Effect on the Company or Parent.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, (notwithstanding any
approval of the Merger Agreement by the shareholders of the Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if (i) Purchaser will not have
accepted for payment any Shares pursuant to the Offer before the 41st
business day following commencement of the Offer or Purchaser will have
failed to commence the Offer within 30 days following the date of the
Merger Agreement; provided that the right to terminate the Merger Agreement
pursuant to this clause (i) shall not be available to any party whose
breach of any provision of the Merger Agreement results in the failure of
the acceptance for payment by Purchaser of any Shares pursuant to the Offer
by such time or of the Offer to be commenced by such time; (ii) there shall
be any law or regulation that makes acceptance for payment of, and payment
for, the Shares pursuant to the Offer or consummation of the Merger illegal
or otherwise prohibited or any judgment, injunction, order or decree of any
court or governmental body having competent jurisdiction enjoining
Purchaser from accepting for payment of, and paying for, the Shares
pursuant to the Offer or the Company or Parent from consummating the Merger
and such judgment, injunction, order or decree shall have become final and
nonappealable; (iii) the Company's shareholders shall have rejected the
Merger and the Merger Agreement at the Company Shareholder Meeting, if
required, or at any adjournment or postponement thereof; or (iv) the Merger
shall not have been consummated by February 28, 2000 (or, if a request for
additional information is received from a governmental entity pursuant to
the HSR Act or applicable Antitrust Laws, April 30, 2000); provided that
the right to terminate the Merger Agreement pursuant to this clause (iv)
shall not be available to any party whose breach of any provision of the
Merger Agreement results in the failure of the Merger to be consummated by
such time;
(c) by Parent, if, prior to the acceptance for payment of the Shares
under the Offer, (i) any person or "group" (as defined in Section 13(d)(3)
of the Exchange Act), other than Parent or any of its affiliates, shall
have acquired beneficial ownership of more than 50% of the Shares, through
the acquisition of stock, the formation of a group or otherwise, or shall
have been granted any option, right or warrant, conditional or otherwise,
to acquire beneficial ownership of such Shares; (ii) (A) the Board of
Directors of the Company shall have withdrawn, or modified in a manner
adverse to Parent, its approval or recommendation of the Merger Agreement,
the Offer or the Merger, or shall have recommended, or entered into, or
publicly announced its intention to enter into, an agreement or an
agreement in principle with respect to an Acquisition Proposal or shall
have failed to reaffirm such approval or recommendation upon Parent's
request (or shall have resolved to do any of the foregoing) or (B) the
Company shall have breached certain of its obligations under the Merger
Agreement or (iii) the Offer terminates due to the failure of the Minimum
Condition (including as modified to the Revised Minimum Number as described
above); and
(d) by the Company, if (i) prior to the acceptance for payment of any
Shares pursuant to the Offer, (ii) the Company is in compliance with
certain of its obligations under the Merger Agreement, (iii) the Board of
Directors of the Company shall have withdrawn or modified in a manner
adverse to Parent its approval or recommendation of the Merger Agreement,
the Offer or the Merger, (iv) the Board of Directors of the Company
authorizes the Company, subject to complying with the terms of the Merger
Agreement, to enter into a binding written agreement concerning a
transaction that constitutes a Superior Proposal and the Company notifies
Parent in writing that it intends to enter into such an agreement,
attaching the most current version of such agreement to such notice, (v)
Parent does not make, within four business days of receipt of the Company's
written notification of its intention to enter into a binding
27
<PAGE>
agreement for a Superior Proposal, an offer that the Board of Directors of
the Company determines, in good faith after consultation with its financial
advisors, is at least as favorable, from a financial point of view, to the
shareholders of the Company as the Superior Proposal and (vi) the Company
prior to such termination pays to Parent in immediately available funds the
fees required to be paid pursuant to the Merger Agreement. The Company
agrees (x) that it will not enter into a binding agreement referred to in
clause (iv) in the preceding sentence until at least the fifth business day
after it has provided the notice to Parent required by the Merger Agreement
and (y) to notify Parent promptly if its intention to enter into the
written agreement referred to in its notification shall change at any time
after giving such notification.
In the event of the termination of the Merger Agreement, the Merger
Agreement will become void and have no effect, without any liability on the
part of any party thereto other than certain provisions of the Merger Agreement
relating to public announcements, termination, expenses, governing law and
waiver of jury trial; provided that a party will not be relieved from liability
for willful and knowing (i) failure to fulfill a condition to the performance
of the material obligations of the other party, (ii) failure to perform a
material covenant or (iii) any material breach of any representation or
warranty or agreement in the Merger Agreement.
Termination Fee. Pursuant to the Merger Agreement, the Company will pay to
Parent a fee of $15,000,000, plus the reasonable expenses of Parent (not to
exceed $2,500,000) incurred in connection with the negotiation of the Merger
Agreement and the consummation of the transactions contemplated thereby, if the
Merger Agreement is terminated (x) pursuant to clause (c) or (d) under
"Termination" above or (y) pursuant to clause (b)(i) or (b)(iii) under
"Termination" above and, in the case of this clause (y), prior to the time of
such termination an Acquisition Proposal shall have been publicly announced and
not withdrawn and, within nine months of the date of termination, the Company
enters into an agreement or letter of intent concerning a transaction that
would constitute an Acquisition Proposal and such transaction is subsequently
consummated.
The fee and expenses reimbursement payable (i) pursuant to clause (x) of the
preceding paragraph shall be paid by the Company immediately upon the
termination of the Merger Agreement, and (ii) pursuant to clause (y) of the
preceding paragraph shall be paid by the Company on the date on which the
transaction referred to in such clause shall be consummated.
The Merger Agreement provides that the Company will pay to Parent, in
immediately available funds an amount equal to Parent's reasonable expenses
(not to exceed $2,500,000) incurred in connection with the Merger Agreement and
the transactions contemplated thereby, if (x) the Merger Agreement shall have
been terminated pursuant to clause (b)(i) of the first paragraph under
"Termination" above, (y) any representation or warranty made by the Company in
the Merger Agreement shall not have been true and correct as of the date
thereof and (z) the Company shall have breached or failed to perform in any
material respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with by it
under the Merger Agreement, or any representations and warranties of the
Company contained in the Merger Agreement that are qualified as to materiality
or Material Adverse Effect or any similar standard or qualification shall not
be true and correct or any such representations or warranties that are not so
qualified shall not be true and correct, individually or in the aggregate, so
as to be reasonably likely to have a Material Adverse Effect on the Company, in
each case, when made or as of the scheduled expiration of the Offer as if made
at and as of such time.
If the Company fails promptly to pay any amount due Parent as described in
the preceding paragraphs, the Company shall also pay any costs and expenses
incurred by Parent in connection with a legal action to enforce the Merger
Agreement that results in any judgment or settlement against the Company for
such amount.
Expenses. Except as discussed above, the Merger Agreement provides that all
costs and expenses incurred in connection with the transactions contemplated by
the Merger Agreement shall be paid by the party incurring such costs and
expenses.
Amendments; No Waivers. Any provision of the Merger Agreement may be amended
or waived prior to the Effective Time if, and only if, such amendment or waiver
is in writing and signed, in the case of an
28
<PAGE>
amendment, by the Company, Parent and Purchaser or in the case of a waiver, by
the party against whom the waiver is to be effective; provided that after the
adoption of the Merger Agreement by the shareholders of the Company, no such
amendment or waiver shall, without the further approval of such shareholders,
reduce the amount or change the kind of consideration to be received in
exchange for the Shares.
Stock Option Agreement
The following is a summary of certain provisions of the Stock Option
Agreement entered into between the Company, Parent and Purchaser, a copy of
which is filed as an Exhibit to the Schedule 14D-1. Such summary is qualified
in its entirety by reference to the Stock Option Agreement.
Under the Stock Option Agreement, the Company granted to Purchaser an
irrevocable Top-Up Stock Option to purchase that number of Top-Up Option Shares
equal to the number of Shares that, when added to the number of Shares owned by
Purchaser, Parent and Saint-Gobain immediately following consummation of the
Offer, will constitute 90% of the Shares then outstanding (assuming the
issuance of the Top-Up Option Shares) at a purchase price per Top-Up Option
Share equal to the Offer Price. However, the Top-Up Stock Option will not be
exercisable if the number of Shares subject thereto exceeds the number of
authorized Shares available for issuance.
Subject to the terms and conditions of the Stock Option Agreement, the Top-
Up Stock Option may be exercised by Purchaser, at its election, in whole, but
not in part, at any one time after the occurrence of a Top-Up Exercise Event
(as defined below) and prior to the Top-Up Termination Date (as defined below).
A "Top-Up Exercise Event" will occur for purposes of the Stock Option Agreement
upon Purchaser's acceptance for payment pursuant to the Offer of Shares
constituting, together with Shares owned directly or indirectly by Parent and
Saint-Gobain, more than 50% but less than 90% of the Shares then outstanding.
Except as provided in the last sentence of this paragraph, the "Top-Up
Termination Date" will occur for purposes of the Stock Option Agreement upon
the earliest to occur of: (i) the Effective Time; (ii) the date which is 20
business days after the occurrence of a Top-Up Exercise Event; (iii) the
termination of the Merger Agreement; and (iv) the date on which Purchaser
reduces the Minimum Condition to the Revised Minimum Number and accepts for
payment the Revised Minimum Number of Shares. Nevertheless, even if the Top-Up
Termination Date has occurred, Purchaser will be entitled to purchase the Top-
Up Option Shares if it has exercised the Top-Up Stock Option in accordance with
the terms of the Stock Option Agreement prior to such occurrence.
The obligation of the Company to deliver Top-Up Option Shares upon the
exercise of the Top-Up Stock Option is subject to the following conditions: (a)
any applicable waiting period under the HSR Act and any applicable non-United
States laws regulating competition, antitrust, investment or exchange controls
relating to the issuance of the Top-Up Option Shares will have expired or been
terminated; (b) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the exercise of the Top-Up
Stock Option or the delivery of the Top-Up Option Shares in respect of any such
exercise; and (c) delivery of the Top-Up Option Shares would not require the
approval of the Company's shareholders pursuant to the rules of the NYSE.
The Shareholder Agreement
The following is a summary of certain provisions of the Shareholder
Agreement entered into between Purchaser and J. Michael Hagan ("Shareholder"),
a copy of which is filed as an Exhibit to the Schedule 14D-1. Such summary is
qualified in its entirety by reference to the Shareholder Agreement.
Agreement to Tender. Pursuant to the Shareholder Agreement, Shareholder
irrevocably and unconditionally agrees to validly tender (and not withdraw),
pursuant to and in accordance with the terms of the Offer, all of the shares of
capital stock of the Company that Shareholder owns as of the date of the
Shareholder Agreement as well as any additional shares of capital stock of the
Company that Shareholder may
29
<PAGE>
own, whether acquired by purchase, exercise of options or otherwise, at any
time after September 18, 1999 (the "Shareholder Shares").
Voting Agreement. Pursuant to the Shareholder Agreement, until the earliest
to occur of (x) the consummation of the Merger, (y) June 18, 2000 and (z) the
termination of the Merger Agreement by Parent under certain circumstances,
Shareholder irrevocably and unconditionally agrees to vote or cause to be voted
all Shareholder Shares that Shareholder is entitled to vote at the time of any
vote of the shareholders of the Company where such matters arise (i) in favor
of the approval and adoption of the Merger Agreement and in favor of the
transactions contemplated thereby, (ii) against any proposal or transaction
which could prevent or delay the consummation of the transactions contemplated
by the Merger Agreement and the related agreements and (iii) against any (A)
Acquisition Proposal (other than the Merger), (B) corporate action the
consummation of which would frustrate the purposes, or prevent or delay the
consummation, of the transactions contemplated by the Merger Agreement and the
related agreements or (C) other matter relating to, or in connection with, any
of the matters referred to in clause (A) and (B) above. The Shareholder
Agreement does not limit or restrict Shareholder's ability to act or vote in
his capacity as an officer or director of the Company in any manner he so
chooses.
Grant of Proxy. Pursuant to the Shareholder Agreement, Shareholder
irrevocably and unconditionally grants a proxy within the meaning of Section
705 of California Law and in accordance with the provisions of Division 100 of
California Law, appointing Purchaser as Shareholder's attorney-in-fact and
proxy, with full power of substitution, for and in Shareholder's name, to vote,
express, consent or dissent, or otherwise to utilize such voting power in the
manner contemplated by the section on "Voting Agreement" above, and upon any
other matter relating to the Offer or the Merger, as Purchaser or its proxy or
substitute shall, in Purchaser's sole discretion, deem proper with respect to
the Shareholder Shares. Such proxy will be revoked upon the termination of the
Shareholder Agreement. The proxy granted by Shareholder is granted in
consideration of Purchaser's entering into the Merger Agreement and to secure
the Shareholder's performance of his agreement and duty to vote or cause to be
voted (including by written consent) all of the Shareholder Shares in favor of
the Merger as set forth in the section on "Voting Agreement" above.
Representations and Warranties. The Shareholder Agreement contains customary
representations and warranties of the parties thereto.
No Proxies for or Encumbrances on Shareholder Shares. Except pursuant to the
terms of the Shareholder Agreement, Shareholder agrees that, without the prior
written consent of Purchaser, Shareholder will not, directly or indirectly, (i)
grant any proxies or enter into any voting trust or other agreement or
arrangement with respect to the voting of any Shareholder Shares or (ii) sell,
assign, transfer, encumber or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the direct or
indirect sale, assignment, transfer, encumbrance or other disposition of, any
Shareholder Shares during the term of the Shareholder Agreement. Shareholder
shall not seek or solicit any of the foregoing and agrees to notify Purchaser
promptly if so approached or solicited himself.
Appraisal Rights. Shareholder agrees not to exercise any rights (including,
without limitation, under Chapter 13 of the CGCL) to demand appraisal of any
Shares which may arise with respect to the Merger.
Amendments; Termination. The Shareholder Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement executed by the parties thereto. The Shareholder Agreement
will terminate on the earliest to occur of (x) the consummation of the Merger,
(y) June 18, 2000 and (z) the termination of the Merger Agreement by Parent
under certain circumstances.
Employment Matters
After consummation of the Offer, Parent intends to offer Mr. Hagan a
position as a consultant for a period of one year. It is intended that Mr.
Hagan will be paid $250,000 for his consulting services. This payment would be
in addition to amounts payable to Mr. Hagan as a result of his termination of
employment by the Company.
30
<PAGE>
The Rights Agreement
The Company's Rights Agreement dated April 30, 1999, between the Company and
The Bank of New York (the "Rights Agreement"), provides that certain
transactions, including the Offer and the Merger, will cause the issuance of
right certificates unless the Board has approved in advance such transactions.
At a special meeting of the Board on September 17, 1999, the Board unanimously
approved the consummation of the transactions contemplated by the Merger
Agreement, including the Stock Option Agreement, the Shareholder Agreement, the
acceptance of the Offer and consummation of the Merger. As a result of the
approval by the Board of the Merger Agreement, the Stock Option Agreement, the
Shareholder Agreement, the Offer and the Merger, none of Purchaser, Parent and
Saint-Gobain will be deemed an "Acquiring Person" under the Rights Agreement
and the Offer and the Merger will not cause the issuance of any right
certificates pursuant to the Rights Agreement. The foregoing is a summary of
certain provisions of the Rights Agreement and is qualified in its entirety by
reference to the Rights Agreement. A copy of the Rights Agreement is filed with
the Commission as an Exhibit to the Schedule 14D-9 filed by the Company
pursuant to Section 14(d)(4) of the Exchange Act in connection with the Offer
(the "Company 14D-9").
Confidentiality Agreement
On May 27, 1999, the Company and Saint-Gobain Industrial Ceramics, Inc., a
wholly owned subsidiary of Parent, entered into a Reciprocal Confidentiality
Agreement (the "Confidentiality Agreement"). Each party has agreed therein that
for three years following the date of the Confidentiality Agreement, it will
keep confidential all nonpublic, confidential or proprietary information of the
other party, subject to certain exceptions, and will use the confidential
information for no purpose other than evaluating a possible business
combination with the other party. The foregoing is a summary of certain
provisions of the Confidentiality Agreement and is qualified in its entirety by
reference to the Confidentiality Agreement. A copy of the Confidentiality
Agreement is filed as an Exhibit to the Schedule 14D-1.
11. Purpose of the Offer; Plans for the Company.
Purpose of the Offer. The purpose of the Offer is to acquire for cash as
many outstanding Shares as possible as a first step in acquiring the entire
equity interest in the Company. Purchaser currently intends, as soon as
practicable after consummation of the Offer, to seek proportional
representation on the Company's Board of Directors and consummate the Merger.
The Board of Directors of the Company has unanimously recommended that all
holders of Shares tender such Shares pursuant to the Offer. The Board of
Directors has unanimously approved the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, which approval
Purchaser believes satisfies the relevant requirements of the CGCL.
If Purchaser purchases Shares pursuant to the Offer, the Merger Agreement
provides that Purchaser will be entitled to designate representatives to serve
on the Board of Directors in proportion to Purchaser's ownership of Shares
following such purchase. See Section 10. Purchaser expects that such
representation would permit Purchaser to exert substantial influence over the
Company's conduct of its business and operations.
"Going Private" Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions
and which may under certain circumstances be applicable to the Merger or
another business combination following the purchase of Shares pursuant to the
Offer in which Purchaser seeks to acquire the remaining Shares not held by it.
Purchaser believes, however, that Rule 13e-3 is not applicable to the Merger.
Rule 13e-3 requires, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority shareholders in
such transaction, be filed with the Commission and disclosed to shareholders
prior to consummation of the transaction.
Shareholder Approval. Under the CGCL, the approval of the Company's Board of
Directors and the affirmative vote of the holders of a majority of the
outstanding Shares are required to approve and adopt the Merger Agreement and
the transactions contemplated thereby. The Company has represented in the
Merger
31
<PAGE>
Agreement that the execution and delivery of the Merger Agreement and the Stock
Option Agreement by the Company and the consummation by the Company of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to the approval and
adoption of the Merger by the shareholders of the Company in accordance with
the CGCL. In addition, the Company has represented that the affirmative vote of
the holders of a majority of the outstanding Shares is the only vote of the
holders of any of the Company's capital stock necessary in connection with the
consummation of the Merger. Therefore, unless the Merger is consummated in
accordance with the short-form merger provisions under the CGCL described below
(in which case no action by the shareholders of the Company will be required to
consummate the Merger), the only remaining corporate action of the Company will
be the approval and adoption of the Merger Agreement and the transactions
contemplated thereby by the affirmative vote of the holders of a majority of
the Shares. The Merger Agreement provides that Parent will vote all Shares
beneficially owned by it in favor of the adoption of the Merger Agreement at
the Company shareholder's meeting. In the event that Purchaser acquires the
Revised Minimum Number of Shares, it would have the ability to ensure approval
of the Merger by the shareholders of the Company with the approval of a de
minimus number of remaining outstanding Shares.
Short-Form Merger. Section 1110 of the CGCL provides that, if a parent
corporation owns at least 90% of the outstanding shares of each class of a
subsidiary corporation, the merger of the parent corporation into the
subsidiary corporation may be effected by having the board of directors of the
parent corporation approve and adopt a resolution or plan of merger and by
making the appropriate filings with the California Secretary of State, without
any action or vote on the part of the shareholders of the subsidiary
corporation. Under the CGCL, if Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the outstanding Shares, Purchaser will be able to
effect the Merger without a vote of the shareholders of the Company. In such
event, Parent, Purchaser and the Company have agreed in the Merger Agreement to
take, subject to the satisfaction or (to the extent permitted under the Merger
Agreement) waiver of the conditions set forth in the Merger Agreement, all
necessary and appropriate action to cause the Merger to be effective as soon as
practicable after the acceptance for payment and purchase of Shares by
Purchaser pursuant to the Offer without a meeting of shareholders of the
Company.
Under the CGCL, the Merger consideration paid to the Company's shareholders
may not be cash if Purchaser, Parent or Saint-Gobain owns, directly or
indirectly, more than 50% but less than 90% of the then outstanding Shares
unless either all the shareholders consent or the Commissioner of Corporations
of the State of California approves, after a hearing, the terms and conditions
of the Merger and the fairness thereof. If such shareholder consent or
Commissioner of Corporations approval is not obtained, the CGCL requires that
the consideration received in the Merger consist only of non-redeemable common
stock of Parent. The purpose of the Offer is to obtain 90% or more of the
Shares and thus to enable Parent and Purchaser to acquire all the equity of the
Company for consideration consisting solely of cash.
Approval Under the Restated Articles of Incorporation. Article 4 of the
Company's Restated Articles of Incorporation (the "Articles") provides that the
adoption or authorization of certain transactions (including the Merger) with
"Interested Persons" holding more than 20% of the shares of Common Stock,
including Parent, Purchaser and Saint-Gobain after the purchase by Purchaser of
at least 20% of the shares of Common Stock pursuant to the Offer, requires the
affirmative vote of the holders of at least 80% of the shares of Common Stock,
unless the acquisition of 20% of the shares of Common Stock by such "Interested
Person" was approved in advance by the Company's Board of Directors by a vote
of not less than 75% of the authorized number of directors then holding office.
At a special meeting of the Company's Board of Directors on September 17, 1999,
the Company's Board of Directors unanimously approved the consummation of the
transactions contemplated by the Merger Agreement, the acceptance of the Offer
and consummation of the Merger. As a result of the unanimous approval by the
Company's Board of Directors of the Merger Agreement, the Stock Option
Agreement, the Shareholder Agreement, the Offer and the Merger, the provisions
of Article 4 of the Articles shall not apply to the Merger Agreement, the Stock
Option Agreement, the Shareholder Agreement, the Offer or the Merger.
32
<PAGE>
The foregoing is a summary of certain provisions of the Articles and is
qualified in its entirety by the provisions of the Articles filed as an Exhibit
to the Company 14D-9.
Dissenters' Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
at the Effective Time, by complying with the provisions of Chapter 13 of the
CGCL, may have certain rights to dissent and to require the Company to purchase
their Shares for cash at "fair market value." In general, holders of Shares
will be entitled to exercise dissenters' rights under the CGCL only if the
holders of five percent or more of the outstanding Shares properly file demands
for payment or if the Shares held by such holders are subject to any
restriction on transfer imposed by the Company or by any law or regulation
("Restricted Shares"). Accordingly, if any holder of Restricted Shares or the
holders of five percent or more of the Shares properly file demands for
payment, all other holders who fully comply with all other applicable
provisions of Chapter 13 of the CGCL will be entitled to require the Company to
purchase their Shares for cash at their fair market value if the Merger is
consummated. In addition, if immediately prior to the Effective Time, the
Shares are not listed on a national securities exchange or on the list of over-
the-counter margin stocks issued by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), holders of Shares may exercise
dissenters' rights as to any or all of their Shares entitled to such rights.
If the statutory procedures under the CGCL relating to dissenters' rights
are complied with, such rights could lead to a judicial determination of the
fair market value of the Shares. The "fair market value" would be determined as
of the day before the first announcement of the terms of the Merger, excluding
any appreciation or depreciation as a result of the Merger. The value so
determined could be more or less than the Offer Price.
The foregoing summary of the rights of dissenting shareholders does not
purport to be a complete statement of the procedures to be followed by
shareholders desiring to exercise any available dissenters' rights and is
qualified in its entirety by reference to the CGCL. The preservation and
exercise of dissenters' rights require strict adherence to the applicable
provisions of the CGCL.
Plans for the Company. In connection with its consideration of the Offer,
Parent has made a preliminary review, and will continue to review, on the basis
of available information, various possible business strategies that it might
consider in the event that it acquires control of the Company. Such strategies
are expected to include, among other things, the integration of certain assets
or lines of business of the Company with those of Parent and its subsidiaries,
as well as the implementation of technical and industrial savings and synergies
created by the transaction, including the rationalization of production
capabilities and a reduction in selling, general and administrative expense.
Parent currently estimates that up to $16 million, $23 million and $29 million
of such savings and synergies may be achieved in fiscal years 2000, 2001 and
2002, respectively, as a result of the transaction.
Except as described above or elsewhere in this Offer to Purchase, Parent has
no present plans or proposals that would relate to or result in an
extraordinary corporate transaction involving the Company or any of its
subsidiaries (such as a merger, reorganization, liquidation, relocation of any
operations or sale or other transfer of a material amount of assets), any
change in the Company's Board of Directors or management, any material change
in the Company's capitalization or dividend policy or any other material change
in the Company's corporate structure or business.
12. Effect of the Offer on the Market for the Shares; Stock Exchange
Listing(s); Registration under the Exchange Act. The purchase of Shares
pursuant to the Offer will reduce the number of Shares that might otherwise
trade publicly and may reduce the number of holders of Shares, which could
adversely affect the liquidity and market value of the remaining Shares held by
shareholders other than Purchaser. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market price for, or marketability
of, the Shares or whether such reduction would cause future market prices to be
greater or less than the Offer Price.
33
<PAGE>
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE for continued listing
and may, therefore, be delisted from such exchange. According to the NYSE's
published guidelines, the NYSE would consider delisting the Shares if, among
other things, the number of publicly-held Shares (excluding Shares held by
officers, directors, their immediate families and other concentrated holdings
of 10% or more) were less than 600,000, there were fewer than 1,200 holders of
at least 100 Shares or the aggregate market value of such publicly-held Shares
were less than $5 million. According to the Company 10-K, there were
approximately 1,000 holders of record of Shares as of March 31, 1999. If, as a
result of the purchase of Shares pursuant to the Offer, the Shares no longer
meet the requirements of the NYSE for continued listing and the listing of
Shares is discontinued, the market for the Shares could be adversely affected.
If the NYSE were to delist the Shares (which Purchaser intends to cause the
Company to seek if it acquires control of the Company and the Shares no longer
meet the NYSE listing requirements), it is possible that the Shares would trade
on another securities exchange or in the over-the-counter market and that price
quotations for the Shares would be reported by such exchange or through the
National Association of Securities Dealers Automated Quotation Systems or other
sources. The extent of the public market for the Shares and availability of
such quotations would, however, depend upon such factors as the number of
holders and/or the aggregate market value of the publicly-held Shares at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System, which has the effect, among
other things, of allowing brokers to extend credit on the collateral of such
Shares. Depending upon factors similar to those described above regarding
listing and market quotations, it is possible, that following the Offer, the
Shares might no longer constitute "margin securities" for the purposes of the
Federal Reserve Board's margin regulations and therefore could no longer be
used as collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Company to the
Commission if the Shares are neither listed on a national securities exchange
nor held by 300 or more holders of record. Termination of the registration of
the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to holders of Shares and to the
Commission and would make certain of the provisions of the Exchange Act, such
as the short-swing profit recovery provisions of Section 16(b), the requirement
of furnishing a proxy statement pursuant to Section 14(a) in connection with a
shareholder's meeting and the related requirement of an annual report to
shareholders and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions, no longer applicable to the Shares.
Furthermore, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act. If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be "margin securities" or be eligible for NYSE listing.
Purchaser intends to seek to cause the Company to terminate registration of the
Shares under the Exchange Act as soon after consummation of the Offer as the
requirements for termination of registration of the Shares are met.
13. Dividends and Distributions. If on or after September 18, 1999, the
Company should split, combine or otherwise change the Shares or its
capitalization, acquire or otherwise cause a reduction in the number of
outstanding Shares or issue or sell any additional Shares (other than Shares
issued pursuant to and in accordance with the terms in effect on September 18,
1999 of stock options outstanding prior to such date), shares of any other
class or series of capital stock, other voting securities or any securities
convertible into, or options, rights, or warrants, conditional or otherwise, to
acquire, any of the foregoing, then, without prejudice to Purchaser's rights
under Sections 14 and 15, Purchaser may, in its sole discretion, make such
adjustments in the purchase price and other terms of the Offer as it deems
appropriate including the number or type of securities to be purchased.
34
<PAGE>
If, on or after September 18, 1999, the Company should declare or pay any
dividend on the Shares (other than regular quarterly cash dividends not in
excess of $0.03 per Share having usual record and payment dates) or any
distribution with respect to the Shares (including the issuance of additional
Shares or other securities or rights to purchase of any securities) that is
payable or distributable to shareholders of record on a date prior to the
transfer to the name of Purchaser or its nominee or transferee on the Company's
stock transfer records of the Shares purchased pursuant to the Offer, then,
without prejudice to Purchaser's rights under Sections 14 and 15, (i) the
purchase price per Share payable by Purchaser pursuant to the Offer will be
reduced to the extent of any such cash dividend or distribution and (ii) the
whole of any such non-cash dividend or distribution to be received by the
tendering shareholders will (a) be received and held by the tendering
shareholders for the account of Purchaser and will be required to be promptly
remitted and transferred by each tendering shareholder to the Depositary for
the account of Purchaser, accompanied by appropriate documentation of transfer,
or (b) at the direction of Purchaser, be exercised for the benefit of
Purchaser, in which case the proceeds of such exercise will promptly be
remitted to Purchaser. Pending such remittance and subject to applicable law,
Purchaser will be entitled to all rights and privileges as owner of any such
non-cash dividend or distribution or proceeds thereof and may withhold the
entire purchase price or deduct from the purchase price the amount or value
thereof, as determined by Purchaser in its sole discretion.
14. Extension of Tender Period; Termination; Amendment. Purchaser reserves
the right, at any time or from time to time, in its sole discretion and
regardless of whether or not any of the conditions specified in Section 15
shall have been satisfied, (i) to extend the period of time during which the
Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension, (ii) to waive
any conditions to the Offer, other than the Minimum Condition which requires
the prior written consent of the Company (except in contemplation of the
exercise of the Top-Up Option), by making a public announcement of such waiver
or (iii) to amend the Offer in any respect (other than any of the following
changes to the Offer which require the prior written consent of the Company:
changes to the form of consideration to be paid, decreases in the price per
Share or the number of Shares sought in the Offer, imposition of conditions to
the Offer in addition to those set forth in Section 15 or is otherwise
materially adverse to the holders of the Shares) by making a public
announcement of such amendment; provided that, in accordance with the Merger
Agreement, Purchaser may extend the Offer on not more than two occasions and
for not more than ten business days on each such occasion. Except as required
by the Merger Agreement, there can be no assurance that Purchaser will exercise
its right to extend, waive any condition of or amend the Offer.
If, with the prior written consent of the Company, Purchaser decreases the
percentage of Shares being sought or increases or decreases the consideration
to be paid for Shares pursuant to the Offer and the Offer is scheduled to
expire at any time before the expiration of a period of 10 business days from,
and including, the date that notice of such increase or decrease is first
published, sent or given in the manner specified below, the Offer will be
extended until the expiration of such period of 10 business days. If Purchaser
makes a material change in the terms of the Offer (other than a change in price
or percentage of securities sought) or in the information concerning the Offer,
or waives a material condition of the Offer, Purchaser will extend the Offer,
if required by applicable law, for a period sufficient to allow shareholders to
consider the amended terms of the Offer. In a published release, the Commission
has stated that in its view an offer must remain open for a minimum period of
time following a material change in the terms of such offer and that the waiver
of a condition such as the Minimum Condition is a material change in the terms
of an offer. The release states that an offer should remain open for a minimum
of five business days from the date the material change is first published,
sent or given to security holders, and that if material changes are made with
respect to information that approaches the significance of price and share
levels, a minimum of 10 business days may be required to allow adequate
dissemination and investor response. The term "business day" shall mean any day
other than Saturday, Sunday or a federal holiday and shall consist of the time
period from 12:01 A.M. through 12:00 Midnight, New York City time.
Purchaser also reserves the right, in its sole discretion, in the event any
of the conditions specified in Section 15 shall not have been satisfied and so
long as Shares have not theretofore been accepted for payment,
35
<PAGE>
to delay (except as otherwise required by applicable law) acceptance for
payment of or payment for Shares or to terminate the Offer and not accept for
payment or pay for Shares.
If Purchaser extends the period of time during which the Offer is open, is
delayed in accepting for payment or paying for Shares or is unable to accept
for payment or pay for Shares pursuant to the Offer for any reason, then,
without prejudice to Purchaser's rights under the Offer, the Depositary may, on
behalf of Purchaser, retain all Shares tendered, and such Shares may not be
withdrawn except as otherwise provided in Section 4. The reservation by
Purchaser of the right to delay acceptance for payment of or payment for Shares
is subject to applicable law, which requires that Purchaser pay the
consideration offered or return the Shares deposited by or on behalf of
shareholders promptly after the termination or withdrawal of the Offer.
Any extension, termination, waiver of any condition or amendment of the
Offer will be followed as promptly as practicable by a public announcement
thereof. Without limiting the manner in which Purchaser may choose to make any
public announcement, Purchaser will have no obligation (except as otherwise
required by applicable law) to publish, advertise or otherwise communicate any
such public announcement other than by making a release to the Dow Jones News
Service. In the case of an extension of the Offer, Purchaser will make a public
announcement of such extension no later than 9:00 A.M., New York City time, on
the next business day after the previously scheduled Expiration Date.
15. Certain Conditions of the Offer. Notwithstanding any other provision of
the Offer, Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer), pay for any
Shares, and may terminate the Offer as provided in Section 14, if (i) the
Minimum Condition has not been satisfied or waived (pursuant to the Merger
Agreement) by the Expiration Date, (ii) the applicable waiting period under the
HSR Act or under any applicable Antitrust Laws shall not have expired or been
terminated by the Expiration Date, or (iii) at any time on or after September
18, 1999 and prior to the Expiration Date, any of the following conditions
exist:
(a) there shall be instituted or pending any action, investigation or
proceeding by any government or governmental authority or agency, domestic
or foreign, or by any other person, before any court or governmental
authority or agency, domestic or foreign,
(1) challenging the acquisition by Parent or Purchaser of any Shares
under the Offer, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of
the other transactions contemplated by the Merger Agreement or seeking
to require the Company, Parent or Purchaser to pay any damages related
to the Offer, the Merger or the other transactions contemplated by the
Merger Agreement that are material in relation to the Company taken as
a whole,
(2) seeking to impose material limitations on the ability of
Purchaser, or to render Purchaser unable to accept for payment, pay for
or purchase some or all of the Shares pursuant to the Offer and the
Merger,
(3) seeking to restrain or prohibit Parent's ownership or operation
(or that of its affiliates) of all or any portion of the business or
assets of the Company and its subsidiaries or of Parent and its
affiliates or to compel Parent or any of its affiliates to dispose of
or hold separate all or any portion of the business or assets of the
Company and its subsidiaries or of Parent and its affiliates, other
than any such restraint, prohibition or disposition that is a De
Minimus Restriction,
(4) seeking to impose limitations on the ability of Parent,
Purchaser or any of Parent's other affiliates effectively to exercise
full rights of ownership of the Shares, including, without limitation,
the right to vote any Shares acquired or owned by Parent, Purchaser or
any of Parent's other affiliates on all matters properly presented to
the Company's shareholders,
36
<PAGE>
(5) seeking to require divestiture by Parent, Purchaser or any of
Parent's other affiliates of any Shares or
(6) that otherwise is reasonably likely to have a Material Adverse
Effect on the Company; or
(b) there shall have been any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Offer or the Merger, by any
court, government or governmental authority or agency, domestic or foreign,
other than the routine application of the waiting period provisions of the
HSR Act and of any applicable Antitrust Laws to the Offer or the Merger,
that is reasonably likely, directly or indirectly, to result in any of the
consequences referred to in clauses (1) through (6) of paragraph (a) above;
or
(c) any person shall have entered into a definitive agreement or an
agreement in principle with the Company regarding an Acquisition Proposal;
or
(d) the Board of Directors of the Company (i) shall have withdrawn, or
modified in a manner adverse to Parent, its approval or recommendation of
the Merger Agreement, the Offer or the Merger, (ii) shall have failed to
reaffirm such approval or recommendation upon Parent's request or (iii)
shall have recommended or publicly announced its intention to enter into, a
definitive agreement or an agreement in principle with respect to an
Acquisition Proposal; or
(e) it shall have been publicly disclosed or Parent shall have otherwise
learned that any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent or any of its affiliates, shall have
acquired beneficial ownership of more than 50% of any class or series of
capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall have
been granted any option, right or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 50% of any class or series of
capital stock of the Company (including the Shares); or
(f) the Company shall have breached or failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with by it
under the Merger Agreement, or any representations and warranties of the
Company contained in the Merger Agreement that are qualified as to
materiality or Material Adverse Effect or any similar standard or
qualification shall not be true and correct or any such representations or
warranties that are not so qualified shall not be true and correct,
individually or in the aggregate, so as to be reasonably likely to have a
Material Adverse Effect on the Company, in each case, when made or as of
the scheduled expiration of the Offer as if made at and as of such time; or
(g) there shall have occurred a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States (other than any war or armed
hostilities or other calamity in the Balkan States) that is reasonably
expected to have a Material Adverse Effect on the Company; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the judgment of Parent in any such case, and regardless of the
circumstances (including any action or omission by Parent) giving rise to any
such condition, makes it inadvisable to proceed with such acceptance for
payment or payment.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may, subject to the terms of the Merger Agreement, be waived by Parent and
Purchaser in whole or in part at any time and from time to time in their
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time prior to the Effective Time.
37
<PAGE>
16. Certain Legal Matters; Regulatory Approvals.
General. Purchaser is not aware of any material pending legal proceeding
relating to the Offer. Based on its examination of publicly available
information filed by the Company with the Commission and other publicly
available information concerning the Company, Purchaser is not aware of any
governmental license or regulatory permit that appears to be material to the
Company's business that might be adversely affected by Purchaser's acquisition
of Shares as contemplated herein or, except as set forth below, of any approval
or other action by any government or governmental administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of Shares by Purchaser as contemplated herein. Should
any such approval or other action be required, Purchaser currently contemplates
that such approval or other action will be sought. Except as described under
"Antitrust" and "Foreign Laws" below, there is, however, no current intent to
delay the purchase of Shares tendered pursuant to the Offer pending the outcome
of any such matter. There can be no assurance that any such approval or other
action, if needed, would be obtained or would be obtained without substantial
conditions or that if such approvals were not obtained or such other actions
were not taken adverse consequences might not result to the Company's business
or certain parts of the Company's business might not have to be disposed of,
any of which could cause Purchaser to elect to terminate the Offer without the
purchase of Shares thereunder. Purchaser's obligation under the Offer to accept
for payment and pay for Shares is subject to certain conditions. See Section
15.
State Takeover Statutes--Section 1203 of the CGCL. The Company is
incorporated under the laws of the State of California. Section 1203 of the
CGCL provides that if a tender offer is made to some or all of a corporation's
shareholders by an "interested party," an affirmative opinion in writing as to
the fairness of the consideration to the shareholders of such corporation is
required to be delivered to the shareholders at the time that the tender offer
is first made in writing to the shareholders. However, if the tender offer is
commenced by publication and tender offer materials are subsequently mailed or
otherwise distributed to the shareholders, the opinion may be omitted in the
publication if the opinion is included in the materials distributed to the
shareholders. For purposes of Section 1203, the term "interested party"
includes, among other things, a person who is a party to the transaction and
(A) directly or indirectly controls the corporation that is the subject of the
tender offer or proposal, (B) is, or is directly or indirectly controlled by,
an officer or director of the subject corporation or (C) is an entity in which
a material financial interest is held by any director or executive officer of
the subject corporation. While none of the Company, Parent or Purchaser
believes that the Offer constitutes a transaction that falls within the
provisions of Section 1203, an independent financial advisor, Lehman Brothers,
has been retained by the Company to provide a fairness opinion with respect to
the Offer.
Under the CGCL, the Merger consideration paid to the shareholders of the
Company may not be cash if Purchaser, Parent or Saint-Gobain owns directly or
indirectly more than 50% but less than 90% of the then outstanding Shares,
unless either all the shareholders of the Company consent or the Commissioner
of Corporations of the State of California approves, after a hearing, the terms
and conditions of the Merger and the fairness thereof.
The Merger Agreement provides that, in the event the Minimum Condition is
not satisfied on any scheduled Expiration Date of the Offer, Purchaser may,
without the consent of the Company (i) extend the Offer (provided that
Purchaser may only extend the Offer on two occasions for not more than ten
business days on each such occasion), (ii) amend the Offer to waive the Minimum
Condition in contemplation of the exercise of the Top-Up Stock Option (to the
extent the Top-Up Stock Option is exercisable at such time), or (iii) amend the
Offer to provide that, in the event (A) the Minimum Condition is not satisfied
at the next scheduled Expiration Date of the Offer (without giving effect to
the exercise of the Top-Up Stock Option) and (B) the number of Shares tendered
pursuant to the Offer and not withdrawn as of such next scheduled Expiration
Date, when taken together with the Shares owned directly or indirectly by
Parent and Saint-Gobain, is more than 50% of the then outstanding Shares,
Purchaser will (x) reduce the Minimum Condition to the Revised Minimum Number,
(y) reduce the number of Shares subject to the Offer to a number of Shares
that, when added to the Shares then owned directly or indirectly by Parent and
Saint-Gobain, will equal the Revised Minimum Number and (z) if a number of
Shares greater than the Revised Minimum Number is tendered into
38
<PAGE>
the Offer and not withdrawn, purchase, on a pro rata basis, the Revised Minimum
Number of Shares. In the event that (a) the number of Shares tendered pursuant
to the Offer and not withdrawn as of such next scheduled expiration date, taken
together with the number of Shares owned directly or indirectly by Parent and
Saint-Gobain, is more than 50% of the then outstanding Shares, (b) all
conditions to the Offer other than the Minimum Condition shall have been
satisfied and (c) Shares have not been accepted for payment by Purchaser prior
to November 10, 1999, Purchaser shall be required to take either the action
contemplated by clause (ii) or the action contemplated by clause (iii) above.
In the event that Purchaser acquires the Revised Minimum Number of Shares, it
would have the ability to ensure approval of the Merger by the shareholders of
the Company with the approval of a de minimus number of remaining outstanding
Shares.
State Takeover Statutes--Ohio Take-Over Act. Section 1707.041 and related
sections of the Ohio Revised Code (collectively, the "Ohio Take-Over Act")
regulate tender offers for any equity security of a subject company from a
resident of Ohio if, after the purchase, the offeror would directly or
indirectly be the beneficial owner of more than 10% of any class of issued and
outstanding equity securities of such company(a "control bid"). A subject
company includes an issuer, such as the Company, that either has its principal
place of business or principal executive offices located in Ohio or owns or
controls assets located in Ohio that have a fair market value of at least $1.0
million, and that has more than 10% of its beneficial or record equity security
holders resident in Ohio, or has more than 10% of its equity securities owned,
beneficially or of record, by residents of Ohio, or has 1,000 beneficial or
record equity security holders who are resident in Ohio. A subject company,
however, need not be incorporated in Ohio.
The Ohio Take-Over Act prohibits an offeror from making a control bid for
securities of a subject company pursuant to a tender offer until the offeror
has filed specified information with the Ohio Division of Securities (the "Ohio
Division"). In addition, the offeror is required to deliver a copy of such
information to the subject company not later than the offeror's filing with the
Ohio Division and to send or deliver such information and the material terms of
the proposed offer to all offerees in Ohio as soon as practicable after the
offeror's filing with the Ohio Division.
Within three calendar days of such filing, the Ohio Division may, by order,
summarily suspend the continuation of the control bid if it determines that the
offeror has not provided all of the specified information or that the control
bid materials provided to offerees do not provide full disclosure of all
material information concerning the control bid. If the Ohio Division summarily
suspends a control bid, it must schedule and hold a hearing within 10 calendar
days of the date on which the suspension is imposed and must make its
determination within three calendar days after the hearing has been completed
but no later than 16 calendar days after the date on which the suspension is
imposed. The Ohio Division may maintain its suspension of the continuation of
the control bid if, based upon the hearing, it determines that all of the
information required to be provided by the Ohio Take-Over Act has not been
provided by the offeror, that the control bid materials provided to offerees do
not provide full disclosure of all material information concerning the control
bid, or that the control bid is in material violation of any provision of the
Ohio securities laws. If, after the hearing, the Ohio Division maintains the
suspension, the offeror has the right to correct the disclosure and other
deficiencies identified by the Ohio Division and to reinstitute the control bid
by filing new or amended information pursuant to the Ohio Take-Over Act.
Purchaser and Parent have filed the information required under the Ohio Take-
Over Statute.
State Takeover Statutes--Other. A number of states have adopted laws which
purport, to varying degrees, to apply to attempts to acquire corporations that
are incorporated in, or which have substantial assets, shareholders, principal
executive offices or principal places of business or whose business operations
otherwise have substantial economic effects in, such states. The Company,
directly or through subsidiaries, conducts business in a number of states
throughout the United States, some of which have enacted such laws. Except as
described herein, Purchaser does not know whether any of these laws will, by
their terms, apply to the Offer or any merger or other business combination
between Purchaser or any of its affiliates and the Company and has not complied
with any such laws. To the extent that certain provisions of these laws purport
to apply to the
39
<PAGE>
Offer or any such merger or other business combination, Purchaser believes that
there are reasonable bases for contesting such laws.
In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Statute
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in 1987 in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana
could, as a matter of corporate law, constitutionally disqualify a potential
acquiror from voting shares of a target corporation without the prior approval
of the remaining shareholders where, among other things, the corporation is
incorporated in, and has a substantial number of shareholders in, the state.
Subsequently, in TLX Acquisition Corp. v. Telex Corp., a Federal District Court
in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as
they apply to corporations incorporated outside Oklahoma in that they would
subject such corporations to inconsistent regulations. Similarly, in Tyson
Foods, Inc. v. McReynolds, a Federal District Court in Tennessee ruled that
four Tennessee takeover statutes were unconstitutional as applied to
corporations incorporated outside Tennessee. This decision was affirmed by the
United States Court of Appeals for the Sixth Circuit. In December 1988, a
Federal District Court in Florida held in Grand Metropolitan PLC v.
Butterworth, that the provisions of the Florida Affiliated Transactions Act and
the Florida Control Share Acquisition Act were unconstitutional as applied to
corporations incorporated outside of Florida.
If any government official or third party should seek to apply any state
takeover law to the Offer or any merger or other business combination between
Purchaser or any of its affiliates and the Company, Purchaser will take such
action as then appears desirable, which action may include challenging the
applicability or validity of such statute in appropriate court proceedings. In
the event it is asserted that one or more state takeover statutes is applicable
to the Offer or any such merger or other business combination and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer or any such merger or other business combination,
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities or holders of Shares, and
Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer or
any such merger or other business combination. In such case, Purchaser may not
be obligated to accept for payment or pay for any tendered Shares. See Section
15.
Antitrust--United States. Under the HSR Act and the rules that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The purchase of Shares pursuant to the Offer is subject to such
requirements.
Pursuant to the requirements of the HSR Act, Purchaser will file a
Notification and Report Form with respect to the Offer with the Antitrust
Division and the FTC. As a result, the waiting period applicable to the
purchase of Shares pursuant to the Offer is expected to expire prior to October
22, 1999. However, prior to such time, the Antitrust Division or the FTC may
extend the waiting period by requesting additional information or documentary
material relevant to the Offer from Purchaser. If such a request is made, the
waiting period will be extended until 11:59 P.M., New York City time, on the
tenth day after substantial compliance by Purchaser with such request.
Thereafter, such waiting period can be extended only by court order.
A request is being made pursuant to the HSR Act for early termination of the
waiting period applicable to the Offer. There can be no assurance, however,
that the applicable 15-day HSR Act waiting period will be terminated early.
Shares will not be accepted for payment or paid for pursuant to the Offer until
the expiration or earlier termination of the applicable waiting period under
the HSR Act. See Section 15. Subject to Section 4, any extension of the waiting
period will not give rise to any withdrawal rights not otherwise provided for
by applicable law. If Purchaser's acquisition of Shares is delayed pursuant to
a request by the Antitrust Division or
40
<PAGE>
the FTC for additional information or documentary material pursuant to the HSR
Act, the Offer must be extended, as necessary, through November 10, 1999 and
thereafter may, but need not, be extended.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the consummation
of any such transactions, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant to
the Offer or seeking divestiture of the Shares so acquired or divestiture of
substantial assets of Purchaser or the Company. Private parties (including
individual states) may also bring legal actions under the antitrust laws.
Purchaser does not believe that the consummation of the Offer will result in a
violation of any applicable antitrust laws. However, there can be no assurance
that a challenge to the Offer on antitrust grounds will not be made, or if such
a challenge is made, what the result will be. See Section 15 for certain
conditions to the Offer, including conditions with respect to litigation and
certain governmental actions and Section 10 for certain termination rights in
connection with antitrust suits.
Antitrust--Germany. Pursuant to the Gesetz gegen Wettbewerbsbeschrankungen
(the Act Against Restraints of Competition), Parent is required to submit a
notification to the German Federal Cartel Office (the "FCO"). The initial
waiting period applicable to the purchase of Shares pursuant to the Offer is
one month unless the FCO extends the waiting period if it determines that
additional review is required. If such a determination is made, the waiting
period may be extended for a period of up to four months (such period to
commence from the day following the filing date of the premerger notification).
If the FCO concludes that the acquisition will lead to the creation or
strengthening of a market dominating position, the acquisition will be
prohibited unless the parties agree to remedy the adverse competitive impact
identified by the FCO. The FCO may approve Purchaser's acquisition of the
Shares pursuant to the Offer prior to the expiration of the initial one-month
waiting period. There can be no assurance, however, that the initial one-month
waiting period will be terminated early. Shares will not be accepted for
payment or paid for pursuant to the Offer until the conditions to the Offer,
including the expiration of this waiting period, are satisfied or waived by
Purchaser by the Expiration Date.
Antitrust--Italy. Pursuant to the Norme per la Tutela della Concorrenze e
del Mercato, Parent may be required to provide notice of the Offer to the
Autorita Garante della Concorranza e del Mercato (the "AGCM") in advance of its
consummation. Upon such filing, the AGCM will have 30 days to either (i)
approve the indirect transfer of Italian assets that would result from
consummation of the Offer or (ii) institute a full investigation of the effect
of the transactions pursuant to the Merger Agreement on competition in the
Italian economy. Within 45 days of commencing any such investigation, the AGCM
will either (a) approve the consummation of the Offer, (b) prohibit the
indirect transfer of Italian assets, (c) condition such transfer on divestiture
of some portion of such assets or (d) extend the investigation for an
additional 30 days. Shares will not be accepted for payment or paid for
pursuant to the Offer until the conditions to the Offer, including the approval
by the AGCM or the expiration of this waiting period, are satisfied or waived
by Purchaser by the Expiration Date.
Antitrust--Other Foreign Laws. There is a possibility that filings may have
to be made with other foreign governmental or regulatory authorities under
their pre-merger notification or similar statutes. The filing requirements of
various nations are being analyzed by the parties and, where necessary, such
filings will be made.
17. Fees and Expenses. Lazard Freres is acting as investment banker to
Parent in connection with the proposed acquisition of the Company and is acting
as Dealer Manager in connection with the Offer. Parent has agreed to pay Lazard
Freres as compensation for its services as investment banker and as Dealer
Manager in connection with the Offer a fee of $2,750,000. Parent has also
agreed to reimburse Lazard Freres for all out-of-pocket expenses incurred in
connection with the Offer (including the fees and disbursements of outside
counsel) and to indemnify Lazard Freres and certain related persons against
certain liabilities, including, without limitation, certain liabilities under
the federal securities laws.
41
<PAGE>
Purchaser has retained Georgeson & Company Inc. to act as the Information
Agent and ChaseMellon Shareholder Services, L.L.C. to act as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telegraph and personal interviews and may request
brokers, dealers and other nominee shareholders to forward materials relating
to the Offer to beneficial owners. The Information Agent and the Depositary
each will receive reasonable and customary compensation for their respective
services, will be reimbursed for certain out-of-pocket expenses and will be
indemnified against certain liabilities in connection therewith, including
certain liabilities under the federal securities laws.
None of Purchaser, Parent or Saint-Gobain will pay any fees or commissions
to any broker or dealer or any other person (other than the Dealer Manager, the
Information Agent and the Depositary) for soliciting tenders of Shares pursuant
to the Offer. Brokers, dealers, commercial banks and trust companies will, upon
request, be reimbursed by Purchaser for reasonable and necessary costs and
expenses incurred by them in forwarding materials to their customers.
18. Miscellaneous. The Offer is not being made to, nor will tenders be
accepted from or on behalf of, holders of Shares in any jurisdiction in which
the making of the Offer or acceptance thereof would not be in compliance with
the laws of such jurisdiction. However, Purchaser may, in its discretion, take
such action as it may deem necessary to make the Offer in any such jurisdiction
and extend the Offer to holders of Shares in such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER, PARENT OR SAINT-GOBAIN NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
Purchaser, Parent and Saint-Gobain have filed the Schedule 14D-1 with the
Commission, furnishing certain additional information with respect to the
Offer. The Schedule 14D-1 may be examined and copies may be obtained from the
offices of the Commission in the manner set forth in Section 7 of this Offer to
Purchase (except that such information will not be available at the regional
offices of the Commission).
FCY Acquisition Corporation
September 24, 1999
42
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
1. Directors and Executive Officers of Saint-Gobain. The following table
sets forth the name, business address, present principal occupation or
employment and five-year employment history of the directors and executive
officers of Compagnie de Saint-Gobain. Where no date is shown, the individual
has occupied the position indicated or a similar position for a period of time
beyond five years. All directors and officers of Compagnie de Saint-Gobain
listed below are citizens of France, except for Mr. Breuer, who is a citizen of
Germany, Mr. Leal Maldonado, who is a citizen of Spain, Mr. Neeteson, who is a
citizen of The Netherlands, Mr. Dachowski, who is a citizen of the United
Kingdom, and Messrs. Caccini and Caliari, who are citizens of Italy. Directors
are identified by an asterisk next to their names.
Present Principal Occupation or Employment
and
Name and Business Address Five-Year Employment History
------------------------- ----------------------------
*Jean-Louis Beffa Chairman and Chief Executive Officer of
Compagnie de Saint-Gobain Compagnie de Saint-Gobain.
Les Miroirs
92096 La Defense Cedex (France)
*Isabelle Bouillot Vice President of Caisse des Depots et
Caisse des Depots et Consignations (1996-present); and Director
Consignations 57, rue de Lille of Budget at the Ministry of Finances
75007 Paris (France) (until 1996).
*Dr. Rolf E. Breuer Chairman of the Management Board of
Deutsche Bank AG Deutsche Bank AG (1997-present) and Member
Taunusanlage 12 of the Management Board of Deutsche Bank
60262 Frankfurt (Germany) AG.
*Bernard Esambert Vice-Chairman of the Bollore Group.
Groupe Bollore
Tour Delmas
31-32 quai de Dion-Bouton 92811
Puteaux (France)
*Pierre Faurre Chairman and Chief Executive Officer of
SAGEM SAGEM.
6 avenue d'Iena
75783 Paris Cedex 16 (France)
*Eric d'Hautefeuille Chief Operating Officer of Compagnie de
Compagnie de Saint-Gobain Saint-Gobain (1998-present); Senior Vice
Les Miroirs President of Compagnie de Saint-Gobain
92096 La Defense Cedex (1996-1998); and President of the Flat
(France) Glass Division of Compagnie de Saint-Gobain
(until 1996).
*Jose-Luis Leal Maldonado Chairman of the Spanish Banking
Centro Velasquez, 64-6e Association.
E-28001 Madrid (Spain)
S-1
<PAGE>
Present Principal Occupation or Employment
and
Name and Business Address Five-Year Employment History
*Jacques-Louis Lions Professor at the College de France (Paris);
College de France President of the French Academy of Sciences
3 rue d'Ulm (1996-1998); and Vice President of The
75005 Paris (France) French Academy of Sciences (1994-1996).
*Jean-Maurice Malot President of the Employees' and Former
Saint-Gobain Vitrage Employees' Shareholders Association and of
Les Miroirs the Supervisory Board of the Group Share
92096 La Defense Cedex Savings Plan Mutual Funds of Compagnie de
(France) Saint-Gobain (1997-present); and Manager of
the French Southern and Western
subsidiaries of the Flat Glass Division of
Compagnie de Saint-Gobain.
*Jean-Marie Messier Chairman and Chief Executive Officer of
Vivendi Group Vivendi (1998-present) and of Cegetel
42, avenue de Friedland (1998-present); and Chairman and Chief
75008 Paris (France) Executive Officer of Compagnie Generale des
Eaux (1996-1998).
*Gerard Mestrallet Chairman of the Management Board of
Suez/Lyonnaise des Eaux Suez/Lyonnaise des Eaux (1997-present);
1rue d'Astorg Chairman and Chief Executive Officer of
75008 Paris (France) Compagnie de Suez (1995-1997); and
Executive Officer of Societe Generale de
Belgique (until 1995).
*Michel Pebereau Chairman and Chief Executive Officer of
Banque Nationale de Paris Banque Nationale de Paris.
16, boulevard des Italiens
75009 Paris (France)
*Bruno Roger Managing Partner of Lazard Freres et Cie.;
Lazard Freres & Cie. and Managing Director of Lazard Freres &
121 boulevard Haussmann Co. LLC.
75008 Paris (France)
Gianpaolo Caccini Senior Vice President of Compagnie de
Saint-Gobain Corporation Saint-Gobain (1996-present); Vice Chairman,
750 East Swedesford Road President and Chief Executive Officer of
Valley Forge, Pennsylvania 19482 Saint-Gobain Corporation (1996-present);
General Delegate of Compagnie de Saint-
Gobain for the United States and Canada
(1996-present); Chairman, President, Chief
Executive Officer and Director of Norton
Company (1996-present); and President of
the Fiber Reinforcement Division of
Compagnie de Saint-Gobain (until 1996).
Emile Francois Senior Vice President of Compagnie de
Poliet Saint-Gobain (1997-present); President of
Les Miroirs the Specialized Distribution Division of
92096 La Defense Cedex (France) Compagnie de Saint-Gobain (1997-present);
Chairman and Chief Executive Officer of
Poliet (1998-present); Chairman and Chief
Executive Officer of Lapeyre (1997-
present); and President of the Industrial
Ceramics Division of Compagnie de Saint-
Gobain (until 1996).
S-2
<PAGE>
Present Principal Occupation or Employment
and
Name and Business Address Five-Year Employment History
Jean-Francois Phelizon Senior Vice President of Compagnie de
Compagnie de Saint-Gobain Saint-Gobain (1998-present); and Finance
Les Miroirs Director of Compagnie de Saint-Gobain.
92096 La Defense Cedex (France)
Claude Picot Senior Vice President of Compagnie de
Saint-Gobain Emballage Saint-Gobain (1996-present); and President
Les Miroirs of the Containers Division of Compagnie de
92096 La Defense Cedex (France) Saint-Gobain.
Bernard Field Corporate Secretary of Compagnie de Saint-
Compagnie de Saint-Gobain Gobain.
Les Miroirs
92096 La Defense Cedex (France)
Herve Gastinel Vice President, Corporate Planning of
Compagnie de Saint-Gobain Compagnie de Saint-Gobain (1998-present);
Les Miroirs and Civil Services.
92096 La Defense Cedex (France)
Jean-Paul Gelly Vice President, Human Resources of
Compagnie de Saint-Gobain Compagnie de Saint-Gobain (1998-present);
Les Miroirs and Managing Director of Saint-Gobain
92096 La Defense Cedex (France) Development (prior to 1998).
Jean-Claude Lehmann Vice President, Research of Compagnie de
Compagnie de Saint-Gobain Saint Gobain.
Les Miroirs
92096 La Defense Cedex (France)
Robert Pistre Advisor to the Chairman of Compagnie de
Compagnie de Saint-Gobain Saint-Gobain (1998-present); and Vice
Les Miroirs President, Human Resources of Compagnie de
92096 La Defense Cedex (France) Saint-Gobain (until 1998).
Reinier-Paul Neeteson Vice President, International Development
Compagnie de Saint-Gobain of Compagnie de Saint-Gobain (1999-
Les Miroirs present); General Delegate of Compagnie de
92096 La Defense Cedex (France) Saint-Gobain for Belgium, Netherlands,
Luxembourg and United Kingdom (1996-1999);
and General Delegate of Compagnie de Saint-
Gobain for Scandinavian countries (until
1996).
Jacques Aschenbroich President of the Flat Glass Division of
Compagnie de Saint-Gobain Compagnie de Saint-Gobain (1996-present);
Les Miroirs and Chairman of the Management Board of
92096 La Defense Cedex (France) Vegla GmbH (until 1996).
Roberto Caliari President of the Reinforcements Division of
Compagnie de Saint-Gobain Compagnie de Saint-Gobain (1996-present);
Les Miroirs and Manager of European and Korean
92096 La Defense Cedex (France) Development of the Fiber Reinforcement
Division of Compagnie de Saint-Gobain
(until 1996).
S-3
<PAGE>
Present Principal Occupation or Employment
and
Name and Business Address Five-Year Employment History
Pierre-Andre de Chalendar President of the Abrasives Division of
Compagnie de Saint-Gobain Compagnie de Saint-Gobain (1996-present);
Les Miroirs Executive Vice President of Norton Company
92096 La Defense Cedex (France) (1996-present); Vice President of Saint-
Gobain Corporation (1996-1999); and General
Manager of Abrasives, Europe of Compagnie
de Saint-Gobain (until 1996).
Gilles Colas President of the Building Materials
Compagnie de Saint-Gobain Division of Compagnie de Saint-Gobain
Les Miroirs (1997-present); and Corporate Planning
92096 La Defense Cedex (France) Director of Compagnie de Saint-Gobain
(until 1997).
Philippe Crouzet President of the Industrial Ceramics
Compagnie de Saint-Gobain Division of Compagnie de Saint-Gobain
Les Miroirs (1996-present); and General Delegate of
92096 La Defense Cedex (France) Compagnie de Saint-Gobain for Spain and
Portugal (until 1996).
Peter R. Dachowski President of the Insulation Division of
Compagnie de Saint-Gobain Compagnie de Saint-Gobain (1996-present);
Les Miroirs and Executive Vice President of CertainTeed
92096 La Defense Cedex (France) Corporation.
Christian Streiff President of the Pipe Division of Compagnie
Pont-a-Mousson SA de Saint-Gobain (1997-present); and
91 avenue de la Liberation Managing Director of Saint-Gobain Emballage
54000 Nancy (France) (until 1997).
S-4
<PAGE>
2. Directors and Executive Officers of Parent. The following table sets
forth the name, present principal occupation or employment and five-year
employment history of the directors and executive officers of Norton Company.
Where no date is shown, the individual has occupied the position indicated or a
similar position for a period of time beyond five years. All directors and
officers listed below are citizens of the United States, except for Mr.
Caccini, who is a citizen of Italy, and Mr. de Chalendar, who is a citizen of
France. Directors are identified by an asterisk next to their names.
Present Principal Occupation or Employment
and
Name and Business Address Five-Year Employment History
*Gianpaolo Caccini Chairman, President, Chief Executive
Saint-Gobain Corporation Officer and Director of Norton Company
750 E. Swedesford Road (1996-present);
Valley Forge, PA 19482-0101 Senior Vice President of Compagnie de
Saint-Gobain (1996-present); Vice Chairman,
President and Chief Executive Officer of
Saint-Gobain Corporation (1996-present);
General Delegate of Compagnie de Saint-
Gobain for the United States and Canada
(1996-present); and President of the Fiber
Reinforcement Division of Compagnie de
Saint-Gobain (until 1996).
Robert C. Ayotte Executive Vice President of Norton Company
Saint-Gobain Industrial (1997-present);
Ceramics, Inc. President and Chief Executive Officer of
1600 West Lee Street Saint-Gobain Industrial Ceramics, Inc.;
Louisville, Ky 40201-7409 Chairman and Chief Executive Officer of
Purchaser (1999-present); President of
Specialty Crystals and Process Systems
Division of Industrial Ceramics Branch of
Compagnie de Saint-Gobain; and President of
Performance Plastics Division of Industrial
Ceramics Branch of Compagnie de Saint-
Gobain and Chairman and Chief Executive
Officer of Norton Performance Plastics
Corporation (1997-present).
Pierre-Andre de Chalendar Executive Vice President of Norton Company
Compagnie de Saint-Gobain (1996-present);
Les Miroirs President of the Abrasives Division of
92096 La Defense Cedex (France) Compagnie de Saint-Gobain (1996-present);
Vice President of Saint-Gobain Corporation
(1996-1999); and General Manager of
Abrasives, Europe of Compagnie de Saint-
Gobain (until 1996).
*George B. Amoss Vice President, Finance and Director of
Saint-Gobain Corporation Norton Company; Vice President, Finance of
750 E. Swedesford Road Saint-Gobain Corporation; and Vice
Valley Forge, PA 19482-0101 President, Finance of Purchaser (1999-
present).
Dennis J. Baker Vice President of Norton Company; Vice
Norton Company President, Human Resources of Saint-Gobain
One New Bond Street Corporation; and Vice President, Human
Worcester, MA 01615-0008 Resources of the Abrasives Division of
Compagnie de Saint-Gobain.
F. Lee Faust Vice President of Norton Company; Vice
Saint-Gobain Corporation President of Purchaser (1999-present); and
750 E. Swedesford Road Vice President of Saint-Gobain Corporation.
Valley Forge, PA 19482-0101
S-5
<PAGE>
Present Principal Occupation or Employment
and
Name and Business Address Five-Year Employment History
Robert W. Fenton Vice President and Controller of Norton
Saint-Gobain Corporation Company (1996-present); and Vice President
750 E. Swedesford Rd. and Controller of Saint-Gobain Corporation
Valley Forge, PA 19482-0101 (1996-present); Financial Controller of
Compagnie de Saint-Gobain (1995-1996); and
Assistant Controller and Director of
Financial Analysis of Saint-Gobain
Corporation (until 1995).
James F. Harkins, Jr. Vice President of Norton Company; Vice
Saint-Gobain Corporation President and Treasurer of Purchaser (1999-
750 E. Swedesford Rd. present); Treasurer of Norton Company
Valley Forge, PA 19482-0101 (1995-present); Vice President and
Treasurer of Saint-Gobain Corporation
(1995-present); and Assistant Treasurer of
Saint-Gobain Corporation (until 1995).
Thomas M. Landin Vice President of Norton Company; and Vice
Saint-Gobain Corporation President of Saint-Gobain Corporation.
750 E. Swedesford Rd.
Valley Forge, PA 19482-0101
Mark E. Mathisen Vice President of Norton Company (1996-
Norton Company present);
One New Bond Street Vice President, North America and Vice
Worcester, MA 01615-0008 President, Coated Abrasives, Worldwide of
the Abrasives Division of Compagnie de
Saint-Gobain (1997-present); Vice
President, Operations, North America of the
Abrasives Division of Compagnie de Saint-
Gobain (1996-present); and Vice President,
Manufacturing, Grinnell Flow Control
Division of Tyco International (until
1995).
John R. Mesher Vice President, Secretary and Clerk of
Saint-Gobain Corporation Norton Company; Vice President and
750 E. Swedesford Road Secretary of Purchaser (1999-present);
Valley Forge, PA 19482-0101 Vice President, General Counsel and
Secretary of Saint-Gobain Corporation
(1997-present); and Vice President, Deputy
General Counsel and Secretary of Saint-
Gobain Corporation (until 1997).
Robert J. Panaro Vice President of Norton Company; Vice
Norton Company President and Controller of the Abrasives
One New Bond Street Division, North America, of Compagnie de
Worcester, MA 01615-0008 Saint-Gobain (1996-1999); Vice President
and Controller of Saint-Gobain Corporation
(1995-1996); and Financial Controller of
Saint-Gobain Corporation (until 1995).
S-6
<PAGE>
Present Principal Occupation or Employment
and
Name and Business Address Five-Year Employment History
John J. Sweeney III Vice President and Assistant Treasurer of
Saint-Gobain Corporation Norton Company; Vice President of Saint-
750 E. Swedesford Rd. Gobain Corporation (1995-present); and
Valley Forge, PA 19482-0101 Assistant Treasurer of Saint-Gobain
Corporation (until 1995).
Dorothy C. Wackerman Vice President of Norton Company; and Vice
Saint-Gobain Corporation President of Saint-Gobain Corporation.
750 E. Swedesford Rd.
Valley Forge, PA 19482-0101
Michael J. Walsh Vice President of Norton Company; Vice
Saint-Gobain Corporation President of Saint-Gobain Corporation
750 E. Swedesford Rd. (1995-present);
Valley Forge, PA 19482-0101 Director of Risks and Assurances of
Compagnie de Saint-Gobain (1995-present);
and Vice President and Treasurer of Saint-
Gobain Corporation (until 1995).
S-7
<PAGE>
3. Directors and Executive Officers of Purchaser. The following table sets
forth the name, present principal occupation or employment and five-year
employment history of the directors and executive officers of FCY Acquisition
Corporation ("Purchaser"). Where no date is shown, the individual has occupied
the position indicated or a similar position for a period of time beyond five
years. All directors and officers listed below are citizens of the United
States, except for Mr. Crouzet, who is a citizen of France, and Mr.
Bergengruen, who is a citizen of Germany. Directors are identified by an
asterisk next to their names.
Present Principal Occupation or Employment
and
Name and Business Address Five-Year Employment History
*Philippe Crouzet President of the Industrial Ceramics
Compagnie de Saint-Gobain Division of Compagnie de Saint-Gobain
Les Miroirs (1996-present); and General Delegate of
92096 La Defense Cedex (France) Compagnie de Saint-Gobain for Spain and
Portugal (until 1996).
*Robert C. Ayotte Executive Vice President of Norton Company
Saint-Gobain Industrial (1997-present);
Ceramics, Inc. President and Chief Executive Officer of
1600 West Lee Street Saint-Gobain Industrial Ceramics, Inc.;
Louisville, Ky 40201-7409 Chairman and Chief Executive Officer of
Purchaser (1999-present); President of
Specialty Crystals and Process Systems
Division of the Industrial Ceramics Branch
of Compagnie de Saint-Gobain; and President
of Performance Plastics Division of the
Industrial Ceramics Branch of Compagnie de
Saint-Gobain and Chairman and Chief
Executive Officer of Norton Performance
Plastics Corporation (1997-present).
*Gerard Walsh President and Chief Operating Officer of
Norton Performance Plastics Purchaser (1999-present); President and
Corporation Chief Operating Officer of Norton
150 Dey Road Performance Plastics Corporation (1998-
Wayne, NJ 07470 present); Executive Vice President of
Performance Plastics Division of the
Industrial Ceramics Branch of Compagnie de
Saint-Gobain (1998-present); and Business
Director, Box Sealing Systems, Masking and
Packaging Systems Divisions, 3M Company
(until 1997).
*George B. Amoss Vice President, Finance and Director of
Saint-Gobain Corporation Norton Company; and Vice President, Finance
750 E. Swedesford Road of Saint-Gobain Corporation and Vice
Valley Forge, PA 19482-0101 President, Finance of Purchaser (1999-
present).
*Mark V. Barter Vice President of Purchaser (1999-present);
Saint-Gobain Industrial Vice President and Controller of Saint-
Ceramics, Inc. Gobain Industrial Ceramics, Inc. (1996-
Goddard Road present); Vice President of Norton
Northboro, MA 01532 Performance Plastics Corporation (1999-
present); Vice President, Finance and
Controller of Carborundum Corporation
(1996-present); and Vice President and
Controller of Saint-Gobain Advanced
Materials Corporation (until 1996).
*Manfred Bergengruen Vice President of Purchaser (1999-present);
Norton Pampus GmbH Vice President of Norton Performance
AM Nordkanal 37 Plastics Corporation; and Vice President
D-47877 Willich and General Manager, Precision Products
Germany Department of Precision Products PRP,
Europe (1997-present).
S-8
<PAGE>
Present Principal Occupation or Employment
and
Name and Business Address Five-Year Employment History
Mark A. Brebberman Vice President of Purchaser (1999-present);
Norton Performance Plastics Vice President Finance and Information
Corporation Systems Norton Performance Plastics
150 Dey Road Corporation (1998-present); Director of
Wayne, NJ 07470 Finance Corhart Refractories (1995-1996);
Manager of Financial Analysis of Saint
Gobain Corporation (1995-1996); and
Business Controller of Corhart Refractories
Sintered Division (until 1995).
John P. Ekstrom Vice President of Purchaser (1999-present);
Norton Performance Plastics and Vice President and General Manager of
Corporation Fluid Systems of Norton Performance
150 Dey Road Plastics Corporation.
Wayne, NJ 07470
F. Lee Faust Vice President of Norton Company; Vice
Saint-Gobain Corporation President of Purchaser (1999-present); and
750 East Swedesford Road Vice President of Saint-Gobain Corporation.
Valley Forge, PA 19482-0101
James F. Harkins, Jr. Vice President of Norton Company; Vice
Saint-Gobain Corporation President and Treasurer of Purchaser (1999-
750 East Swedesford Road present); Treasurer of Norton Company
Valley Forge, PA 19482-0101 (1995-present); Vice President and
Treasurer of Saint-Gobain Corporation
(1995-present); and Assistant Treasurer of
Saint-Gobain Corporation (until 1995).
John R. Mesher Vice President, Secretary and Clerk of
Saint-Gobain Corporation Norton Company; Vice President and
750 East Swedesford Road Secretary of Purchaser (1999-present); Vice
Valley Forge, PA 19482-0101 President, General Counsel and Secretary of
Saint-Gobain Corporation (1997-present);
and Vice President, Deputy General Counsel
and Secretary of Saint-Gobain Corporation
(until 1997).
Steven M. Parker Vice President of Purchaser (1999-present);
Norton Performance Plastics and Vice President of Norton Performance
Corporation Plastics Corporation.
150 Dey Road
Wayne, NJ 07470
Kenneth R. Sidman Vice President of Purchaser (1999-present);
Norton Performance Plastics and Vice President of Norton Performance
Corporation Plastics Corporation.
150 Dey Road
Wayne, NJ 07470
S-9
<PAGE>
ADDITIONAL INFORMATION ON THE DESIGNATION OF REPRESENTATIVES
TO THE BOARD OF DIRECTORS OF THE COMPANY
Prior to the consummation of the Merger, Purchaser may designate some of the
people listed on Schedule I to the Board of Directors of the Company. The
Merger Agreement provides that upon the acceptance for payment by Purchaser
pursuant to the Offer of Shares that satisfies the Minimum Condition (as such
Minimum Condition may be reduced to the Revised Minimum Number as described
above), Parent shall be entitled to designate directors on the Company's Board
of Directors as described in Section 10 under "Merger Agreement--Directors".
None of the executive officers or directors of Saint-Gobain or Parent or any
of its subsidiaries, including Purchaser, currently is a director of, or holds
any position with, the Company. Except for the transactions contemplated by the
Merger Agreement, none of Saint-Gobain, Purchaser or Parent and, to the best
knowledge of Saint-Gobain, Purchaser and Parent, none of their directors or
executive officers, as the case may be, or any of their associates beneficially
owns any equity securities, or rights to acquire any equity securities, of the
Company or has been involved in any transactions with the Company or any of its
directors, executive officers or affiliates which are required to be disclosed
pursuant to the rules and regulations of the Commission, including Rule 14f-1
of the Exchange Act.
S-10
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent to the Depositary at one of the addresses set forth below:
The Depositary for the Offer is:
ChaseMellon Shareholder Services, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
P.O. Box 3301 85 Challenger Road 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Mail Drop-Reorg New York, NY 10271
Attn: Reorganization Department Ridgefield Park, NJ 07660 Attn: Reorganization Department
Attn: Reorganization Department
</TABLE>
By Facsimile Transmission
(for Eligible Institutions only):
(201) 296-4293
Confirm By Telephone:
(201) 296-4860
Questions or requests for assistance or additional copies of this Offer to
Purchase and the Letter of Transmittal may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth below. Shareholders may also contact their broker, dealer, commercial
bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
GEORGESON
SHAREHOLDER
COMMUNICATIONS INC.
17 State Street
10th Floor
New York, New York 10004
Bankers and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10020
(212) 632-6717
<PAGE>
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Furon Company
Pursuant to the Offer to Purchase
dated September 24, 1999
by
FCY Acquisition Corporation
an indirect wholly owned subsidiary of
Norton Company
an indirect wholly owned subsidiary of
Compagnie de Saint-Gobain
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, OCTOBER 22, 1999, UNLESS THE OFFER IS EXTENDED.
To: ChaseMellon Shareholder Services, L.L.C., as Depositary
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
P.O. Box 3301 85 Challenger Road 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Mail Drop-Reorg New York, NY 10271
Attn: Reorganization Department Ridgefield Park, NJ 07660 Attn: Reorganization Department
Attn: Reorganization Department
</TABLE>
By Facsimile Transmission
(for Eligible Institutions only):
(201) 296-4293
Confirm By Telephone:
(201) 296-4860
Delivery of this Letter of Transmittal to an address other than as set forth
above or transmission of instructions to a facsimile number other than the one
listed above will not constitute a valid delivery.
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and Address(es) of Registered Holder(s) Shares Tendered
(Please fill in, if blank) (Attach additional list if necessary)
- --------------------------------------------------------------------------------------------
Total Number of
Shares
Represented Number of
Certificate by Shares
Number(s)* Certificate(s)* Tendered**
-----------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Total Shares
- -------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares
represented by any certificates delivered to the Depositary are being
tendered. See Instruction 4.
<PAGE>
This Letter of Transmittal is to be used if certificates are to be forwarded
herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is
utilized, if delivery of Shares (as defined on page 3) is to be made by book-
entry transfer to the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3 of the Offer to Purchase.
Shareholders who cannot deliver their Shares and all other documents
required hereby to the Depositary by the Expiration Date (as defined in the
Offer to Purchase) must tender their Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2.
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution ______________________________________________
Account No. ________________________________ at The Depository Trust Company
Transaction Code No. _______________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Shareholder(s) ________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed Delivery ______________________________
If delivery is by book-entry transfer:
Name of Tendering Institution ___________________________________________
Account No. ________________________________ at The Depository Trust Company
Transaction Code No. _______________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to FCY Acquisition Corporation, a California
corporation ("Purchaser"), and an indirect wholly owned subsidiary of Norton
Company, a Massachusetts corporation, which is an indirect wholly owned
subsidiary of Compagnie de Saint-Gobain, a French corporation, the shares of
Common Stock described on page 1, without par value (including the associated
preferred share purchase rights, the "Shares"), of Furon Company, a California
corporation (the "Company"), pursuant to Purchaser's offer to purchase all
outstanding Shares of Common Stock at a price of $25.50 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated September 24, 1999, receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together constitute the
"Offer"). Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on purchase of Shares pursuant to the Offer.
Purchaser and Parent will pay all charges and expenses of Lazard Freres & Co.
llc (the "Dealer Manager"), ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") and Georgeson & Company Inc. (the "Information Agent") incurred
in connection with the Offer. Purchaser reserves the right to transfer or
assign, in whole or from time to time in part, to one or more of its affiliates
the right to purchase Shares tendered pursuant to the Offer.
Upon the terms and subject to the terms and conditions of the Offer and
effective upon acceptance for payment of and payment for the Shares tendered
herewith, the undersigned hereby sells, assigns and transfers to or upon the
order of Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby (and any and all other Shares or other securities
issued or issuable in respect thereof on or after September 18, 1999) and
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares (and all such other Shares or
securities), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) deliver
certificates for such Shares (and all such other Shares or securities), or
transfer ownership of such Shares (and all such other Shares or securities) on
the account books maintained by the Book-Entry Transfer Facility, together, in
any such case, with all accompanying evidences of transfer and authenticity, to
or upon the order of Purchaser, (b) present such Shares (and all such other
Shares or securities) for transfer on the books of the Company and (c) receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and all such other Shares or securities), all in accordance with the
terms of the Offer.
The undersigned hereby irrevocably appoints George B. Amoss, Vice President,
Finance of Purchaser and John R. Mesher, Vice President and Secretary of
Purchaser, and each of them, the attorneys and proxies of the undersigned, each
with full power of substitution, to exercise all voting and other rights of the
undersigned in such manner as each such attorney and proxy or his substitute
shall in his sole discretion deem proper, with respect to all of the Shares
tendered hereby which have been accepted for payment by Purchaser prior to the
time of any vote or other action (and any and all other Shares or other
securities issued or issuable in respect thereof on or after September 18,
1999), at any meeting of shareholders of the Company (whether annual or special
and whether or not an adjourned meeting), by written consent or otherwise. This
proxy is irrevocable and is granted in consideration of, and is effective upon,
the acceptance for payment of such Shares by Purchaser in accordance with the
terms of the Offer. Such acceptance for payment shall revoke any other proxy or
written consent granted by the undersigned at any time with respect to such
Shares (and all such other Shares or securities), and no subsequent proxies
will be given or written consents will be executed by the undersigned (and if
given or executed, will not be deemed to be effective).
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any and all other Shares or other securities issued or issuable in
respect thereof on or after September 18, 1999) and that when the same are
accepted for payment by Purchaser, Purchaser will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claims. The undersigned will, upon
request, execute and deliver any additional documents deemed by the Depositary
or Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby (and all such other Shares or
securities).
3
<PAGE>
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and
Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated under "Special Payment Instructions", please
issue the check for the purchase price of any Shares purchased, and return any
Shares not tendered or not purchased, in the name(s) of the undersigned (and,
in the case of Shares tendered by book-entry transfer, by credit to the account
at the Book-Entry Transfer Facility designated above). Similarly, unless
otherwise indicated under "Special Delivery Instructions", please mail the
check for the purchase price of any Shares purchased and any certificates for
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Payment Instructions" and
"Special Delivery Instructions" are completed, please issue the check for the
purchase price of any Shares purchased and return any Shares not tendered or
not purchased in the name(s) of, and mail said check and any certificates to,
the person(s) so indicated. The undersigned recognizes that Purchaser has no
obligation, pursuant to the "Special Payment Instructions", to transfer any
Shares from the name of the registered holder(s) thereof if Purchaser does not
accept for payment any of the Shares so tendered.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 5, 6 and 7) (See Instructions 5, 6 and 7)
To be completed ONLY if the check To be completed ONLY if the check
for the purchase price of Shares for the purchase price of Shares
purchased (less the amount of any purchased (less the amount of any
federal income and backup federal income and backup
withholding tax required to be withholding tax required to be
withheld) or certificates for withheld) or certificates for
Shares not tendered or not Shares not tendered or not
purchased are to be issued in the purchased are to be mailed to
name of someone other than the someone other than the undersigned
undersigned. or to the undersigned at an address
other than that shown below the
undersigned's signature(s).
Issue: [_] check
[_] certificate(s) to: Mail: [_] check
Name: [_] certificate(s) to:
------------------------------------
(Please Print) Name:
-------------------------------
Address: (Please Print)
------------------------------------
Address:
------------------------------------ ------------------------------
(Zip Code)
------------------------------------
(Zip Code)
------------------------------------
(Taxpayer Identification No.)
------------------------------------
(Taxpayer Identification No.)
5
<PAGE>
SIGN HERE
(Please complete Substitute Form W-9 on page 7)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Owners
Dated _________________________________________, 1999
Name(s) ________________________________________________________________________
- --------------------------------------------------------------------------------
(Please Print)
Capacity (full title) __________________________________________________________
Address ________________________________________________________________________
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number _________________________________________________
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian, attorney-in-
fact, agent, officer of a corporation or other person acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 5.)
Guarantee of Signature(s)
(If required; see Instructions 1 and 5)
Name of Firm ___________________________________________________________________
Authorized Signature ___________________________________________________________
Dated _________________________________________, 1999
6
<PAGE>
Payer: ChaseMellon Shareholder Services, L.L.C.
- -------------------------------------------------------------------------------
Part I Taxpayer Identification Part II For Payees
SUBSTITUTE No.--For All Accounts Exempt From
Form W-9 ------------------------------- Backup
Enter your taxpayer Withholding
identification [_________] (see enclosed
Department of the number in the Social Guidelines)
Treasury appropriate box. Security
For most Number
individuals and
Internal Revenue sole proprietors,
Service this is your Social
Security Number.
Payer's Request for For other entities,
Taxpayer it is your Employer
Identification Identification
No. Number. If you do OR
not have a number,
see "How to Obtain
a TIN" in the
enclosed
Guidelines.
Note: If the
account is in more
than one name, see
the chart on page 2
of the enclosed
Guidelines to [_________]
determine what Employee
number to enter. Identification
Number
- --------------------------------------------------------------------------------
Certification--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me) and either (a) I
have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service Center
or Social Security Administration Office or (b) I intend to mail or
deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I
provide a number;
(2) I am not subject to backup withholding either because (a) I am exempt
from backup withholding, or (b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding; and
(3) Any information provided on this form is true, correct and complete.
You must cross out item (2) above if you have been notified by the IRS that
you are currently subject to backup withholding because of underreporting
interest or dividends on your tax return and you have not received a notice
from the IRS advising you that backup withholding has terminated.
- -------------------------------------------------------------------------------
SIGNATURE ___________________________ DATE _______________ ,_1999_________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
7
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm which is
a member of a recognized Medallion Program approved by The Securities Transfer
Associations, Inc. (an "Eligible Institution"). Signatures on this Letter of
Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed
by the registered holder(s) of the Shares (which term, for purposes of this
document, shall include any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares)
tendered herewith and such holder(s) have not completed the instruction
entitled "Special Payment Instructions" on this Letter of Transmittal or (b) if
such Shares are tendered for the account of an Eligible Institution. See
Instruction 5.
2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal
is to be used either if certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if delivery of Shares is to be made by book-entry
transfer pursuant to the procedures set forth in Section 3 of the Offer to
Purchase. Certificates for all physically delivered Shares, or a confirmation
of a book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility of all Shares delivered electronically, as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof or, in
the case of a book-entry transfer, an Agent's Message) and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth on the front page of this Letter of Transmittal
by the Expiration Date. Shareholders who cannot deliver their Shares and all
other required documents to the Depositary by the Expiration Date must tender
their Shares pursuant to the guaranteed delivery procedure set forth in Section
3 of the Offer to Purchase. Pursuant to such procedure: (a) such tender must be
made by or through an Eligible Institution, (b) a properly completed and duly
executed Notice of Guaranteed Delivery substantially in the form provided by
Purchaser must be received by the Depositary by the Expiration Date and (c) the
certificates for all physically delivered Shares, or a confirmation of a book-
entry transfer into the Depositary's account at the Book-Entry Transfer
Facility of all Shares delivered electronically, as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantee (or, in the case of a book-entry delivery, an
Agent's Message) and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in Section 3 of the Offer to Purchase.
The method of delivery of Shares and all other required documents is at the
option and risk of the tendering shareholder and the delivery will be deemed
made only when actually received by the Depositary (including, in the case of a
book-entry transfer, by a timely confirmation). If certificates for Shares are
sent by mail, registered mail with return receipt requested, properly insured,
is recommended. In all cases, sufficient time should be allowed to ensure
timely delivery.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal
(or facsimile thereof), the tendering shareholder waives any right to receive
any notice of the acceptance for payment of the Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (not applicable to shareholders who tender by book-entry
transfer). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
which are to be tendered in the box entitled "Number of Shares Tendered". In
such case, a new certificate for the remainder of the Shares represented by the
old certificate will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as promptly as practicable following the expiration or termination
of the Offer. All Shares represented by certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
8
<PAGE>
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby is held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made, or
Shares not tendered or not purchased are to be returned, in the name of any
person other than the registered holder(s). Signatures on any such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the
certificates for such Shares. Signature(s) on any such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to Purchaser of the authority of such person so to act must be submitted.
6. Stock Transfer Taxes. Purchaser will pay any stock transfer taxes with
respect to the sale and transfer of any Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or
Shares not tendered or not purchased are to be returned in the name of, any
person other than the registered holder(s), or if a transfer tax is imposed for
any reason other than the sale or transfer of Shares to Purchaser pursuant to
the Offer, then the amount of any stock transfer taxes (whether imposed on the
registered holder(s), such other person or otherwise) will be deducted from the
purchase price unless satisfactory evidence of the payment of such taxes, or
exemption therefrom, is submitted herewith.
7. Special Payment and Delivery Instructions. If the check for the purchase
price of any Shares purchased is to be issued, or any Shares not tendered or
not purchased are to be returned, in the name of a person other than the
person(s) signing this Letter of Transmittal or if the check or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that
shown on page 1, the appropriate boxes on this Letter of Transmittal should be
completed. Shareholders tendering Shares by book-entry transfer may request
that Shares not purchased be credited to such account at the Book-Entry
Transfer Facility as such shareholder may designate under "Special Payment
Instructions". If no such instructions are given, any such Shares not purchased
will be returned by crediting the account at the Book-Entry Transfer Facility
designated above.
8. Substitute Form W-9. Under the federal income tax laws, the Depositary
will be required to withhold 31% of the amount of any payments made to certain
shareholders pursuant to the Offer. In order to avoid such backup withholding,
each tendering shareholder, and, if applicable, each other payee, must provide
the Depositary with such shareholder's or payee's correct taxpayer
identification number and certify that such shareholder or payee is not subject
to such backup withholding by completing the Substitute Form W-9 set forth on
page 7. In general, if a shareholder or payee is an individual, the taxpayer
identification number is the Social Security Number of such individual. If the
Depositary is not provided with the correct taxpayer identification number, the
shareholder or payee may be subject to a $50 penalty imposed by the Internal
Revenue Service. Certain shareholders or payees (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. In order to satisfy the Depositary that
a foreign individual qualifies as an exempt recipient, such shareholder or
payee must submit a statement,
9
<PAGE>
signed under penalties of perjury, attesting to that individual's exempt
status. Such statements can be obtained from the Depositary. For further
information concerning backup withholding and instructions for completing the
Substitute Form W-9 (including how to obtain a taxpayer identification number
if you do not have one and how to complete the Substitute Form W-9 if Shares
are held in more than one name), consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Shares to be deemed invalidly tendered, but may require the Depositary to
withhold 31% of the amount of any payments made pursuant to the Offer. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained provided that the required information is furnished to
the Internal Revenue Service. NOTE: FAILURE TO COMPLETE AND RETURN THE
SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS
MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
ADDITIONAL DETAILS.
9. Requests for Assistance or Additional Copies. Requests for assistance or
additional copies of the Offer to Purchase and this Letter of Transmittal may
be obtained from the Information Agent or the Dealer Manager at their
respective addresses or telephone numbers set forth below.
10
<PAGE>
The Information Agent for the Offer is:
GEORGESON
SHAREHOLDER
COMMUNICATIONS INC.
17 State Street
10th Floor
New York, New York 10004
Bankers and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10020
(212) 632-6717
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
- -------------------------------------- --------------------------------------
<TABLE>
<CAPTION>
Give the TAXPAYER
IDENTIFICATION
For this type of account: number of--
- ---------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, the first
individual on
the account(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(3)
minor, or incompetent
person
7.a The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- ---------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Give the TAXPAYER
IDENTIFICATION
For this type of account: number of--
-----
<S> <C>
9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
</TABLE>
--------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use either your Social Security Number or Employer Identification Number.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), at the local office or Website of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
Payees Exempt from Backup Withholding
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except those identified in item (9). For broker transac-
tions, payees listed in items (1) through (13) and a person registered under
the Investment Advisors Act of 1940 who regularly acts as a broker are exempt.
Payments subject to reporting under Sections 6041 and 6041A of the Internal
Revenue Code (the "Code") are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup with-
holding for barter exchange transactions, patronage dividends, and payments by
certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a) of the Code, and IRA,
or a custodial account under Section 403(b)(7) of the Code if the account
satisfies the requirements of Section 401(f)(2).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or in-
strumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures Trad-
ing Commission.
(10) A real estate investment trust.
(11) An entity registered at all items during the tax year under the Invest-
ment Company Act of 1940.
(12) A common trust fund operated by a bank under Section 584(a) of the Code.
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corpora-
tion Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under Section 664 of the Code or described in
Section 4947 of the Code.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under U.C. Section
1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
U.C. Section 852).
. Payments described in U.C. Section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under U.C. Section 1451.
. Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup with-
holding. For details, see the regulations under U.C. Sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice.-- Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give taxpayer identification numbers
to payers who must report the payments to IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not re-
cipients are required to file a tax return. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Willfully falsifying certi-
fications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE .
<PAGE>
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
To Tender Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Furon Company
Pursuant to the Offer to Purchase
dated September 24, 1999
by
FCY Acquisition Corporation
an indirect wholly owned subsidiary of
Norton Company
an indirect wholly owned subsidiary of
Compagnie de Saint-Gobain
This Notice of Guaranteed Delivery, or a form substantially equivalent to
this form, must be used to accept the Offer (as defined below) if the shares of
Common Stock, without par value (including the associated preferred share
purchase rights), of Furon Company and all other documents required by the
Letter of Transmittal cannot be delivered to the Depositary by the expiration
of the Offer. This Notice of Guaranteed Delivery may be delivered by hand or
facsimile transmission, telex or mail to the Depositary. See Section 3 of the
Offer to Purchase.
The Depositary for the Offer is:
ChaseMellon Shareholder Services, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
P.O. Box 3301 85 Challenger Road 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Mail Drop-Reorg New York, NY 10271
Attn: Reorganization Department Ridgefield Park, NJ 07660 Attn: Reorganization Department
Attn: Reorganization Department
</TABLE>
By Facsimile Transmission
(for Eligible Institutions only):
(201) 296-4293
Confirm By Telephone:
(201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" (as defined in the Offer) under the
instructions thereto, such signature guarantee must appear in the applicable
space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to FCY Acquisition Corporation, a
California corporation ("Purchaser"), and an indirect wholly owned
subsidiary of Norton Company, a Massachusetts corporation, which is an
indirect wholly owned subsidiary of Compagnie de Saint-Gobain, a French
corporation, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated September 24, 1999 and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of which is
hereby acknowledged, _______________ shares of Common Stock, without par
value (including the associated preferred share purchase rights, the
"Shares"), of Furon Company, a California corporation, pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase.
Certificate Nos. (if available) SIGN HERE
------------------------------------- -------------------------------------
Signature(s)
-------------------------------------
-------------------------------------
Name(s) (Please Print or Type)
If Shares will be tendered by book-
entry transfer:
-------------------------------------
Name of Tendering Institution Address
------------------------------------- -------------------------------------
Zip Code
Account No. _________________________
at The Depository Trust Company -------------------------------------
Area Code and Telephone No.
Dated: ________________________, 1999
2
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm which is a member of a registered national
securities exchange or the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or
correspondent in the United States, guarantees (a) that the above named
person(s) "own(s)" the Shares tendered hereby within the meaning of Rule
14e-4 under the Securities Exchange Act of 1934, (b) that such tender of
Shares complies with Rule 14e-4 and (c) to deliver to the Depositary the
Shares tendered hereby, together with a properly completed and duly
executed Letter(s) of Transmittal (or facsimile(s) thereof) or an Agent's
Message (as defined in the Offer to Purchase) in the case of a book-entry
delivery and any other required documents, all within three New York Stock
Exchange trading days of the date hereof.
------------------------------------- ------------------------------------
Name of Firm Authorized Signature
------------------------------------- Name:
Address -------------------------------
(Please Print or Type)
-------------------------------------
Zip Code
Title:
------------------------------
(Please Print or Type)
Area Code and Telephone No.: Dated: , 1999
--------- ---------------------------
NOTE: Do not send Share certificates with this Notice of Guaranteed Delivery.
Share certificates should be sent with your Letter of Transmittal.
3
<PAGE>
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Furon Company
at
$25.50 Net Per Share
by
FCY Acquisition Corporation
an indirect wholly owned subsidiary of
Norton Company
an indirect wholly owned subsidiary of
Compagnie de Saint-Gobain
September 24, 1999
To Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees:
We have been appointed by FCY Acquisition Corporation, a California
corporation ("Purchaser"), and an indirect wholly owned subsidiary of Norton
Company, a Massachusetts corporation, which is an indirect wholly owned
subsidiary of Compagnie de Saint Gobain, a French corporation, to act as Dealer
Manager in connection with its offer to purchase all outstanding shares of
common stock, without par value (including the associated preferred share
purchase rights, "Shares"), of Furon Company, a California corporation (the
"Company"), at $25.50 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in Purchaser's Offer to Purchase dated
September 24, 1999 and the related Letter of Transmittal (which together
constitute the "Offer").
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated September 24, 1999;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information relating
to backup federal income tax withholding;
3 Notice of Guaranteed Delivery to be used to accept the Offer if Shares
and all other required documents cannot be delivered to ChaseMellon
Shareholder Services, L.L.C. (the "Depositary") by the Expiration Date (as
defined in the Offer to Purchase);
4. A form of letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard to
the Offer; and
5. Return envelope addressed to the Depositary.
<PAGE>
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 22, 1999, UNLESS THE OFFER IS EXTENDED.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Dealer Manager, the Information Agent or the
Depositary as described in the Offer to Purchase) for soliciting tenders of
Shares pursuant to the Offer. Purchaser will, however, upon request, reimburse
brokers, dealers, commercial banks and trust companies for reasonable and
necessary costs and expenses incurred by them in forwarding materials to their
customers. Purchaser will pay all stock transfer taxes applicable to its
purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
In order to accept the Offer a duly executed and properly completed Letter
of Transmittal and any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry delivery of
Shares, and any other required documents, should be sent to the Depositary by
12:00 midnight, New York City time, on Friday, October 22, 1999.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers set
forth on the back cover of the Offer to Purchase.
Very truly yours,
Lazard Freres & Co. LLC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF FCY ACQUISITION CORPORATION, NORTON COMPANY, COMPAGNIE DE SAINT-
GOBAIN, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Furon Company
at
$25.50 Net Per Share
by
FCY Acquisition Corporation
an indirect wholly owned subsidiary of
Norton Company
an indirect wholly owned subsidiary of
Compagnie de Saint-Gobain
September 24, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated September
24, 1999 and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the offer by FCY Acquisition Corporation, a
California corporation ("Purchaser"), and an indirect wholly owned subsidiary
of Norton Company, a Massachussetts Corporation ("Parent"), which is an
indirect wholly owned subsidiary of Compagnie de Saint-Gobain, a French
corporation ("Saint-Gobain"), to purchase for cash all outstanding shares of
common stock, without par value (including the associated preferred share
purchase rights (the "Rights") (collectively, the "Shares"), of Furon Company,
a California corporation (the "Company"). We are the holder of record of Shares
held for your account. A tender of such Shares can be made only by us as the
holder of record and pursuant to your instructions. The Letter of Transmittal
is furnished to you for your information only and cannot be used by you to
tender Shares held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the Letter of Transmittal.
Your attention is invited to the following:
1. The tender price is $25.50 per Share, net to you in cash.
2. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on Friday, October 22, 1999, unless the Offer is extended.
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement, the Stock Option Agreement, the Shareholder Agreement,
the Offer and the Merger (each as defined in the Offer to Purchase), and
determined that the terms of the Offer and the Merger are fair to, and in
the best interests of, the Company's shareholders, and has recommended
acceptance of the Offer and approval and adoption of the Merger Agreement
by the Company's shareholders (if such approval is required by applicable
law). Accordingly, the Board of Directors of the Company unanimously
recommends that the Company's shareholders accept the Offer and tender
their shares of common stock pursuant to the Offer.
<PAGE>
4. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the Expiration Date (as defined
in the Offer to Purchase) a number of Shares which, together with the
Shares then owned by Purchaser, Parent and Saint-Gobain, would represent at
least ninety percent (90%) of the total number of outstanding Shares and
(ii) any waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and under any applicable laws of Italy or Germany regulating
competition, antitrust, investment or exchange controls having expired or
been terminated. In the event that more than 50% and less than 90% of the
Shares then outstanding are tendered pursuant to the Offer and not
withdrawn, Purchaser will, under certain circumstances described in the
Offer, either exercise the Top-Up Stock Option described in the Offer or
reduce the number of Shares subject to the Offer to a number equal to
49.99% of the Shares then outstanding.
5. Any stock transfer taxes applicable to the sale of Shares to
Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
on the following page. An envelope to return your instructions to us is
enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise specified on the instruction form. Your instructions
should be forwarded to us in ample time to permit us to submit a tender on your
behalf by the expiration of the Offer.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making of the
Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction.
Payment for Shares purchased pursuant to the Offer will in all cases be made
only after timely receipt by ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") of (a) Share certificates and, if applicable, Rights certificates
or timely confirmation of the book-entry transfer of such Shares and, if
applicable, Rights into the account maintained by the Depositary at The
Depository Trust Company (the "Book-Entry Transfer Facility"), pursuant to the
procedures set forth in Section 3 of the Offer to Purchase, (b) the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees or an Agent's Message (as defined in the
Offer) in connection with a book-entry delivery, and (c) any other documents
required by the Letter of Transmittal. Accordingly, payment may not be made to
all tendering shareholders at the same time depending upon when certificates
for or confirmations of book-entry transfer of such Shares (or Rights, if
available) into the Depositary's account at the Book-Entry Transfer Facility
are actually received by the Depositary.
2
<PAGE>
Instructions with Respect to
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Furon Company
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated September 24, 1999, and the related Letter of
Transmittal, in connection with the offer by FCY Acquisition Corporation to
purchase all outstanding shares of common stock, without par value (including
the associated preferred share purchase rights, the "Shares"), of Furon
Company.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
Number of Shares to be Tendered: SIGN HERE
_________________________________ Shares*
----------------------------------
Signature(s)
Dated _____________________________, 1999
----------------------------------
----------------------------------
----------------------------------
Please print name(s) and
address(es) here
- --------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE>
EXHIBIT (a)(6)
NEWS RELEASE
FURON COMPANY NORTON COMPANY
29982 Ivy Glenn Drive 750 E. Swedesford Road
Laguna Niguel, California 92677 Valley Forge, Pennsylvania 19482
Contact: Ronald M. Bissell Contact: Dorothy C. Wackerman
Phone: 949-831-5350 Phone: 610-341-7428
FOR IMMEDIATE RELEASE:
FURON COMPANY AGREES TO BE ACQUIRED BY
NORTON COMPANY,
A SUBSIDIARY OF COMPAGNIE DE SAINT-GOBAIN
September 19, 1999 -- Laguna Niguel, CA and Valley Forge, PA -- The Boards of
Directors of Furon Company (NYSE: FCY) and Norton Company, a subsidiary of
Compagnie de Saint-Gobain, today jointly announced the signing of a definitive
agreement under which Norton will acquire all of Furon's outstanding shares at a
cash price of $25.50 per share. This price represents a 56% premium over
Furon's closing price on Friday, September 17, 1999, of $16.31. The value of
the transaction is approximately $472 million to purchase Furon's shares and
approximately $29 million to extinguish outstanding options, plus the assumption
of approximately $116 million in net financial debt.
Furon is a leading designer, developer and manufacturer of highly engineered
products made primarily from specially formulated high-performance polymer
materials. "This acquisition marks a major step in our growth strategy," noted
Robert C. Ayotte, Executive Vice President of Norton and President of Saint-
Gobain's worldwide performance plastics business unit. "Furon's impressive line
of products, strong cash flow, and management expertise will perfectly
complement and add value to Norton's current operations," he said. On a pro
forma basis for calendar year 1999, the combined businesses are expected to have
$830 million in worldwide sales and 5,500 employees.
"We feel that this transaction provides excellent value to our shareholders as
well as exciting opportunities for employees and enhanced capabilities for our
customers worldwide," said J. Michael Hagan, Furon's Chairman, President and
Chief Executive Officer. Mr. Hagan has agreed to tender all of his shares of
Furon common stock to Norton in the tender offer.
<PAGE>
Under the agreement, Norton Company will begin a tender offer on Friday,
September 24, 1999, to purchase all of the outstanding shares of Furon at $25.50
per share, net to the seller in cash (excluding any tax effect). The Board of
Directors of Furon has recommended unanimously that its shareholders accept the
Norton offer and tender their shares. The tender offer is scheduled to close at
the end of October, but may be extended by Norton under certain conditions.
Furon's Board of Directors has received a fairness opinion from Lehman Brothers,
its financial advisor, stating that the offer price is fair to Furon
shareholders from a financial point of view. Lazard Freres & Co. LLC acted as
investment banker for Compagnie de Saint-Gobain in connection with the
transaction.
The offer is made on the condition that Norton acquires at least 90% of all
outstanding Furon shares. However, if more than 50% but fewer than 90% of such
shares are tendered into the offer, Norton will under certain circumstances
reduce the number of shares subject to the offer to 49.99% of the outstanding
shares and subsequently pursue a merger with Furon. The transaction is subject
to usual regulatory approvals and is not subject to financing.
In connection with the tender offer for Furon's shares, Furon plans within the
next several weeks to repurchase its 8.125% Senior Subordinated Notes Due 2008.
Norton expects to rapidly implement technical, industrial and commercial
synergies in the US and Europe. Norton will also focus on the opportunities
presented through distributing a broader range of products to each company's
customers, benefitting from the strong presence of Furon in the US and of the
Norton Performance Plastics unit in Europe and Asia. All these elements will
make the acquisition earnings enhancing for Compagnie de Saint-Gobain as early
as the year 2000.
Norton Company is an indirect wholly owned subsidiary of Compagnie de Saint-
Gobain. A worldwide manufacturer serving a broad range of industries, Norton is
the world's leading manufacturer of abrasives, and produces technologically
advanced ceramics, plastics and chemical process products. Norton's performance
plastics business unit processes high-performance plastics which are formed into
flexible foams, bearings, flexible tubing, radomes, pressure sensitive tapes,
labware fittings, sealants and films.
Saint-Gobain, one of the top 100 industrial companies in the world, is a leading
producer of flat glass, glass containers, insulation, reinforcements, building
materials, abrasives, industrial ceramics and piping. The company's 1998 sales
totaled approximately $20 billion.
2
<PAGE>
Certain statements contained in this release are forward looking and involve
risks and uncertainties. Those risks and uncertainties include, but are not
limited to, the effect of general economic conditions, impact of competitive
products and pricing, general product demand, industrial production and the
other factors disclosed in Furon's Securities and Exchange Commission filings.
# # #
3
<PAGE>
EXHIBIT (a)(7)
SAINT-GOBAIN to
---------------
launch a tender offer for FURON COMPANY and create
--------------------------------------------------
a global leader in Performance Plastics
---------------------------------------
NORTON COMPANY, a US subsidiary of COMPAGNIE DE SAINT-GOBAIN, announced the
commencement of a friendly public tender offer for FURON COMPANY (NYSE: FCY),
the leading US manufacturer of performance plastics. When completed, the
acquisition of FURON will significantly strengthen SAINT-GOBAIN's position in
this fast growing and profitable industry. FURON's sales are about $480M.
The offered price amounts to $25.50 per share, and represents a 56% premium over
FURON's closing price on Friday, September 17, 1999, of $16.31. The value of
the transaction is approximately $472M in cash to purchase FURON's shares and
approximately $29M to extinguish outstanding stock options, plus the assumption
of approximately $116M in net financial debt. Subject to the satisfaction of
certain legal conditions, the tender offer is scheduled to be consummated at the
end of October, unless extended.
In support of the tender offer, Mr. Michael HAGAN, FURON's Chairman, President
and Chief Executive Officer, has agreed to tender all of his shares of FURON
common stock to NORTON in the tender offer. FURON's Board of Directors has
recommended unanimously that its shareholders accept the Norton offer and tender
their shares.
Performance plastics are engineered polymer materials that offer specific
properties of electrical, mechanical or thermal resistance; chemical purity; or
corrosion or wear resistance in demanding environments. They are replacing more
traditional materials and find applications in very diverse industries such as
electronics, aerospace, automotive, medical, food and beverage.
NORTON Performance Plastics, a division of the Industrial Ceramics Branch of
SAINT-GOBAIN, has, on a pro forma basis, $350M in sales for a wide variety of
value-added applications: adhesive foams, seals and bearings, ultra-pure
flexible tubing, technical films and composites. It has experienced annual
internal growth exceeding 7% over the last 8 years.
The acquisition of FURON will create a global leader in performance plastics
with an unmatched portfolio of technologies and applications. FURON and NORTON
Performance Plastics, having technical and commercial complementary features,
will be able to supply a wider range of products to their customers, especially
in light of FURON's strong presence in the US and NORTON's position in Europe
and Asia. On a pro forma basis for calendar year 1999, the combined businesses
should have sales of $830M and 5500 employees in more than 50 locations.
After the completion of the transaction, SAINT-GOBAIN expects to rapidly
implement technical, industrial and commercial synergies in the US and Europe.
This acquisition will be earnings enhancing for SAINT-GOBAIN as early as the
year 2000.
<PAGE>
EXHIBIT (a)(8)
This announcement is not an offer to purchase or a solicitation of an offer to
sell Shares. The Offer is made solely by the Offer to Purchase dated September
24, 1999 and the related Letter of Transmittal and is not being made to, nor
will tenders be accepted from or on behalf of, holders of Shares in any
jurisdiction in which the making of the Offer or acceptance thereof would not be
in compliance with the laws of such jurisdiction. In those jurisdictions where
the applicable laws require that the Offer be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of Purchaser by the
Dealer Manager or one or more registered brokers or dealers licensed under the
laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Furon Company
at
$25.50 Net per Share
by
FCY Acquisition Corporation
an indirect wholly owned subsidiary of
Norton Company
which is an indirect wholly owned subsidiary of
Compagnie de Saint-Gobain
FCY Acquisition Corporation, a California corporation ("Purchaser"), and an
indirect wholly owned subsidiary of Norton Company, a Massachusetts corporation
("Parent"), which is an indirect wholly owned subsidiary of Compagnie de Saint-
Gobain, a French corporation ("Saint-Gobain"), is offering to purchase all
outstanding shares of Common Stock, without par value (including the associated
preferred share purchase rights, the "Shares"), of Furon Company, a California
corporation (the "Company"), at $25.50 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated September 24, 1999 (the "Offer to Purchase") and in the related Letter of
Transmittal (which together constitute the "Offer").
- --------------------------------------------------------------------------------
THIS OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, OCTOBER 22, 1999,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
<PAGE>
The purpose of the Offer is to acquire for cash as many outstanding Shares as
possible as a first step in acquiring the entire equity interest in the Company.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) A
NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES THEN OWNED BY PURCHASER, PARENT
AND SAINT-GOBAIN, WOULD REPRESENT AT LEAST NINETY PERCENT (90%) OF THE TOTAL
NUMBER OF OUTSTANDING SHARES (THE "MINIMUM CONDITION") AND (ii) ANY WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 AND UNDER
ANY APPLICABLE LAWS OF ITALY OR GERMANY REGULATING COMPETITION, ANTITRUST,
INVESTMENT OR EXCHANGE CONTROLS HAVING EXPIRED OR BEEN TERMINATED.
IN THE EVENT THAT MORE THAN 50% AND LESS THAN 90% OF THE SHARES THEN OUTSTANDING
ARE TENDERED PURSUANT TO THE OFFER AND NOT WITHDRAWN, PURCHASER WILL, UNDER
CERTAIN CIRCUMSTANCES DESCRIBED BELOW, EITHER EXERCISE THE TOP-UP STOCK OPTION
DESCRIBED HEREIN OR REDUCE THE NUMBER OF SHARES SUBJECT TO THE OFFER TO A NUMBER
EQUAL TO 49.99% OF THE SHARES THEN OUTSTANDING.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE STOCK OPTION AGREEMENT, THE SHAREHOLDER AGREEMENT, THE OFFER AND
THE MERGER (EACH AS DEFINED BELOW), AND DETERMINED THAT THE TERMS OF THE OFFER
AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
SHAREHOLDERS, AND HAS RECOMMENDED ACCEPTANCE OF THE OFFER AND APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT BY THE COMPANY'S SHAREHOLDERS (IF SUCH APPROVAL
IS REQUIRED BY APPLICABLE LAW).
ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES OF COMMON STOCK PURSUANT TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as of
September 18, 1999 (the "Merger Agreement") among the Company, Parent and
Purchaser. The Merger Agreement provides, among other things, that as soon as
practicable after the consummation of the Offer, and in accordance with the
applicable provisions of the California General Corporation Law, Purchaser will
be merged with and into the Company (the "Merger"), with the Company continuing
as the surviving corporation (the "Surviving Corporation"). Thereupon, each
outstanding Share (other than Dissenting Shares (as defined in the Offer to
Purchase), Shares held by the Company as treasury stock and Shares owned by
Purchaser, Parent, or Saint-Gobain or any of their subsidiaries or any
subsidiary of the Company) will be converted into and represent the right to
receive $25.50 in cash or any higher price that may be paid per Share in the
Offer, without interest.
The Offer is subject to certain conditions set forth in the Offer to Purchase,
including (i) satisfaction of the Minimum Condition and (ii) expiration or
termination of the waiting period applicable to Purchaser's acquisition of
Shares pursuant to the Offer under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and under any applicable laws of Italy or Germany
regulating competition, antitrust, investment or exchange controls.
The Merger Agreement provides that, in the event the Minimum Condition is not
satisfied on any Expiration Date of the Offer, Purchaser may, without the
consent of the Company, (i) extend the Offer (but not more than on two occasions
and for not more than ten business days on each such occasion); (ii) amend the
Offer to waive the Minimum Condition in contemplation of the exercise of the
Top-Up Stock Option (as defined below) (to the extent the Top-Up Stock Option is
exercisable at such time); or (iii) amend the Offer to provide that, in the
event (A) the Minimum Condition is not satisfied at the next scheduled
Expiration Date of the Offer (without giving effect to the exercise of the Top-
Up Stock Option) and (B) the number of Shares tendered pursuant to the Offer and
not withdrawn as of such next scheduled Expiration Date, when taken together
with the Shares owned directly or indirectly by Parent and Saint-Gobain, is more
than 50% of the then outstanding Shares, Purchaser will (x) reduce the Minimum
Condition to the Revised Minimum Number (as defined below), (y) reduce the
number of Shares subject to the Offer to a number of Shares that, when added to
the Shares then owned directly or indirectly by Parent and Saint-Gobain, will
equal 49.99% of the Shares then outstanding (the "Revised Minimum Number") and
(z) if a number of Shares greater than the Revised Minimum Number is tendered
into the Offer and not withdrawn, purchase, on a pro rata basis, the Revised
Minimum Number of Shares.
<PAGE>
If all of the conditions to the Offer are not satisfied or waived on any
scheduled Expiration Date of the Offer and subject to the immediately preceding
paragraph, Purchaser will either (i) extend the Offer (but not later than
November 10, 1999) until such conditions are satisfied or waived or (ii)
exercise its rights described in clause (ii) or (iii) of the immediately
preceding paragraph, if applicable; provided that (w) such conditions are
reasonably capable of being satisfied, (x) the Company exercises its reasonable
best efforts to cause such conditions to be satisfied, (y) an Acquisition
Proposal (as defined in the Offer to Purchase) shall not have been publicly
announced and not withdrawn as of such scheduled expiration date and (z) the
Company is in compliance with all of its covenants in the Merger Agreement.
Concurrently with the execution of the Merger Agreement, and as a condition and
inducement to Parent's and Purchaser's entering into the Merger Agreement, the
Company entered into a Stock Option Agreement dated as of September 18, 1999
(the "Stock Option Agreement") with Parent and Purchaser. Pursuant to the Stock
Option Agreement, the Company granted to Purchaser an irrevocable option (the
"Top-Up Stock Option") to purchase that number of Shares (the "Top-Up Option
Shares") equal to the number of Shares that, when added to the number of Shares
owned by Purchaser, Parent and Saint-Gobain immediately following consummation
of the Offer, will constitute 90% of the Shares then outstanding (assuming the
issuance of the Top-Up Option Shares) at a purchase price per Top-Up Option
Share equal to the Offer Price (as defined in the Offer to Purchase), subject to
the terms and conditions set forth in the Stock Option Agreement, including,
without limitation, that the Top-Up Stock Option shall not be exercisable if the
number of Shares that would otherwise be issued thereunder would exceed the
number of authorized Shares available for issuance.
J. Michael Hagan, Chairman and Chief Executive Officer of the Company, has
entered into a Shareholder Agreement with Purchaser dated as of September 18,
1999 (the "Shareholder Agreement") pursuant to which, among other things, Mr.
Hagan has agreed to tender his Shares in the Offer.
The term "Expiration Date" means 12:00 midnight, New York City time, on Friday,
October 22, 1999, unless and until Purchaser, in accordance with the term of the
Merger Agreement, extends the period of time during which the Offer is open, in
which event the term "Expiration Date" will mean the latest time and date at
which the Offer, as so extended by Purchaser, will expire. Purchaser reserves
the right, at any time or from time to time, to extend the period of time during
which the Offer is open by giving oral or written notice of such extension to
the Depositary. Any such extension will be followed as promptly as practicable
by public announcement thereof.
For purposes of the Offer, Purchaser shall be deemed to have accepted for
payment tendered Shares when, as and if Purchaser gives oral or written notice
to the Depositary (as defined in the Offer to Purchase) of its acceptance of the
tenders of such Shares pursuant to the Offer. Payment for Shares accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of certificates for such Shares (or a confirmation of a book-entry
transfer of such Shares into the Depositary's account at the Book-Entry Transfer
Facility (as defined in the Offer to Purchase)), a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other required
documents.
If proration is required as a result of any reduction in the number of Shares
subject to the Offer to a number equal to the Revised Minimum Number, then,
because of the difficulty of determining precisely the number of Shares validly
tendered and not withdrawn, Purchaser would not expect to announce the final
results of proration until approximately seven New York Stock Exchange trading
days after the Expiration Date. Preliminary results of proration will be
announced by press release as promptly as practicable after the Expiration Date.
Holders of Shares may obtain such preliminary information from the Depositary
and may also be able to obtain such preliminary information from their brokers.
Purchaser will not pay for any Shares accepted for payment pursuant to the Offer
until the final proration factor is known.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date. Thereafter, such tenders are irrevocable, except that
they may be withdrawn after November 23, 1999 unless theretofore accepted for
payment as provided in the Offer to Purchase. To be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth in the Offer to
Purchase and must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of Shares, if different from that of the person who tendered such Shares.
If the Shares to be withdrawn have been delivered to the Depositary, a signed
notice of withdrawal with (except in the case of Shares tendered by an Eligible
Institution (as defined in the Offer to Purchase)) signatures guaranteed by an
Eligible Institution must be submitted prior to the release of such Shares. In
addition, such notice must specify, in the case of Shares tendered by delivery
of certificates, the name of the registered holder (if different from that of
the tendering shareholder) and the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn or, in the case of Shares
tendered by book-entry transfer, the name and number of the account at the Book-
Entry Transfer Facility to be credited with the withdrawn Shares. All questions
as to the form and validity (including time of receipt)
<PAGE>
of any notice of withdrawal will be determined by Purchaser, in its sole
discretion, which determination shall be final and binding. None of Purchaser,
the Dealer Manager, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification. Withdrawals of Shares may not be rescinded, and Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3 of the
Offer to Purchase.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-6
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's shareholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on the
shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
The Offer to Purchase and Letter of Transmittal contain important information
which should be read carefully before any decision is made with respect to the
Offer.
Requests for copies of the Offer to Purchase and the related Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
as set forth below, and copies will be furnished promptly at Purchaser's
expense. Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Information Agent, the Depositary and the Dealer
Manager) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
GEORGESON
SHAREHOLDER
COMMUNICATIONS INC.
17 State Street
10th FLOOR
New York, New York 10004
Bankers and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza
New York, New York 10020
(212) 632-6717
September 24, 1999
<PAGE>
EXHIBIT (c)(1)
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of
September 18, 1999
among
FURON COMPANY,
NORTON COMPANY
and
FCY ACQUISITION CORPORATION
<PAGE>
TABLE OF CONTENTS
---------------
Page
----
ARTICLE 1
- ---------
Definitions
-----------
Section 1.01. Definitions.................................. 1
ARTICLE 2
- ---------
The Offer
---------
Section 2.01. The Offer.................................... 5
Section 2.02. Company Action............................... 8
Section 2.03. Directors.................................... 9
ARTICLE 3
- ---------
The Merger
----------
Section 3.01. The Merger................................... 10
Section 3.02. Conversion of Shares......................... 11
Section 3.03. Surrender and Payment........................ 11
Section 3.04. Dissenting Shares............................ 12
Section 3.05. Stock Options................................ 13
Section 3.06. Employee Stock Purchase Plan................. 13
Section 3.07. Restricted Stock Units....................... 14
Section 3.08. Adjustments.................................. 14
Section 3.09. Withholding Rights........................... 14
Section 3.10. Lost Certificates............................ 14
ARTICLE 4
- ---------
The Surviving Corporation
-------------------------
Section 4.01. Articles of Incorporation.................... 15
Section 4.02. Bylaws....................................... 15
Section 4.03. Directors and Officers....................... 15
ARTICLE 5
- ---------
Representations and Warranties of the Company
---------------------------------------------
Section 5.01. Corporate Existence and Power................ 15
Section 5.02. Corporate Authorization...................... 16
Section 5.03. Governmental Authorization................... 16
Section 5.04. Non-contravention............................ 16
Section 5.05. Capitalization............................... 17
Section 5.06. Subsidiaries................................. 18
Section 5.07. SEC Filings.................................. 19
Section 5.08. Financial Statements......................... 20
i
<PAGE>
Section 5.09. Disclosure Documents......................... 20
Section 5.10. Absence of Certain Changes................... 21
Section 5.11. No Undisclosed Material Liabilities.......... 23
Section 5.12. Compliance with Laws and Court Orders........ 23
Section 5.13. Litigation................................... 24
Section 5.14. Material Contracts........................... 24
Section 5.15. Finders' Fees................................ 25
Section 5.16. Taxes........................................ 25
Section 5.17. Employee Benefit Plans....................... 27
Section 5.18. Environmental Matters........................ 28
Section 5.19. Antitakeover Statutes and Rights Agreement... 30
Section 5.20. Title to Real Properties..................... 31
Section 5.21. Insurance Coverage........................... 31
Section 5.22. Labor Matters................................ 31
Section 5.23. Intellectual Property........................ 32
ARTICLE 6
- ---------
Representations and Warranties of Parent
----------------------------------------
Section 6.01. Corporate Existence and Power................ 32
Section 6.02. Corporate Authorization...................... 33
Section 6.03. Governmental Authorization................... 33
Section 6.04. Non-contravention............................ 33
Section 6.05. Disclosure Documents......................... 34
Section 6.06. Finders' Fees................................ 34
Section 6.07. Financing.................................... 35
ARTICLE 7
- ---------
Covenants of the Company
------------------------
Section 7.01. Conduct of the Company....................... 35
Section 7.02. Shareholder Meeting; Proxy Material.......... 38
Section 7.03. Access to Information........................ 38
Section 7.04. No Solicitation; Other Offers................ 39
Section 7.05. Notices of Certain Events.................... 40
Section 7.06. Certificate of the Company................... 41
Section 7.07. Notes Offer and Consent Solicitation......... 41
Section 7.08. Interim Financial Statements................. 42
ARTICLE 8
- ---------
Covenants of Parent
-------------------
Section 8.01. Obligations of Merger Subsidiary............. 42
Section 8.02. Voting of Shares............................. 42
ii
<PAGE>
Section 8.03. Director and Officer Liability............... 42
Section 8.04. Employees; Benefits.......................... 43
ARTICLE 9
- ---------
Covenants of Parent and the Company
-----------------------------------
Section 9.01. Reasonable Best Efforts...................... 45
Section 9.02. Certain Filings.............................. 46
Section 9.03. Public Announcements......................... 47
Section 9.04. Further Assurances........................... 47
Section 9.05. Merger Without Meeting of Shareholders....... 47
ARTICLE 10
- ----------
Conditions to the Merger
------------------------
Section 10.01. Conditions to Obligations of Each Party..... 47
Section 10.02. Conditions to the Obligations of Parent
and Merger Subsidiary....................... 48
ARTICLE 11
- ----------
Termination
-----------
Section 11.01. Termination................................. 49
Section 11.02. Effect of Termination....................... 51
ARTICLE 12
- ----------
Miscellaneous
-------------
Section 12.01. Notices..................................... 51
Section 12.02. Survival of Representations and Warranties.. 53
Section 12.03. Amendments; No Waivers...................... 53
Section 12.04. Expenses.................................... 53
Section 12.05. Successors and Assigns...................... 54
Section 12.06. Governing Law............................... 54
Section 12.07. WAIVER OF JURY TRIAL........................ 54
Section 12.08. Counterparts; Effectiveness; Benefit........ 55
Section 12.09. Entire Agreement............................ 55
Section 12.10. Captions.................................... 55
Section 12.11. Severability................................ 55
Section 12.12. Specific Performance........................ 55
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of September 18, 1999 among Furon
Company, a California corporation (the "Company"), Norton Company, a
Massachusetts corporation ("Parent"), and FCY Acquisition Corporation, a
California corporation and an indirect, wholly-owned subsidiary of Parent
("Merger Subsidiary").
The parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.01. Definitions. (a) The following terms, as used herein, have
the following meanings:
"Acquisition Proposal" means an inquiry, offer or proposal regarding any of
the following involving the Company or any of its Subsidiaries: (w) any merger,
consolidation, share exchange, recapitalization, business combination or other
similar transaction, (x) any sale, lease, exchange, transfer or other
disposition of all or substantially all the assets of the Company and its
Subsidiaries, taken as a whole, in a single transaction or series of related
transactions or (y) any tender offer or exchange offer for 25 percent or more of
the outstanding Shares or the filing of a registration statement under the 1933
Act in connection therewith. An "Acquisition Proposal" shall not be deemed to
include the continuing process to sell the Company's subsidiary located in Rugby
England (the "Subsidiary Sale").
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person.
"California Law" means the General Corporation Law of the State of
California.
"California Merger Agreement" means the Agreement of Merger among the
Company, Merger Subsidiary and Parent, together with the related officers'
certificates required by Section 1103 of California Law.
"Closing Date" means the date on which the Effective Time occurs.
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Balance Sheet" means the consolidated balance sheet of the Company
as of July 31, 1999 and the footnotes thereto set forth in the Company 10-Q.
"Company Balance Sheet Date" means July 31, 1999.
"Company 10-Q" means the Company's quarterly report on Form 10-Q for the
period ended July 31, 1999.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
"knowledge" of any Person that is not an individual means the knowledge of
such Person's officers after reasonable inquiry.
"Lien" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"Material Adverse Effect" means, with respect to any Person, a material
adverse effect (other than an effect that impacts the Person's industry
generally) on the financial condition, business or results of operations of such
Person and its Subsidiaries, taken as a whole.
"Medical Device Products Business" means the medical device products
business currently conducted by the Company and its Subsidiaries, including
Medex, Inc.
"1933 Act" means the Securities Act of 1933.
"1934 Act" means the Securities Exchange Act of 1934.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
2
<PAGE>
"Revised Minimum Number" shall mean that number of Shares that when added
to the Shares then owned directly or indirectly by Parent and Saint-Gobain would
equal 49.99% of the Shares then outstanding.
"Right" means, with respect to each outstanding Share, the right to
purchase one one-hundredth of a share of Junior Participating Preferred Stock,
without par value, pursuant to the Rights Agreement dated as of April 30, 1999
between the Company and The Bank of New York.
"Saint-Gobain" means Compagnie de Saint-Gobain, a French corporation.
"SEC" means the Securities and Exchange Commission.
"Shares" means the shares of common stock, without par value, of the
Company (including the Rights and shares of restricted stock issued pursuant to
the employee benefit plans of the Company).
"Stock Option Agreement" means the Stock Option Agreement dated as of the
date hereof among the Company, Parent and Merger Subsidiary pursuant to which
the Company has granted to Merger Subsidiary an option to purchase Shares.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such Person.
"Top-Up Stock Option" has the meaning set forth in the Stock Option
Agreement.
"Transactions" means the transactions contemplated by this Agreement and
the Stock Option Agreement, including the Offer and the Merger.
Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
- ---- -------
Antitrust Law..................... 9.01
3
<PAGE>
Term Section
- ---- -------
CERCLA............................ 5.18
Certificates...................... 3.03
Company Disclosure Documents...... 5.09
Company Employees................. 8.04
Company Material Contract......... 5.14
Company Proxy Statement........... 5.09
Company Real Properties........... 5.18
Company SEC Documents............. 5.07
Company Securities................ 5.05
Company Subsidiary Securities..... 5.06
Company Shareholder Meeting....... 7.02
Confidentiality Agreement......... 7.03
Continuing Director............... 2.03
Current Plan Year................. 8.04
De Minimus Restriction............ 9.01
DOJ............................... 9.01
Effective Time.................... 3.01
Employee Plans.................... 5.17
Environmental Laws................ 5.18
ERISA............................. 5.17
ERISA Affiliate................... 5.17
ESPP.............................. 3.06
Exchange Agent.................... 3.03
FAS 106........................... 5.17
FTC............................... 9.01
GAAP.............................. 5.08
Hazardous Materials............... 5.18
HMTA.............................. 5.18
Indemnified Person................ 8.03
Intellectual Property Rights...... 5.23
International Plan................ 5.17
Merger............................ 3.01
Merger Consideration.............. 3.02
Minimum Condition................. 2.01
Multiemployer Plan................ 5.17
Notes............................. 7.07
Notes Offer....................... 7.07
Notes Offer Documents............. 7.07
Offer............................. 2.01
Offer Documents................... 2.01
Options........................... 5.05
Parent Plan....................... 8.04
4
<PAGE>
Term Section
- ---- -------
Pre-Closing Tax Period............ 5.16
RCRA.............................. 5.18
Release........................... 5.18
Returns........................... 5.16
Schedule 14D-1.................... 2.01
Schedule 14D-9.................... 2.02
Severance Continuation Period..... 8.04
Severance Plan.................... 8.04
Superior Proposal................. 7.04
Surviving Corporation............. 3.01
Tax............................... 5.16
Tax Asset......................... 5.16
Taxing Authority.................. 5.16
ARTICLE 2
The Offer
Section 2.01. The Offer. (a) Provided that nothing shall have occurred
that would result in a failure to satisfy any of the conditions set forth in
Annex I hereto, as promptly as practicable after the date hereof, but in no
event later than five business days following the public announcement of this
Agreement, Merger Subsidiary shall, and Parent shall cause Merger Subsidiary to,
commence an offer (the "Offer") to purchase any and all of the outstanding
Shares at a price of $25.50 per Share, net to the seller in cash. Subject to
Section 2.01(c), the Offer shall be subject to the condition that there shall be
validly tendered in accordance with the terms of the Offer, prior to the
expiration date of the Offer and not withdrawn, a number of Shares that,
together with the Shares then owned by Parent, Merger Subsidiary and Saint-
Gobain, represents at least 90% of the Shares outstanding (the "Minimum
Condition") and to the other conditions set forth in Annex I hereto. Merger
Subsidiary expressly reserves the right to waive any of the conditions to the
Offer and to make any change in the terms or conditions of the Offer, provided
that, subject to Section 2.01(c), no change or waiver may be made that, without
the prior written consent of the Company, waives the Minimum Condition, changes
the form of consideration to be paid, decreases the price per Share or the
number of Shares sought in the Offer, imposes conditions to the Offer in
addition to those set forth in Annex I or is otherwise materially adverse to the
holders of the Shares. Notwithstanding the foregoing, without the consent of
the Company, Merger Subsidiary shall have the right to extend the
5
<PAGE>
Offer (i) from time to time if, at the scheduled or extended expiration date of
the Offer, any of the conditions to the Offer shall not have been satisfied or
waived, until such conditions are satisfied or waived; provided that Merger
Subsidiary may extend the Offer under this clause (i) on not more than two
occasions and for not more than ten business days on each such occasion or (ii)
for any period required by any rule, regulation, interpretation or position of
the SEC or the staff thereof applicable to the Offer or any period required by
applicable law. If all of the conditions to the Offer are not satisfied or
waived on any scheduled expiration date of the Offer, Merger Subsidiary shall
either (i) extend the Offer from time to time until such conditions are
satisfied or waived (but not beyond November 10, 1999) or (ii) exercise its
rights under Section 2.01(c), if applicable; provided that (w) such conditions
are reasonably capable of being satisfied, (x) the Company exercises its
reasonable best efforts to cause such conditions to be satisfied, (y) an
Acquisition Proposal shall not have been publicly announced and not withdrawn as
of such scheduled expiration date and (z) the Company is in compliance with all
of its covenants in this Agreement. Subject to the foregoing and to the terms
and conditions of the Offer, Merger Subsidiary shall, and Parent shall cause it
to, accept for payment and pay for, as promptly as practicable after the
expiration of the Offer, all Shares properly tendered and not withdrawn pursuant
to the Offer that Merger Subsidiary is obligated to purchase. Parent shall
provide or cause to be provided to Merger Subsidiary on a timely basis the funds
necessary to pay for any Shares that Merger Subsidiary becomes obligated to
accept for payment, and pay for, pursuant to the Offer. The Offer shall have an
initial scheduled expiration date 20 business days following commencement
thereof.
(b) As soon as practicable on the date of commencement of the Offer,
Parent and Merger Subsidiary shall file with the SEC a Tender Offer Statement on
Schedule 14D-1 (the "Schedule 14D-1") with respect to the Offer, which will
contain the offer to purchase and form of the related letter of transmittal and
summary advertisement (such Schedule 14D-1 and such documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "Offer Documents"). Parent and the Company each agrees
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect. Parent and Merger Subsidiary agree to take
all steps necessary to cause the Schedule 14D-1 as so corrected to be filed with
the SEC and the other Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given an
opportunity to review and comment on the Offer Documents prior to their being
filed with the SEC or disseminated to the holders of Shares.
6
<PAGE>
(c) In the event the Minimum Condition is not satisfied on any scheduled
expiration date of the Offer, Merger Subsidiary may, without the consent of the
Company:
(i) extend the Offer pursuant to Section 2.01(a);
(ii) amend the Offer to waive the Minimum Condition in contemplation
of the exercise of the Top-Up Stock Option (to the extent the Top-Up
Stock Option is exercisable at such time); or
(iii) amend the Offer to provide that, in the event (x) the Minimum
Condition is not satisfied at the next scheduled expiration date of the
Offer (without giving effect to the exercise of the Top-Up Stock Option
or the stock option contemplated by Section 1.02 of the Shareholder
Agreement) and (y) the number of Shares tendered pursuant to the Offer
and not withdrawn as of such next scheduled expiration date, taken
together with the number of Shares owned directly or indirectly by
Parent and Saint-Gobain, is more than 50% of the then outstanding
Shares, Merger Subsidiary shall:
(A) reduce the Minimum Condition to the Revised Minimum Number,
(B) reduce the number of Shares subject to the Offer to a number
of Shares that when added to the Shares then owned by Merger
Subsidiary, Parent and Saint-Gobain will equal the Revised Minimum
Number, and
(C) if a number of Shares greater than the Revised Minimum
Number is tendered into the Offer and not withdrawn, purchase, on a
pro rata basis, the Revised Minimum Number of Shares.
Notwithstanding any other provision of this Agreement, in the event that Merger
Subsidiary purchases a number of Shares equal to the Revised Minimum Number,
then without the prior written consent of Merger Subsidiary, at any time prior
to the termination of this Agreement, the Company shall take no action
whatsoever (including, without limitation, the redemption of any Shares) which
would have the effect of increasing the percentage ownership of Shares by Merger
Subsidiary, Parent and Saint-Gobain in excess of the Revised Minimum Number.
7
<PAGE>
(d) In the event that (x) the number of Shares tendered pursuant to the
Offer and not withdrawn as of such next scheduled expiration date, taken
together with the number of Shares owned directly or indirectly by Parent and
Saint-Gobain, is more than 50% of the then outstanding Shares, (y) all
conditions to the Offer other than the Minimum Condition shall have been
satisfied and (z) Shares have not been accepted for payment by Merger Subsidiary
prior to November 10, 1999, Merger Subsidiary shall be required to take either
the action contemplated by Section 2.01(c)(ii) above or the action contemplated
by Section 2.01(c)(iii) above.
Section 2.02. Company Action. (a) The Company hereby consents to the Offer
and represents that its Board of Directors, at a meeting duly called and held
has (i) unanimously determined that this Agreement, the Stock Option Agreement
and the Transactions, including the Offer and the Merger, are fair to and in the
best interests of the Company's shareholders, (ii) unanimously approved and
adopted this Agreement, the Stock Option Agreement, the Shareholder Agreement
and the Transactions, including the Offer and the Merger, in accordance with the
requirements of the California Law and (iii) unanimously resolved to recommend
acceptance of the Offer and approval and adoption of this Agreement and the
Merger by its shareholders, provided that, subject to Section 7.04(c), the Board
of Directors of the Company may withdraw, modify or amend such recommendation
only to the extent the Company's Board of Directors shall have determined in
good faith, on the basis of advice of its outside legal counsel, that consistent
with its fiduciary duties under applicable law, it must take such action. The
Company further represents that Lehman Brothers Inc. has delivered to the
Company's Board of Directors its written opinion that the consideration to be
paid in the Offer and the Merger is fair to the holders of Shares from a
financial point of view. The Company has been advised that all of its
directors, and each of its executive officers who has been informed of the
Transactions and who owns Shares, intend to tender their Shares pursuant to the
Offer and, if applicable, to vote in favor of the Merger. The Company will
cause its transfer agent to promptly furnish Parent with a list of the Company's
shareholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of Shares and lists of
securities positions of Shares held in stock depositories and to provide to
Parent such additional information (including, without limitation, updated lists
of shareholders, mailing labels and lists of securities positions) and such
other assistance as Parent may reasonably request in connection with the Offer.
(b) As soon as practicable on the day that the Offer is commenced, the
Company shall file with the SEC and disseminate to holders of Shares, in each
case as and to the extent required by applicable federal securities laws, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
8
<PAGE>
amendments or supplements thereto, the "Schedule 14D-9") that shall reflect the
recommendations of the Company's Board of Directors referred to above. The
Company and Parent each agree promptly to correct any information provided by it
for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect. The Company agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given an opportunity to review and comment on the Schedule 14D-9 prior
to its being filed with the SEC.
Section 2.03. Directors. (a) Promptly following the purchase of and
payment for a number of Shares that satisfies the Minimum Condition or the
Revised Minimum Number, Parent shall be entitled to designate the number of
directors, rounded up to the next whole number, on the Company's Board of
Directors that equals the product of (i) the total number of directors on the
Company's Board of Directors (giving effect to the election of any additional
directors pursuant to this Section) and (ii) the percentage that the number of
Shares beneficially owned by Parent and Saint-Gobain (including Shares accepted
for payment) bears to the total number of Shares outstanding (provided that if
Merger Subsidiary has accepted for payment the Revised Minimum Number of Shares
in the Offer, such number of directors shall be rounded up to the next whole
number plus one to give Parent at least a majority of the members of the
Company's Board of Directors), and the Company shall take all action within its
power to cause Parent's designees to be elected or appointed to the Company's
Board of Directors, including, without limitation, increasing the number of
directors, and seeking and accepting resignations of incumbent directors. At
such time, the Company will also use its reasonable best efforts to cause
individual directors designated by Parent to constitute the number of members,
rounded up to the next whole number, on (i) each committee of the Company's
Board of Directors other than any committee of such Board established to take
action under this Agreement or the Stock Option Agreement and (ii) each board of
directors of each Subsidiary of the Company (and each committee thereof) that
represents the same percentage as such individuals represent on the Board of
Directors of the Company. Notwithstanding the foregoing, in the event that
Parent's designees are to be appointed or elected to the Company's Board of
Directors, until the Effective Time, such Board of Directors shall have at least
three directors who are directors on the date of this Agreement and who are not
officers of the Company (the "Continuing Directors"); provided that in the event
that the number of Continuing Directors shall be reduced below three for any
reason whatsoever, any remaining Continuing Directors (or Continuing Director,
if there shall be only one remaining) shall be entitled to designate persons to
fill such vacancies who shall be deemed to be Continuing Directors for purposes
of this Agreement.
9
<PAGE>
(b) The Company's obligations to appoint Parent's designees to the Board
of Directors shall be subject to Section 14(f) of the 1934 Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions, and shall
include in the Schedule 14D-9 such information with respect to the Company and
its officers and directors, as Section 14(f) and Rule 14f-1 require in order to
fulfill its obligations under this Section. Parent shall supply to the Company
in writing and be solely responsible for any information with respect to itself
and its nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
(c) Following the election or appointment of Parent's designees pursuant
to Section 2.03(a) and until the Effective Time, the approval of the Continuing
Directors shall be required to authorize (and such authorization shall
constitute the authorization of the Board of Directors and no other action on
the part of the Company, including any action by any other director of the
Company, shall be required to authorize) any termination of this Agreement by
the Company, any amendment of this Agreement requiring action by the Board of
Directors, any amendment of the articles of incorporation or bylaws of the
Company, any extension of time for performance of any obligation or action
hereunder by Parent or Merger Subsidiary, any waiver of compliance with any of
the agreements or conditions contained herein for the benefit of the Company and
any material transaction with Parent, Merger Subsidiary or any affiliate thereof
unless such transaction is on terms no less favorable to the Company than the
Company would obtain in a similar transaction with an unrelated third party.
ARTICLE 3
The Merger
Section 3.01. The Merger. (a) At the Effective Time, Merger Subsidiary
shall be merged (the "Merger") with and into the Company in accordance with
California Law, whereupon the separate existence of Merger Subsidiary shall
cease, and the Company shall be the surviving corporation (the "Surviving
Corporation").
(b) As soon as practicable after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to the Merger, the Company and Merger
Subsidiary will file the California Merger Agreement with the California
Secretary of State and make all other filings or recordings required by
California Law in connection with the Merger. The Merger shall become effective
at such time (the "Effective Time") as the California Merger Agreement is duly
filed with
10
<PAGE>
the California Secretary of State or at such later time as is specified in the
California Merger Agreement.
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Merger Subsidiary, all as provided under California Law.
Section 3.02. Conversion of Shares. At the Effective Time:
(a) except as otherwise provided in Section 3.02(b) or Section 3.04, each
Share outstanding immediately prior to the Effective Time shall be converted
into the right to receive $25.50 in cash or any higher price paid for each Share
in the Offer, without interest (the "Merger Consideration");
(b) each Share held by the Company as treasury stock or owned by Saint-
Gobain, Parent or any Subsidiary of Saint-Gobain or Parent immediately prior to
the Effective Time shall be canceled, and no payment shall be made with respect
thereto; and
(c) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
Section 3.03. Surrender and Payment. (a) Prior to the Effective Time,
Parent shall appoint an agent reasonably acceptable to the Company (the
"Exchange Agent") for the purpose of exchanging certificates representing Shares
(the "Certificates") for the Merger Consideration. Parent will make available
to the Exchange Agent, as and when needed, the Merger Consideration to be paid
in respect of the Shares. Promptly after the Effective Time, Parent will send,
or will cause the Exchange Agent to send, to each holder of Shares at the
Effective Time a letter of transmittal and instructions (which shall specify
that the delivery shall be effected, and risk of loss and title shall pass, only
upon proper delivery of the Certificates to the Exchange Agent) for use in such
exchange.
(b) Each holder of Shares that have been converted into the right to
receive the Merger Consideration will be entitled to receive, upon surrender to
the Exchange Agent of a Certificate, together with a properly completed letter
of transmittal, the Merger Consideration payable for each Share represented by
such Certificate. Until so surrendered, each such Certificate shall represent
after the
11
<PAGE>
Effective Time for all purposes only the right to receive such Merger
Consideration.
(c) If any portion of the Merger Consideration is to be paid to a Person
other than the Person in whose name the surrendered Certificate is registered,
it shall be a condition to such payment that the Certificate so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a Person other than the
registered holder of such Certificate or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, they shall be canceled and exchanged for the
Merger Consideration provided for, and in accordance with the procedures set
forth, in this Article.
(e) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 3.03(a) (and any interest or other income earned
thereon) that remains unclaimed by the holders of Shares nine months after the
Effective Time shall be returned to Parent, upon demand, and any such holder who
has not exchanged them for the Merger Consideration in accordance with this
Section prior to that time shall thereafter look only to the Surviving
Corporation and Parent for payment of the Merger Consideration in respect of
such Shares without any interest thereon. Notwithstanding the foregoing, neither
the Surviving Corporation nor Parent shall be liable to any holder of Shares for
any amount paid to a public official pursuant to applicable abandoned property,
escheat or similar laws. Any amounts remaining unclaimed by holders of Shares
two years after the Effective Time (or such earlier date immediately prior to
such time when the amounts would otherwise escheat to or become property of any
governmental authority) shall become, to the extent permitted by applicable law,
the property of Parent and the Surviving Corporation free and clear of any
claims or interest of any Person previously entitled thereto.
(f) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 3.03(a) to pay for Shares for which appraisal rights
have been perfected shall be returned to Parent, upon demand.
Section 3.04. Dissenting Shares. Notwithstanding Section 3.02, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger, if required, or consented thereto, if
required, in writing and who has demanded appraisal for such Shares in
accordance with
12
<PAGE>
California Law (if California Law provides for appraisal rights for such Shares
in the Merger) shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect, withdraws or otherwise loses
its right to appraisal. If, after the Effective Time, such holder fails to
perfect, withdraws or loses its right to appraisal, such Shares shall be treated
as if they had been converted as of the Effective Time into a right to receive
the Merger Consideration. The Company shall give Parent prompt notice of any
demands received by the Company for appraisal of Shares, and Parent shall have
the right to direct all negotiations and proceedings with respect to such
demands. Except with the prior written consent of Parent, the Company shall not
make any payment with respect to, or settle or offer to settle, any such
demands. If Parent is not required under California Law to obtain the approval
of the other shareholders of the Company in order to effectuate the Merger and
effects the Merger without holding a meeting of such shareholders, then, prior
to consummating the Merger, Parent will provide notice, as required by
California Law, that the Merger will become effective on or after a specified
date and that such shareholders are entitled to exercise their dissenters'
rights.
Section 3.05. Stock Options. (a) At or immediately prior to the Effective
Time, each outstanding stock option issued by the Company to purchase Shares,
whether or not vested or exercisable, shall be canceled, and the Company shall
pay each holder of any such option at or promptly after the Effective Time for
each such option surrendered an amount in cash determined by multiplying (i) the
excess, if any, of the Merger Consideration over the applicable exercise price
of such option by (ii) the number of Shares such holder could have purchased
(assuming full vesting of all options) had such holder exercised such option in
full immediately prior to the Effective Time. Such payment shall be reduced by
applicable withholding taxes.
(b) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of any option plan or
arrangement) that are within its power to give effect to the transactions
contemplated by Section 3.05(a).
Section 3.06. Employee Stock Purchase Plan. (a) After the date hereof, no
new offering period shall commence under the Company's Employee Stock Purchase
Plan (the "ESPP"). As of the Effective Time, the ESPP shall be terminated. The
Company shall pay each participant in any current offering period under such
Plan in cash at the Effective Time, in cancellation of all rights under such
Plan, an amount determined by multiplying (i) the Merger Consideration per Share
by (ii) the number of Shares such participant could have purchased under the
ESPP based on his or her account balance under such Plan immediately prior to
the Effective Time (such payment to be reduced by
13
<PAGE>
applicable withholding taxes); provided that with respect to any fractional
shares, the foregoing shall not apply and the balance of each account
attributable to such fractional shares shall be returned to the participant in
cash.
(b) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of the ESPP or obtaining
participant consents) that are necessary to give effect to the transactions
contemplated by Section 3.06(a).
Section 3.07. Restricted Stock Units. At or immediately prior to the
Effective Time, each outstanding restricted stock unit (including deferred stock
units and deferred shares) issued by the Company, whether or not vested or
transferable, shall be canceled, and the Company shall pay each holder of any
such restricted stock unit at or promptly after the Effective Time the Merger
Consideration for each unit surrendered. Prior to the Effective Time, the
Company shall take all actions (including, if appropriate, amending the terms of
any incentive compensation plan or arrangement) that are necessary to give
effect to the transactions contemplated by this Section 3.07.
Section 3.08. Adjustments. If, during the period between the date of this
Agreement and the Effective Time, any change in the outstanding Shares shall
occur, including by reason of any reclassification, recapitalization, stock
split or combination, exchange or readjustment of Shares, or stock dividend
thereon with a record date during such period, the cash payable pursuant to the
Offer, the Merger Consideration and any other amounts payable pursuant to this
Agreement shall be appropriately adjusted.
Section 3.09. Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this Article such amounts as it is required to
deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign tax law. If the Surviving
Corporation or Parent, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which the Surviving Corporation or Parent, as
the case may be, made such deduction and withholding.
Section 3.10. Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent
14
<PAGE>
will pay, in exchange for such lost, stolen or destroyed Certificate, the Merger
Consideration to be paid in respect of the Shares represented by such
Certificate, as contemplated by this Article.
ARTICLE 4
The Surviving Corporation
Section 4.01. Articles of Incorporation. The articles of incorporation of
Merger Subsidiary in effect at the Effective Time shall be the articles of
incorporation of the Surviving Corporation until amended in accordance with
applicable law, provided that, at the Effective Time, Article First of such
articles of incorporation shall be amended to read as follows: "The name of the
corporation is Furon Company."
Section 4.02. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 4.03. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation and (ii) the officers of the
Company at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE 5
Representations and Warranties of the Company
The Company represents and warrants to Parent that:
Section 5.01. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of California and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not have, individually or in
the aggregate, a Material Adverse Effect on the Company. The Company has all
governmental licenses, authorizations, permits, consents and approvals required
to carry on the Medical Device Products Business, except for those licenses,
15
<PAGE>
authorizations, permits, consents and approvals the absence of which would not
have, individually or in the aggregate, a Material Adverse Effect on the Medical
Device Products Business. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not have, individually or in the aggregate, a Material
Adverse Effect on the Company. The Company has heretofore delivered to Parent
true and complete copies of the articles of incorporation and bylaws of the
Company as currently in effect.
Section 5.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the Stock Option Agreement, and
the consummation by the Company of the Transactions, are within the Company's
corporate powers and, except for the affirmative vote of the holders of a
majority of the outstanding Shares in connection with the consummation of the
Merger (if required by law) or any applicable shareholder approval required by
The New York Stock Exchange, have been duly authorized by all necessary
corporate action on the part of the Company. The affirmative vote of the
holders of a majority of the outstanding Shares (if required by law) is the only
vote of the holders of any of the Company's capital stock necessary in
connection with the consummation of the Merger. Each of this Agreement and the
Stock Option Agreement constitutes a valid and binding agreement of the Company.
Section 5.03. Governmental Authorization. Except as set forth on Schedule
5.03, the execution, delivery and performance by the Company of this Agreement,
and the consummation by the Company of the transactions, require no action by or
in respect of, or filing with, any governmental body, agency, official or
authority, domestic or foreign, other than (i) the filing of the California
Merger Agreement with respect to the Merger with the California Secretary of
State and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business, (ii) compliance with any
applicable requirements of the HSR Act and of any applicable Antitrust Laws,
(iii) compliance with any applicable requirements of the 1933 Act, the 1934 Act
and any other applicable securities or takeover laws, whether state or foreign,
(iv) the filing of reports with the United States Department of Commerce
regarding foreign investment in the United States and (v) any actions or filings
the absence of which would not be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company or materially to
impair the ability of the Company to consummate the Transactions.
Section 5.04. Non-contravention. The execution, delivery and performance
by the Company of this Agreement and the Stock Option Agreement, and the
consummation by the Company of the Transactions, do not and will not
16
<PAGE>
(i) contravene, conflict with, or result in any violation or breach of any
provision of the articles of incorporation or bylaws of the Company, (ii)
assuming compliance with the matters referred to in Section 5.03, contravene,
conflict with, or result in a violation or breach of any provision of any
applicable law, statute, ordinance, rule, regulation, judgment, injunction,
order or decree, (iii) require any consent or other action by any Person under,
constitute a default, or an event that, with or without notice or lapse of time
or both, would become a default, under, or cause or permit the termination,
cancellation, acceleration or other change of any right or obligation or the
loss of any benefit to which the Company or any of its Subsidiaries is entitled
under any provision of any agreement or other instrument binding upon the
Company or any of its Subsidiaries (except as set forth on Schedule 5.04) or any
license, franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of the Company and
its Subsidiaries or (iv) result in the creation or imposition of any Lien on any
asset of the Company or any of its Subsidiaries, except for (A) such failures to
obtain any such consent or other action, default, termination, cancellation,
acceleration, change or loss referred to in clause (iii), with respect to the
Medical Device Products Business or the assets thereof, that could not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Medical Device Products Business and (B) such
contraventions, conflicts and violations referred to in clause (ii) and such
failures to obtain any such consent or other action, default, termination,
cancellation, acceleration, change, loss or Lien referred to in clauses (iii) or
(iv) that could not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company or to impair materially the
ability of the Company to consummate the Transactions.
Section 5.05. Capitalization. (a) The authorized capital stock of the
Company consists of 30,000,000 Shares and 2,000,000 shares of preferred stock,
without par value per share. As of September 14, 1999, there were outstanding
18,508,997 Shares and stock options issued by the Company (the "Options") to
purchase an aggregate of 1,996,709 Shares (of which Options to purchase an
aggregate of 1,325,834 Shares were exercisable). There are and there will be no
shares of preferred stock outstanding. The Company has issued to shareholders
Rights to purchase Junior Participating Preferred Stock of the Company, which
Preferred Stock is, under certain circumstances, convertible into Common Stock
of the Company. All outstanding shares of capital stock of the Company have
been, and all shares that may be issued pursuant to the 1982 Stock Incentive
Plan, the 1995 Stock Incentive Plan, the 1993 Non-Employee Directors' Stock
Compensation Plan, the ESPP, the Economic Value Added Incentive Compensation
Plan, the Deferred Compensation Plan and the Option Gain Deferral Program will
be, when issued in accordance with the respective terms thereof, duly authorized
and validly issued and fully paid and nonassessable.
17
<PAGE>
Schedule 5.05(a) identifies (i) the holders of each of the Options, (ii) the
number of Options vested for each holder, (iii) the option plan under which each
Option was issued, (iv) the number of Options held by such holder and (v) the
exercise price of each of the Options.
(b) Except as set forth in this Section 5.05 (including rights under the
plans described in Section 5.05(a)) or in the Stock Option Agreement and for
changes since September 14, 1999 resulting from the exercise of stock options
issued by the Company outstanding on such date, there are no outstanding (i)
shares of capital stock or voting securities of the Company, (ii) securities of
the Company convertible into or exchangeable for shares of capital stock or
voting securities of the Company or (iii) options or other rights to acquire
from the Company or other obligation of the Company to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of the Company (the items in clauses (i), (ii) and
(iii) being referred to collectively as the "Company Securities"). Except as set
forth in Schedule 5.05(b), there are no outstanding obligations of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the
Company Securities.
(c) The Shares issuable pursuant to the Stock Option Agreement have been
duly authorized and, when issued upon payment of the exercise price therefor
pursuant to the Stock Option Agreement and subject to shareholder approval to
the extent required pursuant to the rules of The New York Stock Exchange, will
be validly issued, fully paid and non-assessable, and free and clear of all
Liens and the issuance of such Shares will not be subject to any preemptive or
similar rights.
Section 5.06. Subsidiaries. (a) Each Significant Subsidiary (within the
meaning of Regulation S-X promulgated under the 1934 Act) of the Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted, except for (i) those licenses,
authorizations, permits, consents and approvals the absence of which would not
have, individually or in the aggregate, a Material Adverse Effect on the Company
and (ii) those licenses, authorizations, permits, consents and approvals
required to carry on the Medical Device Products Business the absence of which
would not have, individually or in the aggregate, a Material Adverse Effect on
the Medical Device Products Business. Each such Significant Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not have, individually or
in the aggregate, a Material
18
<PAGE>
Adverse Effect on the Company. All Significant Subsidiaries of the Company and
their respective jurisdictions of incorporation are identified in the Company's
most recent Form 10-K.
(b) Except as set forth on Schedule 5.06, all of the outstanding capital
stock of, or other voting securities or ownership interests in, each Subsidiary
of the Company, is owned by the Company (except for shares of foreign
Subsidiaries of the Company held in nominee names), directly or indirectly, free
and clear of any Lien and free of any other limitation or restriction (including
any restriction on the right to vote, sell or otherwise dispose of such capital
stock or other voting securities or ownership interests). There are no
outstanding (i) securities of the Company or any of its Subsidiaries convertible
into or exchangeable for shares of capital stock or other voting securities or
ownership interests in any Subsidiary of the Company or (ii) options or other
rights to acquire from the Company or any of its Subsidiaries, or other
obligation of the Company or any of its Subsidiaries to issue, any capital stock
or other voting securities or ownership interests in, or any securities
convertible into or exchangeable for any capital stock or other voting
securities or ownership interests in, any Subsidiary of the Company (the items
in clauses (i) and (ii) being referred to collectively as the "Company
Subsidiary Securities"). There are no outstanding obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the
Company Subsidiary Securities.
(c) Except for its Subsidiaries and as set forth on Schedule 5.06, the
Company does not directly or indirectly own any capital stock of or other equity
interest in any corporation, partnership or other Person and neither the Company
nor any of its Subsidiaries is a member of or participant in any partnership,
joint venture or similar Person.
Section 5.07. SEC Filings. (a) Parent has received (i) the Company's annual
reports on Form 10-K for its fiscal years ended January 30, 1999 and January 31,
1998, (ii) its quarterly reports on Form 10-Q for its fiscal quarters ended July
31, 1999 and May 1, 1999, (iii) its proxy or information statements relating to
meetings of, or actions taken without a meeting by, the shareholders of the
Company held since January 30, 1999, and (iv) all of its other reports,
statements, schedules and registration statements filed with the SEC since
January 30, 1999 (the documents referred to in this Section 5.07(a),
collectively, the "Company SEC Documents").
(b) As of the filing date, each Company SEC Document complied as to form
in all material respects with the applicable requirements of the 1933 Act and
the 1934 Act, as the case may be.
19
<PAGE>
(c) As of its filing date (or, if amended or superceded by a filing prior
to the date hereof, on the date of such later filing), each Company SEC Document
filed pursuant to the 1934 Act did not, and each such Company SEC Document filed
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(d) Each Company SEC Document that is a registration statement, as amended
or supplemented, if applicable, filed pursuant to the 1933 Act, as of the date
such statement or amendment became effective, did not 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.
Section 5.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the Company SEC Documents fairly present, in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis
(except as may be indicated in the notes thereto), the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements).
Section 5.09. Disclosure Documents. (a) Each document required to be filed
by the Company with the SEC or required to be distributed or otherwise
disseminated to the Company's shareholders in connection with the Transactions
(the "Company Disclosure Documents"), including, without limitation, the
Schedule 14D-9, the proxy or information statement of the Company (the "Company
Proxy Statement"), if any, to be filed with the SEC in connection with the
Merger, and any amendments or supplements thereto, when filed, distributed or
disseminated, as applicable, will comply as to form in all material respects
with the applicable requirements of the 1934 Act.
(b) (i) The Company Proxy Statement, as supplemented or amended, if
applicable, at the time such Company Proxy Statement or any amendment or
supplement thereto is first mailed to shareholders of the Company and at the
time such shareholders vote on adoption of this Agreement, and (ii) any Company
Disclosure Document (other than the Company Proxy Statement), at the time of the
filing of such Company Disclosure Document or any supplement or amendment
thereto and at the time of any distribution or dissemination thereof, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light
20
<PAGE>
of the circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 5.09(b) will not apply
to statements or omissions included in the Company Disclosure Documents based
upon information furnished to the Company in writing by Parent specifically for
use therein.
(c) The information with respect to the Company or any of its Subsidiaries
that the Company furnishes to Parent in writing specifically for use in the
Offer Documents, at the time of the filing thereof, at the time of any
distribution or dissemination thereof and at the time of the consummation of the
Offer, will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
Section 5.10. Absence of Certain Changes. Since the Company Balance Sheet
Date, the business of the Company and its Subsidiaries has been conducted in the
ordinary course consistent with past practices and, except as disclosed in
Schedule 5.10 and as disclosed in the Company SEC Documents, there has not been:
(a) any event, occurrence, development or state of circumstances or facts
that has had or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company (other
than quarterly cash dividends on the Shares not in excess of $.03 per share per
quarter and having customary record and payment dates), or any repurchase,
redemption or other acquisition by the Company or any of its Subsidiaries of any
outstanding shares of capital stock or other securities of, or other ownership
interests in, the Company or any of its Subsidiaries;
(c) any acquisition by the Company or any of its Subsidiaries of a
material amount of assets, including without limitation stock or other equity
interests, from any Person or any sale, lease, license or other disposition of
assets or property of the Company or any of its Subsidiaries other than in the
ordinary course of business consistent with past practices;
(d) any amendment of any material term of any outstanding security of the
Company or any of its Subsidiaries;
(e) any incurrence, assumption or guarantee by the Company or any of its
Subsidiaries of any indebtedness for borrowed money (i) exceeding
21
<PAGE>
$10,000,000 in the aggregate or (ii) having a term longer than one year in
duration;
(f) any creation or other incurrence by the Company or any of its
Subsidiaries of any Lien on any asset other than in the ordinary course of
business consistent with past practices;
(g) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in its wholly-owned Subsidiaries made in the ordinary course of
business consistent with past practices;
(h) any damage, destruction or other similar casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any of
its Subsidiaries that has resulted, or could reasonably be expected to result,
in an aggregate amount in excess of $5,000,000;
(i) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its Subsidiaries relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its Subsidiaries of any contract or
other right, in either case, material to the Company and its Subsidiaries, taken
as a whole, other than transactions and commitments in the ordinary course of
business consistent with past practices and those contemplated by this
Agreement;
(j) any change in any method of accounting, method of tax accounting or
accounting principles or practice by the Company or any of its Subsidiaries,
except for any such change required by reason of a concurrent change in GAAP or
Regulation S-X under the 1934 Act;
(k) any tax election, other than those consistent with past practice, not
required by law or any settlement or compromise of any tax liability in either
case that is material to the Company and its Subsidiaries;
(l) any (i) grant of any severance or termination pay to (or amendment to
any existing arrangement with) any director or officer of the Company or any of
its Subsidiaries, (ii) increase in benefits payable under any existing severance
or termination pay policies or employment agreements, (iii) any entering into
any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or employee
of the Company or any of its Subsidiaries, (iv) establishment, adoption or
amendment (except as required by applicable law) of any collective bargaining,
bonus, profit-sharing, thrift, pension, retirement, deferred compensation,
22
<PAGE>
compensation, stock option, restricted stock or other benefit plan or
arrangement covering any director, officer or employee of the Company or any of
its Subsidiaries or (v) increase in compensation, bonus or other benefits
payable to any director, officer or employee of the Company or any of its
Subsidiaries, other than, in the case of clause (iii) or (v), in the ordinary
course of business consistent with past practice; or
(m) to the Company's knowledge, any labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of its
Subsidiaries, which employees were not subject to a collective bargaining
agreement at the Company Balance Sheet Date, or any lockouts, strikes,
slowdowns, work stoppages or threats thereof by or with respect to such
employees.
Section 5.11. No Undisclosed Material Liabilities. There are no
liabilities or obligations of the Company or any of its Subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
that could reasonably be expected to result in such a liability, other than:
(a) liabilities or obligations disclosed and provided for in the Company
Balance Sheet or in the notes thereto or in the Company SEC Documents filed
prior to the date hereof;
(b) liabilities or obligations that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company; and
(c) liabilities or obligations under this Agreement or the Stock Option
Agreement or incurred in connection with the Transactions.
Section 5.12. Compliance with Laws and Court Orders. The Company and
each of its Subsidiaries are and have been in compliance with, and to the
knowledge of the Company are not under investigation with respect to and have
not been threatened to be charged with or given notice of any violation of, any
applicable law, statute, ordinance, rule, regulation, judgment, injunction,
order or decree, except for (i) failures to comply or violations that have not
had and could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company or (ii) failures to comply
with or violations with respect to any law, statute, ordinance, rule,
regulation, judgment, injunction, order or decree applicable to the Medical
Device Products Business that have not had
23
<PAGE>
and could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on the Medical Device Products Business.
Section 5.13. Litigation. Except as set forth in the Company SEC
Documents filed prior to the date hereof and on Schedule 5.13, there is no
action, suit, investigation or proceeding pending against, or, to the knowledge
of the Company, threatened against or affecting, the Company, any of its
Subsidiaries, any present or former officer, director or employee of the Company
or any of its Subsidiaries or any other Person for whom the Company or any such
Subsidiary is liable or any of their respective properties before any court or
arbitrator or before or by any governmental body, agency or official, domestic
or foreign, that (i) the Company believes is reasonably likely to result in a
liability to the Company or any of its Subsidiaries of an amount in excess of
$1,000,000, which liability is either uninsured or is insured but has not been
accepted by the applicable insurer without a reservation of rights under a
policy with a deductible in excess of $250,000 or (ii) that in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the Offer or
the Merger or any other Transaction.
Section 5.14. Material Contracts. Schedule 5.14(a) sets forth a complete
and accurate list of any of the following to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound (each, a "Company Material Contract"):
(a) all written management, compensation, employment or other contracts
entered into with any executive officer or director of the Company or the
principal officer of Medex, Inc.;
(b) all contracts or agreements under which the Company or any of its
Subsidiaries has any outstanding indebtedness, obligation or liability for
borrowed money or the deferred purchase price of property or has the right or
obligation to incur any such indebtedness, obligation or liability, in each case
in an amount greater than $1,000,000;
(c) all bonds or agreements of guarantee or indemnification in which the
Company or any of its Subsidiaries acts as surety, guarantor or indemnitor with
respect to any obligation (fixed or contingent) in an amount or potential amount
greater than $1,000,000, other than any such bonds or agreements entered into in
connection with an asset or stock acquisition or disposition made by the Company
or any of its Subsidiaries and other than any such guarantees of the obligations
of the Company or any of its Subsidiaries;
(d) all noncompete agreements to which the Company or any of its
Affiliates (other than any director of the Company) is a party;
24
<PAGE>
(e) all partnership and joint venture agreements;
(f) each other contract or agreement listed as an exhibit to the Company's
most recent Form 10-K and the Company 10-Q; and
(g) all agreements relating to material business acquisitions or
dispositions during the last three years, including any separate tax or
indemnification agreements.
Except as set forth on Schedule 5.14(a), (i) neither the Company nor any of
its Subsidiaries is in default under the terms of any Company Material Contract,
which default permits the other party to adversely alter or terminate any rights
of the Company or any of its Subsidiaries or accelerate the obligations of the
Company or any of its Subsidiaries under such Company Material Contract or to
collect damages, (ii) to the knowledge of the Company, no other party thereto is
in default in any material respect under the terms of any Company Material
Contract and (iii) each Company Material Contract is in full force and effect in
all material respects.
Section 5.15. Finders' Fees. Except for Lehman Brothers Inc., a copy of
whose engagement agreement has been provided to Parent, there is no investment
banker, broker, finder or other intermediary that has been retained by or is
authorized to act on behalf of the Company or any of its Subsidiaries who might
be entitled to any fee or commission from the Company or any of its Affiliates
in connection with the Transactions.
Section 5.16. Taxes. (a) Filing and Payment. The Company and each of its
Subsidiaries has timely filed all material federal, state, local and foreign tax
returns and reports (including estimated tax or information returns and reports)
required to be filed by it. All such returns and reports are complete and
correct in all material respects. The Company and each of its Subsidiaries has
timely paid, or withheld and remitted to the appropriate Taxing Authority or
such Person, respectively, (or the Company has paid on its Subsidiaries' behalf)
all material taxes required to be paid, or withheld and remitted, respectively,
by it. There are no agreements in effect to extend the period of limitations
for the assessment of any federal tax for which the Company or any of its
Subsidiaries may be liable. The federal income tax returns filed with respect to
Tax years of the Company and its Subsidiaries through the Tax year ended January
31, 1995 have been examined and closed or are returns with respect to which the
applicable period for assessment under applicable law, after giving effect to
extensions or waivers, has expired.
25
<PAGE>
(b) Financial Records. The charges, accruals and reserves for Taxes with
respect to the Company and each of its Subsidiaries for any Pre-Closing Tax
Period reflected on the books of the Company and its Subsidiaries (excluding any
provision for deferred income taxes reflecting either differences between the
treatment of items for accounting and income tax purposes or carryforwards) are
adequate to cover material Tax liabilities accruing through the end of the last
period for which the Company and its Subsidiaries ordinarily record items on
their respective books.
(c) Procedure and Compliance. Except as set forth on Schedule 5.16(c),
(i) there is no material claim, audit, action, suit, proceeding, or
investigation now pending or threatened in a writing received by the Company or
any Subsidiary against or with respect to the Company or any Subsidiary in
respect of any income, franchise or sales Tax or Tax Asset (only insofar as it
relates to income, franchise or sales Taxes) and (ii) there are no Liens for
Taxes upon the assets of the Company or any Subsidiary except Liens for current
Taxes not yet due, except where such Liens would not have a Material Adverse
Effect.
(d) Definitions. The following terms, as used herein, have the following
meanings:
"Pre-Closing Tax Period" means any Tax period ending on or before the
Closing Date; and, with respect to a Tax period that begins on or before the
Closing Date and ends thereafter, the portion of such Tax period ending on the
Closing Date.
"Tax" means (i) any tax, governmental fee or other like assessment or
charge of any kind whatsoever (including, but not limited to, withholding on
amounts paid to or by any Person), together with any interest, penalty, addition
to tax or additional amount imposed by any governmental authority (a "Taxing
Authority") responsible for the imposition of any such tax (domestic or foreign)
and (ii) in the case of the Company or any Subsidiary, liability for the payment
of any amount of the type described in clause (i) as a result of being or having
been before the Closing Date a member of an affiliated, consolidated, combined
or unitary group, or a party to any agreement or arrangement, as a result of
which liability of the Company or any Subsidiary to a Taxing Authority is
determined or taken into account with reference to the liability of any other
Person.
"Tax Asset" means any net operating loss, net capital loss, investment tax
credit, foreign tax credit, charitable deduction or any other credit or tax
attribute that could be carried forward or back to reduce Taxes (including
without limitation deductions and credits related to alternative minimum Taxes).
26
<PAGE>
Section 5.17. Employee Benefit Plans. (a) Schedule 5.17 contains a
correct and complete list identifying each material "employee benefit plan", as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA"), each material employment, severance or similar contract, plan,
arrangement or policy and each other material plan or arrangement (written or
oral) providing for compensation, bonuses, profit-sharing, stock option or other
stock related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured arrangements),
health or medical benefits, disability benefits, workers' compensation,
supplemental unemployment benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension, health, medical or life
insurance benefits) which is maintained, administered or contributed to by the
Company or any ERISA Affiliate and covers any employee or former employee of the
Company or any of its Subsidiaries, or with respect to which the Company or any
of its Subsidiaries has any liability. Copies of such plans (and, if
applicable, related trust agreements) and all amendments thereto and written
interpretations thereof have been furnished, or will be made available upon
request, to Parent together with the most recent annual report (Form 5500
including, if applicable, Schedule B thereto) prepared in connection with any
such plan. Such plans are referred to collectively herein as the "Employee
Plans". For purposes of this Section 5.17, "ERISA Affiliate" of any Person
means any other Person which, together with such Person, would be treated as a
single employer under Section 414 of the Code.
(b) Except as disclosed in Schedule 5.17, neither the Company nor any of
its ERISA Affiliates currently contributes to or maintains any plan subject to
Title IV of ERISA, other than a "multiemployer plan" as defined in Section 3(37)
of ERISA (a "Multiemployer Plan"). With respect to any Multiemployer Plan or
other plan subject to Title IV of ERISA which the Company or any of its ERISA
Affiliates has contributed to or maintained during the past five years, neither
the Company nor any of its current ERISA Affiliates has any contingent liability
that (i) is reasonably likely to become a liability of Parent or its ERISA
Affiliates after the Effective Time and (ii) individually or in the aggregate,
would have a Material Adverse Effect on the Company.
(c) Except as set forth in Schedule 5.17, the consummation of the
transactions contemplated by this Agreement will not entitle any employee or
independent contractor of the Company or any of its Subsidiaries to severance
pay or accelerate the time of payment or vesting or trigger any payment or
funding (through a grantor trust or otherwise) of compensation or benefits
under, increase the amount payable or trigger any other material obligation
pursuant to, any Employee Plan. Except as set forth in Schedule 5.17, there is
no contract, agreement, plan or arrangement covering any employee or former
employee of the
27
<PAGE>
Company or any Affiliate that, individually or collectively, could give rise to
the payment of any amount that would not be deductible pursuant to the terms of
Sections 162(m) or 280G of the Code.
(d) Except as set forth in Schedule 5.17, neither the Company nor any of
its Subsidiaries has any liability in respect of post-retirement health, medical
or life insurance benefits for retired, former or current employees of the
Company or its Subsidiaries except as required to avoid excise tax under Section
4980B of the Code.
(e) There has been no amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its Subsidiaries relating to,
or change in employee participation or coverage under, any Employee Plan which
would increase materially the expense of maintaining such Employee Plan above
the level of the expense incurred in respect thereof for the fiscal year ended
on the Company Balance Sheet Date, except that the benefits under the Furon
Company Employees' Profit Sharing Plan will be provided to employees of Medex,
Inc.
(f) All material contributions and payments accrued under each Employee
Plan, determined in accordance with prior funding and accrual practices have
been discharged and paid when due.
(g) There is no action, suit, investigation, audit or proceeding pending
against or involving or, to the knowledge of the Company, threatened against or
involving, any Employee Plan before any court or arbitrator or any state,
federal or local governmental body, agency or official other than routine claims
for benefits and other than actions, including qualified domestic relations
orders.
Section 5.18. Environmental Matters. (a) Except as set forth on
Schedule 5.18:
(i) neither the Company nor any of its Subsidiaries has received any
written notice, claim, request for information or demand from any
governmental agency or third party alleging that any of the Company, its
Subsidiaries or the Company Real Properties is in material violation of,
is subject to any administrative or judicial proceeding pursuant to, or
has any material liability under, any Environmental Law;
(ii) with respect to the Company Real Properties which are currently
owned, leased or operated by the Company or its Subsidiaries, there has
not occurred, nor is there presently occurring, any Release or Releases
of any Hazardous Materials at, on, into, beneath or migrating
28
<PAGE>
from such Company Real Properties which, in the aggregate, would
reasonably be expected to result in a material liability to the Company;
(iii) with respect to the Company Real Properties which were
previously owned, leased or operated by the Company or its Subsidiaries,
there did not occur any Release or Releases of any Hazardous Materials,
at, on, into, beneath or migrating from such Company Real Properties
during or prior to the period of ownership, lease or operation by the
Company or its Subsidiaries which, in the aggregate, would reasonably be
expected to result in a material liability to the Company;
(iv) neither the Company nor any of its Subsidiaries has Released, or
allowed or arranged for any third parties to Release, any Hazardous
Materials at any other site in violation of or which would reasonably be
expected to lead to liability under, any Environmental Law which, in the
aggregate, would reasonably be expected to result in a material
liability with respect to the Company;
(v) neither the Company nor any of its Subsidiaries is a potentially
responsible party with respect to a federal, state, local or foreign
environmental cleanup site or sites or with respect to investigation or
corrective actions under any Environmental Law with respect to matters
which, in the aggregate, would reasonably be expected to result in a
material liability to the Company;
(vi) each of the Company and its Subsidiaries is currently in
compliance with all Environmental Laws, and to the extent of any prior
noncompliance by any of the Company or its Subsidiaries with
Environmental Laws, such noncompliance has been fully resolved, except
where any failure to comply or failure to resolve noncompliance would
not reasonably be expected to result in a material liability to the
Company; and
(vii) during the period of ownership, lease or operation by the
Company or any of its Subsidiaries of any Company Real Properties, the
Company or such Subsidiary operated the Company Real Properties in
compliance with all Environmental Laws, except where any failure to
comply would not reasonably be expected to result in a material
liability to the Company.
(b) For purposes of this Section, "Company Real Properties" shall mean all
real property now or previously owned, operated or leased by the Company or its
Subsidiaries.
29
<PAGE>
(c) For purposes of this Agreement, "Hazardous Materials" shall mean
asbestos, petroleum products and all other materials on the date hereof defined
as "hazardous substances", "hazardous wastes", "toxic substances", "solid
wastes" or otherwise on or prior to the date hereof listed or regulated pursuant
to the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. (S)9601 et seq. ("CERCLA"); the Resource
Conservation and Recovery Act, 42 U.S.C. (S)(S)6901 et seq. ("RCRA") and any
amendments thereto; the Hazardous Materials Transportation Act, 49 U.S.C.
(S)(S)1801 et seq. ("HMTA"); the Clean Water Act, the Safe Drinking Water Act;
the Atomic Energy Act; the Federal Insecticide, Fungicide, and Rodenticide Act,
the Clean Air Act; or any other similar foreign, federal, state or local
statute, regulation or ordinance or any other law or common law theory of any
foreign, state or federal court, as now in effect, relating to, or imposing
liability or standards of conduct concerning any hazardous or toxic waste,
substance or material.
(d) For purposes of this Agreement, "Environmental Laws" shall mean any
and all foreign, federal, state and local laws (including, without limitation,
common law), statutes, ordinances, rules, regulations, permits, licenses or
other governmental requirements relating to health, pollution, the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), the release or threatened release, discharge,
emission, of any Hazardous Materials or materials containing Hazardous Materials
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials or
the pollution of the environment, including, without limitation, CERCLA, RCRA
and HMTA.
(e) For purposes of this Agreement, "Release" shall mean releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, escaping,
leaching, disposing or dumping.
Section 5.19. Antitakeover Statutes and Rights Agreement. (a) Except as
set forth on Schedule 5.19, to the Company's knowledge, no "control share
acquisition," "fair price," "moratorium" or other antitakeover laws or
regulations enacted under U.S. state apply to this Agreement or any of the
transactions contemplated hereby.
(b) The Company has taken all action necessary to render the rights issued
pursuant to the terms of the Rights Agreement dated as of April 30, 1999 between
the Company and The Bank of New York inapplicable to this
30
<PAGE>
Agreement, the Stock Option Agreement, the Offer, the Shareholder Agreement and
transactions contemplated thereby, the Merger and any other Transactions.
Section 5.20. Title to Real Properties. The Company and each of its
Subsidiaries have good fee simple title to, or in the case of leased property
and assets have valid leasehold interests in, all real property reflected on the
Company Balance Sheet or acquired after the Company Balance Sheet Date, except
for properties sold since the Company Balance Sheet Date in the ordinary course
of business consistent with past practices, except for such imperfections in
title and easements, if any, as are not substantial in character, amount or
extent and do not materially detract from the value, or materially interfere
with the present use of the property subject thereto or affected thereby, or
otherwise materially impair the Company's business operations. None of such
property is subject to any Lien, except:
(i) Liens disclosed on the Company Balance Sheet;
(ii) Liens for taxes not yet due or being contested in good faith (and for
which adequate accruals or reserves have been established on the Company Balance
Sheet); or
(iii) Liens which do not materially detract from the value or materially
interfere with any present use of such property or assets.
Section 5.21. Insurance Coverage. The Company and its Subsidiaries have
obtained and maintained in full force and effect public liability insurance,
insurance against claims for personal injury or death or property damage
occurring in connection with the activities of the Company or its Subsidiaries
or any properties owned, occupied or controlled by the Company or its
Subsidiaries and other insurance, in each case, with responsible and reputable
insurance companies or associations in such amounts, on such terms and covering
such risks as reasonably deemed necessary by the Company and its Subsidiaries.
Such policies and bonds will not terminate or otherwise materially be affected
solely as a result of the transactions contemplated hereby.
Section 5.22. Labor Matters. Schedule 5.22 lists, as of the date hereof,
all collective bargaining agreements which relate to any of the employees of the
Company or its Subsidiaries and a summary of all material changes thereto since
the Company Balance Sheet Date. The Company does not know of any activity or
proceedings of any labor union (or representatives thereof) to organize any
unorganized employees employed by the Company or its Subsidiaries, or of any
strikes, slowdowns, work stoppages, lockouts or threats thereof, by or with
respect to any of the employees of the Company or its Subsidiaries during the
period from
31
<PAGE>
the Company Balance Sheet Date through the date hereof. Except as set forth on
Schedule 5.22, each of the Company and its Subsidiaries has complied in all
material respects with all material laws relating to the employment of labor,
including, without limitation, any provisions thereof relating to wages, hours,
collective bargaining, the payment of social security and similar taxes, equal
employment opportunity, employment discrimination or employment safety and
neither the Company nor any of its Subsidiaries has received any written notice
of any claim that they have not complied in any material respect with such laws
except in each case such failures to comply or such claims which, in the
aggregate, would not reasonably be expected to result in a liability in excess
of $1,000,000.
Section 5.23. Intellectual Property. The Company and its Subsidiaries have
rights to use, whether through ownership, licensing or otherwise, all patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes that are material to the conduct
of the business of the Company and its Subsidiaries (collectively the
"Intellectual Property Rights"). The patents owned by the Company or any of its
Subsidiaries are valid and enforceable and any patent issuing from patent
applications of the Company or any of its Subsidiaries will be valid and
enforceable, except as such invalidity or unenforceability, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect. Except as disclosed in Schedule 5.23, to the Company's knowledge, there
are no infringements by any other party of any of the Intellectual Property
Rights. Except as set forth on Schedule 5.23, to the knowledge of the Company,
there are no currently pending lawsuits against the Company and its Subsidiaries
alleging infringement of any intellectual property right of another Person.
ARTICLE 6
Representations and Warranties of Parent
Parent represents and warrants to the Company that:
Section 6.01. Corporate Existence and Power. Each of Parent and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals the
absence of which would not have, individually or in the aggregate, a Material
Adverse Effect on Parent. Since the date of its incorporation, Merger
Subsidiary has not engaged in
32
<PAGE>
any activities other than in connection with or as contemplated by this
Agreement, the Shareholder Agreement or the Stock Option Agreement or in
connection with arranging any financing required to consummate the Transactions.
Section 6.02. Corporate Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the Stock
Option Agreement, and the consummation by Parent and Merger Subsidiary of the
Transactions, are within the corporate powers of Parent and Merger Subsidiary
and have been duly authorized by all necessary corporate action. Each of this
Agreement and the Stock Option Agreement constitutes a valid and binding
agreement of each of Parent and Merger Subsidiary.
Section 6.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the Stock
Option Agreement, and the consummation by Parent and Merger Subsidiary of the
Transactions, require no action by or in respect of, or filing with, any
governmental body, agency, official or authority, domestic or foreign, other
than (i) the filing of the California Merger Agreement with respect to the
Merger with the California Secretary of State and appropriate documents with the
relevant authorities of other states in which Parent is qualified to do
business, (ii) compliance with any applicable requirements of the HSR Act and of
any applicable Antitrust Laws, (iii) compliance with any applicable requirements
of the 1933 Act, the 1934 Act and any other applicable securities or takeover
laws, whether state or foreign, (iv) the filing of a written notification
pursuant to Section 5021 of the Omnibus Trade and Competitiveness Act of 1988
(the Exon-Florio Statute), and (v) any actions or filings the absence of which
would not be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent or materially to impair the ability of Parent
and Merger Subsidiary to consummate the Transactions.
Section 6.04. Non-contravention. The execution, delivery and performance
by Parent and Merger Subsidiary of this Agreement and the Stock Option
Agreement, and the consummation by Parent and Merger Subsidiary of the
Transactions, do not and will not (i) contravene, conflict with, or result in
any violation or breach of any provision of the certificate of incorporation or
bylaws of Parent or Merger Subsidiary, (ii) assuming compliance with the matters
referred to in Section 6.03, contravene, conflict with, or result in any
violation or breach of any provision of any applicable law, statute, ordinance,
rule, regulation, judgment, injunction, order or decree or (iii) require any
consent or other action by any Person under, constitute a default, or an event
that, with or without notice or lapse of time or both, would become a default,
under, or cause or permit the termination, cancellation, acceleration or other
change of any right or obligation or the loss of any benefit to which Parent or
Merger Subsidiary is entitled under
33
<PAGE>
any provision of any agreement or other instrument binding upon Parent or Merger
Subsidiary or any license, franchise, permit, certificate, approval or other
similar authorization affecting, or relating in any way to, the assets or
business of Parent or Merger Subsidiary, except for such contraventions,
conflicts and violations referred to in clause (ii) and for such failures to
obtain consent or other action, defaults, terminations, cancellations,
accelerations, changes, losses or Liens referred to in clause (iii) that could
not be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent or materially to impair the ability of Parent and
Merger Subsidiary to consummate the Transactions.
Section 6.05. Disclosure Documents. (a) The information with respect to
Parent and any of its Subsidiaries that Parent furnishes to the Company in
writing specifically for use in any Company Disclosure Document will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading (i) in the case of the
Company Proxy Statement, as supplemented or amended, if applicable, at the time
such Company Proxy Statement or any amendment or supplement thereto is first
mailed to shareholders of the Company and at the time such shareholders vote on
adoption of this Agreement, and (ii) in the case of any Company Disclosure
Document other than the Company Proxy Statement, at the time of the filing of
such Company Disclosure Document or any supplement or amendment thereto and at
the time of any distribution or dissemination thereof.
(b) The Offer Documents, when filed, distributed or disseminated, as
applicable, will comply as to form in all material respects with the applicable
requirements of the 1934 Act and, at the time of the filing thereof, at the time
of any distribution or dissemination thereof and at the time of consummation of
the Offer, will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, provided
that this representation and warranty will not apply to statements or omissions
included in the Offer Documents based upon information furnished to Parent or
Merger Subsidiary in writing by the Company specifically for use therein.
Section 6.06. Finders' Fees. Except for Lazard Freres & Co. L.L.C., whose
fees will be paid by Parent, there is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Parent who might be entitled to any fee or commission from the Company or any
of its Affiliates upon consummation of the Transactions.
34
<PAGE>
Section 6.07. Financing. Parent has, or will have prior to the expiration
of the Offer, sufficient cash, available lines of credit or other sources of
immediately available funds (including, if required or desirable, funds provided
by Saint-Gobain) to enable it to purchase all of the Shares (and options and
other rights to purchase Shares) outstanding (whether in the Offer or the
Merger), to pay off all of the outstanding debt of the Company, to fund the
Company's severance and change of control obligations and to pay all related
fees and expenses pursuant to the Offer.
ARTICLE 7
Covenants of the Company
The Company agrees that:
Section 7.01. Conduct of the Company. Except as expressly permitted by
this Agreement, from the date hereof until the Effective Time, the Company and
its Subsidiaries shall conduct their business in the ordinary course consistent
with past practice and shall use their commercially reasonable efforts to
preserve intact their business organizations and relationships with third
parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time:
(a) the Company will not adopt or propose any change to its articles of
incorporation or bylaws;
(b) the Company will not, and will not permit any of its Subsidiaries to,
merge or consolidate with any other Person or acquire a material amount of stock
or assets of any other Person;
(c) except for the Subsidiary Sale, the Company will not, and will not
permit any of its Subsidiaries to, sell, lease, license or otherwise dispose of
any material subsidiary or material amount of assets, securities or property
except (i) pursuant to existing contracts or commitments and (ii in the ordinary
course consistent of business with past practice;
(d) the Company will not, and will not permit any of its Subsidiaries to,
(i) take any action that (A) would make any representation and warranty of the
Company hereunder that is qualified by materiality or Material Adverse Effect
inaccurate in any respect at, or as of any time prior to, the Effective Time or
(B) would make any representation or warranty of the Company hereunder that is
35
<PAGE>
not so qualified to be inaccurate in any material respect at, or as of any time
prior to, the Effective Time or (ii) omit to take any action necessary to
prevent any such representation or warranty from being inaccurate in any respect
or material respect, as the case may be, at any such time;
(e) the Company will not, and will not permit any of its Subsidiaries to,
issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale,
pledge, disposition or encumbrance of, any shares of capital stock of any class,
or any options, warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock, or any other ownership interest of the
Company, any of its Subsidiaries or Affiliates (except for the issuance of
Shares pursuant to the exercise of Options, which Options are outstanding on the
date hereof and the issuance of Shares as required under the ESPP);
(f) the Company will not, and will not permit any of its Subsidiaries to,
(i) declare, set aside, make or pay any dividend or other distribution (whether
in cash, stock or property of any combination thereof) in respect of its capital
stock, except for the payment of quarterly cash dividends on the Shares not in
excess of $.03 per Share with usual record and payment dates in accordance with
past dividend practice and except that any wholly-owned Subsidiary of the
Company may declare and pay a dividend to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) except for the Notes Offer, repurchase, redeem or
otherwise acquire any of its securities or any securities of its Subsidiaries,
or propose to do any of the foregoing;
(g) the Company will not, and will not permit any of its Subsidiaries to,
sell, transfer, license, sublicense or otherwise dispose of any material
Intellectual Property Rights (other than in the ordinary course of business
consistent with past practice) or amend or modify any existing agreements with
respect to any material Intellectual Property Rights or third party Intellectual
Property Rights;
(h) except as set forth on Schedule 7.01(h), the Company will not, and
will not permit any of its Subsidiaries to, (i) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations of any
other Person (other than (x) for an amount not exceeding $10 million in the
aggregate and (y) for a term not greater than one year in duration), or make any
loans, advances, or capital contributions to, or investments in, any other
Person (other than to any wholly-owned Subsidiary of the Company or customary
loans or advances to employees in the ordinary course of business consistent
with past practice), (ii) enter into or amend any contract or agreement other
than in the ordinary course of business consistent with past practice, (iii)
authorize or make any capital
36
<PAGE>
expenditures or purchases of fixed assets that are not currently budgeted and
that in the aggregate exceeds $1,000,000, (iv) terminate any Company Material
Contract or amend in any material respect any Company Material Contract or (v)
enter into or amend any contract, agreement, commitment or arrangement to effect
any of the matters prohibited hereunder;
(i) the Company will not, and will not permit any of its Subsidiaries to,
take any action, other than as required by GAAP, to change accounting policies
or procedures or cash maintenance policies or procedures (including, without
limitation, procedures with respect to revenue recognition, capitalization of
development costs, payments of accounts payable and collection of accounts
receivable);
(j) the Company will not, and will not permit any of its Subsidiaries to,
make any Tax election not required by law and inconsistent with past practice or
settle or compromise any Tax liability, except to the extent the amount of any
such settlement or compromise has been reserved for on the consolidated
financial statements contained in the Company SEC Documents, or would not have a
Material Adverse Effect;
(k) the Company will not, and will not permit any of its Subsidiaries to,
pay, discharge, settle, or satisfy any lawsuits, claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice of liabilities reflected or
reserved against in the Company Balance Sheet or incurred in the ordinary course
of business consistent with past practice or other payments, discharges or
satisfactions which in the aggregate do not exceed $1,000,000, or waive the
benefits of, or agree to modify in any manner, any confidentiality, standstill
or similar agreement to which the Company or any of its Subsidiaries is a party;
(l) except as contemplated by Section 8.04 and as described on Schedule
7.01(h), the Company will not, and will not permit any of its Subsidiaries to
(i) adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement, deferred
compensation, employment or employee benefit plan, agreement, trust,
plan, fund or other arrangement for the benefit and welfare of any
director, officer or employee,
(ii) increase in any manner the compensation or fringe benefits of
any director, officer or employee (except for increases in the ordinary
37
<PAGE>
course of business consistent with past practice and that, in the
aggregate, do not result in a material increase in benefits or
compensation expense to the Company) or
(iii) pay any benefit not required by any currently existing plan
or arrangement (including, without limitation, the granting of stock
options or stock appreciation rights or the removal of existing
restrictions in any benefit plans or agreements); and
(m) the Company will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing.
Section 7.02. Shareholder Meeting; Proxy Material. The Company shall cause
a meeting of its shareholders (the "Company Shareholder Meeting") to be duly
called and held as soon as reasonably practicable after consummation of the
Offer for the purpose of voting on the approval and adoption of this Agreement
and the Merger, unless California Law does not require a vote of shareholders of
the Company for consummation of the Merger. Subject to their fiduciary duties as
advised by outside counsel to the Company, and subject to Section 7.04(c), the
Board of Directors of the Company shall recommend approval and adoption of this
Agreement and the Merger by the Company's shareholders. In connection with such
meeting, the Company will (i) promptly prepare and file with the SEC, will use
its best efforts to have cleared by the SEC and will thereafter mail to its
shareholders as promptly as practicable the Company Proxy Statement and all
other proxy materials for such meeting, (ii) use its best efforts to obtain the
necessary approvals by its shareholders of this Agreement and the Transactions
and (iii) otherwise comply with all legal requirements applicable to such
meeting.
Section 7.03. Access to Information. From the date hereof until the
Effective Time and subject to applicable law and the Confidentiality Agreement
dated as of May 27, 1999 between the Company and an Affiliate of Parent (the
"Confidentiality Agreement"), the Company shall (i) give Parent, its counsel,
financial advisors, auditors and other authorized representatives full access to
the offices, properties, books and records of the Company and its Subsidiaries,
(ii) furnish to Parent, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and other
information as such Persons may reasonably request and (iii) instruct the
employees, counsel, financial advisors, auditors and other authorized
representatives of the Company and its Subsidiaries to cooperate with Parent in
its investigation of the Company and its Subsidiaries; provided that in each
case appropriate procedures are implemented to protect the attorney-client
privilege to the extent applicable with respect to any such materials. Any
investigation pursuant to this Section shall be conducted in such manner as not
to interfere unreasonably with the conduct of the business of
38
<PAGE>
the Company and its Subsidiaries. No information or knowledge obtained by Parent
or any of its Affiliates in any investigation pursuant to this Section shall
affect or be deemed to modify any representation or warranty made by the Company
hereunder.
Section 7.04. No Solicitation; Other Offers. (a) From the date hereof
until the termination hereof, the Company will not, and will cause its
Subsidiaries and the officers, directors, employees, investment bankers,
attorneys, accountants, consultants or other agents or advisors of the Company
and its Subsidiaries not to, directly or indirectly, (i) take any action to
solicit, initiate, facilitate or encourage the submission of any Acquisition
Proposal, (ii) engage in discussions or negotiations with, or disclose any
nonpublic information relating to the Company or any of its Subsidiaries or
afford access to the properties, books or records of the Company or any of its
Subsidiaries to, any Person who the Company has reason to believe may be
considering making, or has made, an Acquisition Proposal or any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal, or (iii) grant any waiver or release under any
standstill or similar agreement with respect to any class of equity securities
of the Company. The Company will notify Parent or Parent's outside legal counsel
promptly (but in no event later than 36 hours) after receipt by the Company (or
any of its advisors) of any Acquisition Proposal, any indication that any Person
is considering making an Acquisition Proposal or any request for nonpublic
information relating to the Company or any of its Subsidiaries or for access to
the properties, books or records of the Company or any of its Subsidiaries by
any Person who the Company has reason to believe may be considering making, or
has made, an Acquisition Proposal. The Company shall provide such notice orally
and in writing and shall identify the Person making, and the terms and
conditions of, any such Acquisition Proposal, indication or request. The Company
shall keep Parent fully informed, on a current basis, of the status and details
of any such Acquisition Proposal, indication or request (including, without
limitation, any material changes to the terms thereof). The Company shall, and
shall cause its Subsidiaries and the directors, employees and other agents of
the Company and its Subsidiaries to, cease immediately and cause to be
terminated all activities, discussions and negotiations, if any, with any
Persons conducted prior to the date hereof with respect to any Acquisition
Proposal. Nothing contained in this Agreement shall prevent the Board of
Directors of the Company from complying with Rule 14d-9 or Rule 14e-2 under the
1934 Act with respect to any Acquisition Proposal.
(b) Notwithstanding the foregoing, the Company may negotiate or otherwise
engage in substantive discussions with, and furnish nonpublic information to,
any Person who delivers a Superior Proposal if (i) the Company has complied with
the terms of this Section 7.04, including, without limitation,
39
<PAGE>
the requirement in Section 7.04(a) that it notify Parent promptly after its
receipt of any Acquisition Proposal, (ii) the Board of Directors of the Company
determines in good faith by a majority vote, on the basis of advice from its
outside legal counsel, that consistent with its fiduciary duties under
applicable law, it must take such action, (iii) such Person executes a
confidentiality agreement with terms no less favorable to the Company than those
contained in the Confidentiality Agreement, (iv) the Company shall have
delivered to Parent four business days' prior written notice advising Parent
that it intends to take such action and (v) the Offer shall not have closed.
(c) The Board of Directors of the Company shall be permitted to withdraw,
or modify in a manner adverse to Parent, its approval and recommendation to its
shareholders referred to in Sections 2.02 and 7.02 hereof, but only if (i) the
Company has complied with the terms of this Section 7.04, including, without
limitation, the requirement in Section 7.04(a) that it notify Parent promptly
after its receipt of any Acquisition Proposal, (ii) a Superior Proposal is
pending at the time the Company's Board of Directors determines to take any such
action, (iii) the Company's Board of Directors determines in good faith by a
majority vote, on the basis of the advice of its outside legal counsel, that
consistent with its fiduciary duties under applicable law, it must take such
action and (iv) the Company shall have delivered to Parent four business days'
prior written notice advising Parent that it intends to take such action. For
purposes of this Agreement, "Superior Proposal" means any bona fide, unsolicited
written Acquisition Proposal for 50% or more of the outstanding Shares on terms
that the Board of Directors of the Company determines in good faith by a
majority vote is more favorable and provides greater value to the Company's
shareholders than as provided hereunder, and such decision is made on the basis
of the advice of a financial advisor of nationally recognized reputation and
takes into account all the terms and conditions of the Acquisition Proposal,
including any break-up fees, expense reimbursement provisions and conditions to
closing. Nothing in this Section 7.04(c) shall (i) permit the Company to
terminate this Agreement (except as provided in Article 11 hereof) or (ii)
affect any other obligations of the Company under this Agreement.
Section 7.05. Notices of Certain Events. The Company shall promptly notify
Parent of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the
Transactions;
(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the Transactions; and
40
<PAGE>
(c) any actions, suits, claims, investigations or proceedings commenced
or, to its knowledge, threatened against, relating to or involving or otherwise
affecting the Company or any of its Subsidiaries that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Section 5.12, 5.13, 5.16 or 5.18, as the case may be, or that relate to the
consummation of the Transactions.
Section 7.06. Certificate of the Company. On or prior to the date on which
Merger Subsidiary purchases Shares pursuant to the Offer, the Company shall
deliver to Parent a certification signed by an officer of the Company to the
effect that the Company is not nor has it been within 5 years of such date a
"United States real property holding corporation" as defined in Section 897 of
the Code.
Section 7.07. Notes Offer and Consent Solicitation. (a) The Company shall
as promptly as practicable, but in no event later than ten business days
following the public announcement of this Agreement, commence a consent
solicitation and an offer (the "Notes Offer") to purchase all of the Company's
8.125% Senior Subordinated Notes (the "Notes") with one or more dealer managers
selected by the Company and reasonably acceptable to Parent. The Company shall
commence the Notes Offer by preparing and mailing to the holders of the Notes an
offer to purchase and consent solicitation statement, together with the related
letter of transmittal and other documents (the "Notes Offer Documents"), the
terms of which (including any amendments or supplements thereto) in each case
shall be in form and substance satisfactory to Parent. The Notes Offer shall be
subject to (i) the condition that the Company receive consents from holders of
not less than 75% in aggregate principal amount of the Notes outstanding
(excluding for such purposes any Notes held by the Company and its Affiliates)
to certain amendments to be set forth in the Notes Offer Documents to the
indenture relating to the Notes, (ii) the condition that the Merger shall have
been consummated and (iii) the condition that the trustee has executed a
supplemental amendment to the indenture relating to the Notes, and other
customary conditions satisfactory to Parent; provided that no such condition may
be waived prior to the Effective Date without Parent's consent. The Notes Offer
shall initially expire 20 business days after the date of its commencement;
provided that, unless this Agreement is terminated in accordance with Article
11, in which case the Notes Offer (whether or not previously extended in
accordance with the terms hereof) shall expire on such date of termination, the
Company may agree to extend the expiration date of the Notes Offer from time to
time. The Company shall not, without the prior written consent of Parent,
change, waive or impose additional conditions to the Notes Offer.
41
<PAGE>
(b) Parent agrees to reimburse the Company for all reasonably documented
out-of-pocket expenses incurred in connection with the Notes Offer promptly
following any termination of this Agreement other than (A) any such termination
pursuant to Section 11.01(c)(i) or (ii) or Section 11.01(d) or (B) any other
termination of this Agreement arising as a result of the failure of the Company
to satisfy the condition to Closing set forth in Section 10.02(a).
Section 7.08. Interim Financial Statements. Until the Effective Date or,
if earlier, the date of termination of this Agreement pursuant to Section 11.01,
as soon as practicable but in no event later than 30 days after the end of each
month beginning with August, the Company shall deliver to Parent unaudited
consolidated financial information for such month and the corresponding month of
the preceding year as prepared by the Company's management for its own internal
purposes.
ARTICLE 8
Covenants of Parent
Parent agrees that:
Section 8.01. Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and the Stock Option Agreement and to consummate the Merger on
the terms and conditions set forth in this Agreement.
Section 8.02. Voting of Shares. Parent agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement at the Company
Shareholder Meeting.
Section 8.03. Director and Officer Liability. Parent shall, and shall
cause the Surviving Corporation to, do the following:
(a) For six years after the Effective Time, the Surviving Corporation
shall indemnify and hold harmless the present and former officers and directors
of the Company (each an "Indemnified Person") in respect of acts or omissions
occurring at or prior to the Effective Time to the fullest extent permitted by
California Law or any other applicable laws or provided under the Company's
articles of incorporation and bylaws in effect on the date hereof, provided that
such indemnification shall be subject to any limitation imposed from time to
time under applicable law.
42
<PAGE>
(b) For six years after the Effective Time, the Surviving Corporation
shall provide officers' and directors' liability insurance in respect of acts or
omissions occurring prior to the Effective Time covering each such Indemnified
Person currently covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less favorable
than those of such policy in effect on the date hereof.
(c) If Parent, the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent or
the Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 8.03.
(d) The rights of each Indemnified Person under this Section 8.03 shall be
in addition to any rights such Person may have under the articles of
incorporation or bylaws of the Company or any of its Subsidiaries, or under
California Law or any other applicable laws or under any agreement between an
Indemnified Person and the Company the form of which agreement and the name of
each Indemnified Person has been furnished to Parent prior to the date hereof.
These rights shall survive consummation of the Merger and are intended to
benefit, and shall be enforceable by, each Indemnified Person as an intended
third party beneficiary.
Section 8.04. Employees; Benefits. (a) Parent and Merger Subsidiary shall
honor (i) all employment, severance or similar contractual or benefit plan
arrangements in accordance with their terms in existence on the date hereof and
(ii) all legally imposed obligations relating to employment matters. After the
Effective Time, Parent and Merger Subsidiary shall comply with applicable law,
including without limitation the Worker Adjustment and Retraining Notification
Act, 29 U.S.C. (S) 2101 et seq. It is the current intention of Parent and
-- ----
Merger Subsidiary to cause the Surviving Corporation to provide benefits to
employees of the Company and its Subsidiaries that are no less favorable in the
aggregate to such employees than those in effect on the date hereof; provided,
however, that the foregoing shall not limit or restrict the right of the
Surviving Corporation or its Subsidiaries to terminate the employment of such
employees or subsequently to modify the benefits or other terms of employment of
such employees, to the extent permitted by applicable law.
(b) Notwithstanding the foregoing, until the end of calendar year 2000
Parent shall cause the Surviving Corporation to continue to maintain the
43
<PAGE>
Company's existing compensation, severance, welfare and pension benefit plans,
programs and arrangements (other than any stock based plans, programs and
arrangements), to the extent disclosed to Parent prior to the date hereof, for
the benefit of current and former employees of the Company and its Subsidiaries
(subject to such modification as may be required by applicable law or to
maintain the tax exempt status of any such plan which is intended to be
qualified under Section 401(a) of the Code); provided, however, that (i) nothing
herein shall prohibit Parent from replacing any such existing plan, program or
arrangement with a plan, program or arrangement which Parent reasonably believes
will provide such employees with benefits which are not materially less
favorable in the aggregate than the benefits that would have been provided under
such existing plan, program or arrangement and (ii) nothing herein shall
obligate Parent to provide such employees with any stock based compensation
(including, without limitation, stock options or stock appreciation rights)
after the Effective Time. Without limiting the generality of the foregoing, the
Company and Parent shall:
(I) take such actions as are necessary or appropriate to reflect
the understanding set forth on Schedule 8.04(b);
(II) amend the Furon Employee Stock Ownership Plan and the Furon
Employees Profit Sharing Retirement Plan to eliminate the requirement
that a participant be employed on the last day of the plan year to be
entitled to an allocation of contributions thereunder; provided, that
such amendment shall apply (A) only with respect to the plan year in
effect for each such plan as of the Effective Time (the "Current Plan
Year") and (B) only to plan participants whose employment with a
participating employer is involuntarily terminated during the period
commencing at the Effective Time and ending on the last day of the
Current Plan Year; and
(III) keep in effect the Furon Company Severance Pay Plan, as in
effect and disclosed to Parent as of the date hereof (the "Severance
Plan"), (or a plan providing benefits at least equal to the benefits
under the Severance Plan) for a period of at least one year following
the Effective Time (the "Severance Continuation Period"), and amend the
Severance Plan to provide that (x) any employee whose employment is
involuntarily terminated during the Severance Continuation Period shall
be deemed to satisfy the condition in Section 2.1(a) of the Severance
Plan that the employee's termination be as a result of a reduction in
work force, and (y) during the Severance Continuation Period, without
regard to Section 2.1(e)(2) of the Severance Plan, employees shall be
eligible for benefits under the Severance Plan notwithstanding their
employment by a
44
<PAGE>
business unit that is sold to another company unless
such employee becomes an employee of such other company or its
affiliate.
(c) All service credited to each employee by the Company through the
Effective Time shall be recognized by Parent for purposes of eligibility and
vesting under any employee benefit plan provided by the Surviving Corporation or
Parent for the benefit of employees in which such employees of the Company
participate.
(d) From and after the date hereof through the Effective Time, the Company
and Parent shall cooperate in good faith in (i) communicating with Company
employees with regard to the Merger and any personnel or employee benefits
matters related thereto and (ii) facilitating any necessary transitions in
connection with the Merger with respect to Company benefit plans, payroll
administration or similar matters.
ARTICLE 9
Covenants of Parent and the Company
The parties hereto agree that:
Section 9.01. Reasonable Best Efforts. (a) Subject to the terms and
conditions of this Agreement, the Company and Parent will use their 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 under applicable laws and
regulations to consummate the Transactions. In furtherance and not in
limitation of the foregoing, each of Parent and the Company agrees to make
appropriate filings pursuant to applicable Antitrust Laws, including a
Notification and Report Form pursuant to the HSR Act and any applicable filings
in Italy and Germany with respect to the transactions contemplated hereby as
promptly as practicable and in any event within ten business days of the date
hereof and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and to take
all other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 9.01 shall (i) limit a party's right to terminate this Agreement
pursuant to Section 11.01(b)(iv) so long as such party has up to then complied
in all material respects with its obligations under this
45
<PAGE>
Section 9.01 or (ii) require Parent, its Affiliates or the Company to consent
to: any restriction, limitation, or obligation with respect to the businesses of
Parent, its Affiliates or the Company or any sale or disposition of any assets
of Parent, its Affiliates or the Company which is reasonably expected to result
in, directly or indirectly, a reduction in aggregate revenues of Parent and its
affiliates (including the Company) on an annualized basis in excess of
$50,000,000 (a "De Minimus Restriction").
(b) In connection with the efforts referenced in Section 9.01(a) to obtain
all requisite approvals and authorizations for the Transactions under the HSR
Act or any other Antitrust Law, each of Parent and the Company shall use its
reasonable best efforts to (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (ii) keep the other party informed in all material respects of any
material communication received by such party from, or given by such party to,
the Federal Trade Commission (the "FTC"), the Antitrust Division of the
Department of Justice (the "DOJ") or any other governmental authority and of any
material communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby and (iii) permit the other party to review any material communication
given by it to, and consult with each other in advance of any meeting or
conference with, the FTC, the DOJ or any such other governmental authority or,
in connection with any proceeding by a private party, with any other Person. For
purposes of this Agreement, "Antitrust Law" means the Sherman Act, as amended,
the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal, state and foreign, if any, statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
Section 9.02. Certain Filings. The Company and Parent shall cooperate with
one another (i) in connection with the preparation of the Company Disclosure
Documents and the Offer Documents, (ii) in determining whether any action by or
in respect of, or filing with, any governmental body, agency, official, or
authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the Transactions and (iii) in taking such actions or
making any such filings, furnishing information required in connection therewith
or with the Company Disclosure Documents or the Offer Documents and seeking
timely to obtain any such actions, consents, approvals or waivers.
46
<PAGE>
Section 9.03. Public Announcements. Parent and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement or the Transactions and, except as may be
required by applicable law or any listing agreement with any national securities
exchange, will not issue any such press release or make any such public
statement prior to such consultation.
Section 9.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
Section 9.05. Merger Without Meeting of Shareholders. If Parent, Merger
Subsidiary or any other Subsidiary of Parent shall acquire at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, the parties hereto agree,
subject to satisfaction or (to the extent permitted hereunder) waiver of all
conditions to the Merger, to take all necessary and appropriate action to cause
the Merger to be effective as soon as practicable after the acceptance for
payment and purchase of Shares pursuant to the Offer without a meeting of
shareholders of the Company in accordance with California Law.
ARTICLE 10
Conditions to the Merger
Section 10.01. Conditions to Obligations of Each Party. The obligations of
the Company, Parent and Merger Subsidiary to consummate the Merger are subject
to the satisfaction of the following conditions:
(a) if required by California Law, this Agreement shall have been approved
and adopted by the shareholders of the Company in accordance with such Law;
(b) any applicable waiting period under the HSR Act and under the
Antitrust Laws of Italy and Germany relating to the Merger shall have expired or
been terminated;
47
<PAGE>
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger; and
(d) Merger Subsidiary shall have purchased Shares pursuant to the Offer.
Section 10.02. Conditions to the Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions:
(a) (i) the Company shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) the representations and warranties of the Company contained
in this Agreement and in any certificate or other writing delivered by the
Company pursuant hereto, disregarding all qualifications and exceptions
contained therein relating to materiality or Material Adverse Effect, shall be
true and correct in all material respects with only such exceptions as would
not, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on the Company at and as of the date hereof as if made at and as
of such time and at and as of the Effective Time as if made at and as of such
time and (iii) Parent shall have received a certificate signed by an executive
officer of the Company to the foregoing effect;
(b) There shall not be instituted or pending any action, investigation or
proceeding by any government or governmental authority or agency, domestic or
foreign, or by any other Person, before any court or governmental authority or
agency, domestic or foreign, (i) challenging the acquisition by Parent, Merger
Subsidiary or any of their respective Affiliates of any Shares, seeking to
restrain or prohibit the making or consummation of the Merger or the performance
of any of the other transactions contemplated by this Agreement or the Stock
Option Agreement or seeking to require the Company, Parent, Merger Subsidiary or
any of their respective Affiliates to pay any damages related to the Merger or
the other Transactions that are material in relation to the Company taken as a
whole, (ii) seeking to impose limitations on the ability of Merger Subsidiary,
or to render Merger Subsidiary unable to accept for payment, pay for or purchase
some or all of the Shares, (iii) seeking to restrain or prohibit Parent's
ownership or operation (or that of its Affiliates) of all or any portion of the
business or assets of the Company and its Subsidiaries or of Parent and its
Affiliates or to compel Parent or any of its Affiliates to dispose of or hold
separate all or any portion of the business or assets of the Company and its
Subsidiaries or of Parent and its Affiliates, other than any such restraint,
prohibition or disposition that is a De Minimus Restriction, (iv) seeking to
impose limitations on the ability of Parent, Merger Subsidiary or any of
Parent's other Affiliates effectively to exercise full
48
<PAGE>
rights of ownership of the Shares, including, without limitation, the right to
vote any Shares acquired or owned by Parent, Merger Subsidiary or any of
Parent's other Affiliates on all matters properly presented to the Company's
shareholders, (v) seeking to require divestiture by Parent, Merger Subsidiary or
any of Parent's other Affiliates of any Shares, other than any such divestiture
that is a De Minimus Restriction or (vi) that otherwise is reasonably likely to
have a Material Adverse Effect on the Company or Parent.
ARTICLE 11
Termination
Section 11.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the shareholders of the Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) Merger Subsidiary shall not have accepted for payment any
Shares pursuant to the Offer before the 41st business day following
commencement of the Offer or Merger Subsidiary shall have failed to
commence the Offer within 30 days following the date of this Agreement,
provided that the right to terminate this Agreement pursuant to this
Section 11.01(b)(i) shall not be available to any party whose breach of
any provision of this Agreement results in the failure of the acceptance
for payment by Merger Subsidiary of any Shares pursuant to the Offer by
such time or of the Offer to be commenced by such time;
(ii) there shall be any law or regulation that makes acceptance for
payment of, and payment for, the Shares pursuant to the Offer or
consummation of the Merger illegal or otherwise prohibited or any
judgment, injunction, order or decree of any court or governmental body
having competent jurisdiction enjoining Merger Subsidiary from accepting
for payment of, and paying for, the Shares pursuant to the Offer or the
Company or Parent from consummating the Merger and such judgment,
injunction, order or decree shall have become final and nonappealable;
49
<PAGE>
(iii) the Company's shareholders shall have rejected the Merger and
this Agreement at the Company Shareholder Meeting, if required, or at
any adjournment or postponement thereof; or
(iv) the Merger shall not have been consummated by February 28,
2000 (or, if a request for additional information is received from a
governmental entity pursuant to the HSR Act or applicable Antitrust
Laws, April 30, 2000); provided that the right to terminate this
Agreement pursuant to this Section 11.01(b)(iv) shall not be available
to any party whose breach of any provision of this Agreement results in
the failure of the Merger to be consummated by such time.
(c) by Parent, if, prior to the acceptance for payment of the Shares
under the Offer,
(i) any Person or "group" (as defined in Section 13(d)(3) of the
1934 Act), other than Parent or any of its Affiliates, shall have
acquired beneficial ownership of more than 50% of the Shares, through
the acquisition of stock, the formation of a group or otherwise, or
shall have been granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of such Shares;
(ii) (A) the Board of Directors of the Company shall have
withdrawn, or modified in a manner adverse to Parent, its approval or
recommendation of this Agreement, the Offer or the Merger, or shall have
recommended, or entered into, or publicly announced its intention to
enter into, an agreement or an agreement in principle with respect to an
Acquisition Proposal or shall have failed to reaffirm such approval or
recommendation upon Parent's request (or shall have resolved to do any
of the foregoing) or (B) the Company shall have breached any of its
obligations under Section 7.04; or
(iii) the Offer terminates due to the failure of the Minimum
Condition (including as modified to the Revised Minimum Number).
(d) by the Company, if (i) prior to the acceptance for payment of any
Shares pursuant to the Offer, (ii) the Company is in compliance with Section
7.04(c), (iii) the Board of Directors of the Company shall have withdrawn or
modified in a manner adverse to Parent its approval or recommendation of this
Agreement, the Offer or the Merger, (iv) the Board of Directors of the Company
authorizes the Company, subject to complying with the terms of this Agreement,
to enter into a binding written agreement concerning a transaction that
constitutes a Superior Proposal and the Company notifies Parent in writing that
it intends to
50
<PAGE>
enter into such an agreement, attaching the most current version of such
agreement to such notice, (v) Parent does not make, within four business days of
receipt of the Company's written notification of its intention to enter into a
binding agreement for a Superior Proposal, an offer that the Board of Directors
of the Company determines, in good faith after consultation with its financial
advisors, is at least as favorable, from a financial point of view, to the
shareholders of the Company as the Superior Proposal and (vi) the Company prior
to such termination pays to Parent in immediately available funds the fees
required to be paid pursuant to Section 12.04. The Company agrees (x) that it
will not enter into a binding agreement referred to in clause (iv) above until
at least the fifth business day after it has provided the notice to Parent
required hereby and (y) to notify Parent promptly if its intention to enter into
the written agreement referred to in its notification shall change at any time
after giving such notification.
The party desiring to terminate this Agreement pursuant to this Section
11.01 (other than pursuant to Section 11.01(a)) shall give notice of such
termination to the other party.
Section 11.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 11.01, this Agreement shall become void and of no effect
with no liability on the part of any party (or any shareholder, director,
officer, employee, agent, consultant or representative of such party) to the
other party hereto, provided that, if such termination shall result from the
willful and knowing (i) failure of either party to fulfill a condition to the
performance of the material obligations of the other party, (ii) failure of
either party to perform a material covenant hereof or (iii) material breach by
either party hereto of any representation or warranty or agreement contained
herein, such party shall be fully liable for any and all liabilities and damages
incurred or suffered by the other party as a result of such failure or breach.
The provisions of Sections 9.03, 1102, 12.04, 12.06 and 12.07 shall survive any
termination hereof pursuant to Section 11.01.
ARTICLE 12
Miscellaneous
Section 12.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,
51
<PAGE>
if to Parent or Merger Subsidiary, to:
Compagnie de Saint-Gobain
Les Miroirs
18, Avenue d'Alsace
92096 Paris La Defense, Cedex 27
France
Fax: 011-33-1-4762-3710
Attention: Philippe Crouzet
with a copy to:
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482
Fax: (610) 341-7087
Attention: John R. Mesher, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Fax: (212) 450-4800
Attention: Carole Schiffman, Esq.
if to the Company, to:
Furon Company
29982 Ivy Glenn Drive
Laguna Niguel, California
Fax: (949) 363-6275
Attention: General Counsel
with a copy to:
O'Melveny & Myers LLP
610 Newport Center Dr.
Suite 1700
Newport Beach, CA 92660-6429
Fax: (949) 823-6994
Attention: Gary J. Singer, Esq.
or such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the other parties hereto. All such
notices, requests and
52
<PAGE>
other communications shall be deemed received on the date of receipt by the
recipient thereof if received prior to 5 p.m. in the place of receipt and such
day is a business day in the place of receipt. Otherwise, any such notice,
request or communication shall be deemed not to have been received until the
next succeeding business day in the place of receipt.
Section 12.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement, except for the agreements
set forth in Sections 8.03, 8.04, 9.03, 11.02, 12.04, 12.06 and 12.07.
Section 12.03. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement or, in the case of a waiver, by each
party against whom the waiver is to be effective, provided that, after the
adoption of this Agreement by the shareholders of the Company and without their
further approval, no such amendment or waiver shall reduce the amount or change
the kind of consideration to be received in exchange for the Shares.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 12.04. Expenses. (a) Except as otherwise provided in this Section
12.04, all costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.
(b) The Company agrees to pay Parent a fee in immediately available funds
equal to $15,000,000, plus the reasonable expenses of Parent (not to exceed
$2,500,000) incurred in connection with the negotiation of this Agreement and
the consummation of the transactions contemplated hereby if this Agreement shall
be terminated (i) pursuant to Section 11.01(c) or Section 11.01(d); or (ii)
pursuant to Section 11.01(b)(i) or Section 11.01(b)(iii) and, in the case of
this clause (ii), prior to the time of such termination an Acquisition Proposal
shall have been publicly announced and not withdrawn and, within nine months of
the date of termination, the Company enters into an agreement or letter of
intent concerning a transaction that would constitute an Acquisition Proposal
and such transaction is subsequently consummated.
53
<PAGE>
(c) The fee and expenses reimbursement payment payable (i) pursuant to
subsection (b)(i) above shall be paid by the Company immediately upon the
termination of this Agreement and (ii) pursuant to subsection (b)(ii) above
shall be paid by the Company on the date on which the transaction referred to in
such subsection shall be consummated.
(d) The Company agrees to pay Parent in immediately available funds an
amount equal to Parent's reasonable expenses (not to exceed $2,500,000) incurred
in connection with this Agreement and the transactions contemplated hereby, if
(x) this Agreement shall have been terminated pursuant to Section 11.01(b)(i),
(y) any representation or warranty made by the Company in this Agreement shall
not have been true and correct as of the date hereof and (z) the condition in
paragraph (iv)(f) of Annex I shall not have been satisfied. Such payment shall
be made promptly, and in no event later than two business days, after such
termination.
(e) If the Company fails promptly to pay any amount due Parent pursuant to
this Section 12.04, the Company shall also pay any costs and expenses incurred
by Parent in connection with a legal action to enforce this Agreement that
results in any judgment or settlement against the Company for such amount.
Section 12.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Parent or Merger
Subsidiary may transfer or assign, in whole or from time to time in part, to one
or more of its Affiliates, the right to purchase all or a portion of the Shares
pursuant to the Offer, but no such transfer or assignment will relieve Parent or
Merger Subsidiary of its obligations under the Offer or prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
Section 12.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of California, without regard
to the conflicts of law rules of such state.
Section 12.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
54
<PAGE>
Section 12.08. Counterparts; Effectiveness; Benefit. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Except as provided in Section 8.03, no provision of this Agreement is intended
to confer any rights, benefits, remedies, obligations, or liabilities hereunder
upon any Person other than the parties hereto and their respective successors
and assigns.
Section 12.09. Entire Agreement. This Agreement, the Stock Option
Agreement, the Confidentiality Agreement and the Shareholder Agreement dated as
of the date hereof between Merger Subsidiary and Mr. Hagan constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.
Section 12.10. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
Section 12.11. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
Section 12.12. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof,
in addition to any other remedy to which they are entitled at law or in equity.
55
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
FURON COMPANY
By: /s/ J. Michael Hagan
-------------------------------------
Name: J. Michael Hagan
Title: President and Chief Executive Officer
NORTON COMPANY
By: /s/ Robert C. Ayotte
-------------------------------------
Name: Robert C. Ayotte
Title: Executive Vice President
FCY ACQUISITION CORPORATION
By: /s/ Robert C. Ayotte
-------------------------------------
Name: Robert C. Ayotte
Title: Chairman and Chief Executive Officer
<PAGE>
ANNEX I
Notwithstanding any other provision of the Offer, Parent and Merger
Subsidiary shall not be required to accept for payment or pay for any Shares,
and may terminate the Offer, if
(i) the Minimum Condition (as defined in the Merger Agreement) has not
been satisfied or waived (pursuant to the Merger Agreement, including Section
2.01(c)) by the scheduled expiration date,
(ii) the applicable waiting period under the HSR Act and under the
Antitrust Laws of Italy and Germany shall not have expired or been terminated by
the expiration date of the Offer,
(iii) at any time on or after the date of the Merger Agreement and prior to
the expiration date of the Offer, any of the following conditions exist:
(a) there shall be instituted or pending any action, investigation
or proceeding by any government or governmental authority or agency,
domestic or foreign, or by any other Person, before any court or
governmental authority or agency, domestic or foreign,
(1) challenging the acquisition by Parent or Merger Subsidiary
of any Shares under the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by the
Merger Agreement or seeking to require the Company, Parent or
Merger Subsidiary to pay any damages related to the Offer, the
Merger or the other transactions contemplated by the Merger
Agreement that are material in relation to the Company taken as a
whole,
(2) seeking to impose limitations on the ability of Merger
Subsidiary, or to render Merger Subsidiary unable to accept for
payment, pay for or purchase some or all of the Shares pursuant to
the Offer and the Merger,
(3) seeking to restrain or prohibit Parent's ownership or
operation (or that of its Affiliates) of all or any portion of the
business or assets of the Company and its Subsidiaries or of Parent
and its Affiliates or to compel Parent or any of its Affiliates to
dispose of or hold separate all or any portion of the business or
<PAGE>
assets of the Company and its Subsidiaries or of Parent and its
Affiliates, other than any such restraint, prohibition or
disposition that is a De Minimus Restriction,
(4) seeking to impose limitations on the ability of Parent,
Merger Subsidiary or any of Parent's other Affiliates effectively
to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned
by Parent, Merger Subsidiary or any of Parent's other Affiliates on
all matters properly presented to the Company's shareholders,
(5) seeking to require divestiture by Parent, Merger Subsidiary
or any of Parent's other Affiliates of any Shares or
(6) that otherwise is reasonably likely to have a Material
Adverse Effect on the Company; or
(b) there shall have been any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Offer or the Merger, by
any court, government or governmental authority or agency, domestic or
foreign, other than the routine application of the waiting period
provisions of the HSR Act and of any applicable Antitrust Laws to the
Offer or the Merger, that is reasonably likely, directly or indirectly,
to result in any of the consequences referred to in clauses (1) through
(6) of paragraph (a) above; or
(c) any Person shall have entered into a definitive agreement or an
agreement in principle with the Company regarding an Acquisition
Proposal; or
(d) the Board of Directors of the Company (1) shall have withdrawn,
or modified in a manner adverse to Parent, its approval or
recommendation of the Merger Agreement, the Offer or the Merger, (2)
shall have failed to reaffirm such approval or recommendation upon
Parent's request or (3) shall have recommended or publicly announced its
intention to enter into, a definitive agreement or an agreement in
principle with respect to an Acquisition Proposal; or
(e) it shall have been publicly disclosed or Parent shall have
otherwise learned that any Person or "group" (as defined in Section
13(d)(3) of the 1934 Act), other than Parent or any of its Affiliates,
shall have acquired beneficial ownership of more than 50% of any class
or
2
<PAGE>
series of capital stock of the Company (including the Shares), through
the acquisition of stock, the formation of a group or otherwise, or
shall have been granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of more than 50% of any class
or series of capital stock of the Company (including the Shares); or
(f) the Company shall have breached or failed to perform in any
material respect any obligation or to comply in any material respect
with any agreement or covenant of the Company to be performed or
complied with by it under the Merger Agreement; or any representations
and warranties of the Company contained in the Merger Agreement that are
qualified as to materiality or Material Adverse Effect or any similar
standard or qualification shall not be true and correct or any such
representations or warranties that are not so qualified shall not be
true and correct, individually or in the aggregate, so as to be
reasonably likely to have a Material Adverse Effect on the Company, in
each case, when made or as of the scheduled expiration of the Offer as
if made at and as of such time; or
(g) there shall have occurred a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States (other than any war or armed
hostilities or other calamity in the Balkan States) that is reasonably
expected to have a Material Adverse Effect on the Company; or
(h) the Merger Agreement shall have been terminated in accordance
with its terms;
which, in the judgment of Parent in any such case, and regardless of the
circumstances (including any action or omission by Parent) giving rise to any
such condition, makes it inadvisable to proceed with such acceptance for payment
or payment.
The foregoing conditions are for the sole benefit of Parent and Merger
Subsidiary and may, subject to the terms of the Merger Agreement, be waived by
Parent and Merger Subsidiary in whole or in part at any time and from time to
time in their discretion. The failure by Parent or Merger Subsidiary at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time prior to the Effective Time.
3
<PAGE>
EXHIBIT (c)(2)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of September 18, 1999 (this "Agreement")
among Furon Company, a California corporation (the "Company"), Norton Company, a
Massachusetts corporation ("Parent"), and FCY Acquisition Corporation, a
California corporation and an indirect wholly owned subsidiary of Parent
("Merger Subsidiary").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
the parties hereto are entering into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement")
which provides, upon the terms and subject to the conditions set forth therein,
for (i) the commencement by Merger Subsidiary of an offer (the "Offer") to
purchase any and all of the outstanding shares of the common stock, without par
value of the Company (the "Shares"), at a price of $25.50 per Share (or any
higher price paid for each Share in the Offer, the "Offer Price") and (ii) the
subsequent merger of Merger Subsidiary with and into the Company (the "Merger"),
whereby each Share then outstanding (other than Shares owned by Parent or any of
its Subsidiaries or held by the Company and other than dissenting Shares) will
be converted into the right to receive the Offer Price;
WHEREAS, as a condition to the willingness of Parent and Merger Subsidiary
to enter into the Merger Agreement, Parent and Merger Subsidiary have required
that the Company agree, and in order to induce Parent and Merger Subsidiary to
enter into the Merger Agreement, the Company has agreed, to grant to Merger
Subsidiary certain options to purchase Shares upon the terms and subject to the
conditions of this Agreement; and
WHEREAS, capitalized terms used but not defined in this Agreement shall
have the meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE>
ARTICLE 1
The Top-up Option
Section 1.01. Grant of Top-Up Stock Option. Subject to the terms and
conditions set forth herein, the Company hereby grants to Merger Subsidiary an
irrevocable option (the "Top-Up Stock Option") to purchase that number of Shares
(the "Top-Up Option Shares") equal to the number of Shares that, when added to
the number of Shares owned by Merger Subsidiary, Parent and Saint-Gobain
immediately following consummation of the Offer, shall constitute 90% of the
Shares then outstanding (assuming the issuance of the Top-Up Option Shares) at a
purchase price per Top-Up Option Share equal to the Offer Price; provided,
however, that the Top-Up Stock Option shall not be exercisable if the number of
Shares subject thereto exceeds the number of authorized Shares available for
issuance. The Company agrees to provide Parent and Merger Subsidiary with
information regarding the number of Shares available for issuance on an ongoing
basis.
Section 1.02. Exercise of Top-Up Stock Option. (a) Merger Subsidiary may,
at its election, exercise the Top-Up Stock Option in whole, but not in part, at
any one time after the occurrence of a Top-Up Exercise Event (as defined below)
and prior to the Top-Up Termination Date (as defined below).
(b) A "Top-Up Exercise Event" shall occur for purposes of this Agreement
upon Merger Subsidiary's acceptance for payment pursuant to the Offer of Shares
constituting, together with Shares owned directly or indirectly by Parent and
Saint-Gobain, more than 50% but less than 90% of the Shares then outstanding.
(c) Except as provided in the last sentence of this Section 1.02(c), the
"Top-Up Termination Date" shall occur for purposes of this Agreement upon the
earliest to occur of: (i) the Effective Time; (ii) the date which is 20 business
days after the occurrence of a Top-Up Exercise Event; (iii) the termination of
the Merger Agreement; and (iv) the date on which Merger Subsidiary reduces the
Minimum Condition to the Revised Minimum Number and accepts for payment the
Revised Minimum Number of Shares.
Notwithstanding the occurrence of the Top-Up Termination Date, Merger
Subsidiary shall be entitled to purchase the Top-Up Option Shares if it has
exercised the Top-Up Stock Option in accordance with the terms hereof prior to
such occurrence, and the occurrence of the Top-Up Termination Date shall not
affect any rights hereunder which by their terms do not terminate or expire
prior to or as of such date.
2
<PAGE>
(d) In the event Merger Subsidiary wishes to exercise the Top-Up Stock
Option, Merger Subsidiary shall send to the Company a written notice (a "Top-Up
Exercise Notice," the date of which notice is referred to herein as the "Top-Up
Notice Date") specifying the denominations of the certificate or certificates
evidencing the Top-Up Option Shares which Merger Subsidiary wishes to receive,
the place for the closing of the purchase and sale pursuant to the Top-Up Stock
Option (the "Top-Up Closing") and a date not earlier than one day nor later than
ten business days after the Top-Up Notice Date for the Top-Up Closing; provided,
however, that (i) the Top-Up Closing shall occur concurrently with the
consummation of the Offer, (ii) if the Top-Up Closing cannot be consummated by
reason of any applicable laws or orders, the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which such
restriction on consummation has expired or been terminated and (iii) without
limiting the foregoing, if prior notification to or approval of any governmental
entity is required in connection with such purchase, Merger Subsidiary and the
Company shall promptly file the required notice or application for approval and
shall cooperate in the expeditious filing of such notice or application, and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which, as the case may be, (A) any required
notification period has expired or been terminated or (B) any required approval
has been obtained, and in either event, any requisite waiting period has expired
or been terminated. The Company shall, promptly after receipt of the Top-Up
Exercise Notice, deliver a written notice to Merger Subsidiary confirming the
number of Top-Up Option Shares and the aggregate purchase price therefor.
ARTICLE 2
Closing
Section 2.01. Conditions to Closing. The obligation of the Company to
deliver Top-Up Option Shares upon the exercise of the Top-Up Stock Option is
subject to the following conditions:
(a) any applicable waiting period under the HSR Act and any applicable
non-United States laws regulating competition, antitrust, investment or exchange
controls relating to the issuance of the Top-Up Option Shares hereunder shall
have expired or been terminated;
(b) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the exercise of the Top-Up Stock
Option or the delivery of the Top-Up Option Shares in respect of any such
exercise; and
3
<PAGE>
(c) delivery of the Top-Up Option Shares would not violate, or otherwise
cause a violation of, Section 312.03(c) of the NYSE Listed Company Manual.
Section 2.02. Closing. (a) At the Top-Up Closing (i) the Company shall
deliver to Merger Subsidiary a certificate or certificates evidencing the
applicable number of Top-Up Option Shares (in the denominations designated by
Merger Subsidiary in the Top-Up Exercise Notice) and (ii) Merger Subsidiary
shall purchase each Top-Up Option Share from the Company at the Offer Price.
Payment by Merger Subsidiary of the purchase price for the Top-Up Option Shares
may be made, at the option of Merger Subsidiary, by delivery of (i) immediately
available funds by wire transfer to an account designated by the Company or (ii)
a promissory note, in form and substance reasonably satisfactory to the Company
and in a principal face amount equal to the aggregate amount of the purchase
price, which promissory note shall be secured with property (other than the Top-
Up Option Shares) reasonably acceptable to the parties, shall bear interest at a
rate equal to 5% per annum and shall be payable in full with accrued interest
immediately prior to the Effective Time.
(b) The Company shall pay all expenses, and any and all federal, state and
local taxes and other charges, that may be payable in connection with the
preparation, issuance and delivery of stock certificates under this
Section 2.02.
(c) Certificates evidencing Top-Up Option Shares delivered hereunder may
include legends legally required including the legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY
IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
It is understood and agreed that the foregoing legend shall be removed by
delivery of substitute certificate(s) without such legend upon the sale of the
Top-Up Option Shares pursuant to a registered public offering or Rule 144 under
the Securities Act, or any other sale as a result of which such legend is no
longer required.
4
<PAGE>
ARTICLE 3
Additional Agreements
Section 3.01. Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, Parent, Merger Subsidiary and the Company will use their
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 under applicable
laws and regulations to consummate the transactions contemplated by this
Agreement.
Section 3.02. Further Assurances. The Company shall perform such further
acts and execute such further documents and instruments as may reasonably be
required to vest in Merger Subsidiary and Parent the power to carry out the
provisions of this Agreement. If Merger Subsidiary shall exercise the Top-Up
Stock Option granted hereunder in accordance with the terms of this Agreement,
the Company shall, without additional consideration, execute and deliver all
such further documents and instruments and take all such further action as
Merger Subsidiary or Parent may reasonably request to carry out the transactions
contemplated by this Agreement.
ARTICLE 4
Miscellaneous
Section 4.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given as specified in Section 12.01 of the Merger Agreement.
Section 4.02. Amendments; No Waivers. (a) Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed, in the case of an amendment, by each party to this Agreement or,
in the case of a waiver, by each party against whom the waiver is to be
effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 4.03. Expenses. Except as otherwise provided herein or in Section
12.04 of the Merger Agreement, all costs and expenses incurred
5
<PAGE>
in connection with this Agreement shall be paid by the party incurring such cost
or expense.
Section 4.04. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Merger Subsidiary
may transfer or assign, in whole or from time to time in part, to one or more of
its Affiliates, the right to purchase all or a portion of the Top-Up Option
Shares pursuant to this Agreement, but no such transfer or assignment will
relieve Merger Subsidiary of its obligations under this Agreement.
Section 4.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of California, without regard
to the conflicts of law rules of such state.
Section 4.06. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 4.07. Counterparts; Effectiveness; Benefit. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto. No
provision of this Agreement is intended to confer any rights, benefits,
remedies, obligations, or liabilities hereunder upon any Person other than the
parties hereto and their respective successors and assigns.
Section 4.08. Entire Agreement. This Agreement, the Merger Agreement and
the Confidentiality Agreement constitute the entire agreement between the
parties with respect to the subject matter of this Agreement and supersede all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter of this Agreement.
Section 4.09. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
6
<PAGE>
Section 4.10. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
Section 4.11. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof,
in addition to any other remedy to which they are entitled at law or in equity.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
FURON COMPANY
By: /s/ J. Michael Hagan
--------------------------------------------
Name: J. Michael Hagan
Title: President and Chief Executive Officer
NORTON COMPANY
By: /s/ Robert C. Ayotte
-----------------------------------
Name: Robert C. Ayotte
Title: Executive Vice President
FCY ACQUISITION CORPORATION
By: /s/ Robert C. Ayotte
-----------------------------------
Name: Robert C. Ayotte
Title: Chairman and Chief Executive Officer
<PAGE>
EXHIBIT (c)(3)
SHAREHOLDER AGREEMENT
AGREEMENT, dated as of September 18, 1999 between FCY Acquisition
Corporation, a California corporation ("Buyer"), and Michael Hagan
("Shareholder").
WHEREAS, in order to induce Buyer to enter into an agreement and plan of
merger (as amended from time to time, the "Merger Agreement") with Furon
Company, a California corporation (the "Company"), Buyer has requested
Shareholder, and Shareholder has agreed, to enter into this Agreement.
WHEREAS, as of the date hereof, Shareholder is the holder of the shares of
capital stock of the Company (the "Shares") listed on the signature page hereof.
Capitalized terms used but not separately defined herein shall have the meanings
ascribed to them in the Merger Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Agreement to Tender
Section 1.0. Agreement to Tender. Shareholder hereby irrevocably and
unconditionally agrees to validly tender (and not withdraw) or cause to be
validly tendered (and not withdrawn) pursuant to and in accordance with the
terms of the Offer all of the Shares that Shareholder owns as of the date hereof
as well as any additional Shares that Shareholder may own, whether acquired by
purchase, exercise of options or otherwise, at any time after the date hereof
(the "Shareholder Shares"). Within five business days after the commencement of
the Offer (or within five business days after any Shareholder Shares are
acquired during pendency of the Offer, if later), Shareholder shall deliver
(with respect to Shareholder Shares controlled by Shareholder) to the depositary
designated in the Offer (i) a letter of transmittal with respect to the
Shareholder Shares complying with the terms of the Offer, (ii) certificates
representing all of the Shareholder Shares and (iii) all other documents or
instruments required to be delivered pursuant to the terms of the Offer.
<PAGE>
ARTICLE 2
Voting Agreement; Grant of Proxy
Section 2.01. Voting Agreement. (a) Until the earliest to occur of (x) the
consummation of the Merger, (y) the nine month anniversary of the date hereof
and (z) the termination of the Merger Agreement pursuant to Section 11.01(a),
11.01(b) or 11.01(d) thereof (the "Termination Date"), Shareholder hereby
irrevocably and unconditionally agrees to vote or cause to be voted all
Shareholder Shares that Shareholder is entitled to vote at the time of any vote
of the shareholders of the Company where such matters arise (i) in favor of the
approval and adoption of the Merger Agreement and in favor of the transactions
contemplated thereby, (ii) against any proposal or transaction which could
prevent or delay the consummation of the Transactions and (iii) against any (A)
Acquisition Proposal (other than the Merger), (B) corporate action the
consummation of which would frustrate the purposes, or prevent or delay the
consummation, of the Transactions or (C) other matter relating to, or in
connection with, any of the matters referred to in clause (A) and (B) above.
Nothing in this Article 2 shall limit or restrict Shareholder's ability to act
or vote in his capacity as an officer or director of the Company in any manner
he so chooses.
(b) If any shareholder vote in respect of the Merger Agreement or any of
the transactions contemplated by the Merger Agreement is taken by written
consent, the provisions of this Agreement imposing obligations in respect of or
in connection with any vote of shareholders shall apply mutatis mutandis to such
action by written consent.
Section 2.02. Proxy. Shareholder hereby revokes any and all previous
proxies granted with respect to the Shareholder Shares. By entering into this
Agreement, Shareholder hereby grants an irrevocable proxy, within the meaning of
Section 705 of the California General Corporation Law, and in accordance with
the provisions of Division 100 of the California Corporations Code appointing
Buyer as Shareholder's attorney-in-fact and proxy, with full power of
substitution, for and in Shareholder's name, to vote, express consent or
dissent, or otherwise to utilize such voting power in such manner and upon any
of the matters referred to in Section 2.01 above, as Buyer or its proxy or
substitute shall, in Buyer's sole discretion, deem proper with respect to the
Shareholder Shares. The proxy granted by Shareholder pursuant to this Article 2
is irrevocable and is granted in consideration of Buyer's entering into the
Merger Agreement and to secure the Shareholder's performance of his agreement
and duty to vote or cause to be voted (including by written consent) all of the
Shareholder Shares in favor of the Merger as set forth in Section 2.01 (a) and
(b) hereof and such irrevocable proxy shall remain in effect until the
Termination Date, notwithstanding the death or
2
<PAGE>
incapacity of Shareholder; provided, however, that such proxy shall be revoked
on the Termination Date.
ARTICLE 3
Representations and Warranties of Shareholder
Shareholder represents and warrants to Buyer that:
Section 3.01. Valid Title. Shareholder is the beneficial owner of the
Shareholder Shares held by him on the date hereof with no restrictions on
Shareholder's voting rights or rights of disposition pertaining thereto, except
community property rights of Shareholder's spouse. Except as previously
disclosed to Buyer, none of the Shareholder Shares is subject to any voting
trust or other agreement or arrangement with respect to the voting of such
Shares (other than this Agreement).
Section 3.02. Binding Effect. This Agreement is the valid and binding
Agreement of Shareholder, enforceable against Shareholder in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
Section 3.03. Total Shares. The number of Shares set forth on the
signature page hereto opposite the name of Shareholder are the only Shares owned
by Shareholder.
ARTICLE 4
Representations and Warranties of Buyer
Buyer represents and warrants to Shareholder:
Section 4.01. Corporate Power and Authority. Buyer has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by Buyer of this
Agreement and the consummation by Buyer of the transactions contemplated hereby
have been duly authorized by the board of directors of Buyer and no other
corporate action on the part of Buyer is necessary to authorize the execution,
delivery or performance by Buyer of this Agreement and the consummation by Buyer
of the transactions contemplated hereby. This Agreement has been duly
3
<PAGE>
executed and delivered by Buyer and is a valid and binding Agreement of Buyer,
enforceable against it in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights generally.
ARTICLE 5
Covenants of Shareholder
Shareholder hereby covenants and agrees that:
Section 5.01. No Proxies for or Encumbrances on Shareholder Shares. Except
pursuant to the terms of this Agreement, prior to the Termination Date
Shareholder shall not, without the prior written consent of Buyer, directly or
indirectly, (i) grant any proxies or enter into any voting trust or other
agreement or arrangement with respect to the voting of any Shareholder Shares or
(ii) sell, assign, transfer, encumber or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to the
direct or indirect sale, assignment, transfer, encumbrance or other disposition
of, any Shares during the term of this Agreement. Shareholder shall not seek or
solicit any such sale, assignment, transfer, encumbrance or other disposition or
any such contract, option or other arrangement or assignment or understanding
and agrees to notify Buyer promptly and to provide all details requested by
Buyer if Shareholder shall be approached or solicited, directly or indirectly,
by any person with respect to any of the foregoing.
Section 5.02. Appraisal Rights. Shareholder agrees not to exercise any
rights (including, without limitation, under Chapter 13 of the California
General Corporation Law) to demand appraisal of any Shares which may arise with
respect to the Merger.
Section 5.03. Further Action. Shareholder intends this proxy to be
irrevocable and will take such further action and execute such other instruments
as may be necessary to effectuate the intent of this proxy, including, without
limitation, filing written notice of this irrevocable proxy with the secretary
of the Company or permitting Buyer, as his attorney-in-fact, to file a copy of
this Agreement with the secretary of the Company.
Section 5.04. Legend. At the request of Buyer, Shareholder agrees to
stamp, print or type on the face of his certificates evidencing the Shares the
following legend:
4
<PAGE>
"THE VOTING, SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER
ENCUMBRANCE OR DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO A SHAREHOLDER'S AGREEMENT DATED AS OF 18TH DAY OF SEPTEMBER, 1999 BY
AND BETWEEN FCY ACQUISITION CORPORATION AND THE RECORD OWNER HEREOF, COPIES OF
WHICH ARE ON FILE AT THE OFFICES OF FCY ACQUISITION CORPORATION."
ARTICLE 6
Miscellaneous
Section 6.01. Expenses. All costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense.
Section 6.02. Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement, to obtain all necessary waivers, consents and approvals and effect
all necessary registrations and filings, responses to requests for additional
information related to such filings, and submission of information requested by
governmental authorities, and to rectify any event or circumstances which could
impede consummation of the transactions contemplated hereby.
Section 6.03. Specific Performance. The parties hereto agree that Buyer
would be irreparable damaged if for any reason Shareholder failed to perform any
of his obligations under this Agreement, and that Buyer would not have an
adequate remedy at law for money damages in such event. Accordingly, Buyer shall
be entitled to specific performance and injunctive and other equitable relief to
enforce the performance of this Agreement by Shareholder. This provision is
without prejudice to any other rights that Buyer may have against Shareholder
for any failure to perform his obligations under this Agreement.
Section 6.04. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when
5
<PAGE>
delivered in person, by cable, telegram or telex, or by registered or certified
mail (postage prepaid, return receipt requested) to such party at its address
set forth on the signature page hereto.
Section 6.05. Amendments. This Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement executed by the parties hereto.
Section 6.06. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto; provided further that Buyer may
assign its rights and obligations to any affiliate of Buyer without any such
consent.
Section 6.07. Governing Law. This Agreement shall construed in accordance
with and governed by the law of the State of California without giving effect to
the principles of conflicts of laws thereof.
Section 6.08. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FCY ACQUISITION CORPORATION
By: /s/ Robert C. Ayotte
-------------------------------------------
Name: Robert C. Ayotte
Title: Chairman and Chief Executive Officer
/s/ J. Michael Hagan
-------------------------------------
Shares Owned J. MICHAEL HAGAN
219,065/1/
- ----------
4,633/2/
- ----------
18,003/3/
- ----------
2,253/4/
Agreed and Acknowledged
/s/ Arlene S. Hagan
- ------------------------------------
ARLENE S. HAGAN
- ---------------------------
/1/ Owned by the Hagan Living Trust dated March 17, 1995, the sole trustees
of which are J. Michael Hagan and Arlene S. Hagan.
/2/ Shares in employee stock purchase plan account and are subject to the
restrictions and requirements of such plan.
/3/ Shares in 401(K) account and are subject to the restrictions and
requirements of such plan.
/4/ Shares in ESOP account and are subject to the restrictions and
requirements of such plan.
<PAGE>
EXHIBIT (c)(4)
Reciprocal Confidentiality Agreement Dated May 27, 1999
Each of us (a) agrees that we will use the other's "Confidential
Information" solely in connection with our joint consideration of a possible
business combination involving our companies and not for any individual
commercial or any other use and will at all times keep it confidential, (b)
warrants that it has the right to disclose the Confidential Information it
elects to disclose to the other and (c) acknowledges any information exchanged
hereunder is provided "AS IS" without any representation or warranty (express or
implied).
1. The "Confidential Information" of a party that is protected by this
Agreement is any information about it or its customers or suppliers that is
disclosed by or on behalf of it to this other party, whether in oral, visual,
written, electronic or other tangible or intangible form. This includes
(without limitation) all information about (a) products, processes or services
(including information concerning any material, method or manufacture, mold,
tooling, formula, trade secret, invention, drawing, design, research,
development, schematic, specification, graph, experimental data or the like) and
(b) purchasing, engineering, marketing, financial or other business information,
studies or practices.
2. The party's "Confidential Information" does not include any
information which (a) is at the time of disclosure, or thereafter becomes
without violation of this Agreement, a part of the public domain, (b) is already
known to the recipient at the time of disclosure or is subsequently received by
it from a third party, in each case without violation of any obligation of
confidentiality to the disclosing party, or (c) is independently developed by
the recipient without violation of this Agreement.
3. The recipient may only disclose the other party's Confidential
Information to those employees, affiliates and other representatives who need to
know it for purposes of evaluating the possible business combination. The
recipient will inform those representatives of the confidential nature of this
Confidential Information, will direct them to, and they shall, abide by the
terms of this Agreement as if they were parties, and will be responsible for any
breach by any of them. In addition, the recipient may disclose the other party's
Confidential Information pursuant to, but only to the extent of, an order or
similar decree of a court, administrative agency or other governmental body,
provided that it has given prompt prior written notice of such requirement to
the other party so that the other party can seek a protective order or other
appropriate remedy. Further, except to the extent as may otherwise be required
by law, neither of us nor our respective representatives will disclose to any
other person the fact that discussions or negotiations are taking place
regarding a possible business combination or any of the terms, conditions or
other facts with respect therein, including this notice thereof.
4. The recipient will protect the other party's Confidential
Information by using commercially reasonable efforts at least equal to those the
recipient employs for the protection of his own confidential information. Unless
and until otherwise agreed by the parties in writing, either party may terminate
discussions and negotiations regarding the possible business combination at any
time and for any reason. Upon demand, the recipient will cease using the
Confidential Information, immediately return all written, printed and other
eligible Confidential Information, destroy all notes, analysis, complilations,
studies and other documents it has prepared which contain or reflect that
information and all copies of the foregoing it is reasonably able to locate
(except for one file copy which may be kept solely for record keeping purposes
and to determine compliance with this Agreement in the event of a dispute), and
provide written confirmation that the foregoing has occurred.
5. Each of us will be entitled to specific performance and injunctive
relief as remedies for any violation of this Agreement by the other, in addition
to all other remedies available at law or equity. No failure or delay in
exercising any right will operate as a waiver, nor will any single or partial
exercise of a right preclude any other or further exercise or this exercise of
any other right. This Agreement constitutes our full understanding about its
subject matter, may not be amended or modified except in a written agreement
signed by each of us and shall be governed by the laws of California (without
reference to the conflicts of law principles thereof). This Agreement shall
expire on the third anniversary of the date hereof and thereafter be of no
further force or effect.
SAINT-GOBAIN INDUSTRIAL CERAMICS, INC. FURON COMPANY
By: /s/ Robert C. Ayotte By: /s/ J. Michael Hagan
-------------------------- --------------------------
Name: Robert C. Ayotte J. Michael Hagan
Title: President and Chief Chairman & CEO
Executive Officer
