<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
CIMCO, INC.
(Name of Subject Company)
HANWEST, INC.
AND
M.A. HANNA COMPANY
(Bidders)
COMMON STOCK, $0.01 PAR VALUE
(Title of Class of Securities)
171842107
(CUSIP Number of Class of Securities)
------------------------
JOHN S. PYKE, JR.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
M.A. HANNA COMPANY
SUITE 36-5000
200 PUBLIC SQUARE
CLEVELAND, OHIO 44114
(216) 589-4000
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
<TABLE>
<CAPTION>
COPIES TO:
<S> <C>
LYLE G. GANSKE, ESQ. NICK E. YOCCA, ESQ.
JONES, DAY, REAVIS & POGUE STRADLING, YOCCA, CARLSON & RAUTH, P.C.
NORTH POINT 660 NEWPORT CENTER DRIVE, SUITE 1600
901 LAKESIDE AVENUE NEWPORT BEACH, CALIFORNIA 92660
CLEVELAND, OHIO 44114 (714) 752-4000
(216) 586-3939
</TABLE>
DECEMBER 19, 1995
(Date of event which requires filing of this Statement on Schedule 13D)
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION AMOUNT OF
VALUATION FILING FEE
<S> <C>
$34,042,376(*) $6,908.48(**)
</TABLE>
(*) Determined in accordance with Rule 0-11(d) under the Securities Exchange
Act of 1934. This Transaction Valuation assumes, solely for purposes of
calculating the Filing Fee for this Schedule 14D-1, the purchase of
3,242,131 shares of common stock, par value $0.01 per share, and any
associated Rights (collectively, the "Shares"), of the Subject Company at
$10.50 per Share net to the seller in cash. Such number of Shares
represents all of the Shares outstanding as of December 18, 1995, and
assumes the exercise or conversion of all existing options, rights and
securities which were then exercisable or convertible into Shares.
(**) Includes a Schedule 13D filing fee of $100.
/ / 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: None Filling Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
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<PAGE>
<TABLE>
<S> <C> <C>
CUSIP No. 171842107 14D-1 Page __ of __ Pages
</TABLE>
- --------------------------------------------------------------------------------
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
HANWEST, INC.
34-1233868
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a member of a Group*
<TABLE>
<S> <C> <C>
(a) / /
(b) / /
</TABLE>
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3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources 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
DELAWARE
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
539,734**
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares*
/ /
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
16.6% as of December 18, 1995**
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10. Type of Reporting Person*
CO
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
**On December 19, 1995, Hanwest, Inc., a Delaware corporation (the "Purchaser"),
entered into a Stockholder Tender Agreement (the "Stockholder Tender
Agreement") with Russell T. Gilbert (the "Seller Stockholder"), the President
and Chief Executive Officer of CIMCO, Inc., a Delaware corporation (the
"Company"), pursuant to which the Seller Stockholder agreed to sell and tender
(and not withdraw) all Shares owned by the Seller Stockholder pursuant to and
in accordance with the terms of the Purchaser's Offer to Purchase dated
December 27, 1995 (the "Offer to Purchase"). The Seller Stockholder owns
539,734 Shares, which represents approximately 16.6% of the Shares outstanding
on December 18, 1995 on a fully diluted basis. The number of Shares subject to
the Stockholder Tender Agreement is reflected in rows 7 and 9 of the table
above. The Stockholder Tender Agreement remains in effect until the earlier of
the following: (i) the Seller Stockholder's Shares are purchased in accordance
with the terms of the Offer to Purchase, (ii) the date the Agreement and Plan
of Merger, dated as of December 19, 1995, among the Purchaser, the Company and
M.A. Hanna Company is terminated and (iii) March 31, 1996. The Stockholder
Tender Agreement is described more fully in Section 10, "Background of the
Offer; the Merger Agreement; the Stockholder Tender Agreement; the
Confidentiality Agreement; Appraisal Rights; the Rights Agreement," of the
Offer to Purchase. During the term of the Stockholder Tender Agreement,
Purchaser and M.A. Hanna Company have the power to vote the Seller
Stockholder's Shares in connection with the transactions contemplated by the
Offer to Purchase and with respect to certain other extraordinary transactions
involving the Company. Neither Purchaser nor M.A. Hanna Company have
dispositive power with respect to the Shares until acceptance and payment for
the Shares pursuant to the Offer to Purchase.
2
<PAGE>
<TABLE>
<S> <C> <C>
CUSIP No. 171842107 14D-1 Page __ of __ Pages
</TABLE>
- --------------------------------------------------------------------------------
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
M.A. HANNA COMPANY
34-0232435
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a member of a Group*
<TABLE>
<S> <C> <C>
(a) / /
(b) / /
</TABLE>
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources 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
DELAWARE
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
539,734**
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares*
/ /
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
16.6% as of December 18, 1995**
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10. Type of Reporting Person*
CO, HC
- --------------------------------------------------------------------------------
* SEE INSTRUCTIONS BEFORE FILLING OUT!
** See description for Hanwest, Inc. on immediately preceding page.
3
<PAGE>
INTRODUCTION
This Schedule 14D-1 relates to a tender offer by Hanwest, Inc., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of M.A. Hanna
Company, a Delaware corporation (the "Parent"), to purchase all the outstanding
shares of common stock, par value $0.01 per share, including any associated
Rights (as defined in the Offer to Purchase) (collectively, the "Shares"), of
CIMCO, Inc., a Delaware corporation (the "Company"), at $10.50 per Share net to
the seller in cash, upon the terms and subject to the conditions set forth in
its Offer to Purchase dated December 27, 1995 (the "Offer to Purchase"), a copy
of which is attached hereto as Exhibit (a)1, and in the related Letter of
Transmittal, a copy of which is attached hereto as Exhibit (a)2, which together
constitute the "Offer." The Offer is made pursuant to an Agreement and Plan of
Merger, dated as of December 19, 1995, among the Parent, the Purchaser and the
Company (the "Merger Agreement"), a copy of which is attached hereto as Exhibit
(c)1.
This Statement shall also constitute a Schedule 13D with respect to the
Stockholder Tender Agreement, dated as of December 19, 1995 (the "Stockholder
Tender Agreement"), entered into by Russell T. Gilbert, the President and Chief
Executive Officer of the Company (the "Seller Stockholder"), and the Purchaser.
Pursuant to the Stockholder Tender Agreement, the Seller Stockholder has agreed
to tender and sell (and not withdraw) all Shares owned by the Seller Stockholder
pursuant to and in accordance with the Offer. A copy of the Seller Stockholder
Agreement is filed as Exhibit (c)2 hereto.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is CIMCO, Inc., a Delaware corporation.
The address of its principal executive offices is 265 Briggs Avenue, Costa Mesa,
California 92626.
(b) The information set forth in the Introduction of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) The Purchaser is a Delaware corporation. All of the
outstanding capital stock of the Purchaser is owned by the Parent. The
information set forth in Section 8 ("Certain Information Concerning the
Purchaser and the Parent") and Schedule I of the Offer to Purchase is
incorporated herein by reference.
(e)-(f) None of the Purchaser, the Parent or, to the best knowledge of the
Purchaser, any of the persons listed in Schedule I to the Offer to Purchase has
during the last five years been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) 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 (i) Section 7 ("Certain Information
Concerning the Company"), Section 8 ("Certain Information Concerning the
Purchaser and the Parent"), and Section 10 ("Background of the Offer; the Merger
Agreement; the Stockholder Tender Agreement; the Confidentiality Agreement;
Appraisal Rights; the Rights Agreement") of the Offer to Purchase, (ii) the
Merger Agreement, and (iii) the Stockholder Tender Agreement is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Introduction and Section 9 ("Source and
Amount of Funds") of the Offer to Purchase is incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
4
<PAGE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in (i) the Introduction, Section 10
("Background of the Offer; the Merger Agreement; the Stockholder Tender
Agreement; the Confidentiality Agreement; Appraisal Rights; the Rights
Agreement") and Section 11 ("Purpose of the Offer; Plans for the Company") of
the Offer to Purchase, (ii) the Merger Agreement, and (iii) the Stockholder
Tender Agreement is incorporated herein by reference.
(f)-(g) The information set forth in Section 12 ("Effect of the Offer on
the Market for the Shares; NASDAQ Quotations; Registration Under the Exchange
Act") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in (i) the Introduction and Section 8
("Certain Information Concerning the Purchaser and the Parent") of the Offer to
Purchase, (ii) the Merger Agreement, and (iii) the Stockholder Tender Agreement
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 (i) the Introduction, Section 8 ("Certain
Information Concerning the Purchaser and the Parent"), and Section 10
("Background of the Offer; the Merger Agreement; the Stockholder Tender
Agreement; the Confidentiality Agreement; Appraisal Rights; the Rights
Agreement") of the Offer to Purchase (ii) the Merger Agreement, and (iii) the
Stockholder Tender Agreement is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and 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 the
Purchaser and the Parent") 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; NASDAQ Quotations; Registration under the Exchange Act")
of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference in its entirety.
5
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)1............................................ Offer to Purchase, dated December 27,
1995
(a)2............................................ Letter of Transmittal
(a)3............................................ Form of Letter from Dealer Manager to
Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees
(a)4............................................ Form of Letter from Brokers, Dealers,
Commercial Banks, Trust Companies and
Nominees to their Clients
(a)5............................................ Form of Notice of Guaranteed Delivery
(a)6............................................ Form of Guidelines for Certification of
Taxpayer Identification Number on
Substitute Form W-9
(a)7............................................ Form of Press Release issued on December
20, 1995 by the Parent and the Company
(a)8............................................ Form of Summary Advertisement, dated
December 27, 1995
(b) ............................................ None
(c)1............................................ Agreement and Plan of Merger, dated as of
December 19, 1995, among the Parent, the
Purchaser and the Company
(c)2............................................ Stockholder Tender Agreement, dated as of
December 19, 1995, between the Seller
Stockholder and the Purchaser
(c)3............................................ Confidentiality Agreement, dated
September 2, 1994, as amended, between
the Parent and the Company
(c)4............................................ Letter of Intent, dated November 2, 1995,
as amended, between the Parent and the
Company
(d) ............................................ None
(e) ............................................ Not Applicable
(f) ............................................ None
</TABLE>
6
<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: December 27, 1995
HANWEST, INC.
By: /s/ J.S. PYKE, JR.
--------------------------------------
Name: J.S. Pyke, Jr.
Title: Vice President and Secretary
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: December 27, 1995
M.A. HANNA COMPANY
By: /s/ J.S. PYKE, JR.
--------------------------------------
Name: J.S. Pyke, Jr.
Title: Vice President, General
Counsel and Secretary
8
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------------------------------------------------------------------
(a)1 Offer to Purchase, dated December 27, 1995
(a)2 Letter of Transmittal
(a)3 Form of Letter from Dealer Manager to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees
(a)4 Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies
and Nominees to their Clients
(a)5 Form of Notice of Guaranteed Delivery
(a)6 Form of Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9
(a)7 Form of Press Release issued on December 20, 1995 by the Parent and the
Company
(a)8 Form of Summary Advertisement, dated December 27, 1995
(c)1 Agreement and Plan of Merger, dated as of December 19, 1995, among the
Parent, the Purchaser and the Company
(c)2 Stockholder Tender Agreement, dated as of December 19, 1995, between
the Seller Stockholder and the Purchaser
(c)3 Confidentiality Agreement, dated September 2, 1994, as amended, between
the Parent and the Company
(c)4 Letter of Intent, dated November 2, 1995, as amended, between the
Parent and the Company
9
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
CIMCO, INC.
BY
HANWEST, INC.
A WHOLLY OWNED SUBSIDIARY
OF
M.A. HANNA COMPANY
AT
$10.50 PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF CIMCO, INC. (THE "COMPANY") UNANIMOUSLY HAS
DETERMINED THAT THE OFFER AND THE MERGER DESCRIBED HEREIN ARE FAIR TO, AND IN
THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS APPROVED THE OFFER
AND THE MERGER AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN IMMEDIATELY PRIOR TO THE EXPIRATION DATE (AS DEFINED
HEREIN) THAT NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE
(INCLUDING THE ASSOCIATED RIGHTS) (COLLECTIVELY, THE "SHARES"), OF THE COMPANY
REPRESENTING AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES THEN OUTSTANDING
ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION").
------------------------
IMPORTANT
Any stockholder 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 to the Depositary with
the certificate(s) representing tendered Shares and all other required documents
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
stockholder 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 stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such Shares
pursuant to the guaranteed delivery procedure set forth in Section 3.
Questions and requests for assistance or additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the Information Agent or to 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 brokers,
dealers, commercial banks or trust companies.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
SALOMON BROTHERS INC
December 27, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- -------------------------------------------------------------------------- ----
<S> <C> <C>
Introduction.............................................................. 1
1. Terms of the Offer; Expiration Date.................................. 2
2. Acceptance for Payment and Payment................................... 3
3. Procedure for Tendering Shares....................................... 3
4. Withdrawal Rights.................................................... 5
5. Certain Tax Considerations........................................... 6
6. Price Range of Shares; Dividends..................................... 6
7. Certain Information Concerning the Company........................... 7
8. Certain Information Concerning the Purchaser and the Parent.......... 9
9. Source and Amount of Funds........................................... 11
10. Background of the Offer; the Merger Agreement; the Stockholder Tender
Agreement; the Confidentiality Agreement; Appraisal Rights; the
Rights Agreement.................................................... 12
11. Purpose of the Offer; Plans for the Company.......................... 28
12. Effect of the Offer on the Market for the Shares; NASDAQ Quotations;
Registration under the Exchange Act................................. 29
13. Dividends and Distributions.......................................... 29
14. Extension of Tender Period; Amendment; Termination................... 30
15. Certain Conditions to the Offer...................................... 31
16. Certain Legal Matters; Regulatory Approvals.......................... 33
17. Fees and Expenses.................................................... 37
18. Miscellaneous........................................................ 37
Schedule I -- Directors and Executive Officers of the Parent and the
Purchaser
Exhibit A -- Agreement and Plan of Merger
</TABLE>
<PAGE>
To the Holders of Common Stock of
CIMCO Inc.:
INTRODUCTION
Hanwest, Inc., a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of M.A. Hanna Company, a Delaware corporation (the "Parent"), hereby
offers to purchase all outstanding shares of common stock, par value $0.01 per
share (the "Common Stock"), of CIMCO, Inc., a Delaware corporation (the
"Company"), and the associated preferred stock purchase rights (the "Rights,"
and together with the Common Stock, the "Shares") issued pursuant to the Rights
Agreement, dated as of December 5, 1992, between the Company and First
Interstate Bank of California, as Rights Agent (as the same may be amended, the
"Rights Agreement"), at $10.50 per Share, net to the seller in cash, without
interest, 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 stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. The Purchaser will pay all charges and expenses of
Salomon Brothers Inc ("Salomon"), which is acting as Dealer Manager for the
Offer (the "Dealer Manager"), National City Bank (the "Depositary") and
Georgeson & Company Inc. (the "Information Agent") incurred in connection with
the Offer. See Section 17.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN IMMEDIATELY PRIOR TO THE EXPIRATION DATE (AS DEFINED
HEREIN) THAT NUMBER OF SHARES REPRESENTING AT LEAST A MAJORITY OF THE TOTAL
NUMBER OF SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION").
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF DIRECTORS" OR THE
"BOARD") UNANIMOUSLY HAS DETERMINED THAT THE OFFER AND THE MERGER DESCRIBED
HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE
COMPANY, HAS APPROVED THE OFFER AND THE MERGER AND RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 19, 1995 (the "Merger Agreement"), among the Parent, the
Purchaser and the Company. The Merger Agreement provides, among other things,
that the Purchaser will make the Offer and that, following the purchase of the
Shares pursuant to the Offer and the satisfaction of the other conditions set
forth in the Merger Agreement and in accordance with relevant provisions of
Delaware General Corporation Law ("DGCL"), the Purchaser will be merged with and
into the Company (the "Merger"). Following the consummation of the Merger, the
Company will continue as the surviving corporation (the "Surviving Corporation")
and will be a wholly owned subsidiary of the Parent. At the effective time of
the Merger (the "Effective Time"), each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held in the treasury of the
Company or owned by the Parent or any wholly owned subsidiary of the Parent and
other than Shares held by stockholders exercising appraisal rights pursuant to
Section 262 of the DGCL) will be cancelled and automatically converted into the
right to receive $10.50 in cash or any higher price per Share that may be paid
pursuant to the Offer, without interest. See Section 10.
Pursuant to the Company's Certificate of Incorporation and the DGCL, the
affirmative vote of the holders of a majority of the outstanding Shares is
required to approve and adopt the Merger Agreement and the Merger. Concurrently
with the execution of the Merger Agreement, the Purchaser entered into an
agreement (the "Stockholder Tender Agreement") with Russell T. Gilbert, the
President and Chief Executive Officer of the Company (the "Seller Stockholder"),
who owns 539,734 Shares (representing approximately 16.6% of the Shares
outstanding on December 18, 1995 on a fully-diluted basis). Pursuant to the
Stockholder Tender Agreement, the Seller Stockholder has agreed to tender and
sell (and not withdraw) all Shares owned by him pursuant to and in accordance
with the Offer. The Stockholder Tender Agreement also provides that the
Purchaser is entitled to receive a fee from the Seller Stockholder, under
certain circumstances, in connection with certain subsequent transactions
involving the Shares. See Section 10.
<PAGE>
According to the Company, as of December 18, 1995, there were 2,970,481
Shares outstanding and not more than 271,650 Shares subject to issuance pursuant
to stock options under the Company's stock option plans. As a result, the
Purchaser believes that the Minimum Condition would be satisfied if at least
1,621,066 Shares are validly tendered and not withdrawn immediately prior to the
Expiration Date. Pursuant to the Stockholder Tender Agreement, the Seller
Stockholder has agreed to tender 539,734 Shares to the Purchaser pursuant to the
Offer. Therefore, the Purchaser will need to have only 1,081,332 Shares validly
tendered and not withdrawn pursuant to the Offer, in addition to the Shares
subject to the Stockholder Tender Agreement, in order to satisfy the Minimum
Condition.
PaineWebber Incorporated ("PaineWebber"), financial advisor to the Company,
has delivered to the Board of Directors its written opinion to the effect that,
as of the date of the Merger Agreement, the $10.50 in cash to be received by the
holders of Shares in the Offer and the Merger is fair to such holders from a
financial point of view. A copy of such opinion is included with the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, which is being mailed
to stockholders concurrently herewith, and stockholders are urged to read the
opinion in its entirety for a description of the assumptions made, factors
considered and procedures followed by PaineWebber.
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; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer, the Purchaser will accept for payment and pay for all
Shares that have been validly tendered prior to the Expiration Date and not
withdrawn as permitted by Section 4. The term "Expiration Date" means 12:00
Midnight, New York City time, on Thursday, January 25, 1996, unless the
Purchaser shall have extended, in its sole discretion, the period of time for
which the Offer is open, in which event the term "Expiration Date" means the
latest time and date at which the Offer, as so extended by the Purchaser, shall
expire.
The Offer is subject to certain conditions set forth in Section 15,
including satisfaction of the Minimum Condition and the expiration or
termination of the waiting period applicable to the Purchaser's acquisition of
Shares pursuant to the Offer under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"). If any such condition is not satisfied,
the Purchaser may (i) terminate the Offer and return all tendered Shares to
tendering stockholders, (ii) extend the Offer and, subject to withdrawal rights
as set forth in Section 4, retain all such Shares until the expiration of the
Offer as so extended, (iii) waive such condition and, subject to any requirement
to extend the period of time during which the Offer is open, purchase all Shares
validly tendered by the Expiration Date and not withdrawn or (iv) delay
acceptance for payment of or payment for Shares, subject to applicable law,
until satisfaction or waiver of the conditions to the Offer; provided, however,
that, unless previously approved by the Company in writing, no change may be
made which decreases the price per Share payable in the Offer, which changes the
form of consideration to be paid in the Offer, which reduces the maximum number
of Shares to be purchased in the Offer, which imposes conditions to the Offer in
addition to those set forth in Section 15, which broaden the scope of such
conditions, which increases the minimum number of Shares that must be tendered
as a condition to the acceptance for payment and payment for the Shares, which
waives the Minimum Condition if such waiver would result in less than a majority
of the Shares being accepted for payment or paid for pursuant to the Offer or
which, except as provided in the Merger Agreement, extends the period of the
Offer beyond 45 days after the date of commencement of the Offer, or which
otherwise amends the terms of the Offer (including any of the conditions set
forth in Section 15) in a manner that is materially adverse to the holders of
Shares. For a description of the Purchaser's right to extend the period of time
during which the Offer is open, and to amend, delay or terminate the Offer, see
Section 14.
The Company has provided or will provide the Purchaser with the Company's
stockholder list 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
2
<PAGE>
furnished to brokers, banks and similar persons whose names, or the names of
whose nominees, appear on the stockholder 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, the Purchaser will accept for payment and pay for all
Shares validly tendered by the Expiration Date and not properly withdrawn at the
earliest time following expiration of the Offer that all conditions to the Offer
shall have been satisfied or waived by the Purchaser. For a description of the
Purchaser's right to terminate the Offer and not accept for payment of or pay
for Shares or to delay acceptance for payment of or payment for Shares, see
Section 14.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment tendered Shares when, as and if the 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 stockholders for the purpose of receiving payments from the
Purchaser and transmitting such payments to tendering stockholders. 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 a Book-Entry Transfer Facility (as defined in Section
3)), a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) (unless, in the case of book-entry transfer, an Agent's Message (as
defined in Section 3) is utilized) 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 stockholders at
different times if delivery of the Shares and other required documents occur at
different times. Under no circumstances will interest be paid by the Purchaser
on the consideration paid for Shares pursuant to the Offer, regardless of any
delay in making such payment.
If the Purchaser increases the consideration to be paid for Shares pursuant
to the Offer, the Purchaser will pay such increased consideration for all Shares
purchased pursuant to the Offer.
The 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 the Purchaser of its obligations under the Offer or prejudice the
rights of tendering stockholders 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 appropriate Book-Entry Transfer Facility),
without expense to the tendering stockholder, 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 (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of Transmittal
or an Agent's Message must be received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase and either (a)
certificates for the Shares to be tendered must be received by the Depositary at
one of such addresses or (b) 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 if the
tendering stockholder has not delivered a Letter of Transmittal), in each case
prior to the Expiration Date, or (ii) the guaranteed delivery procedure
described below must be complied with. The term "Agent's Message" means a
message transmitted by a Book-Entry Transfer Facility to and received by the
Depositary and forming a part of a book-entry confirmation, which states that
such Book-Entry Transfer Facility has received an express acknowledgement from a
participant in the system established by 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 the Purchaser may enforce such agreement against such
participant.
3
<PAGE>
BOOK-ENTRY TRANSFERS. The Depositary will cause a book-entry account in
respect of the Shares to be established at The Depository Trust Company, the
Midwest Securities Trust Company and the Philadelphia Depository Trust Company
(individually, a "Book-Entry Transfer Facility" and collectively, the
"Book-Entry Transfer Facilities") in connection with the Offer within two
business days after the date of this Offer to Purchase, and any financial
institution that is a participant in the system of any Book-Entry Transfer
Facility may make book-entry 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, the
Letter of Transmittal (or facsimile thereof) properly completed and duly
executed, together with any required signature guarantees and any other required
documents or an Agent's Message must, in any case, be received by the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
prior to the Expiration Date, or the guaranteed delivery procedure described
below must be complied with. Delivery of the Letter of Transmittal and any other
required documents to a 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 bank, broker or other
institution that is a member of the Medallion Signature Guaranty Program (each,
an "Eligible Institution"). Signatures on a Letter of Transmittal need not be
guaranteed (i) 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" on the Letter of Transmittal or (ii) if
such Shares are tendered for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates evidencing such Shares are not
immediately available or time will not permit all required documents to reach
the Depositary on or prior to the Expiration Date, or such stockholder 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 the 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 one of
the Book-Entry Transfer Facilities), together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantee and any other documents required by the Letter of
Transmittal, or an Agent's Message, are received by the Depositary within
three National Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ System") 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
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 SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING THROUGH BOOK-ENTRY TRANSFER FACILITIES, IS AT THE OPTION
AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES FOR SHARES ARE SENT BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED.
FEDERAL INCOME TAX WITHHOLDING. Under the federal income tax laws, the
Depositary will be required to withhold 31% of the amount of any payments made
to certain stockholders pursuant to the
4
<PAGE>
Offer. In order to avoid such backup withholding, each tendering stockholder
must provide the Depositary with such stockholder's correct taxpayer
identification number and certify that such stockholder is not subject to such
backup withholding by completing the Substitute Form W-9 included in the Letter
of Transmittal (see paragraph 8 of the Terms and Conditions of the Offer set
forth in the Letter of Transmittal) or by filing a Form W-9 with the Depositary
prior to any such payments. If the stockholder is a nonresident alien or foreign
entity not subject to back-up withholding, the stockholder must give the
Depositary a completed Form W-8 Certificate of Foreign Status prior to receipt
of any payments.
APPOINTMENT OF PROXY. By executing a Letter of Transmittal or causing a
Book-Entry Transfer Facility to transmit an Agent's Message, a tendering
stockholder irrevocably appoints designees of the Purchaser as such
stockholder's proxies in the manner set forth in the Letter of Transmittal to
the full extent of such stockholder's rights with respect to the Shares tendered
by such stockholder and accepted for payment by the Purchaser (and any and all
other shares of common stock or other securities issued or issuable in respect
of such Shares on or after December 19, 1995). 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
the Purchaser. Upon such acceptance for payment, all prior proxies and consents
granted by such stockholder 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 stockholder (and, if given or
executed, will be deemed ineffective). Such designees of the Purchaser will be
empowered to exercise all voting and other rights of such stockholder as they,
in their sole discretion, may deem proper at any annual, special or adjourned
meeting of the Company's stockholders, by written consent or otherwise. The
Purchaser reserves the right to require that, in order for Shares to be validly
tendered, immediately upon the Purchaser's acceptance for payment of such
Shares, the Purchaser is able to exercise full voting rights with respect to
such Shares and other securities (including voting at any meeting of
stockholders then scheduled or acting by written consent without a meeting).
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer, as well as the tendering stockholder's representation
and warranty that (i) such stockholder has the full power and authority to
tender, sell, assign and transfer the tendered Shares (and any and all other
shares of common stock or other securities issued or issuable in respect of such
Shares on or after December 19, 1995), and (ii) when the same are accepted for
payment by the Purchaser, the 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 Purchaser's acceptance for payment of
Shares tendered pursuant to the Offer will constitute a binding agreement
between the tendering stockholder and the Purchaser upon the terms and subject
to the conditions of the Offer.
DETERMINATION OF VALIDITY. 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 the Purchaser, in its sole
discretion, which determination shall be final and binding. The 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 the Purchaser's counsel, be unlawful. The Purchaser
also reserves the absolute right to waive any defect or irregularity in any
tender of Shares. No tender of Shares will be deemed to have been properly made
until all defects and irregularities relating thereto have been cured or waived.
The Purchaser's interpretation of the terms and conditions of the Offer in this
regard will be final and binding. None of the Purchaser, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defect or irregularity in tenders or incur any
liability for failure to give any such notification.
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 February 24, 1996 unless
theretofore accepted for payment as provided in this Offer to Purchase.
5
<PAGE>
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 holders of the 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 stockholder) and the serial numbers shown
on the particular certificates evidencing the Shares to be withdrawn or, in the
case of Shares tendered by book-entry transfer, the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares. Withdrawals may not be rescinded, and Shares withdrawn will thereafter
be deemed not validly tendered for purposes of the Offer. However, withdrawn
Shares may be retendered by again following one of the procedures described in
Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination shall be final and binding. None of the
Purchaser, the Dealer Manager, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defect or
irregularity in any notice of withdrawal or incur any liability for failure to
give any such notification.
5. CERTAIN TAX CONSIDERATIONS. Sales of Shares by stockholders 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 stockholder will recognize gain or loss equal to the
difference between the tax basis of his Shares and the amount of cash received
in exchange therefor. Such gain or loss will be a capital gain or loss if the
Shares are capital assets in the hands of the stockholder 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 stockholders 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 TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY
AND IS BASED UPON PRESENT LAW. STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISORS
WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER TO THEM, INCLUDING
THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND
FOREIGN TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are traded in the
over-the-counter market and price quotations are reported in the National Market
System of NASDAQ under the Symbol "CIMC". The following table sets forth, for
the periods indicated, the reported high and low sales prices for the Shares as
reported by NASDAQ. According to the Company's Annual Report on Form 10-K for
the fiscal year ended April 30, 1995 (the "Company 10-K"), the Company did not
pay any cash dividends on the Shares during the Company's two most recent fiscal
years.
6
<PAGE>
CIMCO, INC.
<TABLE>
<CAPTION>
SALES QUOTATIONS
------------------
CALENDAR YEAR HIGH LOW
- -------------------------------------------------------------------------- ------- -------
<S> <C> <C>
1993:
First Quarter........................................................... $ 9 3/4 $ 6 1/2
Second Quarter.......................................................... 9 7 1/4
Third Quarter........................................................... 8 1/4 6 1/2
Fourth Quarter.......................................................... 9 1/2 6 1/4
1994:
First Quarter........................................................... $ 7 1/2 $ 5 3/4
Second Quarter.......................................................... 6 3/4 5 1/2
Third Quarter........................................................... 6 1/4 4 5/8
Fourth Quarter.......................................................... 5 3/4 4
1995:
First Quarter........................................................... $ 5 1/2 $ 4
Second Quarter.......................................................... 5 1/2 3 3/8
Third Quarter........................................................... 8 3 1/2
Fourth Quarter (through December 26, 1995).............................. 10 3/4 7 1/4
</TABLE>
The Merger Agreement prohibits the Company from declaring or paying any
dividend or other distribution on the Shares prior to the consummation of the
Merger.
On November 7, 1995, the last full day of trading prior to the first public
announcement of negotiations between the Company and the Parent and the proposed
$10.50 per Share to be paid in a possible transaction between the Parent and the
Company, the reported high and low sales prices for the Shares as reported on
NASDAQ were $8 3/4 and $7 1/4, respectively. On December 18, 1995, the last full
day of trading prior to the first public announcement of the Offer, the reported
high and low sales prices for the Shares as reported by NASDAQ were each $9 1/2.
On December 26, 1995, the last full day of trading prior to the commencement of
the Offer, the reported high and low sales prices for the Shares as reported by
NASDAQ were $10 5/16 and $10 1/4, respectively. The Offer represents a twenty
percent premium over the reported high sales price per Share reported by NASDAQ
on November 7, 1995.
As of December 19, 1995, there were approximately 255 holders of record of
outstanding Shares according to the Company.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company is a Delaware
corporation organized in 1959 as a California corporation and reincorporated in
Delaware as CIMCO, Inc. in 1987. The Company's principal executive offices are
located at 265 Briggs Avenue, Costa Mesa, California 92626. The Company is
principally engaged in the manufacture of high precision thermoplastic
components and subassemblies and engineered thermoplastic polymers.
The following summary financial information 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's Quarterly Report on Form 10-Q
for the quarterly period ended October 31, 1995 (the "Company 10-Q"). More
comprehensive financial information is included in the Company 10-K, the Company
10-Q and other documents filed by the Company with the Securities and Exchange
Commission (the "Commission"). The financial information that follows is
qualified in its entirety by reference to the Company 10-K, the Company 10-Q and
such other documents and all the financial information and related notes
contained therein. Copies of the Company 10-K and the Company 10-Q may be
examined at or obtained from the Commission in the manner set forth below.
7
<PAGE>
CIMCO, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
----------------------------- SIX MONTHS ENDED
1995 1994 1993 OCTOBER 31, 1995
---------- ------- ------- ----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
SUMMARY OF EARNINGS DATA:
Net sales................................................. $83,231 $73,880 $76,887 $55,119
Operating profit (loss)................................... (1,047) (1,162) 2,942 422
Other expenses, net....................................... 1,181 674 846 --
Earnings (loss) before provision (benefit) for income
taxes.................................................... (2,228) (1,836) 2,096 (294)
Net income (loss)......................................... (1,548) (1,214) 1,476 (203)
Earnings (loss) per share -- primary...................... $ (0.52) $ (0.41) $ 0.50 $ (.07)
BALANCE SHEET DATA: (1)
Working capital........................................... $(1,456) $12,867 $10,417 $(1,543)
Plant, property and equipment, net........................ 25,869 27,489 22,771 26,465
Total assets.............................................. 58,583 56,648 49,348 65,400
Long-term debt (net)...................................... --(2) 13,536 5,719 --(3)
Stockholders' equity...................................... 25,315 27,107 28,208 25,269
</TABLE>
- ------------------------
(1) At period end.
(2) Working capital has been reduced by $12.1 million due to a reclassification
of long-term debt.
(3) Working capital has been reduced by $8.8 million due to a reclassification
of long-term debt.
AVAILABLE INFORMATION. The Company is subject to the information
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and is required to file reports and other information with the Commission
relating to its business, financial condition and other matters. Information, as
of particular dates, concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interest of such persons in transactions with the
Company is required to be described in periodic statements filed with the
Commission. These reports and other information, including the Company 10-K
included as an exhibit to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9, should be available for inspection and copying at the
Commission's office at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission located at 75 Park Place, New York, New
York 10007 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of this material may also be obtained by mail,
upon payment of the Commission's customary fees, from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549.
The above information concerning the Company has been taken from or based
upon the Company 10-K and other publicly available documents on file with the
Commission and other publicly available information. Although neither the
Purchaser nor the Parent has any knowledge that would indicate that such
information contained herein based upon such documents is untrue, neither the
Purchaser nor the Parent takes any responsibility for, or makes any
representation with respect to, the accuracy or completeness of the information
contained in such 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 which are unknown to the Purchaser or the Parent.
In the course of the discussions between representatives of the Parent and
the Company (see Section 10) certain projections of the future operating
performance of Compounding Technology, Inc. ("CTI"), a California corporation
and a wholly owned subsidiary of the Company, were furnished to the
8
<PAGE>
Parent's representatives, including projections that (i) gross sales for CTI for
fiscal years 1995 through 1997 would be $45 million, $54 million and $65
million, respectively (compared to gross sales of approximately $24 million in
fiscal year 1992, $33 million in fiscal year 1993 and $35.5 million in fiscal
year 1994) and (ii) operating profits for CTI for fiscal years 1995 through 1997
would be approximately $3.8 million, $5.9 million and $7.3 million, respectively
(compared to operating profits of $2.5 million in fiscal year 1992, $3.3 million
in fiscal year 1993 and $2.7 million in fiscal year 1994).
These projections 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. The Company and CTI do not as a matter of course make public
projections as to future sales or operating performance, and such projected
information is included in this Offer to Purchase only because the information
was provided to the Parent. None of the Parent, the Purchaser or the Company, or
any of their financial advisors or the Dealer Manager assumes any responsibility
for the accuracy of these projections. These projections are based upon a
variety of assumptions relating to the business of CTI which may not be realized
and are subject to significant uncertainties and contingencies, many of which
are beyond the control of the Company and CTI. There can be no assurance that
these projections will be realized, and actual results may vary materially from
those shown. These projections relate solely to CTI, as a separate subsidiary,
and do not reflect the projected operating performance of the Company as a
whole.
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE PARENT. The
Purchaser was formed as a Delaware corporation in 1977 and is a wholly owned
subsidiary of the Parent. The Purchaser was originally a general partner in H-G
Coal Company, a Delaware general partnership, which mined and shipped coal from
a Colorado surface mine. In the mid-1980s H-G Coal Company was wound up and its
assets were liquidated. The Purchaser has been idle since that time. As a
result, until immediately prior to the time the Purchaser purchases Shares
pursuant to the Offer, it is not anticipated that the Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to the transactions contemplated by the Offer. Because the Purchaser
has minimal assets and capitalization, no meaningful financial information
regarding the Purchaser is available.
The Parent is a Delaware corporation organized in 1927. Its primary
businesses are rubber and plastics compounding, production of color and
additives concentrates and distribution of plastic resins and engineered plastic
shapes.
The name, citizenship, business address, principal occupation or employment
and five year employment history of each of the directors and executive officers
of the Purchaser and the Parent are set forth in Schedule I hereto. The
principal executive offices of the Parent and the Purchaser are located at Suite
36-5000, 200 Public Square, Cleveland, Ohio 44114-2304.
Set forth below is a summary of certain consolidated financial information
with respect to the Parent and its consolidated subsidiaries excerpted or
derived from the information contained in, or incorporated by reference into,
the Parent's Annual Report on Form 10-K for the fiscal year ended December 31,
1994 (the "Parent 10-K") and the Parent's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1995 (the "Parent 10-Q"). More
comprehensive financial information is included in, or incorporated by reference
into, the Parent 10-K, the Parent 10-Q and other documents filed by the Parent
with the Commission, and the financial information summary set forth below is
qualified in its entirety by reference to the Parent 10-K, the Parent 10-Q and
such other documents and all the financial information and related notes
contained therein.
9
<PAGE>
M.A. HANNA COMPANY
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31 ENDED
---------------------------------- -------------
1994 1993 1992 SEPTEMBER 30,
---------- ---------- ---------- 1995
-------------
(UNAUDITED)
<S> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Net sales................................................. $1,719,356 $1,412,071 $1,188,541 $1,440,145
Cost of goods sold........................................ 1,393,036 1,146,191 961,925 1,174,532
Selling, general and administrative....................... 213,318 179,228 152,366 164,599
Amortization of intangibles............................... 12,458 12,006 11,069 10,473
Interest on debt.......................................... 28,549 32,258 32,509 20,295
Other income.............................................. (4,066) (5,016) (5,250) (13,322)
Other expense............................................. 9,839 9,750 8,917 5,829
Income from continuing operations before income taxes,
extraordinary charge and cumulative effect of changes in
accounting principles.................................... 62,222 37,654 27,005 77,739
Income taxes.............................................. 29,218 16,357 8,819 33,054
Income from continuing operations before extraordinary
charge and cumulative effect of changes in accounting
principles............................................... 37,004 21,297 18,186 44,685
Income (loss) from discontinued
operations............................................... 9,970 (19,279) 12,304 45,337
Extraordinary charge...................................... (3,680) -- -- --
Net income................................................ 43,294 2,018 19,025 90,022
Per share of common stock
Income from continuing operations....................... $ 1.20 $ 0.69 $ 0.63 $ 1.43
Net income.............................................. 1.40 0.07 0.66 2.89
Dividends paid.......................................... 0.51 0.48 0.44 0.405
Cash dividends paid on common stock....................... 15,688 14,003 12,630 12,522
BALANCE SHEET DATA: (1)
Current assets............................................ $ 565,615 $ 405,782 $ 416,739 $ 606,540
Current liabilities....................................... 337,491 259,680 229,327 360,828
Working capital........................................... 228,124 146,102 187,412 245,712
Property, plant and equipment --
net...................................................... 204,135 184,296 195,117 224,566
Other assets.............................................. 445,410 438,628 440,873 427,992
Net long-term assets of discontinued operations........... -- 94,904 99,836 --
Other liabilities......................................... (173,888) (176,422) (174,558) (171,719)
Long-term debt............................................ (288,869) (322,052) (350,737) (231,859)
Total stockholders' equity................................ $ 414,912 $ 365,456 $ 397,943 $ 494,692
</TABLE>
- --------------------------
(1) At period end.
10
<PAGE>
The Parent is subject to the informational filing requirements of the
Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Parent's directors and
officers, their remuneration, options granted to them, the principal holders of
the Parent's securities and any material interest of such persons in
transactions with the Parent is required to be described in periodic statements
filed with the Commission. Such reports and other information, including the
Parent 10-K and the Parent 10-Q, may be inspected and copies may be obtained
from the offices of the Commission in the same manner as set forth in Section 7.
Except as set forth in this Offer to Purchase, none of the Parent, the
Purchaser or any of their affiliates (collectively the "Purchaser Entities"),
or, to the best knowledge of any of the Purchaser Entities, any of the persons
listed on Schedule I, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any securities of the
Company, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of the Purchaser Entities,
or, to the best knowledge of any of the Purchaser Entities, any of the persons
listed on Schedule I, has had, since May 1, 1992, any transactions with the
Company or any of its executive officers, directors or affiliates that would
require reporting under the rules of the Commission. Except as set forth in this
Offer to Purchase, since May 1, 1992, there have been no contacts, negotiations
or transactions between the Purchaser Entities, or their respective subsidiaries
or, to the best knowledge of any of the Purchaser Entities, any of the persons
listed on Schedule I, and the Company or its affiliates, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
election of directors or a sale or other transfer of a material amount of
assets. None of the Purchaser Entities or, to the best knowledge of any of the
Purchaser Entities, any of the persons listed on Schedule I, beneficially owns
any Shares or has effected any transactions in the Shares in the past 60 days.
9. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by the
Purchaser to acquire all outstanding Shares pursuant to the Offer and the
Merger, to consummate the transactions contemplated by the Merger Agreement, and
to pay fees and expenses related to the Offer and the Merger is estimated to be
approximately $35,000,000, which includes estimated expenses of $750,000. These
funds are expected to be provided to the Purchaser in the form of capital
contributions or advances made by the Parent. The Parent plans to obtain the
funds for such capital contributions or advances from its available cash and
working capital. The Purchaser has not conditioned the Offer on obtaining
financing.
The Credit Agreement dated as of February 1, 1995, as amended, between the
Company and Wells Fargo Bank, National Association ("Wells Fargo"), provides,
among other things, that the Company is not permitted to merge into any other
entity without the prior written consent of Wells Fargo and that any change in
ownership during the term of the Credit Agreement of an aggregate of 25% or more
of the Shares constitutes an event of default under the Credit Agreement. In
addition, certain transfers of the Shares cause an event of default under the
promissory note dated as of August 24, 1995 executed by the Company in favor of
Wells Fargo in the original principal amount of $1,800,000 (the "Bridge Note")
and certain defaults under the Credit Agreement and/or the Bridge Note may also
cause an event of default under the Pledge Agreement, dated as of August 24,
1995, executed by the Company in favor of Wells Fargo (the "Pledge Agreement").
On December 19, 1995, Wells Fargo executed an agreement with the Company,
CTI and Medical Molding Corporation of America ("MMCA")pursuant to which Wells
Fargo agreed to waive its right to declare a default or breach under the Credit
Agreement, the Bridge Note and the Pledge Agreement due to the transfers of the
Shares or the Merger effective upon the timely satisfaction of certain
conditions. On December 22, 1995, (i) the Company and Wells Fargo executed the
Fourth Amendment to Credit Documents to, among other things, accelerate the
maturity of certain promissory notes made by the Company in favor of Wells Fargo
and waive compliance with certain financial covenants in the Credit
11
<PAGE>
Agreement through April 30, 1996 and (ii) Wells Fargo and Mesa Leasing Company
("Mesa"), a general partnership comprised of the Company and Mr. Gilbert,
executed the First Amendment to Promissory Note to accelerate the maturity of a
promissory note made by Mesa in favor of Wells Fargo. These amendments satisfied
the conditions to Wells Fargo's consent set forth in its December 19, 1995
agreement with the Company, CTI and MMCA and satisfied the condition to the
Offer set forth in paragraph (iii)(h) of Section 15.
10. BACKGROUND OF THE OFFER; THE MERGER AGREEMENT; THE STOCKHOLDER TENDER
AGREEMENT; THE CONFIDENTIALITY AGREEMENT; APPRAISAL RIGHTS; THE RIGHTS
AGREEMENT.
BACKGROUND OF OFFER
In 1991, 1992 and early 1993, the Parent contacted the Company to express
its interest in the Company and, in particular, CTI. These inquiries were
rebuffed by the Company. However, in late summer 1993, L. Ronald Trepp, the
Chief Financial Officer of the Company, contacted the Parent to discuss the
potential of a strategic relationship between the Company and the Parent.
In late 1993, operations and financial personnel of the Company and the
Parent met to discuss strategic objectives of CTI and the Parent's plastics
compounding business and the potential acquisition of CTI by the Parent.
In September 1994, at a meeting attended by Russell T. Gilbert, the
President and Chief Executive Officer of the Company, and Martin D. Walker, the
Chairman and Chief Executive Officer of the Parent, the Parent and the Company
discussed and evaluated the possibility of a joint venture involving the Company
and the Parent or an acquisition of CTI by the Parent.
In October and November 1994, certain operations and financial personnel of
the two companies met to tour CTI's facilities in Charlotte, North Carolina,
Corona, California and Singapore as well as discuss CTI's business and its long
term plans in Asia.
On December 15 and 16, 1994, the Parent and the Company and their respective
financial and legal advisors met to develop a proposal for the Parent to acquire
CTI, which proposal would then be presented to Mr. Gilbert. However, the parties
could not agree on the terms of such a proposal, including the price.
In February 1995, the Parent submitted a proposal to the Company to acquire
CTI for $12 million in cash. The Company rejected this offer.
On July 19, 1995, Mr. Walker sent a letter on behalf of the Parent to Mr.
Gilbert expressing the Parent's interest in acquiring CTI for a price of $18.5
million in cash. Mr. Walker indicated in the letter that the Parent would
consider as an alternative the acquisition of the Company for cash or stock with
a subsequent spinoff of the Company's molding division.
On August 9, 1995, in response to several unsolicited inquiries by persons
other than the Parent, the Company issued a press release announcing that the
Board had retained PaineWebber to assist the Board in reviewing and evaluating
the inquiries.
12
<PAGE>
On August 10, 1995, Mr. Walker, on behalf of the Parent, sent the following
letter to the Board outlining the terms and conditions pursuant to which the
Parent and an entity unaffiliated with the Parent would acquire the Company:
August 10, 1995
The Board of Directors
CIMCO, Inc.
265 Briggs Avenue
Costa Mesa, CA 92626-4555
Gentlemen:
This letter will set forth the terms and conditions pursuant to which M. A.
Hanna Company ("Hanna") and [an unaffiliated third party] intend to acquire
CIMCO, Inc.
1. Subject to the conditions set forth in this letter, Hanna will acquire
all of the outstanding stock of CIMCO, Inc., for an aggregate purchase price of
$43.0 million, of which $25.0 million will be used to acquire the outstanding
equity and $18.0 million will be allocated to the assumption of outstanding
third party debt. The price will be payable at the election of the CIMCO Board
of Directors wholly in cash or wholly in shares of Hanna Common Stock at $28.00
per Hanna share.
Following the Hanna acquisition of the CIMCO stock, Hanna will immediately
sell the CIMCO assets and subsidiaries not related to the Compounding
Technology, Inc. ("Compounding") business to an entity designated by [the
unaffiliated third party] for $24.0 million in consideration consisting of $6.0
million in cash and approximately $18.0 million in debt assumption, of which
approximately $11.0 million is bank debt, $5.0 million is Industrial Development
Revenue Bond obligations of CIMCO and $2.1 million is a real estate mortgage on
the plant in Costa Mesa. It is anticipated that [the unaffiliated third party]
will own a majority equity interest in the designated purchasing entity and that
Mr. Russell T. Gilbert will be offered an opportunity to own a minority equity
interest and to enter into certain employment arrangements with the entity. In
the event of a Hanna acquisition of CIMCO for Hanna Common Stock, rather than
cash, it is anticipated that Mr. Gilbert will be offered an opportunity to take
out a $1.5 million loan in order to invest in the new entity, said loan to be
secured by a pledge of Hanna Common Stock.
2. If the Board of CIMCO accepts this letter of intent, Hanna and [the
unaffiliated third party] will conduct due diligence investigations of CIMCO and
its businesses. To this end, Hanna and [the unaffiliated third party]
accompanied by CIMCO executives would visit Hewlett Packard and 3M to review the
contractual relationships with CIMCO and Compounding; Hanna and [the
unaffiliated third party] would conduct financial, supplier and legal due
diligence investigations and Phase I environmental audits of all facilities to
be purchased; Hanna would investigate Compounding's new French facility; and
Hanna would prepare and deliver to CIMCO a definitive Purchase Agreement
containing provisions that are customary in transactions of this nature.
3. At the conclusion of the three-week period the parties would promptly
negotiate the definitive Purchase Agreement and submit the transaction to their
respective Boards of Directors for approval. CIMCO will redeem all of the Rights
issued under its Shareholders Rights Plan.
4. CIMCO will work exclusively with Hanna and [the unaffiliated third
party] on the transactions described herein and will not directly or indirectly
encourage, invite, pursue or take any action to facilitate other offers to
purchase any capital stock of CIMCO or any of its assets or subsidiaries or
effect any other business combination. In the event CIMCO shall receive such an
offer, it will immediately notify Hanna and [the unaffiliated third party].
CIMCO also agrees that if during a period of one year from the date of the
acceptance of this letter any capital stock of CIMCO or any of its assets or
subsidiaries or any assets of its subsidiaries are sold to a third party, CIMCO
or its successor will pay Hanna and [the unaffiliated third party] an aggregate
fee of 3% of the total value of each third party transaction in cash, to be
divided equally between Hanna and [the unaffiliated third party], and reimburse
their out-of-pocket expenditures incurred in connection with the transactions
proposed in this letter.
13
<PAGE>
5. From and after the date of receipt of this letter, CIMCO agrees to
conduct its business in the ordinary course consistent with past practice.
6. CIMCO will not make any press release, announcement, report, disclosure
or filing with respect to the transactions described in this letter without the
prior written consent of Hanna and [the unaffiliated third party] except as
required by law based on the advice of counsel.
7. Consummation of the transactions described in this letter is subject
among other things to satisfactory completion of the due diligence
investigations by Hanna and [the unaffiliated third party]; the approval of the
Hanna acquisition of CIMCO and the subsequent sale of assets and assignment of
debt to the entity designated by [the unaffiliated third party] by the Hanna and
[the unaffiliated third party] Boards of Directors; approval by governmental
agencies and regulatory authorities; and the negotiation, execution and delivery
of the definitive Purchase Agreement and the definitive sale agreement between
Hanna and the purchasing entity designated by [the unaffiliated third party].
8. We understand that the CIMCO Board will meet on August 12, 1995. We are
willing to meet with the full Board or a committee of your Board to discuss the
transactions described in this letter further and answer any questions you may
have. Our desire is to pursue a negotiated business combination and work
amicably with you.
9. It is the intention of Hanna and [the unaffiliated third party], and by
signing this letter CIMCO acknowledges that it is CIMCO's intention as well,
that this letter and any actions of the parties with respect hereto, NOT be
deemed to constitute legally binding obligations except with respect to the
matters described in paragraphs 4, 5 and 6 above, or an obligation or commitment
to enter into any definitive agreements. Any legal obligation binding upon the
parties hereto with respect to the transactions described in this letter, except
with respect to paragraphs 4, 5 and 6 above, is subject to, and shall exist only
upon, the due execution and delivery of the definitive agreements with respect
to such transactions, and all obligations and rights of the parties hereto
(except as aforesaid) shall be governed by such agreements.
Your signature below shall indicate your intentions and obligations with
respect to the matters discussed above; please return a fully signed copy to
each of us. If we have not received the fully signed copies by 5:00 p.m. EDST on
Wednesday, August 16, 1995, the intentions stated in this letter shall be null
and void, and we shall consider other alternatives. We look forward to working
with you.
Very truly yours,
<TABLE>
<S> <C>
M. A. HANNA COMPANY [UNAFFILIATED THIRD PARTY]
/s/ Martin D. Walker /s/ XXXXXXX
- ------------------------------------------- -------------------------------------------
Martin D. Walker XXXXXXX
Chairman and Chief Executive Officer President
</TABLE>
Accepted this ___ day of
August, 1995
CIMCO, Inc.
- -------------------------------------------
Title
The foregoing letter was not signed by the Company.
14
<PAGE>
On August 22 through August 24, 1995, operations, financial and legal
personnel of the Parent conducted a due diligence review of the facilities of
the Company and its subsidiaries. The review was undertaken to identify the
major risks and opportunities involved in an acquisition of CTI or the Company
and to assist the Parent in valuing CTI's business.
On August 25, 1995, Mr. Walker sent a letter to the Board presenting the
Parent's offer to purchase CTI for $25,000,000 in cash or, in the alternative,
purchase the Company for $22,500,000 plus an amount equal to the cash purchase
price paid for all of the Company's non-CTI assets and the assumption of certain
of the Company's indebtedness by a third party selected by the Board. In this
letter, Mr. Walker reiterated the Parent's desire to acquire and retain only the
business and assets of CTI and indicated that the Parent's offer for the Company
as a whole was an accomodation to the Company. The purchase price for the
Company as a whole reflected the Parent's exposure to certain contingent
liabilities unrelated to CTI. The letter provided that this offer expired August
30, 1995. This offer was not acted upon by the Company.
On September 20, 1995, Mr. Gilbert, on his own behalf, sent a letter to Mr.
Walker expressing his desire to partner with the Parent in its acquisition of
the Company and his subsequent acquisition of the Company's molding division. In
the letter Mr. Gilbert indicated that he and his partner or partners, acting in
concert, would acquire all of the assets of the Company other than CTI for
$18,000,000, consisting of $6,200,000 in cash and $11,800,000 in assumed
liabilities.
On October 2, 1995, Mr. Gilbert, on his own behalf, sent a letter to the
Board setting forth the terms and conditions of his proposed acquisition of the
Company's molding business. The terms of Mr. Gilbert's offer to the Board
differed from the terms presented in his September 20, 1995 letter to Mr. Walker
in that the $18,000,000 purchase price for the Company's molding business
consisted of $4,100,000 in cash and $13,900,000 in assumed liabilities. Mr.
Gilbert's letter stated that his offer expired October 6, 1995.
On October 3, 1995, Mr. Walker sent a letter to the Board presenting the
Parent's offer to purchase CTI for $32,000,000 in cash, subject to satisfaction
of certain conditions, including satisfactory completion of the Parent's due
diligence investigation of CTI and receipt of CTI's actual results of operations
for August and September 1995 and preliminary results of operations for October
1995 supporting the projections previously provided by CTI to the Parent. The
letter provided that this offer would expire on October 6, 1995.
On October 5, 1995, Mr. Gilbert, on behalf of the Company, sent a letter to
Mr. Walker acknowledging the Parent's October 3, 1995 letter of intent and
requesting an extension of the offer contained therein until October 10, 1995.
The Parent agreed to extend its offer until October 10, 1995 by letter dated
October 6, 1995 to the Board. This offer was not acted upon by the Company.
On October 11, 1995, Mr. Walker received letters from Mr. Gilbert and an
unaffiliated third party discussing their respective interest in the Company's
molding business. The unaffiliated third party stated that it believed the value
range of the Company's molding business was $7,000,000 to $10,000,000. Mr.
Gilbert revised his October 2, 1995 offer for the Company's molding business by
providing two alternative acquisition proposals, each subject to certain terms
and conditions. Mr. Gilbert's letter provided that his offer would expire on
October 20, 1995 and stated that his offer was considerably higher than other
offers and met the fairness criteria set forth by PaineWebber, the investment
bank retained by the Company.
On October 18, 1995, Mr. Walker received a letter from PaineWebber inviting
the Parent to submit an offer to acquire the common stock of the Company. The
letter provided that offers had to be received by PaineWebber by 5:00 p.m.,
California time on October 20, 1995. In addition, Mr. Walker received a letter
from Mr. Gilbert dated October 18, 1995, enclosing a copy of Mr. Gilbert's
October 7, 1995 letter to the Board, which included Mr. Gilbert's views of the
value of the assets of the Company's molding business if the molding business
was liquidated. The Parent had previously analyzed and discussed with Mr Gilbert
the feasibility of selling the Company's molding business or liquidating its
assets after the Merger.
15
<PAGE>
On October 20, 1995, the Parent sent a letter to the Board offering to
acquire all of the capital stock of the Company for $9.25 per share, subject to
certain terms and conditions. The letter provided the Parent's offer expired on
October 24, 1995.
Also on October 20, 1995, Mr. Walker sent the following letter to Mr.
Gilbert:
M.A. Hanna Company
October 20, 1995
PERSONAL AND CONFIDENTIAL
Mr. Russell T. Gilbert
265 Briggs Avenue
Costa Mesa, CA 92626-4555
Dear Russ:
You as a potential purchaser of CIMCO's components businesses have requested
that Hanna confirm its intentions with respect to CIMCO's components businesses
if Hanna completes the acquisition of CIMCO.
As we have advised you, for strategic and other reasons Hanna intends to
sell or liquidate the components businesses promptly after completing the
acquisition. While we have not played a role in PaineWebber's auction of the
components businesses, we understand that your current offer represents more
value for CIMCO than any of the purchase or liquidation alternatives presented
to the CIMCO Board, although we have not reviewed these alternatives in any
depth. Assuming that this state of facts (including your current offer price)
prevails after we complete our purchase of CIMCO, we would be willing to enter
into an agreement to sell the components businesses to you subject to
substantiation of your financing and negotiation and execution of the definitive
documentation.
Very truly yours,
<TABLE>
<S> <C>
/s/ Martin D. Walker
- -------------------------------------------
Martin D. Walker
Chairman and Chief Executive Officer
</TABLE>
Mr. Gilbert responded to Mr. Walker's October 20, 1995 letter with a letter
dated October 20, 1995 discussing the option of liquidating the Company's
molding business and the problems associated with that action and indicating
that he would consider executing an agreement to tender his Shares in connection
with the Offer but only if the Parent and the Purchaser executed a definitive
agreement with him relating to his acquisition of the Company's molding
business.
On October 27, 1995, the Parent sent another letter to the Board indicating
that the Parent's October 20, 1995 offer had expired but that the Parent would
be willing to present a revised offer based on certain assumptions and receipt
of certain information (although the $9.25 per share price would not change).
Between October 27, 1995 and November 2, 1995, the Parent and the Company
engaged in discussions regarding the Parent's proposed acquisition of the
Company, primarily with respect to price. On November 2, 1995, the Company and
the Parent entered into a letter of intent regarding the possible purchase by
the Parent of the outstanding Shares at $10.50 per share in cash. The letter of
intent provided, among other things, that (i) the Parent and the Company would
promptly negotiate a merger agreement, (ii) after approval of the merger
agreement by the respective boards of directors of the Parent and the Company,
the Parent would make an offer to purchase all outstanding Shares, and (iii)
concurrently with the respective boards' approval of the Parent's offer to
purchase the Shares, the
16
<PAGE>
Board will approve the Parent's option to acquire in the tender offer the Shares
owned by Mr. Gilbert, subject to Mr. Gilbert's exercise of his stock options and
the amendment of the Company's rights plan to exclude the Offer and the Merger
from its operation. The parties acknowledged that the proposed acquisition of
the Shares by the Parent was not contingent on Mr. Gilbert's purchase of the
Company's molding division. The letter agreement also provided that the Company
would, subject to a customary fiduciary-out provision based on the advice of
counsel, (i) work exclusively with the Parent on the transactions contemplated
by the letter agreement for a period of 30 days from the date of the letter of
intent and (ii) not directly or indirectly encourage, invite, pursue or take any
action to facilitate other offers to purchase the Company or any of its
subsidiaries or any assets of the Company or any of its subsidiaries or effect
any other business combination involving the Company or any of its subsidiaries
during such 30-day period. The letter of intent also provided that for a period
of one year after the date of the letter of intent the Company would reimburse
the Parent for expenses incurred in connection with the transactions proposed in
the letter of intent, not to exceed $500,000, if the Company chose an
alternative transaction within the year and the Parent had not terminated its
participation for a reason other than the fault of the Company. This letter of
intent was subsequently amended on December 4, 1995, December 11, 1995 and
December 15, 1995 to extend the period of exclusivity provided thereunder.
On November 8, 1995, the Parent issued a press release announcing a
preliminary agreement between the Company and the Parent, pursuant to which the
Purchaser would acquire for $10.50 per share all of the outstanding capital
stock of the Company, subject to receipt of certain required approvals and
execution of definitive documentation. The press release also announced that Mr.
Gilbert intended to sell his Shares to the Purchaser on the same terms offered
to the Company's other stockholders. In addition, the press release provided
that the Parent (i) intended to sell the Company's molding business, (ii) had
received an offer from Mr. Gilbert to acquire the molding business, and (iii)
had advised Mr. Gilbert that while it intended to sell the molding business to
him as a going concern, subject to negotiation of definitive documentation and
other conditions, the sale of the molding business to Mr. Gilbert was not a
condition to the Purchaser's acquisition of the capital stock of the Company.
Thereafter, a draft of the Merger Agreement was prepared, distributed and
subsequently negotiated by representatives of the Company, the Purchaser and the
Parent. On December 6, 1995, the board of directors of the Parent approved the
Merger Agreement.
On December 14, 1995 and December 18, 1995, the Board and the board of
directors of the Purchaser, respectively, approved the Merger Agreement.
Thereafter, the Purchaser, the Parent and the Company executed and delivered the
Merger Agreement and Mr. Gilbert executed and delivered the Seller Stockholder
Agreement.
Concurrent with the execution and delivery of the Merger Agreement and the
Seller Stockholder Tender Agreement, Mr. Gilbert also executed and delivered to
the Company (i) on behalf of Mesa, a letter agreement pursuant to which Mesa
acknowledged that the consummation of the Offer and the Merger will not
constitute a prohibited assignment under Mesa's lease with the Company dated
December 7, 1984, as amended, and (ii) on behalf of himself as a general partner
of Mesa, certain letter agreements which provide, among other things, that Mr.
Gilbert will provide one-half of the funds necessary to satisfy all of Mesa's
outstanding indebtedness and that Mr. Gilbert acknowledges that the consummation
of the Offer and the Merger will not cause Mesa to be dissolved.
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement, a
copy of which is attached hereto as Exhibit A and is incorporated herein by
reference. 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 the
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. The
Purchaser has agreed that, without the written consent of the Company, no change
in
17
<PAGE>
the Offer may be made which changes the form of consideration to be paid or
decreases the price per Share or the maximum number of Shares sought in the
Offer, which imposes conditions to the Offer in addition to the Minimum
Condition and those other conditions described in Section 15, which broaden the
scope of such conditions, which increases the minimum number of Shares which
must be tendered as a condition to the acceptance for payment and payment for
the Shares, which waives the Minimum Condition if such waiver would result in
less than a majority of the Shares being accepted for payment or paid for
pursuant to the Offer, which, except as provided in the Merger Agreement,
extends the period of the Offer beyond 45 days after the commencement of the
Offer or which otherwise amends the terms of the Offer (including any of the
conditions set forth in Section 15) in a manner that is materially adverse to
the holders of Shares. In addition to extending the Offer up to 45 days after
the commencement of the Offer without the consent of the Company, the Purchaser
may, without the consent of the Company, (i) extend the Offer if, at the
scheduled expiration date of the Offer, any of the conditions to the Purchaser's
obligation to purchase Shares have not been satisfied until such time as such
conditions are satisfied, or (ii) extend the Offer for a period of not more than
15 business days beyond the latest expiration date that would otherwise be
permitted under clause (i) of this sentence if, on the date of such extension,
more than two-thirds but less than 90 percent of Shares have been validly
tendered and not properly withdrawn pursuant to the Offer.
THE MERGER. The Merger Agreement provides that, following the purchase of
Shares pursuant to the Offer, the approval of the Merger Agreement by the
stockholders of the Company (if required) and the satisfaction or waiver of the
other conditions to the Merger, the Purchaser will be merged with and into the
Company (the "Surviving Corporation"). The Merger shall become effective at such
time as a certificate of merger is filed with the Secretary of State of the
State of Delaware, or at such later time as is specified in such certificate of
merger (the "Effective Time"). As a result of the Merger, all of the properties,
rights, privileges and franchises of the Company and the Purchaser shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and the Purchaser shall become the debts, liabilities and duties of the
Surviving Corporation.
At the Effective Time, by virtue of the Merger (i) each issued and
outstanding Share held in the treasury of the Company, or by the Parent or any
wholly owned subsidiary of the Parent shall be cancelled, and no payment shall
be made with respect thereto; (ii) each share of common stock of the Purchaser
then outstanding shall be converted into and become one share of common stock of
the Surviving Corporation; and (iii) each Share outstanding immediately prior to
the Effective Time shall, except as otherwise provided in (i) above and except
for Shares held by stockholders exercising appraisal rights pursuant to Section
262 of the DGCL, be converted into the right to receive $10.50 in cash or any
higher price per Share that may be paid pursuant to the Offer, without interest.
The Merger Agreement provides that the Certificate of Incorporation and
By-laws of the Company at the Effective Time will be the Certificate of
Incorporation and By-laws of the Surviving Corporation. The Merger Agreement
also provides that the directors of the 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.
RECOMMENDATION. The Company represents and warrants in the Merger Agreement
that the Board of Directors has (i) determined that the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, are fair
to, and in the best interests of, the stockholders of the Company, (ii) approved
and adopted the Merger Agreement and the transactions contemplated thereby,
including the Offer, the Merger and the Stockholder Tender Agreement and the
transactions contemplated thereby and (iii) resolved to recommend acceptance of
the Offer, the tender of the Shares thereunder and approval and adoption of the
Merger Agreement and the Merger by the Company's stockholders. This
recommendation of the Board of Directors may be withdrawn, modified or amended
if the Board, by a majority vote, determines in its good faith judgment, based
as to legal matters on the advice of legal counsel, that such withdrawal,
amendment or modification is required by the Board in the proper discharge of
its fiduciary duties. Any such withdrawal, modification or amendment may give
rise to certain termination rights on the part of the Parent and the Purchaser,
as described below.
18
<PAGE>
INTERIM AGREEMENTS OF THE PARENT, PURCHASER AND THE COMPANY. Pursuant to
the Merger Agreement, the Company has covenanted and agreed that, during the
period from the date of the Merger Agreement to the Effective Time, the Company
will conduct its business and operations only in the ordinary and usual course
of business consistent with past practice. Pursuant to the Merger Agreement,
without limiting the generality of the foregoing, and except as otherwise
expressly provided in the Merger Agreement, prior to the Effective Time, neither
the Company nor any of its subsidiaries will, without the prior written consent
of the Parent (which consent will not be unreasonably withheld with respect to
the incurrence of indebtedness by the Company evidenced by certain promissory
notes but excluding all of the Company's other indebtedness to Wells Fargo
pursuant to clause (ii)(a) below): (i) amend its charter or by-laws; (ii)(a)
create, incur or assume any indebtedness for money borrowed, including
obligations in respect of capital leases, except (A) purchase money mortgages
granted in connection with past practice, or (B) indebtedness for borrowed money
incurred in the ordinary course of business not aggregating in excess of $7
million outstanding at any time under its revolving credit facility provided by
the Company's existing Credit Agreement with Wells Fargo as the same may be
amended from time to time ("Credit Agreement") reduced by the net proceeds of
any sale of assets by the Company or any subsidiary out of the ordinary course
of business, PROVIDED that the proceeds of any borrowing are not distributed to
the stockholders of the Company; or (b) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person; PROVIDED, HOWEVER, that the Company may
endorse negotiable instruments in the ordinary course of business consistent
with past practice; (iii) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of the Shares; (iv) issue, sell, grant, purchase or redeem, or issue or
sell any securities convertible into, or options with respect to, or warrants to
purchase or rights to subscribe to, or subdivide or in any way reclassify, any
Shares, except in any case above pursuant to outstanding stock purchase rights;
(v)(a) increase the aggregate amount of compensation payable or to become
payable by the Company to its directors, officers or employees whether by salary
or bonus, by more than two percent in the aggregate on an annual basis
(excluding commission-only compensation, the rate of which shall not be
increased); or (b) increase the rate or term of, or otherwise alter, any bonus
(other than any bonus permitted by clause (v)(a) above), insurance, pension,
severance or other employee benefit plan, payment or arrangement made to, for or
with any such directors, officers or employees; (vi) enter into any agreement,
commitment or transaction (other than certain borrowings described above),
except agreements, commitments or transactions in the ordinary course of
business consistent with past practice; (vii) sell, transfer, mortgage, pledge,
grant any security interest or permit the imposition of any lien or other
encumbrance on any asset other than in the ordinary course of business
consistent with past practice and except (a) pursuant to the Credit Agreement,
(b) in connection with any permitted purchase money mortgages or (c) for any
lien or other encumbrance as to which the Company has a valid defense; (viii)
waive any right under certain contracts and other agreements if such waiver
would have a Material Adverse Effect (as defined below); (ix) other than as
required by any change in generally accepted accounting principles, make any
material change in its accounting methods or practices or make any material
change in depreciation or amortization policies or rates adopted by it for
accounting purposes or, other than normal writedowns or writeoffs consistent
with past practices, make any writedowns of inventory or writeoffs of notes or
accounts receivable; (x) make any loan or advance to any of its stockholders,
officers, directors, employees (other than advances to field sales personnel,
vacation advances, relocation advances and travel advances in each case made in
the ordinary course of business in a manner consistent with past practice), or
make any other loan or advance to any other person or group otherwise than in
the ordinary course of business consistent with past practice; (xi) terminate or
fail to renew, where such renewal is at the Company's or subsidiary's option,
any contract or other agreement (excluding customer leases or contracts), the
termination or failure of which to renew would have a Material Adverse Effect;
(xii) enter into any collective bargaining agreement; (xiii) make any addition
to or modification of the Company's employee benefits plans; (xiv) take, agree
to take or do or, with respect to anything within the Company's or subsidiary's
control, knowingly permit to be done or to be taken anything in the conduct of
its business which (a) would cause any of the representations of the Company to
be or
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become untrue in any material respect, and (b) would reasonably be expected to
have a Material Adverse Effect; provided, however, that nothing in this clause
(xiv) shall affect the generality of any of the conditions set forth in Section
15; or (xv) agree to do any of the foregoing.
When used in the Merger Agreement, the term "Material Adverse Effect" means
a material adverse effect on the business, assets, prospects, financial
condition or results of operations of the Company and its subsidiaries
considered on a consolidated basis or on the ability of the Company, the Parent
or the Purchaser to consummate the transactions contemplated by the Merger
Agreement.
OTHER AGREEMENTS OF THE PARENT, THE PURCHASER AND THE COMPANY. In the
Merger Agreement, the Company, its affiliates and their respective officers,
directors, employees, representatives and agents have agreed that they shall
immediately cease any existing discussions or negotiations, if any, with any
parties conducted heretofore with respect to any acquisition of all or any
material portion of the assets of, or any equity interest in, the Company or any
business combination with the Company, subject to certain exceptions. The
Company may, directly or indirectly, furnish information and access, in each
case only in response to unsolicited requests therefor, to any corporation,
partnership, person or other entity or group pursuant to confidentiality
agreements that do not prohibit or restrict disclosure of any matter to the
Parent other than confidential information regarding any such corporation,
partnership, person or other entity or group, and may participate in discussions
and negotiate with such entity or group concerning any proposed merger, sale of
assets, sale of shares of capital stock, acquisition of Shares other than
pursuant to the Offer or the Merger or similar transaction involving the Company
or any division of the Company (an "Acquisition Proposal"), only if such entity
or group has submitted a written proposal to the Board relating to any such
transaction and the Board by a majority vote determines in its good faith
judgment, based as to legal matters on the advice of legal counsel, that failing
to take such action would constitute a breach of the Board's fiduciary
obligations under applicable law. The Board shall promptly advise the Parent
orally or in writing of any Acquisition Proposal and any inquiries or
developments with respect thereto. Except as set forth above, neither the
Company or any of its affiliates, nor any of its or their respective officers,
directors, employees, representatives or agents shall, directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with,
or provide any information to, any corporation, partnership, person or other
entity or group (other than the Parent and the Purchaser, any affiliate or
associate of the Parent and the Purchaser or any designees of the Parent and
Purchaser) concerning any Acquisition Proposal or take any other action to
facilitate the making of a proposal that constitutes or could reasonably be
expected to lead to an Acquisition Proposal, PROVIDED, HOWEVER, that nothing in
the Merger Agreement shall prevent the Board from approving or recommending to
the Company's stockholders any unsolicited tender offer or exchange offer by a
third party as contemplated by Rules 14d-9 and 14e-2 promulgated under the
Exchange Act in the event any unsolicited takeover proposal shall have been made
by a third party, if, in the good faith judgment of the Board, based as to legal
matters on the advice of legal counsel, that withdrawing or modifying such
approval or recommendation is required under applicable law in the proper
discharge of its fiduciary duties. Notwithstanding the foregoing, nothing shall
prevent the Company from negotiating and executing agreements relating to the
sale by the Company of its real estate located in Corona, California as long as
(i) the terms and conditions of any such agreement shall be reasonably
acceptable to the Parent and (ii) the proceeds (net of reasonable expenses of
the Company relating to such sale) of any such sale are used to reduce the
indebtedness of the Company under the revolving credit facility under the Credit
Agreement.
Pursuant to the Merger Agreement, between the date of the Merger Agreement
and the Effective Time, the Company will give the Parent and the Purchaser and
their authorized representatives reasonable access to all personnel, books,
records, plants, offices, and other facilities and properties of the Company and
its subsidiaries, will permit the Parent and the Purchaser to make such
inspections as the Parent and the Purchaser may reasonably request and will
cause the Company's officers to furnish Purchaser with such financial and
operating data and other information with respect to the business and properties
of the Company and its subsidiaries as Purchaser may from time to time
reasonably request.
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The Merger Agreement provides that promptly upon acceptance for payment of,
and commencement of payment for such number of Shares which represents at least
a majority of the Shares (determined on a fully diluted basis) by the Purchaser,
the Purchaser 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 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 owned by the Purchaser
(including Shares accepted for payment) bears to the total number of Shares, and
the Company shall cause the Purchaser's designees to be elected or appointed to
the Board of Directors, including, without limitation, by increasing the number
of directors, and seeking and accepting resignations of its incumbent directors.
Notwithstanding the foregoing, the Company has agreed to use its best efforts to
ensure that two of the current members of the Board who are not officers,
employees or affiliates of the Company or the Parent remain members of the Board
until the Purchaser owns a majority of the Shares and thereafter until the
Effective Time.
Pursuant to the Merger Agreement, the Company shall at the Parent's request,
cause a meeting of its stockholders (the "Company Stockholder Meeting") to be
duly called and held as soon as practicable (provided the Purchaser shall have
accepted for payment Shares tendered pursuant to the Offer) for the purposes of
voting on the approval and adoption of the Merger Agreement, the Merger and the
transactions contemplated thereby.
The Merger Agreement provides that the Company will promptly prepare and
file with the Commission under the Exchange Act a proxy statement relating to
the Company Stockholder Meeting (the "Proxy Statement") and cause the Proxy
Statement to be mailed to its stockholders at the earliest practicable time and
obtain the necessary approvals by its stockholders of the Merger Agreement. The
Parent has agreed to vote and to cause its affiliates (including, without
limitation, the Purchaser) to vote all Shares owned by them in favor of adoption
of the Merger Agreement. Notwithstanding the foregoing, in the event that
Purchaser acquires at least 90% of the Shares and the Purchaser so requests, the
Parent, the Purchaser and the Company will take all actions necessary and
appropriate to cause the Merger to become effective without a meeting of the
stockholders of the Company in accordance with Section 253 of the DGCL.
The Parent has agreed that all rights to indemnification now existing in
favor of the directors and officers of the Company as provided in the Company's
by-laws as of the date of the Merger Agreement shall survive the Merger and
shall continue in full force and effect for a period of at least five years. The
Parent shall not permit the indemnification agreements between the Company and
each of the directors and officers that are in existence as of the date of the
Merger Agreement to be amended during the term of such indemnification
agreements without the consent of the respective parties. For a period of at
least five years after the Effective Time, the Purchaser has agreed to indemnify
and hold harmless, to the maximum extent permitted by the DGCL, each of the
present or former directors and officers of the Company and advance expenses in
connection with such indemnification. In addition, the Parent has agreed that
for two years after the Effective Time, the Parent will cause the Surviving
Corporation to use reasonable efforts to maintain, if available for an annual
premium not in excess of $150,000, officers' and directors' liability insurance
with respect to 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 no less favorable than those of such policy
in effect on the date of the Merger Agreement or at the Effective Time, or if
such insurance coverage is not available for an annual premium not in excess of
$150,000, to obtain the amount of coverage that is available for an annual
premium of $150,000.
The Merger Agreement provides that the Company, the Purchaser and the Parent
will each use their best efforts to consummate the transactions contemplated by
the Merger Agreement.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations by the Company as to undisclosed
liabilities, certain changes or events concerning its businesses, compliance
with
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applicable law, employee benefit plans, litigation and environmental
liabilities. In addition, the Company represented to the Parent and the
Purchaser that the Board, at a meeting duly called and held, has (i) determined
that the Merger Agreement and the transactions contemplated thereby, including
the Offer and the Merger, are fair to, and in the best interests of, the
stockholders of the Company, and (ii) approved and adopted the Merger Agreement
and the transactions contemplated thereby, including the Offer, the Merger, and
the Stockholder Tender Agreement and the transactions contemplated thereby in
all respects and that such approval constitutes approval of the Offer, the
Merger Agreement, the Merger and the Stockholder Tender Agreement and the
transactions contemplated thereby for purposes of Article EIGHTH of the
Certificate of Incorporation of the Company and Section 203 of the DGCL and
similar statutes of other states that might be deemed applicable.
CONDITIONS TO THE MERGER. The obligations of each of the Parent, the
Purchaser and the Company to effect the Merger are subject to the satisfaction
of certain conditions, including (i) the Purchaser shall have accepted for
payment Shares tendered pursuant to the Offer; (ii) the Merger Agreement shall
have been adopted by the requisite vote, if any is required, of the stockholders
of the Company in accordance with applicable law; (iii) no order, statute, rule,
regulation, executive order, stay, decree, judgment or injunction shall have
been enacted, entered, issued, promulgated or enforced by any court or
governmental authority which prohibits or restricts the consummation of the
Merger; and (iv) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired. The obligation of the Purchaser and the Parent
to effect the Merger is further subject to satisfaction of the conditions,
unless waived by the Parent, that (i) the Company shall have performed and
complied in all material respects with (a) the agreements and obligations
contained in Section 1.03 of the Merger Agreement and (b) the agreements and
obligations contained in the Merger Agreement (other than in Section 1.03)
required to be performed and complied with by it at or prior to the Effective
Time, except where the failure to have performed and complied is not reasonably
expected to have a Material Adverse Effect, (ii) all outstanding stock options
of the Company shall have been surrendered to the Company as provided in the
Merger Agreement and cancelled by the Company, and (iii) the Parent shall have
received a comfort letter, in form and substance reasonably requested by the
Parent, from Grant Thornton or another nationally recognized public accounting
firm regarding the updating of the Company's most recent financial statements.
The obligation of the Company to effect the Merger is further subject to the
Parent and the Purchaser having performed and complied in all material respects
with the agreements and obligations contained in the Merger Agreement required
to be performed and complied with by each of them at or prior to the Effective
Time, except where the failure to have so performed or complied is not
reasonably expected to have a material adverse effect on the ability of the
Parent or the Purchaser to consummate the transactions contemplated by the
Merger Agreement.
TERMINATION. The Merger Agreement may be terminated and the Offer (if the
Purchaser has not accepted Shares for payment) and the Merger may be abandoned
at any time prior to the Effective Time: (i) by mutual written consent of the
Parent, the Purchaser and the Company; (ii) by the Parent and the Purchaser or
the Company if any court of competent jurisdiction in the United States or other
United States governmental body shall have issued an order, decree or ruling or
taken any other final action restraining, enjoining or otherwise prohibiting the
Merger or the acceptance for payment of and payment for the Shares and such
order, decree, ruling or other action shall have become nonappealable; (iii) by
the Parent and the Purchaser if, due to an occurrence or circumstance which
would result in a failure to satisfy any of the conditions set forth in Section
15, the Purchaser shall have (a) failed to commence the Offer within five
business days following the initial public announcement of the Offer, (b)
terminated the Offer or allowed the Offer to expire without the purchase of any
Shares thereunder, or (c) failed to pay for Shares pursuant to the Offer within
75 days following the commencement of the Offer; (iv) by the Company if (a)
there shall not have been a material breach of any representation, warranty,
covenant or agreement on the part of the Company which would entitle the Parent
or the Purchaser to terminate the Merger Agreement pursuant to clause (v) of
this paragraph and, due to an occurrence or circumstance which would result in a
failure to satisfy any of the conditions set forth in Section 15, the Purchaser
shall have (A) failed to commence the Offer within five business days following
the initial public announcement of the Offer, (B) terminated the Offer or
allowed the Offer to expire without the purchase of any
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Shares thereunder, or (C) failed to pay for Shares pursuant to the Offer within
75 days following the commencement of the Offer, or (b) prior to the purchase of
Shares pursuant to the Offer, a corporation, partnership, person or other entity
or group shall have made a bona fide offer with respect to an Acquisition
Proposal that the Board by a majority vote, determines in its good faith
judgment and in the discharge of its fiduciary duties, based as to legal matters
on the advice of legal counsel and as to financial matters on the written
opinion of an investment banking firm of national reputation, is more favorable
to the Company's stockholders than the Offer and the Merger and that the failure
to terminate the Merger Agreement and accept such offer would be inconsistent
with the proper exercise of the Board's fiduciary duties, provided that such
termination under this clause (b) shall not be effective until payment of the
Termination Fee (as defined below); (v) by the Parent and the Purchaser prior to
the purchase of Shares pursuant to the Offer if (a) there shall have been a
breach of any representation or warranty on the part of the Company having a
Material Adverse Effect on the Company or materially adversely affecting (or
materially delaying) the consummation of the Offer, (b) there shall have been a
breach of any covenant or agreement on the part of the Company resulting in a
Material Adverse Effect on the Company or materially adversely affecting (or
materially delaying) the consummation of the Offer, (c) the Company shall engage
in negotiations with any entity or group (other than the Parent or the
Purchaser) that has proposed a Third Party Acquisition (as defined below), (d)
the Board shall have withdrawn or modified (including by amendment of the
Schedule 14D-9) in a manner adverse to the Purchaser its approval or
recommendation of the Offer, the Merger Agreement or the Merger or shall have
recommended another offer, or shall have adopted any resolution to effect any of
the foregoing, or (e) a majority of Shares on a fully diluted basis shall not
have been tendered in the Offer by the expiration date of the Offer and on or
prior to such date an entity or group (other than the Parent or the Purchaser)
shall have made and not withdrawn a proposal with respect to a Third Party
Acquisition; or (vi) by the Company if (a) there shall have been a breach of any
representation or warranty on the part of the Parent or the Purchaser which
materially adversely affects (or materially delays) the consummation of the
Offer, or (b) there shall have been a material breach of any covenant or
agreement on the part of the Parent or the Purchaser and which materially
adversely affects (or materially delays) the consummation of the Offer.
TERMINATION FEE AND EXPENSES. In the event the Parent and the Purchaser
terminate the Merger Agreement pursuant to clause (iii) of the preceding
paragraph (other than any termination based upon the failure to satisfy clause
(iii)(d) of Section 15 below) or clause (v)(a) of the preceding paragraph, or
the Company terminates the Merger Agreement pursuant to clause (iv)(a) of the
preceding paragraph, or in the event that the Merger Agreement is terminated in
the manner described in clause (ii) of the preceding paragraph, the Company
shall reimburse the Parent, the Purchaser and their affiliates (not later than
one business day after submission of statements therefor) for all actual
documented out-of-pocket fees and expenses, not to exceed $750,000, actually and
reasonably incurred by any of them or on their behalf in connection with the
Offer and the Merger and the consummation of all transactions contemplated by
the Merger Agreement (including, without limitation, attorneys' fees, fees
payable to financing sources, investment bankers, counsel to any of the
foregoing, and accountants and filing fees and printing costs). In the event the
Company terminates the Merger Agreement pursuant to clause (iv)(b) of the
preceding paragraph or in the event the Parent and the Purchaser terminate the
Merger Agreement pursuant to clause (v)(b), (c), (d) or (e), the Company shall
pay to the Purchaser the amount of $1,400,000 (the "Termination Fee") as
liquidated damages immediately upon such termination as well as all amounts to
which the Parent and the Purchaser would be entitled pursuant to the immediately
preceding sentence; provided, however, that if the Parent and the Purchaser
terminate the Merger Agreement pursuant to clause (v)(c) of the preceding
paragraph, the Company shall pay to the Purchaser the amount of $700,000 as
liquidated damages immediately upon such a termination (as well as all amounts
to which the Parent and the Purchaser would be entitled to pursuant to the first
sentence of this section), and if within 12 months thereafter the Company enters
into an agreement with respect to a Third Party Acquisition (as defined below),
or a Third Party Acquisition occurs, the Company shall pay to the Purchaser the
amount of $700,000 within one business day following the execution of such an
agreement on such occurrence, as the case may be; provided, however, that the
Parent and the Purchaser will
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only be entitled to recover only on $1,400,000 payment or two $700,000 payments
of liquidated damages even if the Merger Agreement is terminated under more than
one of the provisions in clause (iv)(b) or clause (v) described above.
"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger or otherwise by any person
(which includes a "person" as such term is defined in Section 13(d) (3) of the
Exchange Act) or entity other than the Parent, the Purchaser or any affiliate
thereof (a "Third Party"); (ii) the acquisition by a Third Party of more than
30% of the total assets of the Company; (iii) the acquisition by a Third Party
of 30% or more of the Shares; (iv) the adoption by the Company of a plan of
liquidation or the declaration or payment of an extraordinary dividend; or (v)
the repurchase by the Company of more than 20% of the Shares.
Pursuant to the Merger Agreement, in the event of the termination of the
Merger Agreement and abandonment of the Offer and the Merger, the Merger
Agreement will become void and have no effect, without any liability on the part
of any party or its affiliates, directors, officers or stockholders, provided
that a party will not be relieved from liability for any damages arising out of
any wilful or intentional breach of the Merger Agreement or from their
obligations with respect to brokers and finders, the Termination Fee, expenses
of the parties and confidentiality of information.
COSTS AND 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 AND MODIFICATIONS. Subject to applicable law, at any time prior
to the Effective Time, the Merger Agreement may be amended, modified or
supplemented by a written agreement of the Parent (for itself and the Purchaser)
and the Company executed by duly authorized officers of the respective parties
except that after the earlier of (i) the purchase by the Purchaser of a majority
of the Shares on a fully diluted basis, and (ii) the meeting of the stockholders
of the Company to approve the Merger, the price per Share to be paid pursuant to
the Merger Agreement to the holders of Shares may not be decreased and the form
of consideration to be received by the holders of such Shares in the Merger may
not be altered without approval of such holders.
THE STOCKHOLDER TENDER AGREEMENT
Concurrently with the execution of the Merger Agreement, the Purchaser
entered into a Stockholder Tender Agreement with the Seller Stockholder. The
Seller Stockholder owns 539,734 Shares (representing approximately 16.6% of the
Shares outstanding on December 18, 1995 on a fully diluted basis). Pursuant to
the Stockholder Tender Agreement, the Seller Stockholder has agreed to tender
and sell (and not withdraw) all Shares owned by him to the Purchaser pursuant to
and in accordance with the terms of the Offer. Except with respect to the Seller
Stockholder Fee (as described below) and the representations and warranties of
the Seller Stockholder, the Stockholder Tender Agreement remains in effect until
the earlier to occur of the following (i) the Seller Stockholder's Shares are
purchased in accordance with the terms of the Offer, (ii) the Merger Agreement
is terminated and (iii) March 31, 1996.
During the term of the Stockholder Tender Agreement, the Seller Stockholder
will not, except pursuant to the terms of the Offer, (i) offer to sell, sell,
pledge or otherwise dispose of or transfer any interest in or encumber with any
lien any of the Shares, (ii) acquire any shares of Common Stock or other
securities (except for additional shares of Common Stock or securities issued as
a result of a stock dividend, stock split, recapitalization or similar event and
any such additional shares of Common Stock or securities will constitute
Shares), including, without limitation, by exercising any options, (iii) deposit
the Shares into a voting trust or arrangement with respect to the Shares or
grant any proxy or power of attorney with respect to the Shares or (iv) enter
into any contract, option or other arrangement or undertaking with respect to
the sale, assignment or other disposition of or transfer of any interest in or
the voting of any Shares or any other securities of the Company. In addition,
the Seller Stockholder agrees to comply with the requirements of Section 6.12 of
the Merger Agreement, which provides, among other things, that such Seller
Stockholder will not, directly or indirectly, encourage, solicit,
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participate in or initiate discussions or negotiations with, or provide any
information to any corporation, partnership, person or other entity or group
(other than the Purchaser and the Parent and their affiliates and associates)
concerning any merger, sale of assets, sale of shares of capital stock or
similar transaction involving the Company, or take any action to facilitate the
making of a proposal that constitutes or could reasonably be expected to lead to
an acquisition proposal.
The Seller Stockholder appoints the Purchaser, or its nominee, during the
term of the Stockholder Tender Agreement, as his proxy to vote each of his
Shares at any annual, special or adjourned meeting of the stockholders of the
Company, including the right to sign his name (as stockholder) to any consent,
certificate or other document relating to the Company which the laws of the
State of Delaware may require or permit: (i) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
and adoption of the terms thereof; (ii) against any action or agreement that
would result in a breach in any respect of any covenant, agreement,
representation or warranty of the Company under the Merger Agreement; and (iii)
against the following actions (other than the Merger and the other transactions
contemplated by the Merger Agreement): (a) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company; (b) a sale, lease or transfer of a material amount of
assets of the Company, or a reorganization, recapitalization, dissolution or
liquidation of the Company; and (c)(A) any change in a majority of the persons
who constitute the Board of Directors as of the date hereof; (B) any change in
the present capitalization of the Company or any amendment of the Company's
Certificate of Incorporation or By-Laws, as amended to date; (C) any other
material change in the Company's corporate structure or business; or (D) any
other action which, in the case of each of the matters referred to in clauses
(c)(A), (B), (C) and (D), is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone, or adversely affect the Merger and the
other transactions contemplated by the Merger Agreement and the Seller
Stockholder Agreement. The proxy and power of attorney provided for in the
Seller Stockholder Agreement is irrevocable and, pursuant thereto, the Seller
Stockholder revoked all other proxies with respect to the Shares that he may
have heretofore made or granted.
The Stockholder Tender Agreement provides that the Seller Stockholder agrees
to pay to the Purchaser a fee ("Seller Stockholder Fee") if, as provided below,
the Merger Agreement is terminated and the Seller Stockholder subsequently sells
or otherwise disposes of his Shares in a Subsequent Transaction (as defined
below). Specifically, a Seller Stockholder Fee is payable by the Seller
Stockholder to the Purchaser if: (i) the Parent and the Purchaser or the Company
terminate the Merger Agreement in accordance with its terms (other than a
termination (a) by the Company because of a breach by the Purchaser or the
Parent of any of their respective covenants, agreements, representations or
warranties contained in the Merger Agreement which materially adversely affects
(or materially delays) the consummation of the Offer, (b) by the Parent and the
Purchaser or the Company if any court of competent jurisdiction in the United
States or other United States governmental body shall have issued an order,
decree or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the Merger or the acceptance for payment and payment for
the Shares in the Offer and such order, decree, ruling or other action is or
shall have become nonappealable or (c) by mutual written consent of the Parent,
the Purchaser and the Company); and (ii) not later than one year from the date
of such termination, (a) the Board of Directors approves or recommends any
proposal or offer (an "Acquisition Proposal") concerning any merger, sale of
assets, sale of shares of capital stock or similar transaction involving the
Company other than from the Purchaser, or (b) the Company enters into an
agreement with respect to a merger, acquisition, consolidation,
recapitalization, liquidation, dissolution or similar transaction involving, or
any purchase of all or a substantial portion of the assets or equity securities
of, the Company, or (c) the Seller Stockholder disposes of any or all of his
Shares to any person not an affiliate or an associate of the Purchaser or to the
Company or any affiliate thereof (or realizes cash proceeds in respect of such
Shares as a result of a distribution to the Seller Stockholder by the Company
following the sale of a material amount of the Company's assets) in connection
with a transaction proposed, described or set forth in such Acquisition Proposal
or agreement or (d) the Company undergoes a recapitalization, dissolution,
liquidation or similar transaction proposed, described or set forth in such
Acquisition Proposal or agreement or the Company issues an extraordinary
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dividend or other distribution in accordance with such Acquisition Proposal or
agreement (each a "Subsequent Transaction") at a per Share price or with
equivalent per Share proceeds, as the case may be (the "Subsequent Price") with
a value in excess of $10.50 (the "Offer Price"). The Seller Stockholder Fee is
an amount equal to one-half of the product of (i) the excess of the Subsequent
Price over the Offer Price and (ii) the number of the Seller Stockholder's
Shares disposed of or otherwise participating in the Subsequent Transaction.
THE CONFIDENTIALITY AGREEMENT
On September 2, 1994, the Parent and the Company entered into a
confidentiality agreement (the "Confidentiality Agreement"), pursuant to which
each party agreed to keep confidential all information (the "Information")
provided to it by the other party. The Confidentiality Agreement provides, among
other things, that (i) the Information must not be disclosed for any reason by
the receiving party or any of its representatives, except with the prior written
consent of the disclosing party, (ii) the Information must not be used by the
receiving party or its representatives for any purpose other than evaluating a
possible transaction involving the Company and the Parent ("Transaction"),
except as and to the extent required by a court or regulatory order, (iii)
neither party will disclose the fact that Information has been made available or
that discussions or negotiations are taking place concerning a possible
Transaction, except with the prior written consent of the other party, and (iv)
it will terminate on December 31, 1995, unless mutually extended. The parties
extended the term of the Confidentiality Agreement to December 31, 1996 in the
Merger Agreement and supplemented the Confidentiality Agreement by providing
therein that the Parent, the Purchaser or the Company may disclose any
information required to be disclosed pursuant to the Exchange Act, or otherwise
required or requested to be disclosed by the Commission.
APPRAISAL RIGHTS
Shares that are not voted in favor of the approval and adoption of the
Merger and with respect to which appraisal rights have been demanded and
perfected in accordance with Section 262 of the DGCL and not withdrawn will not
be converted into the right to receive cash at or after the Effective Time, but
such Shares shall instead become the right to receive consideration as may be
determined to be due to such holders in respect of such Shares pursuant to the
DGCL unless such stockholder withdraws its demand for appraisal or becomes
ineligible for such appraisal. If a stockholder withdraws its demand for
appraisal or becomes ineligible for appraisal (through failure to perfect or
otherwise), then, as of the Effective Time or the occurrence of such event,
whichever last occurs, the Shares subject to the demand for appraisal will be
automatically converted into and represent the right to receive $10.50 per Share
or any higher price per Share that may be paid pursuant to the Offer, without
interest.
THE RIGHTS AGREEMENT
The following description is based upon the Company's Current Report on Form
8-K dated December 5, 1992 (the "Company 8-K"). All statements with respect to
the Rights (as defined in the Introduction) and the Rights Agreement (as defined
in the Introduction) are based solely upon the description of such Rights in the
Company's 8-K. Although each of the Parent and the Purchaser has no knowledge
that any such information is untrue, neither the Parent nor the Purchaser takes
any responsibility for the accuracy or completeness of the information contained
in the Company's 8-K, 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 which are unknown to the Parent and the Purchaser. The summary
of the Rights and the Rights Agreement contained in this Offer to Purchase does
not purport to be complete, and is qualified in its entirety by reference to the
Company's 8-K and the exhibits thereto.
Pursuant to the Rights Agreement, on December 5, 1992, the Board of
Directors of the Company declared a dividend of one Right for each Share. The
dividend was payable as of the close of business on December 17, 1992 to the
stockholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one one-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred
Shares"), of the Company at a price of $25 per one one-hundredth of a Preferred
Share (the "Purchase Price"), subject to adjustment.
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Until the earlier to occur of (a) 10 days following a public announcement
that a person or group of affiliated or associated persons has acquired
beneficial ownership of 20% or more of the outstanding Shares (an "Acquiring
Person") or such earlier date as a majority of the Board becomes aware of the
existence of an Acquiring Person (the "Stock Acquisition Date") or (b) 10 days
following the commencement of a tender offer or exchange offer that would result
in a person or group becoming an Acquiring Person (the earlier of such dates
being called the "Distribution Date"), the Rights will be evidenced by the
certificates for Shares.
The Right Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificates for Shares will also constitute the surrender for transfer of the
Rights associated with the Shares represented by such certificates. The Rights
Agreement further provides that, as soon as practicable following the
Distribution Date, separate certificates for Rights will be mailed by the
Company or the Rights Agent to holders of record of the Shares as of the close
of business on the Distribution Date.
The Rights will expire on December 4, 2002 (the "Final Expiration Date"),
unless the Rights are earlier redeemed by the Company.
The Purchase Price payable and the number of Preferred Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time as provided in the Rights Agreement.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a preferential quarterly
dividend payment of the greater of $.25 per share or 100 times the dividend
declared per Share. In the event of liquidation, the holders of the Preferred
Shares will be entitled to a minimum preferential liquidation payment of the
greater of $100 per share or 100 times the payment made per Share. Each
Preferred Share will have 100 votes, voting together as a single class with the
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Shares are exchanged for or changed into other stock or securities,
cash and/or other property , each Preferred Share will be entitled to receive
100 times the amount received per Share. Because of the nature of the Preferred
Shares' dividend, liquidation and voting rights, the value of the one
one-hundredth interest in a Preferred Share purchasable upon exercise of each
Right should, according to Company 8-K, approximate the value of one Share.
If any person becomes an Acquiring Person (except pursuant to an offer for
all outstanding shares of Common Stock which a majority of the independent
directors who are not affiliated with the Acquiring Person determines to be fair
to and otherwise in the best interests of the Company and its stockholders),
then the Rights Agreement requires that proper provision be made so that each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
and certain affiliated or associated persons (which will thereafter be void),
will thereafter have the right to receive upon exercise that number of Shares
(or, in certain circumstances, other securities or cash) having a market value
of two times the exercise price of the Right. In the event that the Company is
acquired in a merger or other business combination transaction or 50% or more of
the assets or earning power of the Company and its subsidiaries is sold or
transferred, the Rights Agreement requires that proper provisions be made so
that each holder of a Right will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of the Right, that number of
shares of common stock of the acquiring company that at the time of such
transaction will have a market value of two times the exercise price of the
Right.
The Rights Agreement provides that, at any time prior to the close of
business on the earlier of (a) the Stock Acquisition Date and (b) the Final
Expiration Date, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right. The redemption period of
may be extended by the Board by amending the Rights Agreement prior to the time
when the Rights become nonredeemable.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
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Other than those provisions relating to the redemption price of the Rights
or the Final Expiration Date, any of the provisions of the Rights Agreement may
be supplemented or amended by the Company prior to the Distribution Date,
without approval of the Rights holders, whether or not a supplement or amendment
is adverse to the Rights holders. After the Distribution Date, any provisions of
the Rights Agreement (other than those provisions relating to the redemption
price of the Rights or the Final Expiration Date) may be amended by the Company
in order to make changes which do not materially and adversely affect the
interests of holders of Rights (other than any Acquiring Person), PROVIDED,
HOWEVER, that the Rights Agreement may not be amended to lengthen (i) the time
period governing redemption or the time period during which the Rights Agreement
may be amended at the sole discretion of the Company at such time as the Rights
are not redeemable, or (ii) any other time period unless such amendment is for
the benefit of the Rights holders (other than any Acquiring Person).
The foregoing summary of the Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement
and the other documents included in the Company 8-K. The Company 8-K should be
available for inspection and copies thereof should be obtainable in the manner
set forth below under "Available Information."
On December 14, 1995, the Board authorized the amendment of the Rights
Agreement to assure that the execution and delivery of the Merger Agreement and
the Stockholder Tender Agreement and the consummation of the transactions
contemplated thereby will not cause (i) the defined term "Acquiring Person" to
apply to the Parent or the Purchaser, (ii) a "Distribution Date" to occur, (iii)
the provision of Section 13(a) of the Rights Agreement to be applicable in
respect of the capital stock of the Purchaser or any affiliate or (iv) any
adjustment under the provision of Section 11(a) of the Rights Agreement. The
amendment was executed by the parties to the Rights Agreement on December 19,
1995. Accordingly, the operation of the Rights Agreement will not affect the
Offer or the Merger.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY.
PURPOSE OF THE OFFER. The purpose of the Offer is for the Purchaser to
acquire control of, and an equity interest in, the Company. The purpose of the
Merger is to acquire all outstanding Shares not tendered and purchased pursuant
to the Offer. The acquisition of the entire equity interest in the Company has
been structured as a cash tender offer followed by a cash merger in order to
provide a prompt and orderly transfer of ownership of the Company from the
public stockholders to the Parent and to provide stockholders with cash for all
their Shares. The purchase of Shares pursuant to the Offer will increase the
likelihood that the Merger will be effected.
PLANS FOR THE COMPANY. The Parent and the Purchaser currently intend to
dispose of the Company's molding division after consummation of the Offer and
the Merger. The Parent believes, based on information provided by PaineWebber,
that the Company has received several offers for the molding division; however,
the details of these offers have not been made available to the Parent. During
the course of its negotiations with the Company regarding the acquisition of CTI
or the Company or both, the Parent has had discussions with Mr. Gilbert
regarding a potential acquisition of the molding division by a group or entity
formed by or including Mr. Gilbert. Neither the Parent nor the Purchaser has any
obligation to sell the molding division to Mr. Gilbert or any affiliate of Mr.
Gilbert. This fact was acknowledged by the Company in its November 2, 1995
letter agreement with the Parent. (See Section 10).
Other than the molding division and except as otherwise noted in this Offer
to Purchase, the Parent and the Purchaser do not have any current plans or
proposals to dispose of any businesses or other assets of the Company or its
subsidiaries or to effect any changes to their operations. If the Parent obtains
control of the Company, it intends to conduct further review of the Company and
its subsidiaries and their respective assets, businesses, corporate structure,
capitalization, operations, properties, policies, management and personnel.
After such review it is possible that the Parent might modify its current plans
not to dispose of any businesses or assets of the Company (other than the
molding division) and not effect any changes in the Company's operations.
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12. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ QUOTATIONS;
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 stockholders other
than the Purchaser. The Purchaser cannot predict whether the reduction in the
number of Shares that might otherwise trade publicly would have an adverse or
beneficial effect on the market price for or marketability of the Shares or
whether it would cause future market prices to be greater or less than the Offer
price.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion in the NASDAQ
System. The NASD requires that an issuer have at least 100,000 publicly held
shares, held by at least 300 stockholders, with a market value of at least
$200,000, have total assets of at least $2 million and have capital and surplus
(total stockholders' equity) of at least $1 million. If, as a result of the
purchase of Shares pursuant to the Offer, the Shares no longer meet the
requirements for inclusion in the NASDAQ System and inclusion of the Shares is
discontinued, the market for the Shares could be adversely affected.
If the NASDAQ System were to cease to publish quotations for the Shares, it
is possible that the Shares would continue to trade in the over-the-counter
market and that price or other quotations would be reported by other sources.
The extent of the public market for such Shares and the availability of such
quotations would depend, however, upon such factors as the number of
stockholders and/or the aggregate market value of such securities remaining at
such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration under the Exchange
Act as described below, and other factors.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
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, 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 if the Shares are not listed on a national
securities exchange and there are less than 300 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 or information statement in
connection with stockholder action and the related requirement of an annual
report to stockholders 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 of 1933, as
amended (the "Securities Act"). If registration of the Shares under the Exchange
Act were terminated, the Shares would no longer be "margin securities" or
eligible for NASDAQ System reporting. It is the current intention of the Parent
to deregister the Shares after consummation of the Offer if the requirements for
termination of registration are met.
13. DIVIDENDS AND DISTRIBUTIONS. If, on or after the date of the Merger
Agreement, the Company should (i) split, combine or otherwise change the Shares
or its capitalization, (ii) issue or sell any additional securities of the
Company or otherwise cause an increase in the number of outstanding securities
of the Company (except for Shares issuable upon the exercise of employee stock
options outstanding on the date of the Merger Agreement) or (iii) acquire
currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares, then, without prejudice to the
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Purchaser's rights under Sections 1 and 15, the Purchaser, in its sole
discretion, subject to the terms of the Merger Agreement, may make such
adjustments as it deems appropriate in the purchase price and other terms of the
Offer.
If, on or after the date of the Merger Agreement, the Company should declare
or pay any dividend on the Shares or make any distribution (including, without
limitation, cash dividends, the issuance of additional Shares pursuant to a
stock dividend or stock split, the issuance of other securities or the issuance
of rights for the purchase of any securities) with respect to the Shares that is
payable or distributable to stockholders of record on a date prior to the
transfer to the name of the 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 the Purchaser's rights under Sections 1 and 15, any
such dividend, distribution or right to be received by the tendering
stockholders will be received and held by the tendering stockholders for the
account of the Purchaser and will be required to be promptly remitted and
transferred by each tendering stockholder to the Depositary for the account of
the Purchaser, accompanied by appropriate documentation of transfer. Pending
such remittance and subject to applicable law, the Purchaser will be entitled to
all rights and privileges as owner of any such dividend, distribution or right
and may withhold the entire purchase price or deduct from the purchase price the
amount or value thereof, as determined by the Purchaser in its sole discretion.
14. EXTENSION OF TENDER PERIOD; AMENDMENT; TERMINATION. The Purchaser
expressly reserves the right, in its sole discretion, at any time or from time
to time, regardless of whether or not any of the events set forth in Section 15
shall have occurred or shall have been determined by the Purchaser to have
occurred, subject to the terms of the Merger Agreement and applicable rules of
the Commission, (i) to extend the period of time during which the Offer is open
and thereby delay acceptance for payment of, and the payment for, any Shares, by
giving oral or written notice of such extension to the Depositary and (ii) to
amend the Offer in any respect by giving oral or written notice of such
amendment to the Depositary. The rights reserved by the Purchaser in this
paragraph are in addition to the Purchaser's rights to terminate the Offer
pursuant to Section 15. Any extension, amendment or termination will be followed
as promptly as practicable by public announcement thereof, the announcement in
the case of an extension to be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date in
accordance with the public announcement requirements of Rule 14d-4(c) under the
Exchange Act. Any reduction in the purchase price pursuant to the Merger
Agreement will be considered an amendment to the Offer, and will be followed by
the appropriate announcement. Without limiting the obligation of the Purchaser
under such Rule or the manner in which the Purchaser may choose to make any
public announcement, the Purchaser currently intends to make announcements by
issuing a release to the Dow Jones News Service or the Reuters News Service.
The 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, 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 the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 4. However, the ability of
the Purchaser to delay the payment for Shares which the Purchaser has accepted
for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by or on behalf of security holders promptly after the termination or withdrawal
of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including the Minimum Condition), the Purchaser will disseminate additional
tender offer materials and extend the Offer to the extent required by Rules
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14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which
the Offer must remain open following material changes in the terms of the Offer
or information concerning the Offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the terms or information. With respect to
a change in price or a change in percentage of securities sought, a minimum ten
business day period is generally required to allow for adequate dissemination to
stockholders and investor response. If prior to the Expiration Date, the
Purchaser should decide to increase the price per Share being offered in the
Offer, such increase will be applicable to all stockholders whose Shares are
accepted for payment pursuant to the Offer. As used in this Offer to Purchase,
"business day" means any day other than Saturday, Sunday or a federal holiday
and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York
City time as computed in accordance with Rule 14d-1 under the Exchange Act.
15. CERTAIN CONDITIONS TO THE OFFER. Notwithstanding any other provisions
of the Merger Agreement or the Offer, the Purchaser shall not be required to
accept for payment, purchase or pay for any Shares of the Company tendered, and
may terminate or, subject to the terms of the Merger Agreement, amend the Offer
and may postpone the acceptance for payment of or payment for any Shares, if
prior to the time of acceptance for payment of Shares tendered pursuant to the
Offer:
(i) the Minimum Condition shall not have been satisfied; or
(ii) any waiting period applicable to the Offer pursuant to the HSR Act
shall not have expired or been terminated; or
(iii) at any time before the time of acceptance for payment for any such
Shares any of the following shall occur or exist:
(a) there shall have been instituted or be pending any action,
proceeding, application, claim or counterclaim by any government or
governmental authority or agency, domestic or foreign, before any court
or governmental regulatory or administrative agency, authority or
tribunal, domestic or foreign, (A) challenging the acquisition by the
Parent or the Purchaser of the Shares, seeking to restrain or prohibit
the making or consummation of the Offer or the Merger or seeking to
obtain from the Parent or the Purchaser any damages that would result in
a Material Adverse Effect if such were assessed against the Company, (B)
seeking to prohibit or materially limit the ownership or operation by the
Parent or the Surviving Corporation of all or any material portion of the
business or assets of the Company or compel the Parent or the Surviving
Corporation to dispose of or to hold separate all or any material portion
of the business or assets of the Company, or to impose any material
limitation on the ability of the Company or the Surviving Corporation to
conduct such business or own such assets, or (C) seeking to impose
material limitations on the ability of the Parent (or any other affiliate
of the Parent) to acquire or hold or to exercise full rights of ownership
of the Shares, including, but not limited to, the right to vote the
Shares purchased by them on all matters properly presented to the
stockholders of the Company; or
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, promulgated, entered, enforced or deemed applicable
to the Offer, the Merger or the Merger Agreement, or any other action
shall have been taken by any government, governmental authority or court,
domestic or foreign, other than the routine application to the Offer or
the Merger of waiting periods under the HSR Act, that has, or has a
substantial likelihood of resulting in, any of the consequences referred
to in clauses (A) through (C) of paragraph (a) above; or
(c) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements
contained in the Merger Agreement, or any of the representations and
warranties of the Company set forth in the Merger Agreement shall not
have been true and correct in any material respect when made or, except
for any representations and warranties made as of a specific date, shall
have ceased to be true and correct in any
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material respect as if made on and as of the Expiration Date (or, in the
case of representations and warranties that are specifically qualified as
to materiality, shall not have been true and correct when made or shall
have ceased to be true and correct on and as of the Expiration Date); or
(d) there shall have occurred (A) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock
Exchange, Inc., (B) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether
or not mandatory), (C) the commencement of a war, armed hostilities or
other international or national calamity directly or indirectly involving
the United States and having a Material Adverse Effect on or materially
adversely affecting (or materially delaying) the consummation of the
Offer, (D) any limitation (whether or not mandatory), by any U.S.
governmental authority or agency on, or any other event that, in the
judgment of the Parent, is substantially likely to materially adversely
affect the extension of credit by banks or other financial institutions,
or (E) from the date of the Merger Agreement through the date of
termination or expiration of the Offer, a decline of at least 25% in the
Standard & Poor's 500 Index; or
(e) the Merger Agreement shall have been terminated in accordance
with its terms; or
(f) prior to the purchase of Shares pursuant to the Offer, the Board
of Directors shall have withdrawn or modified (including by amendment of
the Schedule 14D-9) in a manner adverse to the Parent its approval or
recommendation of the Offer, the Merger Agreement or the Merger or shall
have recommended another offer for the purchase of the Shares, which, in
the sole judgment of the Parent in any such case, and regardless of the
circumstances (including any action or omission by the Parent) giving
rise to such condition, makes it inadvisable to proceed with such
acceptance for payment except where as a result of the Company's receipt
of an unsolicited acquisition proposal from a third party (A) the Company
issues to its stockholders a communication that contains only the
statements permitted by Rule 14d-9(e) under the Exchange Act (and does
not otherwise withdraw, modify or amend its approval or recommendation of
the transactions contemplated hereby) and (B) within five business days
of issuing such communication the Company publicly reconfirms its
approval and recommendation of the transactions contemplated by the Offer
and the Merger Agreement; or
(g) there shall have occurred since July 31, 1995, a change,
occurrence or circumstance in the Company's business having a Material
Adverse Effect thereon; or
(h) The failure of the Company to obtain any of the waivers or
consents of Wells Fargo pursuant to the letter dated December 19, 1995
from Wells Fargo to the Company, CTI, and Medical Molding Corporation of
America.
The foregoing conditions are for the sole benefit of the Parent and the
Purchaser and may be asserted by the Parent or the Purchaser regardless of the
circumstances giving rise to such conditions (including any action or inaction
by the Purchaser, unless any such action or inaction would constitute a breach
by the Purchaser of any of its covenants under the Merger Agreement) or may be
waived by the Parent or the Purchaser in whole or in part at any time and from
time to time, in the sole discretion of the Parent and the Purchaser. The
conditions may be considered to be material to the Offer. If the Purchaser
waives any material conditions of the Offer, it will, if required by applicable
law, extend the period of time during which the Offer is open in accordance with
applicable law for a period sufficient to allow the holders of Shares to
consider the Offer by giving oral or written notice of such extension to the
Depositary and by making a public announcement thereof. The failure by the
Purchaser at any time to exercise any of the forgoing rights will not be deemed
a waiver of any other rights and each such right will be deemed an ongoing right
which may be asserted at any time and from time to time. Any determination by
the Purchaser or the Parent with respect to such conditions (including, without
limitation, the satisfaction of such conditions) will be final and binding on
the parties.
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16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS. Except as described in
this Section 16, based on a review of publicly available information concerning
the Company, neither the Parent nor the Purchaser is aware of any license or
regulatory permit that appears to be material to the business of the Company
that might be adversely affected by the acquisition of Shares by the Purchaser
pursuant to the Offer, the Merger or otherwise or of any approval or other
action by any governmental, administrative or regulatory agency or authority,
domestic or foreign, that would be required prior to the acquisition of Shares
by the Purchaser pursuant to the Offer, the Merger or otherwise. Should any such
approval or other action be required, the Parent and the Purchaser currently
contemplate that it will be sought. While the Purchaser does not currently
intend to delay the acceptance for payment 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 adverse consequences might not result to
the business of the Company or the Purchaser Entities or that certain parts of
the business of the Company or the Purchaser Entities might not have to be
disposed of in the event that such approvals were not obtained or any other
actions were not taken. The Purchaser's obligation under the Offer to accept for
payment and pay for Shares is subject to certain conditions, including
conditions relating to the legal matters discussed in this Section 16. See
Section 15.
SECTION 203 OF THE DGCL. Section 203, in general, prohibits a Delaware
corporation such as the Company from engaging in a "Business Combination"
(defined as a variety of transactions, including mergers, as set forth below)
with an "Interested Stockholder" (defined generally as a person that is the
beneficial owner of 15% or more of a corporation's outstanding voting stock) for
a period of three years following the date that such person became an Interested
Stockholder unless (i) prior to the date such person became an Interested
Stockholder, the board of directors of the corporation approved either the
Business Combination or the transaction that resulted in the stockholder
becoming an Interested Stockholder, (ii) upon consummation of the transaction
that resulted in the stockholder becoming an Interested Stockholder, the
Interested Stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding stock held by
directors who are also officers of the corporation and employee stock ownership
plans that do not provide employees with the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange
offer or (iii) on or subsequent to the date such person became an Interested
Stockholder, the Business Combination is approved by the board of directors of
the corporation and authorized at a meeting of stockholders, and not by written
consent, by the affirmative vote of the holders of at least 66 2/3% of the
outstanding voting stock of the corporation not owned by the Interested
Stockholder.
Under Section 203, the restrictions described above do not apply if, among
other things (i) the corporation's original certificate of incorporation
contains a provision expressly electing not to be governed by Section 203; (ii)
the corporation, by action of its stockholders, adopts an amendment to its
certificate of incorporation or by-laws expressly electing not to be governed by
Section 203, provided that, in addition to any other vote required by law, such
amendment to the certificate of incorporation or by-laws must be approved by the
affirmative vote of a majority of the shares entitled to vote, which amendment
would not be effective until 12 months after the adoption of such amendment and
would not apply to any Business Combination between the corporation and any
person who became an Interested Stockholder of the corporation on or prior to
the date of such adoption; (iii) the corporation does not have a class of voting
stock that is (A) listed on a national securities association (B) authorized for
quotation on an inter-dealer quotation system of a registered national
securities association or (C) held of record by more than 2,000 stockholders,
unless any of the foregoing results from action taken, directly or indirectly,
by an Interested Stockholder or from a transaction in which a person becomes an
Interested Stockholder; or (iv) a stockholder becomes an Interested Stockholder
"inadvertently" and thereafter divests itself of a sufficient number of shares
so that such stockholder ceases to be an Interested Stockholder. Under Section
203, the restrictions described above also do not apply to certain Business
Combinations proposed by an Interested Stockholder following the announcement or
notification of one
33
<PAGE>
of certain extraordinary transactions involving the corporation and a person who
had not been an Interested Stockholder during the previous three years or who
became an Interested Stockholder with the approval of a majority of the
corporation's directors.
Section 203 provides that, during such three-year period, the corporation
may not merge or consolidate with an Interested Stockholder or any affiliate or
associate thereof, and also may not engage in certain other transactions with an
Interested Stockholder or any affiliate or associate thereof, including, without
limitation, (i) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets (except proportionately as a stockholder of the
corporation) having an aggregate market value equal to 10% or more of the
aggregate market value of all the outstanding stock of the corporation; (ii) any
transaction which results in the issuance or transfer by the corporation or by
certain subsidiaries thereof any stock of the corporation or such subsidiaries
to the Interested Stockholder, except pursuant to a transaction which effects a
pro rata distribution to all stockholders of the corporation; (iii) any
transaction involving the corporation or certain subsidiaries thereof which has
the effect of increasing the proportionate share of the stock of any class or
series, or securities convertible into the stock of any class or series, of the
corporation or any such subsidiary which is owned directly or indirectly by the
Interested Stockholder (except as a result of immaterial changes due to
fractional share adjustments) or (iv) any receipt by the Interested Stockholder
of the benefit (except proportionately as a stockholder of such corporation) of
any loans, advances, guarantees, pledges or other financial benefits provided by
or through the corporation.
At a meeting on December 14, 1995, the Board of Directors approved the
Merger Agreement, the Stockholder Tender Agreement, the Merger, the Offer and
the Purchaser's purchase of Shares pursuant to the Offer and the Stockholder
Tender Agreement. Accordingly, the provisions of Section 203 of the DGCL have
been satisfied with respect to the Offer, the Merger and the Stockholder Tender
Agreement, and such provisions will not delay the consummation of the Offer or
the Merger.
OTHER STATE TAKEOVER STATUTES. A number of other states have adopted
"takeover" statutes that purport to apply to attempts to acquire corporations
that are incorporated in such states, or whose business operations have
substantial economic effects in such states, or which have substantial assets,
security holders, employees, principal executive offices or places of business
in such states.
In EDGAR V. MITE CORPORATION, the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Act, which,
as a matter of state securities law, made takeovers of corporations meeting
certain requirements more difficult. However, in CTS CORP. V. DYNAMICS CORP. OF
AMERICA, the Supreme Court held that a state may, as a matter of corporate law
and, in particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided that
such laws were applicable under certain conditions, in particular, that the
corporation has a substantial number of stockholders in the state and is
incorporated there.
The Company conducts business in a number of states throughout the United
States, some of which have enacted "takeover" statutes. The Purchaser does not
know whether any of these statutes will, by their terms, apply to the Offer, and
has not complied with any such statutes other than those adopted by the State of
Delaware. To the extent that certain provisions of these statutes purport to
apply to the Offer, the Purchaser believes that there are reasonable bases for
contesting such statutes. If any person should seek to apply any state takeover
statute, the Purchaser would take such action as then appears desirable, which
action may include challenging the validity or applicability of any such statute
in appropriate court proceedings. If it is asserted that one or more takeover
statutes apply to the Offer, and it is not determined by an appropriate court
that such statute or statutes do not apply or are invalid as applied to the
Offer, the Purchaser might be required to file certain information with, or
receive approvals from, the relevant state authorities, and the Purchaser might
be unable to purchase or pay for Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer. In such case, the Purchaser may
not be obligated to accept for payment or pay for Shares tendered.
34
<PAGE>
FAIR PRICE AND SUPERMAJORITY PROVISIONS. The Certificate of Incorporation
of the Company contains "fair price" and "supermajority vote" provisions which
apply to "Business Combinations" with a corporation or other person who directly
or indirectly then beneficially owns, or within the preceding two years
beneficially owned, 20% or more of the outstanding voting stock of the Company
(an "Interested Stockholder"). A "Business Combination" includes a merger or
consolidation of the Company or any subsidiary of the Company with or into an
Interested Stockholder, a sale of assets to an Interested Stockholder having an
aggregate fair market value of 10% of the total value of the assets of the
Company and its consolidated subsidiaries as reflected on the Company's most
recent balance sheet, the issuance by the Company or any of its subsidiaries of
securities to an Interested Stockholder having an aggregate fair market value of
$5 million or more, the adoption of a plan for dissolution or liquidation of the
Company proposed by an Interested Stockholder, and any reclassification or
recapitalization of securities of the Company resulting in an increase in the
relative voting power of an Interested Stockholder. The supermajority vote
provision provides that a Business Combination with an Interested Stockholder
cannot be effected unless approved by (i) holders of two-thirds of the
outstanding voting stock of the Company and (ii) holders of a majority of the
outstanding voting stock of the Company other than the voting stock of which an
Interested Stockholder is the beneficial owner.
The supermajority vote provisions are not applicable if (i) in the case of a
Business Combination that does not involve any cash or other consideration being
received by the stockholders of the Company, the Business Combination shall have
been approved by a majority of the "Continuing Directors," or (ii) in the case
of any other Business Combination, the Business Combination shall have been
approved either by a majority of the Continuing Directors or the so-called "fair
price" provisions shall have been satisfied. The fair price provisions derive
their name from the fact that they specify a minimum consideration (determined
pursuant to a formula based on the highest per share price paid by the
Interested Stockholder in acquiring the Company's capital stock plus interest)
which must be paid and certain procedural requirements which must be satisfied
in order to effect a Business Combination with an Interested Stockholder in
certain circumstances. "Continuing Directors" are directors who are unaffiliated
with the Interested Stockholder and who were either members of the Board of
Directors prior to the time an Interested Stockholder became such or any
approved successor to a Continuing Director. Any approval required under the
fair price provision or supermajority vote provision is in addition to any
approval required under applicable law or other provisions of the Company's
Certificate of Incorporation.
The fair price and supermajority provisions may not be repealed, amended or
otherwise modified unless such repeal, amendment or modification is approved by
the affirmative vote of holders of (i) not less than two-thirds of the
outstanding voting stock of the Company voting together as a single class, and
(ii) not less than a majority of the outstanding voting stock of the Company
held by all stockholders other than Interested Stockholders voting together as a
single class.
At a meeting on December 14, 1995, the Board of Directors approved the
Merger Agreement, the Stockholder Tender Agreement, the Merger, the Offer and
the Purchaser's purchase of Shares pursuant to the Offer and the Stockholder
Tender Agreement. Accordingly, the provisions of the Fair Price and
Supermajority Vote provisions of the Company's Certificate of Incorporation have
been satisfied with respect to the Offer, the Merger and the Stockholder Tender
Agreement, and such provisions will not delay the consummation of the Offer or
the Merger.
ANTITRUST. Under the HSR Act, certain acquisitions may not be consummated
unless information has been furnished to the Federal Trade Commission ("FTC")
and the Antitrust Division of the Department of Justice (the "Antitrust
Division") and certain waiting period requirements have been satisfied. The
Offer and the acquisition of Shares pursuant to the Merger Agreement are subject
to the HSR Act, which provides that certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division and the FTC and certain waiting period requirements have been
satisfied. The Parent expects to file on or before January 3, 1996 a
Notification and Report Form with respect to the Offer.
35
<PAGE>
Under the provisions of the HSR Act applicable to the Offer, the purchase of
Shares under the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by the Parent. Accordingly,
if such filing is made on January 3, 1996, the waiting period with respect to
the Offer will expire at 11:59 p.m., New York City time, on January 18, 1996,
unless the Parent receives a request for additional information or documentary
material, or the Antitrust Division and the FTC terminate the waiting period
prior thereto. If, within such 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or material from the Parent
concerning the Offer, the waiting period will be extended and would expire at
11:59 p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by the Parent with such request. Only one extension of
the waiting period pursuant to a request for additional information is
authorized by the HSR Act. Thereafter, such waiting period may be extended only
by court order or with the consent of the Parent. The Purchaser will not accept
for payment Shares tendered pursuant to the Offer unless and until the waiting
period requirements imposed by the HSR Act with respect to the Offer have been
satisfied. See Section 15.
No separate HSR Act waiting period requirements with respect to the Merger
Agreement will apply, so long as the 15-day waiting period expires or is
terminated. Thus, all Shares may be acquired pursuant to the Offer at the close
of the 15-day waiting period or on the tenth calendar day after the date of
substantial compliance with a request for additional information.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger Agreement. At any time before or after the
Purchaser's acquisition of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares pursuant
to the Offer or otherwise or seeking divestiture of Shares acquired by the
Purchaser or divestiture of substantial assets of the Parent or its
subsidiaries. Private parties and state attorneys general may also bring legal
action under the antitrust laws under certain circumstances. Based upon an
examination of publicly available information relating to the businesses in
which the Parent and the Company are engaged, the Parent and the Purchaser
believe that the acquisition of Shares by the Purchaser will not violate the
antitrust laws. Nevertheless, there can be no assurance that a challenge to the
Offer or other acquisition of Shares by the Purchaser on antitrust grounds will
not be made or, if such a challenge is made, of the result. See Section 15 for
certain conditions to the Offer, including conditions with respect to litigation
and certain governmental actions.
MARGIN RULES. The Purchaser and the Parent believe that the requirements of
the margin regulations promulgated by the Federal Reserve Board are not
applicable to the financing of the Offer and the Merger.
APPRAISAL RIGHTS. Holders of Shares do not have appraisal rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares at
the effective time of the Merger will have certain rights pursuant to the
provisions of Section 262 of the DGCL ("Section 262") to dissent and demand
appraisal of their Shares. Under Section 262, dissenting stockholders who comply
with the applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or expectation of the Merger) and to
receive payment of such fair value in cash, together with a fair rate of
interest, if any. Any such judicial determination of the fair value of Shares
could be based upon factors other than, or in addition to, the price per Share
to be paid in the Merger or the market value of the Shares. The value so
determined could be more or less than the price per Share to be paid in the
Merger. In WEINBERGER V. UOP, INC., the Delaware Supreme Court stated, among
other things, that "proof of value by any techniques or methods which are
generally considered acceptable in the financial community and otherwise
admissible in court" should be considered in an appraisal proceeding. Therefore,
the value so determined in any appraisal proceeding could be the same, more or
less than the purchase price per Share in the Offer or the Merger Consideration
(as defined in the Merger Agreement).
36
<PAGE>
In addition, several decisions by Delaware courts have held that, in certain
circumstances, a controlling stockholder of a company involved in a merger has a
fiduciary duty to other stockholders which requires that the merger be fair to
such other stockholders. In determining whether a merger is fair to minority
stockholders, Delaware courts have considered, among other things, the type and
amount of consideration to be received by the stockholders and whether there was
fair dealing among the parties. The Delaware Supreme Court stated in WEINBERGER
and RABKIN V. PHILIP A. HUNT CHEMICAL CORP. that the remedy ordinarily available
to minority stockholders in a cash-out merger is the right to appraisal
described above. However, a damages remedy or injunctive relief may be available
if a merger is found to be the product of unfairness, including fraud,
misrepresentation or other misconduct.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the DGCL, the Shares of such stockholder will be converted into the
Merger Consideration in accordance with the Merger Agreement. A stockholder may
withdraw his demand for appraisal by delivery to Parent of a written withdrawal
of his demand for appraisal and acceptance of the Merger.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
17. FEES AND EXPENSES. The Parent and the Purchaser have engaged Salomon
Brothers Inc ("Salomon") as the Dealer Manager in connection with the Offer. The
Parent has agreed to pay Salomon a fee of $100,000 for these services, payable
to Salomon upon commencement of the Offer. In addition, Salomon is acting as
financial advisor to the Parent and the Purchaser in connection with the
proposed acquisition of the Company. In consideration for these services the
Parent and the Purchaser have agreed to pay Salomon a fee equal to $400,000 (of
which $25,000 has already been paid) contingent upon the consummation of the
Merger and payable at the closing of the Merger. The Purchaser also has agreed
to reimburse Salomon for its expenses, including reasonable counsel fees, and to
indemnify it against certain liabilities and expenses, including certain
liabilities under the federal securities laws.
The Purchaser has retained Georgeson & Company Inc. to act as the
Information Agent and National City Bank to act as the Depositary in connection
with the Offer. The Information Agent may contact holders of Shares by mail,
telephone, facsimile, telegraph and personal interview and may request brokers,
dealers, commercial banks, trust companies and other nominees to forward the
Offer material to beneficial owners. The Information Agent and the Depositary
each will receive reasonable and customary compensation for their services, will
be reimbursed for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under the federal securities laws. Neither the
Information Agent nor the Depositary has been retained to make solicitations or
recommendations in connection with the Offer.
Neither the Purchaser nor the Parent will pay any fees or commissions to any
broker or dealer or other persons for soliciting tenders of Shares pursuant to
the Offer (other than the fees of the Dealer Manager). Brokers, dealers,
commercial banks and trust companies will be reimbursed by the Purchaser for
reasonable expenses incurred by them in forwarding material to their customers.
18. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction in which
the making of the Offer is not in compliance with applicable law. If the
Purchaser becomes aware of any jurisdiction in which the making of the Offer
would not be in compliance with applicable law, the Purchaser will make a good
faith effort to comply with any such law. If, after good faith effort, the
Purchaser cannot comply with any such law, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) the holders of Shares residing in
such jurisdiction. In any jurisdiction where the securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of the Purchaser by the Dealer Manager or one or more
registered brokers or dealers which are licensed under the laws of such
jurisdiction.
37
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR THE PARENT 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.
The Purchaser has filed with the Commission the Schedule 14D-1 pursuant to
Rule 14d-3 under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. The Schedule 14D-1
and any amendments thereto, including exhibits, may be inspected and copies may
be obtained at the same places and in the same manner as set forth in Section 7
(except they will not be available at the regional offices of the Commission).
HANWEST, INC.
December 27, 1995
38
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF
THE PARENT
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of the
Parent and certain other information are set forth below. Unless otherwise
indicated below, the address of each director and officer is c/o M.A. Hanna
Company, Suite 36-5000, 200 Public Square, Cleveland, Ohio 44114-2304. No
information is provided in the right-hand column where the individual has
occupied the position indicated in the middle column for the past five years.
Unless otherwise indicated, each occupation set forth opposite an individual's
name refers to employment with the Parent. All directors and officers listed
below are citizens of the United States (except J.T. Eyton, O.C., who is a
citizen of Canada). Directors are identified by a single asterisk.
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES HELD WITH PRINCIPAL OCCUPATION AND BUSINESS
(AGE AT 12/1/95) THE PARENT (YEAR ELECTED) EXPERIENCE (PAST FIVE YEARS)
- -------------------------------- --------------------------------------- ---------------------------------------
<S> <C> <C>
M.D. Walker (63)* Chairman and Chief Executive Officer
(1986); Director (since 1986),
Chairman of Executive Committee and
member of the Board Composition and
Governance Committee
D.J. McGregor (54)* President and Chief Operating Officer
(1989); Director (since 1990) and
member of Executive Committee
S.P. Chong (53) Vice President - Total Quality Planning
& Technical Services (1989)
G.W. Henry (50) Vice President - International Vice President - Operations, 1992-1994
Operations (1994) Vice President - Marine Services and
Special Projects, 1990-1992
J.S. Pyke, Jr. (57) Vice President and General Counsel
(1979), Secretary (1973)
D.R. Schrank (47) Vice President - North American Vice President and Chief Financial
Plastics (1995) Officer, 1993-1995
Senior Vice President and Chief
Financial Officer, Sealy, Inc.,
1989-1993
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES HELD WITH PRINCIPAL OCCUPATION AND BUSINESS
(AGE AT 12/1/95) THE PARENT (YEAR ELECTED) EXPERIENCE (PAST FIVE YEARS)
- -------------------------------- --------------------------------------- ---------------------------------------
<S> <C> <C>
M.S. Duffey (41) Vice President, Chief Financial Officer Treasurer, 1994-1995
and Treasurer (1995) Vice President and Treasurer, Foote,
Cone & Belding Communications, Inc.
(world-wide advertising agency),
1992-1994, Chicago, Illinois
Vice President and Treasurer, Outboard
Marine Corporation, 1986-1992,
Waukegan, Illinois
T.E. Lindsey (45) Controller (1990)
B.C. Ames (70)* Director (since 1980), member of Partner, Clayton, Dubilier & Rice, Inc.
Compensation Committee and Executive (investment bankers), 1990-Present,
Committee New York, New York
C.A. Cartwright, Ph.D. (54)* Director (since 1994), Chairperson of President, Kent State University
Pension Plan Committee and member of (public higher education institution),
Audit Committee and Board Composition 1991-Present, Kent, Ohio
and Governance Committee Vice Chancellor of Academic Affairs,
University of California-Davis,
1988-1991, Davis, California
W.R. Embry (58)* Director (since 1990), Chairman of the President and Chief Operating Officer -
Board Composition and Governance Team Division, The Cleveland Cavaliers
Committee and member of Pension Plan (professional basketball team),
Committee and Audit Committee 1986-Present, Cleveland, Ohio
J.T. Eyton, O.C. (61)* Director (since 1986) and a member of Chairman, Brascan Limited (natural
Compensation Committee and Executive resources, power generation and
Committee financial services), 1991-Present,
Toronto, Ontario, Canada
President, Brascan Limited, prior to
1991
G.D. Kirkham (62)* Director (since 1975), Chairman of the Retired Senior Vice President, Kemper
Audit Committee and member of Pension Securities Inc. (stockbrokers)
Plan Committee
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES HELD WITH PRINCIPAL OCCUPATION AND BUSINESS
(AGE AT 12/1/95) THE PARENT (YEAR ELECTED) EXPERIENCE (PAST FIVE YEARS)
- -------------------------------- --------------------------------------- ---------------------------------------
<S> <C> <C>
M.L. Mann (62)* Director (since 1991), Chairman of Chairman and Chief Executive Officer,
Compensation Committee and member of Lexmark International, Inc. (office
Audit Committee machines), 1991-Present, Greenwich,
Connecticut
Vice President of International
Business Machines Corporation "IBM")
and President and General Manager of
various IBM divisions and
subsidiaries, 1985-1991, White Plains,
New York
R.W. Pogue (67)* Director (since 1988) and member of Senior Advisor, Dix & Eaton (public
Board Composition and Governance relations firm), 1994-Present,
Committee, Compensation Committee and Cleveland, Ohio
Executive Committee Senior Partner, Jones, Day, Reavis &
Pogue (attorneys), 1993-1994
Managing Partner, Jones, Day, Reavis &
Pogue, 1989-1992
</TABLE>
I-3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
OF
THE PURCHASER
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of the
Purchaser and certain other information are set forth below. Unless otherwise
indicated below, the address of each director and officer is c/o M.A. Hanna
Company, Suite 36-5000, 200 Public Square, Cleveland, Ohio 44114-2304. No
information is provided in the right-hand column where the individual has
occupied the position indicated in the middle column for the past five years.
Unless otherwise indicated, each occupation set forth opposite an individual's
name refers to employment with the Purchaser. All directors and officers listed
below are citizens of the United States. Directors are identified by a single
asterisk.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES HELD PRINCIPAL OCCUPATION AND BUSINESS
NAME (AGE AT 12/1/95) WITH THE PURCHASER (YEAR ELECTED) EXPERIENCE (PAST FIVE YEARS)
- -------------------------------- --------------------------------------- ---------------------------------------
<S> <C> <C>
D.R. Schrank (47)* President (1995); Director (since 1995) Vice President -- North American
Plastics, M.A. Hanna Company, 1995
Vice President and Chief Financial
Officer, M.A. Hanna Company, 1993-1995
Senior Vice President and Chief
Financial Officer, Sealy, Inc.
1989-1993
G.W. Henry (50)* Vice President (1995); Director (since Vice President -- International
1995) Operations, M.A. Hanna Company, 1994
Vice President -- Operations M.A. Hanna
Company, 1992-1994
Vice President -- Marine Services and
Special Projects, M.A. Hanna Company,
1990-1992
J.S. Pyke, Jr. (57)* Vice President and Secretary (1995); Vice President and General Counsel,
Director (since 1995) M.A. Hanna Company, 1979-Present
Secretary, M.A. Hanna Company, 1973 -
Present
</TABLE>
I-4
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES HELD PRINCIPAL OCCUPATION AND BUSINESS
NAME (AGE AT 12/1/95) WITH THE PURCHASER (YEAR ELECTED) EXPERIENCE (PAST FIVE YEARS)
- -------------------------------- --------------------------------------- ---------------------------------------
M.S. Duffey (41) Vice President and Treasurer (1995) Vice President, Chief Financial Officer
and Treasurer, M.A. Hanna Company,
1995-Present
Treasurer, M.A. Hanna Company,
1994-1995
Vice President and Treasurer, Foote
Cone & Belding Communications, Inc.
(world-wide advertising agency),
1992-1994
Vice President and Treasurer, Outboard
Marine Corporation 1986-1992
<S> <C> <C>
T.E. Lindsey (45) Controller (1995) Controller, M.A. Hanna Company,
1990-Present
P.W. Phillips (52) Vice President (1995) Executive Director of Tax Compliance
and Audit, M.A. Hanna Company,
1988-Present
R.E. Hahn (50) Assistant Secretary (1995) Senior Associate Counsel, M.A. Hanna
Company, 1977-Present
</TABLE>
I-5
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
CIMCO, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED DECEMBER 27, 1995
OF
HANWEST, INC.
A WHOLLY OWNED SUBSIDIARY
OF
M.A. HANNA COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS
EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
NATIONAL CITY BANK
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
National City Bank, Depositary (216) 476-8367 National City Bank, Depositary
P. O. Box 92301 Corporate Trust Operations
Cleveland, Ohio 44193-0900 Third Floor - North Annex
(800) 622-6757 (SHAREHOLDER 4100 West 150th Street
QUESTIONS) Cleveland, Ohio 44135-1385
CONFIRM FACSIMILE BY TELEPHONE:
(216) 476-8049
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL 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.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used if certificates for Shares (as
defined below) are to be forwarded herewith or, unless an Agent's Message (as
defined in the Offer to Purchase) is utilized, if delivery of Shares is to be
made by book-entry transfer to the Depositary's account at The Depository Trust
Company, Midwest Securities Trust Company or Philadelphia Depository Trust
Company (collectively, the "Book-Entry Transfer Facilities" and individually, a
"Book Entry Transfer Facility") pursuant to the procedures set forth in Section
3 of the Offer to Purchase.
Stockholders 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) or who cannot complete the procedure for delivery by
book-entry transfer on a timely basis and who wish to tender their Shares must
do so pursuant to the guaranteed delivery procedure set forth in 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 A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution_________________________________________
Account No.___________________________________________________________
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Transaction Code No. _________________________________________________
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Shareholder(s) _________________________________
Date of Execution of Notice of Guaranteed Delivery ___________________
Name of Institution which Guaranteed Delivery ________________________
IF DELIVERY IS BY BOOK-ENTRY TRANSFER, PLEASE PROVIDE THE FOLLOWING:
Name of Tendering Institution ________________________________________
Account No. __________________________________________________________
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Transaction Code No. _________________________________________________
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(S) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S) TENDERED
SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
REPRESENTED NUMBER OF
CERTIFICATE BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
TOTAL NUMBER
OF SHARES
- ------------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders delivering Shares 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.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Hanwest, Inc., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of M.A. Hanna Company, the
above-described shares of common stock, par value $0.01 per share, including the
associated Rights (as defined in the Offer to Purchase) (collectively, the
"Shares"), of CIMCO, Inc., a Delaware corporation (the "Company"), pursuant to
the Purchaser's offer to purchase all outstanding Shares at a price of $10.50
per Share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated December 27,
1995, receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which together constitute the "Offer"). The 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.
Subject to, and effective upon, acceptance for payment for the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns, and transfers to, or upon the order of, the 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 December 19, 1995) 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 of common stock 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 of common stock or securities), or transfer ownership
of such Shares (and all such other shares of common stock or securities) on the
account books maintained by a Book-Entry Transfer Facility, together, in any
such case, with all accompanying evidence of transfer and authenticity, to or
upon the order of the Purchaser, (b) present such Shares (and all such other
shares of common stock 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 of common stock or
securities), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Richard E. Hahn, Francis G.
Titas and David J. Roberts, 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 the
Purchaser prior to the time of any vote or other action (and any and all other
shares of common stock or other securities issued or issuable in respect thereof
on or after December 19, 1995), at any meeting of stockholders of the Company
(whether annual or special and whether or not an adjourned meeting), by written
consent or otherwise. This proxy is irrevocable and coupled with an interest in
the tendered Shares and is granted in consideration of, and is effective upon,
the acceptance for payment of such 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 of common stock or other securities issued
or issuable in respect thereof on or after December 19, 1995) and that when the
same are accepted for payment by the Purchaser, the 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 the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby (and all such other shares
of common stock or securities).
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 a tender of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase will constitute
the tendering stockholder's acceptance of the terms and conditions of the Offer,
as well as the tendering stockholder's representation and warranty that such
stockholder has the full power and authority to tender and assign the Shares
tendered, as specified in this Letter of Transmittal. The Purchaser's acceptance
for payment of Shares tendered pursuant to the Offer will constitute a binding
agreement between the tendering stockholder and the 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 the check and any certificates to, the person(s) so
indicated. The undersigned recognizes that the Purchaser has no obligation,
pursuant to the "Special Payment Instructions", to transfer any Shares from the
name of the registered holder(s) thereof if the Purchaser does not accept for
payment any of the Shares so tendered.
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if check for the purchase price of Shares purchased or
certificates for Shares not tendered or not purchased are to be issued in the
name of someone other than the undersigned, or if Shares tendered by
book-entry transfer that are not purchased are to be returned by credit to an
account at a Book-Entry Transfer Facility other than that designated above.
Issue / / check
/ / certificate(s) to:
Name
------------------------------------------------
(Please Print)
Address
-----------------------------------------------
-----------------------------------------------
(Zip Code)
------------------------------------------------------
TAXPAYER IDENTIFICATION NUMBER
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or certificates for Shares not tendered or not purchased are to be
mailed to someone other than the undersigned or to the undersigned at an
address other than that shown under "Description of Shares Tendered".
Mail / / check
/ / certificate(s) to:
Name
------------------------------------------------
(Please Print)
Address
-----------------------------------------------
-----------------------------------------------
(Zip Code)
/ / Credit unpurchased Shares tendered by book-entry transfer to the account
set forth below:
Name of Account Party
Account No.
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
IMPORTANT
STOCKHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)
Signature(s) of Holder(s)
Dated: , 199
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificates or on a security position listing or by a 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, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 5.)
Name(s):
(Please Print)
Capacity (full title):
Address:
(Include Zip Code)
Area Code and Telephone No.:
Taxpayer Identification or
Social Security No.:
(See Substitute Form W-9 below)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
Authorized Signature:
Name:
(Please Type or Print)
Title:
Name of Firm:
Address:
(Include Zip Code)
Area Code and Telephone No:
Dated: , 199
<PAGE>
PAYER'S NAME: NATIONAL CITY BANK
<TABLE>
<S> <C> <C>
PART I -- Taxpayer Identification Number
-- For all accounts enter your taxpayer
identification number in the appropriate
box. For most individuals and sole
proprietors, this is your Social
Security Number. For other entities, it
is your Employer Identification Number.
If you do 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
SUBSTITUTE enclosed GUIDELINES to determine what
FORM W-9 number to enter.
Department of ---------------------------------------- Social Security Number
the Treasury PART II -- For Payees Exempt From Backup OR
Internal Withholding (see enclosed Guidelines and Employer Identification Number
Revenue Service complete as instructed therein). [ ] Awaiting TIN
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 sixty (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 other information provided on this form is true, correct and
complete.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you received
another notification from the IRS that you are no longer subject to backup
withholding, do not cross out item (2).
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION
NUMBER
SIGNATURE DATE , 199
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR INSTRUCTIONS.
<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 bank, broker or
other institution which is a member of a Medallion Signature Guaranty Program
(each, 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 CERTIFICATES. This Letter of
Transmittal is to be used either if certificates are to be forwarded herewith or
if delivery of Shares is to be made by book-entry transfer, without utilizing an
Agent's Message, 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 a Book-Entry Transfer
Facility of all Shares delivered electronically, as well as either a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantee or 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. Stockholders 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 the
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 a Book-Entry Transfer
Facility of all Shares delivered electronically, as well as either a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantee or an Agent's Message, and any other documents
required by this Letter of Transmittal, must be received by the Depositary
within three National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ System") 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 SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING THROUGH A BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION
AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES FOR SHARES ARE SENT BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED.
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) or causing an Agent's Message to be transmitted, the
tendering stockholder waives any right to receive any notice of the acceptance
for payment of 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 STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFERS). 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.
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 are 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
the Purchaser of the authority of such person so to act must be submitted.
6. STOCK TRANSFER TAXES. The 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 the 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
above, the appropriate boxes on this Letter of Transmittal should be completed.
Stockholders tendering Shares by book-entry transfer may request that Shares not
purchased be credited to such account at a Book-Entry Transfer Facility as such
stockholder may designate under "Special Payment Instructions". If no such
instructions are given, any such Share not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated above. If
the box entitled "Special Payment Instructions" is completed, the signature(s)
of the person(s) signing this Letter of Transmittal must be guaranteed. See
Instruction 1.
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
stockholders pursuant to the Offer. In order to avoid such backup withholding,
each tendering stockholder, and, if applicable, each other payee, must provide
the Depositary with such stockholder's or payee's correct taxpayer
identification number and certify that such stockholder or payee is not subject
to such backup withholding by completing the Substitute Form W-9 set forth above
or by filing a properly completed Form W-9. In general, if a stockholder 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 stockholder or payee may be subject
to a $50 penalty imposed by the Internal Revenue Service. Certain stockholders
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 stockholder or payee must submit a
statement, signed under penalties of perjury, attesting to that individual's
exempt status. Such statements can be obtained from the Depositary. For further
information concerning backup withholding and instructions for completing the
Substitute Form W-9 (including how to obtain a taxpayer identification number if
you do not have one and how to complete the Substitute Form W-9 if Shares are
held in more than one name), consult the enclosed GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9.
Failure to complete the Substitute Form W-9 (or to file a 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 Dealer Manager at their respective
addresses or telephone numbers set forth below.
10. IRREGULARITIES. 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 the Purchaser, in its sole
discretion, which determination shall be final and binding. The 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 the Purchaser's counsel, be unlawful. The Purchaser
also reserves the absolute right to waive any defect or irregularity in any
tender of Shares. No tender of Shares will be deemed to have been properly made
until all defects and irregularities relating thereto have been cured or waived.
The Purchaser's interpretation of the terms and conditions of the Offer in this
regard will be final and binding. None of the Purchaser, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defect or irregularity in tenders or incur any
liabililty for failure to give any such notification.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
(DO NOT WRITE IN SPACES BELOW)
Date Received Accepted By Checked By
SHARES SHARES SHARES CHECK NO. AMOUNT OF SHARES CERTIFICATE BLOCK NO.
SURRENDERED TENDERED ACCEPTED CHECK RETURNED NO.
Or
Net
Delivery Prepared By Checked By Date
</TABLE>
THE INFORMATION AGENT IS:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
(212) 509-6240 (Collect)
(800) 223-2064 (Toll Free)
Banks and Brokers call
(212) 440-9800
THE DEALER MANAGER FOR THE OFFER IS:
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(312) 876-8478
(Call Collect)
<PAGE>
Salomon Brothers Inc
8700 Sears Tower
Chicago, Illinois 60606
(312) 876-8700
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
CIMCO, INC.
BY
HANWEST, INC.
A WHOLLY OWNED SUBSIDIARY
OF
M.A. HANNA COMPANY
AT
$10.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS EXTENDED.
TO BROKERS, DEALERS, COMMERCIAL BANKS, DECEMBER 27, 1995
TRUST COMPANIES AND OTHER NOMINEES:
We have been appointed by Hanwest, Inc., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of M.A. Hanna Company, a Delaware
corporation, to act as Dealer Manager in connection with its offer to purchase
all outstanding shares of common stock, par value $0.01 per share, including the
associated Rights (as defined in the Offer to Purchase) (collectively, the
"Shares"), of CIMCO, Inc., a Delaware corporation (the "Company"), at $10.50 per
Share, net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in the Purchaser's Offer to Purchase, dated December
27, 1995, 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 December 27, 1995;
2. Letter of Transmittal for your use to tender Shares 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 for Shares to be used to accept the Offer
if certificates for Shares ("Share Certificates") and all other required
documents are not immediately available or cannot be delivered to the
Depositary by the Expiration Date (as defined in the Offer to Purchase)
or if the procedure for book-entry transfer cannot be completed by the
Expiration Date;
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;
5. Solicitation/Recommendation Statement on Schedule 14D-9 issued by the
Company; and
<PAGE>
6. Return envelope addressed to National City Bank, the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS
EXTENDED.
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 transfer of
Shares, and any other required documents should be sent to the Depositary and
either Share Certificates representing tendered Shares should be delivered to
the Depositary, or Shares should be tendered by book-entry transfer into the
Depositary's account maintained at one of the Book-Entry Transfer Facilities (as
described in the Offer to Purchase), all in accordance with the instructions set
forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to forward their Share Certificates or other required documents on or
prior to the Expiration Date or to comply with the book-entry transfer
procedures on a timely basis, a tender may be effected by following the
guaranteed delivery procedures specified in Section 3 of the Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Dealer Manager) for soliciting tenders of Shares
pursuant to the Offer. The Purchaser will, however, upon request, reimburse you
for reasonable expenses incurred by you in forwarding any of the enclosed
materials to your clients. The Purchaser will pay or cause to be paid any stock
transfer taxes payable on the transfer of the Shares to it, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
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 their respective addresses and telephone
numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
SALOMON BROTHERS INC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON AS AN AGENT OF THE PURCHASER, THE COMPANY, ANY AFFILIATE OF THE
COMPANY, M.A. HANNA COMPANY, 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>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
CIMCO, INC.
BY
HANWEST, INC.
A WHOLLY OWNED SUBSIDIARY
OF
M.A. HANNA COMPANY
AT
$10.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated December
27, 1995 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") and other materials relating to the offer by
Hanwest, Inc., a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of M.A. Hanna Company, a Delaware corporation, to purchase all
outstanding shares of common stock, par value $0.01 per share, including the
associated Rights (as defined in the Offer to Purchase) (collectively, the
"Shares"), of CIMCO, Inc., a Delaware corporation (the "Company"), at $10.50 per
Share, net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in the Offer.
We are (or our nominee is) the holder of record of Shares held by us 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 ACCOMPANYING
THIS LETTER 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 to have us 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.
Your attention is directed to the following:
1. The tender price is $10.50 per Share, net to the seller in cash.
2. The Offer is being made for all outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on Thursday, January 25, 1996, unless the Offer is extended.
4. The Board of Directors of the Company unanimously has determined that
the Offer and the Merger (as defined in the Offer to Purchase) are fair
to, and in the best interests of, the stockholders of the Company, has
approved the Offer and the Merger and recommends that the Company's
stockholders accept the Offer and tender their Shares pursuant to the
Offer.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn immediately prior to the Expiration Date (as
defined in the Offer to Purchase) that number of Shares representing at
least a majority of the total number of Shares then outstanding on a
fully diluted basis.
<PAGE>
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, any stock transfer taxes on the purchase of the
Shares by the Purchaser pursuant to the Offer.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing 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 any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by Salomon Brothers Inc, the Dealer
Manager of the Offer, or one or more registered brokers or dealers licensed
under the laws of such jurisdictions.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing and returning to us the
instruction form set forth below. Please forward your instructions to us in
ample time to permit us to submit a tender on your behalf prior to the
Expiration Date. IF YOU AUTHORIZE THE TENDER OF YOUR SHARES, ALL SUCH SHARES
WILL BE TENDERED UNLESS OTHERWISE SPECIFIED ON THE INSTRUCTION FORM SET FORTH
BELOW.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
CIMCO, INC.
BY
HANWEST, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated December 27, 1995, and the related Letter of Transmittal, in
connection with the offer by Hanwest, Inc., a Delaware corporation and a wholly
owned subsidiary of M.A. Hanna Company, a Delaware corporation, to purchase for
cash all outstanding shares of common stock, par value $0.01 per share,
including associated Rights (collectively, the "Shares"), of CIMCO, Inc., a
Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or if
no number is indicated below, all Shares) that are held by you for the account
of the undersigned, upon the terms and subject to the conditions set forth in
the Offer.
Dated: ________________, 199___
NUMBER OF SHARES TO BE TENDERED:
______________ SHARES*
______________________________________________________
______________________________________________________
SIGNATURE(S)
______________________________________________________
PLEASE PRINT NAME(S)
______________________________________________________
______________________________________________________
PLEASE PRINT ADDRESS(ES)
______________________________________________________
AREA CODE AND TELEPHONE NUMBER(S)
______________________________________________________
TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S)
- ------------------------
* I (we) understand that if I (we) sign this instruction form without indicating
a lesser number of Shares in the space above, all Shares held by you for my
(our) account will be tendered.
3
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
CIMCO, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Offer (as defined below) if the certificates
representing shares of common stock, par value $0.01 per share, of CIMCO, Inc.,
including the associated Rights (as defined in the Offer to Purchase)
(collectively, the "Shares"), are not immediately available or time will not
permit all required documents to reach National City Bank (the "Depositary") on
or prior to the Expiration Date (as defined in the Offer to Purchase), or the
procedures for delivery by book-entry transfer cannot be completed on a timely
basis. This Notice of Guaranteed Delivery may be delivered by hand or facsimile
transmission or mail to the Depositary. See Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
NATIONAL CITY BANK
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
National City Bank, Depositary (216) 476-8367 National City Bank, Depositary
P. O. Box 92301 Corporate Trust Operations
Cleveland, Ohio 44193-0900 Third Floor - North Annex
(800) 622-6757 (SHAREHOLDER 4100 West 150th Street
QUESTIONS) Cleveland, Ohio 44135-1385
CONFIRM FACSIMILE BY TELEPHONE:
(216) 476-8049
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER 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" 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 Hanwest, Inc. (the "Purchaser"), a
Delaware corporation and a wholly owned subsidiary of M.A. Hanna Company, a
Delaware corporation, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated December 27, 1995 (the "Offer to Purchase"), and
the related Letter of Transmittal (which together constitute the "Offer"),
receipt of which is hereby acknowledged, the number of Shares indicated below
pursuant to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase.
<TABLE>
<S> <C>
Share Certificate Nos. (if available): Name(s) of Record Holder(s):
- ------------------------------------------ ------------------------------------------
- ------------------------------------------ ------------------------------------------
If Shares will be delivered by book-entry PLEASE TYPE OR PRINT
transfer, check the box: Address(es) ------------------------------
/ / The Depository Trust Company ------------------------------------------
/ / Midwest Securities Trust Company ZIP CODE
/ / Philadelphia Depository Trust Company Area Code and Telephone Number:
Account Number ------------------------- ------------------------------------------
Dated: ---------------- , 199 --- ------------------------------------------
------------------------------------------
------------------------------------------
SIGNATURE(S)
</TABLE>
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker or other institution that is a member of a
Medallion Signature Guaranty Program (each, an "Eligible Institution"), hereby
guarantees to deliver to the Depositary at one of its addresses set forth above
either the certificates representing all tendered Shares, in proper form for
transfer, or timely confirmation of a book-entry transfer of such Shares into
the Depositary's account at The Depository Trust Company, Midwest Securities
Trust Company or Philadelphia Depository Trust Company together with a properly
completed and duly executed Letter of Transmittal (or manually signed facsimile
thereof), with any required signature guarantees, or, in the case of book-entry
transfer of Shares, an Agent's Message (as defined in the Offer to Purchase),
and any other documents required by the Letter of Transmittal within three
National Association of Securities Dealers, Inc. Automated Quotation System
trading days after the date of execution of this Notice of Guaranteed Delivery.
2
<PAGE>
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal (unless
an Agent's Message is utilized) and certificates for Shares to the Depositary
within the time period shown herein. Failure to do so could result in a
financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm: ----------------------------- -------------------------------------------
Address: ---------------------------------- AUTHORIZED SIGNATURE
Name: ------------------------------------
- ------------------------------------------ PLEASE TYPE OR PRINT
ZIP CODE Title:-------------------------------------
Area Code and Dated: --------------------------- , 199 ---
Tel. No.: ----------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM. CERTIFICATES ARE TO
BE DELIVERED WITH THE LETTER OF TRANSMITTAL.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYOR --
Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by one
hyphen: i.e. 00-0000000. The table below will help determine the number to give
the payor.
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE
SOCIAL SECURITY
NUMBER OF --
- --------------------------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the account or,
account) if combined funds, the first
individual on the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4a. The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b. So-called trust account that is not The actual owner(1)
a legal or valid trust under State
Law
5. Sole proprietorship account The owner(3)
- --------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER
IDENTIFICATION
NUMBER OF --
- --------------------------------------------------------------------------------
6. A valid trust, estate, or pension The legal entity (Do not furnish the
trust identifying number of the personal
representative or trustee unless the
legal entity itself is not
designated in the account title)(4)
7. Corporate account The corporation
8. Association, club, religious, The organization
charitable, educational or other
tax-exempt organization
9. Partnership account The partnership
10. A broker or registered nominee The broker or nominee
11. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district or
prison) that receives agricultural
program payments
</TABLE>
- ------------------------------------------------
- ------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner.
(4) List first and circle the name of the valid 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 (TIN) ON SUBSTITUTE FORM W-9
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE)
Page 2
NAME
If you are an individual, generally provide the name shown on your social
security card. However, if you have changed your last name, for instance, due to
marriage, without informing the Social Security Administration of the name
change, please enter your first name and both the last name shown on your social
security card and your new last name.
OBTAINING A NUMBER
If you don't have a taxpayer identification number ("TIN"), apply for one
immediately. To apply, obtain Form SS-5, Application for a Social Security
Number Card, or Form SS-4, Application for Employer Identification Number, at
the local office of the Social Security Administration or the Internal Revenue
Service (the "IRS").
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for
which no information reporting is required. For interest and dividends, all
listed payees are exempt except item (9). For broker transactions, payees listed
in (1) through (13), and a person registered under the Investment Advisors Act
of 1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except that a corporation
that provides medical and health care services or bills and collects payments
for such services is not exempt from backup withholding or information
reporting.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under section 403(b)(7).
(3) The United States or any agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc. Nominee List.
(15) An trust exempt from tax under Section 664 or described in section 4947.
Payments of dividends generally not subject to backup withholding also
include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR
MORE AND IS PAID IN THE COURSE OF THE PAYOR'S TRADE OR BUSINESS AND YOU HAVE NOT
PROVIDED YOUR CORRECT TIN TO THE PAYOR.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and the regulations under those sections.
PRIVACY ACT NOTICE. -- Section 6109 requires you to furnish your correct TIN
to persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, or contributions you made to an
IRA. The IRS uses the numbers for identification purposes and to help verify the
accuracy of your tax return. You must provide your TIN whether or not you are
qualified to file a tax return. Payors must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
TIN to a payor. Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TIN. -- If you fail to furnish your correct TIN to a
payor, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis that results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION
CONTACT YOUR TAX CONSULTANT OR THE IRS
<PAGE>
NEWS RELEASE
For Immediate Release
Investor contact: Barb Gould 216/589-4085
Media contact: Andy Opila 216/589-4018
CIMCO, Inc. contact: Tammy Trenkmann 714/546-4460
Pondel Parsons & Wilkinson contact: Cecilia Wilkinson 310/207-9300
M.A. HANNA REACHES DEFINITIVE
AGREEMENT TO ACQUIRE CIMCO
CLEVELAND (December 20, 1995) -- M.A. Hanna Company (NYSE/CHX:MAH), an
international specialty chemicals company, and CIMCO, Inc. (NASD:CIMC)
jointly announced that they have entered into a definitive merger agreement
whereby M.A. Hanna will acquire for $10.50 per share in cash all of the
outstanding capital stock of CIMCO, a producer of thermoplastic compounds and
plastic components.
M.A. Hanna will promptly commence a tender offer to acquire all
outstanding shares of CIMCO common stock for $10.50 per share in cash. The
tender offer will be conditioned upon governmental approvals, among other
clearances, and the acquisition of a majority of the CIMCO commmon shares
by M.A. Hanna. Russell T. Gilbert, president and chief executive officer of
CIMCO and that company's largest stockholder, agreed to tender his 539,734
shares to
<PAGE>
M.A. Hanna pursuant to the tender offer. The merger agreement provides that
following the consummation of the offer the remaining CIMCO common shares
will be acquired for $10.50 per share in cash through a merger in which CIMCO
will become a business unit of M.A. Hanna. In connection with its approval
of the definitive agreement, CIMCO amended its share purchase rights to
exclude the M.A. Hanna transaction.
Gilbert said, "My objective and that of the CIMCO management team and
board of directors has been to maximize shareholder value. This transaction
fulfills that objective, and we're pleased that Hanna has recognized our
achievements."
Consistent with its strategy as an intermediary between the polymer
producer and the end product manufacturer, M.A. Hanna intends to sell CIMCO's
plastics components business and retain its plastics compounding operations.
CIMCO's plastics compounding businesses, which operate as Compounding
Technology, Inc. (CTi), are located in Singapore; Corona, Calif.; and
Charlotte, N.C. accounting for 31 million pounds of capacity. Another facility
is under construction in France.
"The acquisition of CTi helps us on three fronts to have a more balanced
market profile. First, we will grow out international business. CTi provides
Hanna with an excellent base for growth in Asia," said Martin D. Walker, M.A.
Hanna chairman and chief executive officer.
<PAGE>
"Second, CTi's strong engineering plastics compounding business will add
breadth to our specialty compounding portfolio throughout the world," Walker
continued. "Third, we are able to build a stronger position in the electrical
and electronics and business machines markets."
CTi, formed in 1980, had sales of $44 million in fiscal 1995 and has 95
associates. Through the first six months of fiscal 1996, CTi's sales have
nearly doubled and operating profits are running five times greater than the
same period in fiscal 1995. The company develops and produces engineering
plastic compounds with an emphasis on polycarbonate resins, which are used in
the electrical/electronics, business machine and appliance markets because of
the material's toughness, clarity and heat resistance.
CIMCO, Inc., with headquarters in Costa Mesa, Calif., reported sales of
$83 million for fiscal 1995. CIMCO was founded in 1959.
M.A. Hanna Company is a leading international specialty chemicals
company. It's primary businesses are plastics and rubber compounding, color
and additive concentrates and distribution of plastic resins and engineered
shapes.
<PAGE>
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER
TO SELL SHARES (AND ASSOCIATED RIGHTS). THE OFFER IS MADE SOLELY BY THE OFFER
TO PURCHASE DATED DECEMBER 27, 1995 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 RESIDING 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 ANY JURISDICTION WHERE THE SECURITIES,
BLUE SKY OR OTHER LAWS REQUIRE THE OFFER TO BE MADE BY A LICENSED
BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE MADE ON BEHALF
OF THE PURCHASER BY SALOMON BROTHERS INC, THE DEALER MANAGER OF
THE OFFER, OR ONE OR MORE REGISTERED BROKERS OR DEALERS
LICENSED UNDER THE LAWS OF SUCH JURISDICTIONS.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
CIMCO, INC.
BY
HANWEST, INC.
A WHOLLY OWNED SUBSIDIARY
OF
M.A. HANNA COMPANY
AT
$10.50 NET PER SHARE
Hanwest, Inc., a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of M.A. Hanna Company, a Delaware corporation (the "Parent"), is
offering to purchase all outstanding shares of common stock, par value $0.01 per
share, including the associated Rights (collectively, the "Shares"), of CIMCO,
Inc., a Delaware corporation (the "Company"), at $10.50 per Share, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated December 27, 1995 (the "Offer to
Purchase") and in the related Letter of Transmittal (which together constitute
the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS
OF THE COMPANY, HAS APPROVED THE OFFER AND THE MERGER AND RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN IMMEDIATELY PRIOR TO THE EXPIRATION DATE (AS DEFINED
IN THE OFFER TO PURCHASE) THAT NUMBER OF SHARES REPRESENTING AT LEAST A MAJORITY
OF THE TOTAL NUMBER OF SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS (THE
"MINIMUM CONDITION").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 19, 1995 (the "Merger Agreement"), among the Parent, the
Purchaser and the Company. The Merger Agreement provides that, among other
things, the Purchaser will make the Offer and that, following the purchase of
Shares pursuant to the Offer and the satisfaction of the other conditions set
forth in the Merger Agreement and in accordance with relevant provisions of the
Delaware General Corporation Law ("DGCL"), the Purchaser will be merged with and
into the Company (the "Merger"). Following consummation of the Merger, the
Company will continue as the surviving corporation and will be a wholly owned
subsidiary of the Parent. At the effective time of the Merger (the "Effective
Time"), each Share issued and outstanding immediately prior to the Effective
Time (other than Shares held in the treasury of the Company or by the Parent or
any wholly owned subsidiary of the Parent and other than Shares held by
stockholders exercising appraisal rights pursuant to Section 262 of the DGCL)
will be cancelled and automatically converted into the right to receive cash
without interest in an amount equal to the price per share paid pursuant to the
Offer.
Pursuant to the Company's Certificate of Incorporation and the DGCL, the
affirmative vote of holders of a majority of the outstanding Shares is required
to approve and adopt the Merger Agreement and the Merger. Concurrently with the
execution of the Merger Agreement, the Purchaser entered into an agreement (the
"Stockholder Tender Agreement") with Russell T. Gilbert, the President and Chief
Executive Officer of the Company (the "Seller Stockholder"), who owns 539,734
Shares (representing approximately 16.6% of the Shares outstanding on December
18, 1995 on a fully diluted basis). Pursuant to the Stockholder Tender
Agreement, the Seller Stockholder has agreed to tender and sell (and not
withdraw) all of the Shares owned by such Seller Stockholder pursuant to and in
accordance with the terms of the Offer. The Stockholder Tender Agreement also
provides that the Purchaser is entitled to receive a fee from the Seller
Stockholder, under certain circumstances, in connection with certain subsequent
transactions involving the Shares.
The Offer is subject to certain conditions set forth in the Offer to
Purchase. If any such condition is not satisfied, the Purchaser may (i)
terminate the Offer and return all tendered Shares to tendering stockholders,
(ii) extend the Offer and, subject to withdrawal rights as set forth below,
retain all such Shares until the expiration of the Offer as so extended, (iii)
waive such condition and, subject to any requirement to extend the time during
which the Offer is open, purchase all Shares validly tendered prior to the
Expiration Date and not withdrawn or (iv) delay acceptance for payment of or
payment for Shares, subject to applicable law, until satisfaction or waiver of
the conditions to the Offer.
<PAGE>
The Purchaser expressly reserves the right, in its sole discretion, 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 National City Bank
(the "Depositary"). Any such extension will be followed as promptly as
practicable by public announcement thereof no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment (and thereby purchased) tendered Shares when, as and if the
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 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 a Book-Entry Transfer Facility (as
defined in the Offer to Purchase)), a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) (unless, in the case of book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase) is utilized)
and any other documents required by the Letter of Transmittal or, in case of
book-entry transfer, an Agent's Message.
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 at any time after February 24, 1996 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 and the number of Shares to be withdrawn and the name of
the registered holders of the Shares if different from the person who tendered
the 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 stockholder) and the serial numbers shown
on the particular certificates evidencing the Shares to be withdrawn or, in the
case of Shares tendered by book-entry transfer, the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares.
The 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 agreed to provide the Purchaser with the Company's
stockholder list 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 stockholder 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 THE RELATED 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, the related Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent or the Dealer Manager as set forth below, and copies will be furnished
promptly at the Purchaser's expense. The Purchaser will not pay any fees or
commissions to any broker or dealer or any other person (other than the Dealer
Manager) for soliciting tenders of Shares pursuant to the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
(212) 509-6240 (Collect)
(800) 223-2064 (Toll Free)
Banks and Brokers call
(212) 440-9800
THE DEALER MANAGER FOR THE OFFER IS:
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(312) 876-8478
(Call Collect)
December 27, 1995
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
CIMCO, INC.,
M.A. HANNA COMPANY
AND
HANWEST, INC.
DATED AS OF DECEMBER 19, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
(Not Part of the Agreement)
Page
----
ARTICLE I -- THE TENDER OFFER. . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 The Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.03 Board of Directors and Committees; Section 14(f) . . . . . . . . . 6
ARTICLE II -- THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.01 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.02 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.03 Certificate of Incorporation . . . . . . . . . . . . . . . . . . . 7
2.04 By-Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.05 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . 8
2.06 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 8
2.07 Stockholders' Meeting. . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III -- CONVERSION OR CANCELLATION OF SHARES; STOCK RIGHTS. . . . . . 10
3.01 Conversion or Cancellation of Shares . . . . . . . . . . . . . . . 10
3.02 Exchange of Certificates; Paying Agent . . . . . . . . . . . . . . 10
3.03 Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . 12
3.04 Transfer of Shares After the Effective Time. . . . . . . . . . . . 12
3.05 Company Stock Rights . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . . 13
4.01 Organization; Qualification. . . . . . . . . . . . . . . . . . . . 13
4.02 Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 13
4.03 The Company's Capitalization . . . . . . . . . . . . . . . . . . . 14
4.04 Company Equity Investments . . . . . . . . . . . . . . . . . . . . 15
4.05 Authority Relative to this Agreement . . . . . . . . . . . . . . . 15
4.06 Consents and Approvals; No Violation . . . . . . . . . . . . . . . 16
4.07 SEC Reports; Financial Statements. . . . . . . . . . . . . . . . . 17
4.08 Proxy Statement; Offer Documents . . . . . . . . . . . . . . . . . 17
4.09 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . 18
4.10 Absence of Certain Changes or Events . . . . . . . . . . . . . . . 18
4.11 Title, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.12 Patents, Trademarks, Etc.. . . . . . . . . . . . . . . . . . . . . 19
4.13 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 20
4.15 Legal Proceedings, Etc.. . . . . . . . . . . . . . . . . . . . . . 21
4.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.17 Material Agreements. . . . . . . . . . . . . . . . . . . . . . . . 22
4.18 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . 23
4.19 Insider Interests. . . . . . . . . . . . . . . . . . . . . . . . . 23
4.20 Officers, Directors and Employees. . . . . . . . . . . . . . . . . 23
4.21 Environmental Protection . . . . . . . . . . . . . . . . . . . . . 23
- i -
<PAGE>
Page
----
4.22 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . 24
4.23 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.24 Respiratory Medical Products Sale. . . . . . . . . . . . . . . . . 25
4.25 No Other Representations or Warranties . . . . . . . . . . . . . . 25
ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE
PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.01 Corporation Organization . . . . . . . . . . . . . . . . . . . . . 25
5.02 Authorized Capital . . . . . . . . . . . . . . . . . . . . . . . . 26
5.03 Corporation Authority. . . . . . . . . . . . . . . . . . . . . . . 26
5.04 No Prior Activities. . . . . . . . . . . . . . . . . . . . . . . . 26
5.05 No Financing Contingency . . . . . . . . . . . . . . . . . . . . . 26
5.06 Governmental Filings; No Violations. . . . . . . . . . . . . . . . 27
5.07 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . 27
5.08 Offer Documents; Proxy Statement; Other Information. . . . . . . . 27
5.09 No Other Representations or Warranties . . . . . . . . . . . . . . 28
ARTICLE VI -- COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . 28
6.01 Conduct of Business of the Company . . . . . . . . . . . . . . . . 28
6.02 Notification of Certain Matters. . . . . . . . . . . . . . . . . . 30
6.03 Access to Information. . . . . . . . . . . . . . . . . . . . . . . 31
6.04 Further Information. . . . . . . . . . . . . . . . . . . . . . . . 32
6.05 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 32
6.06 Interim Financial Statements . . . . . . . . . . . . . . . . . . . 32
6.07 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.08 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.09 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.10 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . 34
6.11 Indemnity; D&O Insurance . . . . . . . . . . . . . . . . . . . . . 34
6.12 Other Potential Bidders. . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VII -- CONDITIONS TO THE MERGER. . . . . . . . . . . . . . . . . . . 38
7.01 Conditions to Each Party's Obligation to Effect the Merger . . . . 38
7.02 Conditions to the Obligations of the Parent and the Purchaser to
Effect the Merger. . . . . . . . . . . . . . . . . . . . . . . . . 38
7.03 Conditions to the Obligations of the Company to Effect the Merger. 39
ARTICLE VIII -- CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.01 Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.02 Filings at the Closing . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX -- TERMINATION; AMENDMENT; WAIVER . . . . . . . . . . . . . . . . 39
9.01 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.02 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . 41
9.03 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 42
- ii -
<PAGE>
Page
----
ARTICLE X -- MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.01 Survival of Representations, Warranties, Covenants and
Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.02 Amendment and Modification. . . . . . . . . . . . . . . . . . 43
10.03 Waiver of Compliance; Consents. . . . . . . . . . . . . . . . 43
10.04 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 44
10.05 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 44
10.06 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.07 Entire Agreement, Assignment Etc. . . . . . . . . . . . . . . 45
10.08 Validity. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.09 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.10 Specific Performance. . . . . . . . . . . . . . . . . . . . . 45
ANNEX A Certain Conditions to Offer
ANNEX B Form of Stockholder Tender Agreement
- iii -
<PAGE>
DEFINITIONS
Page
----
Acquiring Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bridge Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . 7
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Company Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Company Disclosure Letter. . . . . . . . . . . . . . . . . . . . . . . . . . .16
Company Right. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Company Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . .32
Constituent Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Delaware Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . 7
Department of Justice. . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Dissenting Stockholders. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Distribution Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Environmental Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Equity Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FTC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Independent Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Line of Credit Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Minimum Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
MMCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Offer Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Other Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PaineWebber. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
- iv -
<PAGE>
Page
----
Parent Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Parent Disclosure Letter . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Pertinent Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . .24
Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Redelivering Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Related Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Revolving Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Series A Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Stockholder Tender Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 4
Stockholders' Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Third Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Third Party Acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
- v -
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
dated as of December 19, 1995, among CIMCO, Inc., a Delaware corporation (the
"Company"), Hanwest, Inc., a Delaware corporation (the "Purchaser"), and M.A.
Hanna Company, a Delaware corporation (the "Parent").
WHEREAS, the Board of Directors of the Company has determined that it
is in the best interests of its stockholders for the Purchaser to acquire the
Company upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company, the Parent and the Purchaser desire to make
certain representations, warranties and agreements in connection with this
Agreement;
WHEREAS, in furtherance of such acquisition, the Parent proposes to
cause the Purchaser to make the Offer (as defined in Section 1.01) to purchase
all of the issued and outstanding shares of common stock of the Company, par
value $0.01 per share (the "Common Stock"), upon the terms and subject to the
conditions of this Agreement, and the Board of Directors of the Company has
approved the Offer and determined to recommend that the Company's stockholders
accept the Offer; and
WHEREAS, to complete such acquisition, the respective Boards of
Directors of the Parent, the Purchaser and the Company, and the Parent acting as
the sole stockholder of the Purchaser, have approved the Offer and the merger of
the Purchaser with and into the Company upon the terms and subject to the
conditions of this Agreement, whereby each issued and outstanding share of
Common Stock not owned directly or indirectly by the Parent or the Company,
except shares of Common Stock held by persons who object to such merger and
demand payment of the value of their shares of Common Stock, will be converted
into the right to receive in cash the same price per share of Common Stock paid
pursuant to the Offer;
NOW, THEREFORE, in consideration of the representations, warranties
and agreements herein contained, and subject to the terms and conditions herein
contained, the parties hereto hereby agree as follows:
ARTICLE I
THE TENDER OFFER
1.01 THE OFFER. (a) Provided that this Agreement shall not have been
terminated in accordance with Article IX and none of
<PAGE>
- 2 -
the events or conditions set forth in Annex A shall have occurred and be
existing, then, not later than the first business day after execution of this
Agreement, the Parent shall issue a public announcement of the execution of this
Agreement, and not later than the fifth business day after the date of the
public announcement of the execution of this Agreement, the Purchaser shall,
subject to the provisions of this Agreement, commence a tender offer (the
"Offer") for all of the outstanding shares of Common Stock, together with the
associated rights issued pursuant to the Rights Agreement dated as of December
5, 1992, as amended (the "Company Rights Agreement"), between the Company and
First Interstate Bank of California, as Rights Agent (collectively, the
"Shares") at a price of $10.50 per Share, net to the seller in cash. The
Purchaser shall accept for payment and pay for all Shares which have been
validly tendered and not withdrawn pursuant to the Offer at the earliest time
following expiration of the Offer that all conditions to the Offer set forth in
Annex A hereto shall have been satisfied or waived by the Purchaser. The
obligation of the Purchaser to accept for payment, purchase and pay for Shares
tendered pursuant to the Offer shall be subject to the conditions set forth in
Annex A hereto, including the condition that a number of Shares representing not
less than a majority of the Shares on a fully diluted basis shall have been
validly tendered and not withdrawn prior to the expiration date of the Offer
(the "Minimum Condition"). Solely for purposes of determining whether the
Minimum Condition has been satisfied, any Shares owned by Parent or Purchaser
shall be deemed to have been validly tendered and not withdrawn pursuant to the
Offer. The Purchaser expressly reserves the right to increase the price per
Share payable in the Offer or to make any other changes in the terms and
conditions of the Offer; PROVIDED, HOWEVER, that, unless previously approved by
the Company in writing, no change may be made which decreases the price per
Share payable in the Offer, which changes the form of consideration to be paid
in the Offer, which reduces the maximum number of Shares to be purchased in the
Offer, which imposes conditions to the Offer in addition to those set forth in
Annex A hereto, which broadens the scope of such conditions, which increases the
minimum number of Shares which must be tendered as a condition to the acceptance
for payment and payment for shares in the Offer, which waives the Minimum
Condition if such waiver would result in less than a majority of Shares being
accepted for payment or paid for pursuant to the Offer, which, except as
hereinafter set forth in this Subsection 1.01(a), extends the period of the
Offer beyond 45 days after the date of commencement of the Offer, or which
otherwise amends the terms of the Offer (including any of the conditions set
forth in Annex A) in a manner that is materially adverse to holders of Shares.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (i) extend the Offer if, at the scheduled expiration date of the Offer,
any of the conditions to the Purchaser's obligation to purchase Shares shall not
be satisfied until such time as such conditions are satisfied, or (ii) extend
the Offer for a period of not more than 15 business days beyond the latest
expiration date that would otherwise be
<PAGE>
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permitted under clause (i) of this sentence if, on the date of such extension,
more than two-thirds but less than 90 percent of Shares have been validly
tendered and not properly withdrawn pursuant to the Offer. It is agreed that
the conditions set forth in Annex A are for the sole benefit of the Parent and
the Purchaser and may be asserted by the Parent or the Purchaser regardless of
the circumstances giving rise to any such condition (including any action or
inaction by the Purchaser, unless any such action or inaction by the Purchaser
would constitute a breach by the Purchaser of any of its covenants under this
Agreement) or may be waived by the Parent or the Purchaser, in whole or in part
at any time and from time to time, in its sole discretion. The failure by the
Parent or the Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
Any determination by the Parent or the Purchaser with respect to any of the
foregoing conditions (including, without limitation, the satisfaction of such
conditions) shall be final and binding on the parties. The Company agrees that
no Shares held by the Company will be tendered in the Offer.
(b) As promptly as reasonably practicable following execution of this
Agreement, the Parent and the Purchaser shall file with the Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer, which shall contain an offer to purchase and related
letter of transmittal and summary advertisement (such Schedule 14D-1 and the
documents therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "Offer Documents"). The Offer Documents
shall comply as to form in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder and, on the date filed with the SEC and
on the date first published, sent or given to the holders of Shares, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by the Parent or the Purchaser
with respect to information supplied by the Company in writing specifically for
inclusion in the Offer Documents. Each of the Parent, the Purchaser and the
Company agrees promptly to correct any information supplied by it specifically
for inclusion in the Offer Documents if and to the extent that such information
shall have become false or misleading in any material respect, and each of the
Parent and the Purchaser further agrees to take all steps necessary to cause the
Offer Documents 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. The Parent and the Purchaser agree to provide the
Company and its counsel in writing with any comments the Parent, the Purchaser
or their counsel may receive from the SEC or its Staff with respect to the Offer
Documents
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promptly after the receipt of such comments. The Company and its counsel shall
be given a reasonable opportunity to review and comment upon the Offer Documents
and all amendments and supplements thereto prior to their filing with the SEC or
dissemination to the stockholders of the Company.
1.02 COMPANY ACTION. (a) The Company hereby approves of and consents
to the Offer and represents and warrants that the Board of Directors of the
Company (the "Board"), at a meeting duly called and held, has unanimously
adopted resolutions (i) determining that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (as defined in Section
2.01), are fair to, and in the best interests of, the stockholders of the
Company, (ii) approving and adopting this Agreement and the transactions
contemplated hereby, including the Offer, the Merger, and the Stockholder Tender
Agreement of even date between the Purchaser and a certain stockholder of the
Company (the "Stockholder Tender Agreement") and the transactions contemplated
thereby, in all respects and that such approval constitutes approval of the
Offer, this Agreement, the Merger and the Stockholder Tender Agreement, and the
transactions contemplated hereby and thereby, for purposes of Section 203 of the
General Corporation Law of the State of Delaware (the "DGCL") and similar
provisions of any other similar state statutes that might be deemed applicable
to the transactions contemplated hereby, and Article EIGHTH of the Certificate
of Incorporation (as defined in Section 2.03 of this Agreement), and
(iii) recommending that the stockholders of the Company accept the Offer, tender
their Shares thereunder to the Purchaser and approve and adopt this Agreement
and the Merger; PROVIDED, HOWEVER, that such recommendation may be withdrawn,
modified or amended to the extent that the Board, by a majority vote, determines
in its good faith judgment, based as to legal matters on the advice of legal
counsel, that the Board is required to do so for the proper discharge of its
fiduciary duties.
(b) The Company has been advised by each of its executive officers
who as of the date hereof is aware of the transactions contemplated hereby and
each of its Directors, that each such person intends to tender pursuant to the
Offer all Shares owned by such person. The Company represents that the Board
has received the opinion of PaineWebber Incorporated ("PaineWebber") that the
proposed consideration to be received by holders of Shares pursuant to the Offer
and the Merger is fair to such holders from a financial point of view.
(c) The Company shall use its best efforts to file with the SEC a
Solicitation/ Recommendation Statement on Schedule 14D-9 with respect to the
Offer (such Schedule 14D-9, as amended from time to time, the "Schedule 14D-9")
on the date the Offer Documents are filed with the SEC, and in any event shall
file with the SEC the Schedule 14D-9 not later than the date required pursuant
to the Exchange Act and the applicable rules and regulations promulgated
thereunder, containing the recommendation
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described in Section 1.02(a) and shall mail the Schedule 14D-9 to the
stockholders of the Company. The Schedule 14D-9 shall comply in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, and shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied in writing by the Parent or the Purchaser specifically for
inclusion or incorporation by reference in the Schedule 14D-9. Each of the
Company, the Parent and the Purchaser agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's stockholders, in each
case as and to the extent required by applicable Federal securities laws. The
Parent and its counsel shall be given a reasonable opportunity to review and
comment upon the Schedule 14D-9 and all amendments and supplements thereto prior
to their filing with the SEC or dissemination to stockholders of the Company.
(d) In connection with the Offer, the Company will, and will cause
its transfer agent (the "Transfer Agent") to, furnish promptly to the Parent and
the Purchaser mailing labels containing the names and addresses of all record
holders of Shares as of a recent date and of those persons becoming record
holders after such date, together with copies of all lists of stockholders and
security position listing and computer files and all other information in the
Company's possession and control regarding the beneficial ownership of Shares.
The Company shall promptly furnish the Parent and the Purchaser with such
additional information (including, but not limited to, updated lists of holders
of Shares and their addresses, mailing labels and security position listings and
computer files) and such other assistance as the Parent and the Purchaser or
their agents may reasonably request in communicating the Offer to the record and
beneficial holders of Shares. Subject to the requirements of law, and except
for such steps as are necessary or advisable to disseminate the Offer and any
other documents necessary to consummate the Merger and to solicit tenders of
Shares and the approval of the Merger, Parent and Purchaser and each of their
affiliates shall hold in confidence the information contained in any of such
labels, lists and additional information, shall use such information only in
connection with the Offer and the Merger, and, if this Agreement shall be
terminated, shall deliver to the Company all copies of such information then in
their possession or under their control.
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1.03 BOARD OF DIRECTORS AND COMMITTEES; SECTION 14(f). (a) Promptly
upon acceptance for payment of, and commencement of payment for, such number of
Shares which represent at least a majority of the Shares (determined on a fully
diluted basis) by Purchaser pursuant to the Offer and from time to time
thereafter, the Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board as will give the
Purchaser representation on the Board equal to the product of the number of
directors on the Board (giving effect to any increase in the number of directors
pursuant to this Section 1.03) and the percentage that such number of Shares
beneficially owned by the Purchaser and its affiliates bears to the total number
of Shares, and the Company shall, at such time, cause the Purchaser's designees
to be elected or appointed, upon request by the Purchaser. In connection with
the foregoing, the Company shall promptly, as reasonably agreed by the Parent
and the Company, either increase the size of the Board and/or secure the
resignation of such number of its current directors as is necessary to enable
the Purchaser's designees to be elected or appointed to the Board and to cause
the Purchaser's designees to be so elected or appointed. At such times and,
subject to the last sentence of this Section 1.03(a), to the extent requested by
the Parent, the Company will use its best efforts to cause persons designated by
the Purchaser to constitute the same percentage of each committee of the Board
(other than any committee of the Board established to take action under this
Agreement) as the Purchaser's designees constitute on the Board.
Notwithstanding the foregoing, the Company, the Parent and the Purchaser shall
each use its best efforts to ensure that two of the members of the Board as of
the date hereof who are not officers, employees or affiliates of the Company or
the Parent (the "Independent Directors") shall remain members of the Board until
the Purchaser owns a majority of the Shares and thereafter until the Effective
Time (as defined in Section 2.02) and if the number of the Independent Directors
shall be reduced below two for any reason, any remaining Independent Director(s)
shall be entitled to designate independent persons to fill such vacancies and
such persons shall be deemed to be Independent Directors; or, if no Independent
Directors then remain, the other directors shall designate two independent
persons to fill such vacancies, and such persons shall be deemed to be
Independent Directors.
(b) The Company's obligation to appoint designees to the Board shall
be subject to Section 14(f) of the Exchange Act, and Rule 14f-1 promulgated
thereunder. The Company shall promptly take all action required pursuant to
such Section and Rule in order to fulfill its obligations under this
Section 1.03, including mailing to its stockholders with the Schedule 14D-9 such
information as is required under such Section and Rule in order to fulfill its
obligations under this Section 1.03. The Purchaser will 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 such
Section and Rule.
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(c) Following the election or appointment of the Purchaser's
designees pursuant to this Section 1.03, any amendment of this Agreement, any
termination of this Agreement by the Company, any recommendation made by the
Board pursuant to Section 2.07(a)(ii) of this Agreement, any extension by the
Company of the time for the performance of any of the obligations or other acts
of the Purchaser or the Parent hereunder or waiver of any of the Company's
rights or waiver by the Company of any condition hereunder, will require the
concurrence of a majority of the Independent Directors.
ARTICLE II
THE MERGER
2.01 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 2.02), the Parent shall
cause the Purchaser to merge (the "Merger") with and into the Company and the
separate corporate existence of the Purchaser shall thereupon cease. The
Company shall be the surviving corporation in the Merger (the Purchaser and the
Company are sometimes hereinafter referred to as the "Constituent Corporations"
and the Company is sometimes hereinafter referred to as the "Surviving
Corporation") and shall, following the Merger, be governed by the laws of the
State of Delaware, and the separate corporate existence of the Company, with all
its rights, privileges, immunities, powers and franchises, of a public as well
as of a private nature, shall continue unaffected by the Merger. From and after
the Effective Time, the Merger shall have the effects specified in the DGCL.
2.02 EFFECTIVE TIME. At the Closing contemplated in Section 8.01, the
Company and the Parent will cause a Certificate of Merger (the "Delaware
Certificate of Merger") to be executed and filed by the Company and the
Purchaser with the Secretary of State of the State of Delaware as provided in
the DGCL. The Merger shall become effective as of the date and at the time the
Delaware Certificate of Merger is duly filed with the Secretary of State of the
State of Delaware, and such time is hereinafter referred to as the "Effective
Time."
2.03 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation
of the Company (the "Certificate of Incorporation") in effect immediately prior
to the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and the
DGCL.
2.04 BY-LAWS. The By-Laws of the Company as in effect immediately
prior to the Effective Time shall be the By-Laws of the Surviving Corporation,
until duly amended in accordance with the terms thereof and the DGCL.
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2.05 DIRECTORS AND OFFICERS. At the Effective Time, the directors of
the Purchaser immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, each of such directors to hold office, subject to the
applicable provisions of the Certificate of Incorporation and By-Laws of the
Surviving Corporation, until their respective successors shall be duly elected
or appointed and qualified. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation,
in each case until their respective successors are duly elected or appointed and
qualified.
2.06 FURTHER ASSURANCES. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper: (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either of
the Constituent Corporations, or (b) otherwise to carry out the purposes of this
Agreement, the proper officers and directors of the Surviving Corporation are
hereby authorized on behalf of the respective Constituent Corporations to
execute and deliver, in the name and on behalf of the respective Constituent
Corporations, all such deeds, bills of sale, assignments and assurances and do,
in the name and on behalf of the Constituent Corporations, all such other acts
and things necessary, desirable or proper to vest, perfect or confirm its right,
title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of the Constituent Corporations and otherwise
to carry out the purposes of this Agreement.
2.07 STOCKHOLDERS' MEETING. (a) After the Purchaser has accepted for
payment the Shares tendered pursuant to the Offer, the Company, acting through
the Board, shall, at the Parent's request and in accordance with applicable law:
(i) duly call, give notice of, convene and hold an annual or special
meeting of its stockholders (the "Stockholders' Meeting"), to be held as soon as
practicable for the purpose of approving this Agreement, the Merger and the
transactions contemplated hereby and thereby;
(ii) include in the Proxy Statement (as defined in Section 4.08) the
recommendation of the Board that stockholders of the Company vote in favor of
the approval and adoption of this Agreement and the Merger and the other
transactions contemplated hereby and thereby and that the cash consideration to
be received by the stockholders of the Company pursuant to the Merger is fair to
such stockholders; and
(iii) as soon as practicable after the Parent's request, prepare and
file a preliminary Proxy Statement with the SEC and, after consultation with the
Parent and the Purchaser,
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respond promptly to any comments made by the SEC with respect to the Proxy
Statement and any preliminary version thereof and cause the Proxy Statement to
be mailed to its stockholders at the earliest practicable time after responding
to all such comments to the satisfaction of the Staff of the SEC and to obtain
the necessary approvals by its stockholders of this Agreement. Without limiting
the generality of the foregoing, the Company agrees that its obligations
pursuant to this Section 2.07(a) shall not be affected by either the
commencement, public proposal, public disclosure or other communication to the
Company of any offer to acquire some or all of the Shares or all or any
substantial portion of the assets of the Company or any change in the
recommendation of the Board.
(b) The Company, the Parent and the Purchaser, as the case may be,
shall promptly prepare and file any other filings required under the Exchange
Act or any other Federal or state securities or corporate laws relating to the
Merger and the transactions contemplated herein (the "Other Filings"). Each of
the parties hereto shall notify the other parties hereto promptly of the receipt
by it of any comments from the SEC or its Staff and of any request of the SEC
for amendments or supplements to the Proxy Statement or by the SEC or any other
governmental officials with respect to any Other Filings or for additional
information and will supply the other parties hereto with copies of all
correspondence between it and its representatives, on the one hand, and the SEC
or the members of its Staff or any other governmental officials, on the other
hand, with respect to the Proxy Statement, any Other Filings or the Merger. The
Company, the Parent and the Purchaser each shall use its best efforts to obtain
and furnish the information required to be included in the Proxy Statement, any
Other Filings or the Merger. If at any time prior to the time of approval of
this Agreement by the Company's stockholders there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement, the
Company shall promptly prepare and mail to its stockholders such amendment or
supplement. The Company shall not mail the Proxy Statement or, except as
required by the Exchange Act or the rules and regulations promulgated
thereunder, any amendment or supplement thereto, to the Company's stockholders
unless the Company has first obtained the consent of the Parent to such mailing.
(c) At the Stockholders' Meeting, the Parent, the Purchaser and their
affiliates will vote all Shares owned by them in favor of approval and adoption
of this Agreement, the Merger, and the transactions contemplated hereby and
thereby.
(d) Notwithstanding the foregoing, in the event that the Purchaser
shall acquire at least 90 percent of the Shares, the parties hereto agree, at
the request of the Purchaser, to take all necessary and appropriate action to
cause the Merger to become effective, in accordance with Section 253 of the
DGCL, as soon as reasonably practicable after such acquisition and satisfaction
or
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waiver of the conditions of Article VII, without a meeting of the stockholders
of the Company.
ARTICLE III
CONVERSION OR CANCELLATION OF SHARES; STOCK RIGHTS
3.01 CONVERSION OR CANCELLATION OF SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by the Parent or any wholly-owned
subsidiary of the Parent (collectively, the "Parent Companies"), Shares held by
stockholders exercising appraisal rights pursuant to Section 262 of the DGCL
(the "Dissenting Stockholders"), and any shares held in the treasury of the
Company) shall be converted into and represent the right to receive, without
interest, an amount in cash equal to the greater of $10.50 net or the amount per
share which may be paid pursuant to the Offer as it may be amended (the "Merger
Consideration") upon surrender of the certificate or certificates that,
immediately prior to the Effective Time, represented issued and outstanding
Shares (the "Certificates"). As of the Effective Time, all such Shares shall no
longer be outstanding, shall be automatically cancelled and shall cease to
exist, and each holder of a Certificate representing any such Shares shall
thereafter cease to have any rights with respect to such Shares, except the
right to receive the Merger Consideration without interest for such Shares upon
the surrender of such Certificate or Certificates in accordance with
Section 3.02.
(b) Each Share issued and outstanding immediately prior to the
Effective Time and owned by any of the Parent Companies, and each Share issued
and held in the Company's treasury immediately prior to the Effective Time,
shall no longer be outstanding, shall be cancelled without payment of any
consideration therefor and shall cease to exist, and each holder of a
Certificate representing any such Shares shall thereafter cease to have any
rights with respect to such Shares.
(c) Each share of Common Stock, without par value, of the Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully-paid and non-assessable share of Common
Stock, par value $0.01 per share, of the Surviving Corporation.
3.02 EXCHANGE OF CERTIFICATES; PAYING AGENT. (a) Prior to the
Closing, the Parent shall select a bank or trust company to act as paying agent
(the "Paying Agent") for the payment of the cash consideration specified in
Section 3.01 upon surrender of Certificates converted into the right to receive
cash pursuant to the Merger. From time to time at and after the Effective Time,
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the Parent shall make available, or cause the Purchaser or the Surviving
Corporation to make available, to the Paying Agent immediately available funds
in amounts and at times necessary for the payment of the Merger Consideration
(the "Funds") upon surrender of Certificates pursuant to Section 3.01, it being
understood that any and all interest earned on the Funds shall be paid over by
the Paying Agent as the Parent shall direct.
(b) Promptly after the Effective Time, the Paying Agent shall mail to
each person who was, at the Effective Time, a holder of record of a Certificate
or Certificates, other than the Company or any of the Parent Companies, a letter
of transmittal and instructions for use in effecting the surrender, in exchange
for payment in cash therefor, of the Certificates. The letter of transmittal
shall specify that delivery shall be effected, and risk of loss and title shall
pass, only upon proper delivery to and receipt of such Certificates by the
Paying Agent and shall be in such form and have such provisions as the Parent
shall reasonably specify. Upon surrender to the Paying Agent of such
Certificates, together with the letter of transmittal, duly executed and
completed in accordance with the instructions thereto and such other documents
as may be reasonably required by the Paying Agent, the Paying Agent shall
promptly pay to the persons entitled thereto, out of the Funds, a check in the
amount to which such persons are entitled pursuant to Section 3.01(a), after
giving effect to any required tax withholdings, and such Certificate shall
forthwith be cancelled. No interest will be paid or will accrue on the amount
payable upon the surrender of any such Certificates. If payment is to be made
to a person other than the registered holder of the Certificates surrendered, it
shall be a condition of such payment that the Certificates so surrendered shall
be properly endorsed or otherwise in proper form for transfer and that the
person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificates surrendered or establish to the satisfaction of the Surviving
Corporation or the Paying Agent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 3.02, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the amount of cash, without
interest, into which the Shares theretofore represented by such Certificate
shall have been converted pursuant to Section 3.01. No interest shall accrue or
be paid on any portion of the Merger Consideration.
(c) One hundred eighty days following the Effective Time, the
Surviving Corporation shall be entitled to cause the Paying Agent to deliver to
it any Funds (including any interest, dividends, earnings or distributions
received with respect thereto which shall be paid as directed by the Parent)
made available to the Paying Agent by the Parent which have not been disbursed,
and thereafter holders of Certificates who have not theretofore complied with
the instructions for exchanging their Certificates shall be entitled to look
only to the Surviving Corporation for
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payment as general creditors thereof with respect to the cash payable upon due
surrender of their Certificates.
(d) Except as otherwise provided herein, the Parent shall pay all
charges and expenses, including those of the Paying Agent, in connection with
the exchange of the Merger Consideration for Certificates.
(e) Notwithstanding anything to the contrary in this Section 3.02,
none of the Paying Agent, the Parent, the Company, the Surviving Corporation or
the Purchaser shall be liable to a holder of a Certificate formerly representing
Shares for any amount properly delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If Certificates are not
surrendered prior to two years after the Effective Time (or immediately prior to
such earlier date on which any payment pursuant to this Article III would
otherwise escheat or become the property of any Federal, state or local
government agency or authority, court or commission), unclaimed funds payable
with respect to such Certificates shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation, free and clear of all
claims or interest of any person previously entitled thereto.
3.03 DISSENTERS' RIGHTS. Notwithstanding the provisions of
Section 3.01 or any other provision of this Agreement to the contrary, Shares
that have not been voted in favor of the approval and adoption of the Merger and
with respect to which dissenters' rights shall have been demanded and perfected
in accordance with Section 262 of the DGCL (the "Dissenting Shares") and not
withdrawn shall not be converted into the right to receive cash at or after the
Effective Time, but such Shares shall become the right to receive such
consideration as may be determined to be due to holders of Dissenting Shares
pursuant to the laws of the State of Delaware unless and until the holder of
such Dissenting Shares withdraws his or her demand for such appraisal or becomes
ineligible for such appraisal. If a holder of Dissenting Shares shall withdraw
his or her demand for such appraisal or shall become ineligible for such
appraisal (through failure to perfect or otherwise), then, as of the Effective
Time or the occurrence of such event, whichever last occurs, such holder's
Dissenting Shares shall automatically be converted into and represent the right
to receive the Merger Consideration, without interest, as provided in
Section 3.01(a). The Company shall give the Parent (i) prompt notice of any
demands for appraisal of Shares received by the Company and (ii) the opportunity
to participate in and direct all negotiations and proceedings with respect to
any such demands. The Company shall not, without the prior written consent of
the Parent, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
3.04 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. No transfers of
Shares shall be made in the stock transfer books of the Surviving Corporation at
or after the Effective Time. If,
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after the Effective Time, Certificates formerly representing Shares are
presented to the Surviving Corporation, they shall be cancelled and exchanged
for the Merger Consideration set forth in Section 3.01.
3.05 COMPANY STOCK RIGHTS. Prior to the Effective Time, the Company
shall use its best efforts to procure the surrender as of the Effective Time of
all outstanding options to purchase shares of Common Stock of the Company (the
"Options") pursuant to the CIMCO, Inc. 1988 Incentive Stock Option Plan and the
CIMCO, Inc. 1991 Incentive Stock Option Plan (collectively, the "Stock Option
Plans"), in consideration of the payment at the Effective Time of an amount of
cash per share subject to each such Option equal to the difference between the
exercise price of such Option and the Merger Consideration, less an amount equal
to all taxes required to be withheld from such payment. As to any Option not so
surrendered, the Company shall use its best efforts to obtain, prior to the
Effective Time, the consent of the holder of the Option to acquire upon payment
of the exercise price an amount of cash equal to the Merger Consideration, less
an amount equal to all taxes required to be withheld from such payment, in lieu
of each Share formerly covered thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Parent and the
Purchaser that:
4.01 ORGANIZATION; QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to own, lease and
operate its properties and carry on its business as now being conducted. The
Company is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of the Company's business or the location of
its properties makes such qualification necessary, except for any such failure
to qualify or be in good standing as shall not have a Material Adverse Effect
(as defined in Section 4.06) on the Company. The Company Disclosure Letter (as
defined in Section 4.06) identifies, and the Company has heretofore made
available to the Parent, complete and correct copies of the Certificate of
Incorporation and By-Laws of the Company, as currently in effect.
4.02 COMPANY SUBSIDIARIES. (a) The Company Disclosure Letter lists
all subsidiaries of the Company. Except as indicated in the Company Disclosure
Letter, all of the outstanding shares of capital stock of each such subsidiary
are owned by the Company either directly or indirectly through another of its
subsidiaries. Except as set forth in the Company Disclosure Letter, no equity
securities of any subsidiary of the Company are or may be required
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to be issued (other than to the Company or its other subsidiaries) by reason of
any Equity Rights (as defined in Section 4.03) for shares of the capital stock
of any subsidiary of the Company, and there are no contracts, commitments,
understandings or arrangements by which any subsidiary of the Company is bound
to issue (other than to the Company) additional shares of its capital stock or
options, warrants or rights to purchase or acquire any additional shares of its
capital stock. Except as set forth in the Company Disclosure Letter, there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its subsidiaries is or may be obligated to transfer any shares of the
capital stock of any subsidiary of the Company. Except as set forth in the
Company Disclosure Letter, all of the shares of capital stock of each subsidiary
of the Company held by the Company or any subsidiary of the Company are fully
paid and nonassessable and are owned by the Company or such subsidiary of the
Company free and clear of any claim, lien or encumbrance other than restrictions
on transferability under federal and any applicable state securities laws. Each
subsidiary of the Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated or
organized, has the corporate power and authority necessary for it to own or
lease its properties and assets and to carry on its business as it is now being
conducted, and is duly qualified to do business and in good standing in the
states of the United States in which the ownership of its property or the
conduct of its business requires it to be so qualified, except for such
jurisdictions in which the failure to be so qualified and in good standing would
not have a Material Adverse Effect. As used in this Agreement, the term
"subsidiary" shall mean, with respect to the Company, any corporation or other
legal entity of which the Company or any of its subsidiaries controls or owns,
directly or indirectly, 50% or more of the stock or other equity interest
entitled to vote on the election of members to the board of directors or similar
governing body.
(b) Except for interests in the Company's subsidiaries and except as
set forth in the Company Disclosure Letter, neither the Company nor any of the
Company's subsidiaries owns, directly or indirectly, any interest or investment
(whether equity or debt) in any corporation, partnership, joint venture,
business, trust or entity, other than (i) non-controlling investments made in
the ordinary course of business and corporate partnering, development,
cooperative marketing and similar undertakings and arrangements entered into in
the ordinary course of business, and (ii) other investments of less than
$250,000 in the aggregate.
4.03 THE COMPANY'S CAPITALIZATION. The authorized capital stock of
the Company consists of (i) ten million Shares, and (ii) five million shares of
Preferred Stock, $.01 par value (the "Preferred Shares"), which Preferred Shares
include one hundred thousand shares of Series A Junior Participating Preferred
Stock, $.01 par value (the "Series A Shares"). As of the close of business on
December 18, 1995, there were (i) 2,970,481 Shares
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issued and outstanding and no Shares held in the Company's treasury, (ii) no
Preferred Shares issued and outstanding, and (iii) no Series A Shares issued and
outstanding. All outstanding Shares have been duly authorized and validly
issued, and are fully paid, nonassessable and were issued free of preemptive
rights. Except for the Options described in Section 3.05 hereof and except as
set forth on the Company Disclosure Letter there are not now, and at the
Effective Time there will not be, any subscriptions, options, warrants, calls,
rights, agreements or commitments relating to the issuance, sale, delivery or
transfer by the Company (including any right of conversion or exchange under any
outstanding security or other instrument) of its Shares (collectively, "Equity
Rights"). There are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any Shares. The Company Disclosure
Letter contains a complete and accurate list of all holders of Options and any
other options or rights of any kind to purchase or acquire shares of the Common
Stock of the Company, together with the number of such options and the terms of
such options held by each such holder.
4.04 COMPANY EQUITY INVESTMENTS. Except as set forth on the Company
Disclosure Letter, neither the Company nor any of its subsidiaries owns,
directly or indirectly, or has the right to acquire, any equity security of
another entity nor has the Company or any of its subsidiaries made any loan or
advance to any other entity.
4.05 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has full
corporate power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. This Agreement has been
duly and validly approved by the Board, and the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board and,
except for the approval of the Merger by the holders of at least a majority of
the Shares in accordance with the DGCL, no other corporate actions on the part
of the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby, including the acquisition of Shares pursuant
to the Offer and the Merger. The Company has taken all actions necessary to
render the prohibitions of Section 203 of the DGCL and the provisions of Article
EIGHTH of the Certificate of Incorporation to be inapplicable to the execution
and delivery of this Agreement and the Stockholder Tender Agreement and the
transactions contemplated hereby and thereby, including the acquisition of the
Shares pursuant to the Offer and the Merger. To the knowledge of the Company,
no other "fair price", "merger moratorium", "control share acquisition" or other
anti-takeover statute or similar statute or regulation applies or purports to
apply to the Merger, this Agreement or any of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by the
Company and, assuming due authorization, execution and delivery by the Parent
and the
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Purchaser, constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally as at the time in effect and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
4.06 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth on the
Company Disclosure Letter delivered to the Parent as of the date of this
Agreement (the "Company Disclosure Letter"), and except for any required
approval of the Merger by the stockholders of the Company and the filing of the
Delaware Certificate of Merger in accordance with the DGCL, neither the
execution, delivery and performance of this Agreement by the Company nor the
consummation by it of the transactions contemplated hereby will (i) conflict
with or result in any breach of any provision of the Certificate of
Incorporation or By-Laws of the Company; (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, except (A) in connection with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (B) in
connection with the Exchange Act, (C) where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification, would
not have a Material Adverse Effect, and (D) for any requirements which became
applicable to the Company as a result of the specific regulatory status of the
Parent or the Purchaser or as a result of any other facts that specifically
relate to the business or activities in which the Parent or the Purchaser is or
proposes to be engaged; (iii) constitute a breach or result in a default under,
or give rise to any right of termination, amendment, cancellation or
acceleration under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, agreement or other instrument or
obligation of any kind to which the Company is a party or by which the Company
or any of its assets may be bound, except for any such breach, default or right
as to which requisite waivers or consents have been obtained or which, in the
aggregate, would not have a Material Adverse Effect; or (iv) assuming compliance
with the DGCL and the HSR Act, violate any order, writ, injunction, judgment,
decree, law, statute, rule, regulation or governmental permit or license
applicable to the Company or any of its assets, which violation would have a
Material Adverse Effect.
For purposes of this Agreement, "Material Adverse Effect" means a
material adverse effect on the business, assets, prospects, financial condition
or results of operation of the Company and its subsidiaries considered on a
consolidated basis or on the ability of the Company, the Parent or the Purchaser
to consummate the transactions contemplated by this Agreement.
<PAGE>
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4.07 SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed all
required forms, reports and documents with the SEC since May 1, 1992
(collectively, the "SEC Reports"), each of which has complied in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, each as in effect on the
dates so filed. None of such forms, reports or documents, including, without
limitation, any financial statements or schedules included or incorporated by
reference therein, contained, when filed, any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Company has heretofore made available or promptly will make available to the
Parent, a complete and correct copy of any amendment to the SEC Reports. The
Company has previously furnished to the Parent audited consolidated balance
sheets of the Company and its subsidiaries as of April 30th in each of the years
1991 through 1995, and the related audited consolidated statements of income,
statements of cash flow or changes in financial position and changes in
stockholders' equity of the Company and its subsidiaries for the fiscal years
then ended (collectively, the "Related Statements"), together with the
respective reports thereon of Grant Thornton. The unaudited consolidated
balance sheet of the Company and its subsidiaries as of October 31, 1995 is
hereinafter referred to as the "Company Balance Sheet." Each of the balance
sheets included in the financial statements referred to in this Section 4.06
(including the related notes thereto) presents fairly the financial position of
the Company and its subsidiaries as of their respective dates, and the Related
Statements included therein (including the related notes thereto) present fairly
the consolidated results of operations, the cash flows or changes in financial
position, and changes in stockholders' equity for the periods then ended, all in
conformity with generally accepted accounting principles applied on a consistent
basis, except as otherwise noted therein.
4.08 PROXY STATEMENT; OFFER DOCUMENTS. Any proxy or similar materials
distributed to the Company's stockholders in connection with the Merger,
including any amendments or supplements thereto (the "Proxy Statement"), will
comply in all material respects with applicable federal securities laws and will
not contain any untrue statements of a material fact required to be stated
therein or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Company with respect to information supplied by the Parent in
writing for inclusion in the Proxy Statement. None of the information supplied
by the Company in writing for inclusion in the Offer Documents or provided by
the Company in the Schedule 14D-9 will, at the respective times that the Offer
Documents and the Schedule 14D-9 or any amendments or supplements thereto are
filed with the SEC and are first published or sent or
<PAGE>
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given to holders of Shares, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
4.09 UNDISCLOSED LIABILITIES. Except as set forth on the Company
Disclosure Letter or reflected in the financial statements referred to in
Section 4.07, neither the Company nor any of its subsidiaries has any liability
or obligation, secured or unsecured (whether absolute, accrued, contingent or
otherwise, and whether due or to become due) except those which would not,
individually or in the aggregate, have a Material Adverse Effect.
4.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on the
Company Disclosure Letter, since the date of the Company Balance Sheet (i) the
business of the Company and its subsidiaries has been conducted in the ordinary
course consistent with past practice (except as otherwise contemplated by this
Agreement), (ii) there has not been any change which has had a Material Adverse
Effect, and (iii) neither the Company nor any of its subsidiaries has taken any
action described in Section 6.01.
4.11 TITLE, ETC. (a) The Company Disclosure Letter sets forth a list
of all of the land, which includes the buildings, structures and other
improvements located thereon (the "Real Property"), which is owned in fee by the
Company and any of its subsidiaries. The Company or such subsidiary, as the
case may be, has, with respect to personal property, good, and, with respect to
real property, good, marketable and insurable, title to all of the properties
and assets which it purports to own and which are material to the business,
operation or financial condition of the Company and its subsidiaries free and
clear of all mortgages, security interests, liens, claims, charges or other
encumbrances of any nature whatsoever, except for (i) any liens, encumbrances or
defects reflected in the Company Balance Sheet or disclosed in the notes
thereto; (ii) any liens, encumbrances or defects which do not, individually or
in the aggregate, materially detract from the fair market value (free of such
liens, encumbrances or defects) of the property or assets subject thereto or
materially interfere with the current use by the Company and its subsidiaries of
the property or assets subject thereto or affected thereby or otherwise have a
Material Adverse Effect; (iii) any liens or encumbrances for taxes not
delinquent or which are being contested in good faith, provided that adequate
reserves for the same have been established on the Company Balance Sheet to the
extent required by generally accepted accounting principles; (iv) any liens or
encumbrances for current taxes and assessments not yet past due; (v) any
inchoate mechanic's and materialmen's liens and encumbrances for construction in
progress; (vi) any workmen's, repairmen's, warehousemen's and carriers' liens
and encumbrances arising in the ordinary course of business, so long as such
liens have not been filed; (vii) any liens of the type referred to in (vi) above
that have been filed, so long as such
<PAGE>
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liens do not aggregate in excess of $25,000; (viii) liens securing obligations
under the Credit Agreement (as defined in Section 6.01); and (ix) with respect
to Real Property, any liens, encumbrances or defects which are matters of
record, including but not limited to, easements, quasi-easements, rights of way,
land use ordinances and zoning plans.
(b) The Company Disclosure Letter sets forth a list of all of the
leases and subleases (the "Real Property Leases") under which, as of the date
hereof, the Company or any subsidiary has the right to occupy space. The
Company has heretofore delivered to the Parent a true, correct and complete copy
of all of the Real Property Leases, including all amendments thereto. All Real
Property Leases and material leases pursuant to which the Company or any
subsidiary leases personal property from others are, in all material respects,
valid, binding and enforceable in accordance with their terms; neither the
Company nor any subsidiary has received notice of any default by the Company or
any subsidiary under any Real Property Lease which would have a Material Adverse
Effect; there are no existing defaults, or any condition or event which with the
giving of notice or lapse of time would constitute a default, by the Company or
any subsidiary thereunder which would have a Material Adverse Effect; and, with
respect to the Company's or any subsidiary's obligations thereunder without
qualification and with respect to the obligations of all other parties thereto,
to the knowledge of the Company, no uncured default or event or condition on the
part of any landlord exists under any Real Property Lease which with the giving
of notice or the lapse of time would constitute a default thereunder which would
have a Material Adverse Effect.
(c) All of the land, buildings, structures and other improvements
occupied by the Company and its subsidiaries in the conduct of its business are
included in the Real Property or the Real Property Leases.
(d) Neither the Company or any subsidiary owns or holds, nor is
obligated under or a party to, any option, right of first refusal or other
contractual right to purchase, acquire, sell or dispose of the Real Property and
the Real Property Leases or any portion thereof or interest therein.
4.12 PATENTS, TRADEMARKS, ETC. The Company Disclosure Letter
identifies all registered trademarks, copyrights and patents owned or licensed
by the Company and its subsidiaries as of the date hereof. To the Company's
best knowledge, the Company or its subsidiaries own, or are licensed or
otherwise have adequate right to use, all patents, patent rights, trademarks,
trademark rights, service marks, service mark rights, trade names, trade name
rights, copyrights, know-how, technology, trade secrets and other proprietary
information (collectively, the "Intellectual Property") which are material to
the conduct of the business of the Company and its subsidiaries. Except as set
forth in the Company Disclosure Letter, no claims have been asserted by any
<PAGE>
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person, and neither the Company nor any of its subsidiaries has asserted a claim
against any person, with respect to any of the Intellectual Property owned or
used by the Company or its subsidiaries or challenging or questioning the
validity or effectiveness of any license or agreement relating thereto to which
the Company or any subsidiary is a party.
4.13 INSURANCE. The Company Disclosure Letter identifies all material
property, general liability and casualty insurance policies which currently
insure the Company and its subsidiaries and the Company shall use its reasonable
efforts to keep such policies in full force and effect up to the Closing Date.
Such policies are adequate in the view of the management of the Company for the
assets and operations of the Company and its subsidiaries.
4.14 EMPLOYEE BENEFIT PLANS. (a) For purposes of this Section 4.14,
"Company Benefit Plans" means all employee benefit plans and arrangements
described in section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), with respect to which the Company or any subsidiary
has a liability, whether direct or indirect, actual or contingent, and any
material bonus, incentive and similar plans maintained by the Company or any
subsidiary.
(b) The Company Disclosure Letter sets forth a list of all Company
Benefit Plans and the Company has delivered or made available to the Parent,
where applicable, accurate and complete copies of all Company Benefit Plan texts
and related agreements.
(c) Except as set forth in the Company Disclosure Letter with respect
to each Company Benefit Plan: (i) to the best knowledge of the Company, such
plan has been administered and enforced in all material respects in accordance
with its terms and applicable law; (ii) to the best knowledge of the Company
after reasonable inquiry, no breach of fiduciary duty or prohibited transaction
has occurred; (iii) no actions, suits, claims or disputes are pending, or to the
knowledge of the Company, threatened, other than routine claims for benefits;
(iv) all contributions and premiums due have been made on a timely basis; (v) to
the Company's best knowledge, all contributions made or required to be made
under such Company Benefit Plan meet the requirements for deductibility under
the Internal Revenue Code of 1986, as amended (the "Code"); and (vi) no Company
Benefit Plan is a multiemployer plan (as defined in ERISA section 3(37)), a
multiple employer plan within the meaning of the Code or ERISA, a defined
benefit plan within the meaning of ERISA section 3(35), a plan subject to
section 302 of ERISA or section 412 of the Code, or funded through a "welfare
benefit fund" (as defined in Section 419(e) of the Code).
(d) Except as set forth on the Company Disclosure Letter or as
specifically provided in Section 3.05, the consummation of the transactions
contemplated by this Agreement
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will not (i) entitle any individual to severance pay, or (ii) accelerate the
time of payment or vesting, or increase the amount, of compensation due to any
individual. The Company has delivered to the Parent true, correct and complete
copies of each plan, agreement or arrangement relating to the foregoing,
including all amendments thereto.
(e) The Company Disclosure Letter sets forth a description of all
obligations of the Company and its subsidiaries with respect to retiree medical
and retiree life insurance benefits under the Company Benefit Plans. The
Company has delivered to the Parent written material which is representative in
all material respects of written communications of the Company and its
subsidiaries with respect to retiree medical and retiree life insurance benefits
under the Company Benefit Plans, a list of which is set forth on the Company
Disclosure Letter.
(f) Each Company Benefit Plan intended to be qualified under section
401(a) of the Code is so qualified, and each trust or other funding vehicle
related thereto is exempt from federal income tax under section 501(a) of the
Code.
(g) With respect to any insurance policy providing funding for
benefits under any Company Benefit Plan, (i) there is no material liability of
the Company or any subsidiary in the nature of a retroactive or retrospective
rate adjustment, loss sharing arrangement, or other actual or contingent
liability, nor would there be any such material liability if such insurance
policy was terminated on the date hereof, and (ii) to the knowledge of the
Company, no insurance company issuing any such policy is in receivership,
conservatorship, liquidation or similar proceeding and, to the knowledge of the
Company, no such proceeding with respect to any insurer is imminent.
4.15 LEGAL PROCEEDINGS, ETC. Except as set forth on the Company
Disclosure Letter, (i) there is no claim, action, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or relating to
the Company or any subsidiary before any court or governmental or regulatory
authority or body with respect to which there is a reasonable likelihood of a
determination which would have a Material Adverse Effect, and (ii) neither the
Company nor any subsidiary is subject to any outstanding order, writ, judgment,
injunction or decree of any court or governmental or regulatory authority or
body.
4.16 TAXES. Except as set forth on the Company Disclosure Letter,
(i) each of the Company and its subsidiaries has timely paid or adequately
reserved for in the Company Balance Sheet all Taxes (as defined below) required
to be paid by it through the date hereof (other than Taxes or audit adjustments
which would not, in the aggregate, have a Material Adverse Effect) and shall
timely pay any Taxes required to be paid by it after the date hereof and on or
before the Effective Time (unless the payment of such Taxes is being contested
by the Company or such
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subsidiary in good faith and an adequate reserve therefor is set up on the
Company's books to the extent required by generally accepted accounting
principles), (ii) each of the Company and its subsidiaries has timely filed all
notices, reports and returns for Taxes ("Tax Returns") that it is required to
file through the date hereof and shall, on or before the Effective Time,
correctly prepare and timely file, consistent with prior years in all material
respects, all Tax Returns that it is required to file after the date hereof and
on or before the Effective Time, (iii) the Company has correctly prepared, in
all material respects, all previously filed Tax Returns which remain open for
assessment and have not been examined or are currently under examination by the
appropriate governmental taxing authority, (iv) no material penalties or other
material charges are due with respect to the late filing of any Tax Return, (v)
neither the Company nor any subsidiary has been notified that it is currently
being audited by any taxing authority, (vi) no extension of time with respect to
any date on which any Tax Return was or is to be filed by the Company or any
subsidiary is in force as of the date hereof, (vii) no waiver or agreement by
the Company or any subsidiary is in force as of the date hereof for the
extension of time for the assessment or payment of any Tax, (viii) neither the
Company nor any subsidiary has agreed to make nor is required to make any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise, and (ix) the Company has not agreed to indemnify or
reimburse any subsidiary for the amount of any savings in Taxes which the
Company realized for any year as a result of including such subsidiary in the
combined and consolidated Tax Returns which the Company filed for such year, and
neither the Company nor any subsidiary has agreed to indemnify or reimburse, or
to pay any refund to, any third party for any liability or benefit with respect
to Taxes that such third party may owe or be entitled to receive, as the case
may be. "Taxes" shall mean all taxes, levies or other fiscal assessments,
including, without limitation, income, excise, property, sales, use, gross
receipts, value added, payroll, employment, import and franchise taxes and
customs duties imposed by the United States, or any state, county, local or
foreign government, or subdivision or agency thereof, and including any
interest, penalties or additions attributable thereto.
4.17 MATERIAL AGREEMENTS. Except as set forth on the Company
Disclosure Letter and except for agreements made for the purpose of completing
the transactions contemplated by this Agreement, neither the Company nor any of
its subsidiaries is as of the date hereof a party to, or bound by, any material
agreement of any kind to be performed in whole or in part after the Effective
Time. Solely for the purpose of this Section, the term "material agreement"
shall mean any single agreement which involves the payment or receipt by the
Company or any subsidiary, subsequent to the date of this Agreement, of more
than $100,000. Except as set forth on the Company Disclosure Letter, to the
best knowledge of the Company, there is no breach or default and there are no
facts which with notice or the passage of time would
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constitute a breach or default under, or give rise to any right of termination,
amendment, cancellation or acceleration under, whether as a result of the
consummation of the transactions contemplated hereby or otherwise, any
obligation to be performed by any party to a material agreement to which the
Company or any subsidiary is a party, which breach, default or right (assuming
the exercise thereof) would have a Material Adverse Effect.
4.18 COMPLIANCE WITH LAW. Except as set forth on the Company
Disclosure Letter, to the best knowledge of the Company, the business of the
Company and its subsidiaries is not being conducted and the properties and
assets of the Company and its subsidiaries are not currently owned or operated
in violation of any law, ordinance, regulation, order, judgment, injunction,
award or decree of any governmental or regulatory entity or court or arbitrator,
except for possible violations which either individually or in the aggregate do
not, and so far as can be reasonably foreseen will not, have a Material Adverse
Effect.
4.19 INSIDER INTERESTS. The Company Disclosure Letter sets forth all
material contracts, agreements with and other obligations to officers, directors
and employees or stockholders of the Company and its subsidiaries. Except as
set forth on the Company Disclosure Letter, no officer, director or stockholder
of the Company or any subsidiary, and no entity controlled by any such officer,
director or stockholder, and no relative or spouse who resides with any such
officer, director or stockholder (i) owns, directly or indirectly, any material
interest in any person that is or is engaged in business, other than on an
arm's-length basis, as a competitor, lessor, lessee, customer or supplier of the
Company or any subsidiary or (ii) owns, in whole or in part, any tangible or
intangible property that the Company or any subsidiary uses in the conduct of
the business of the Company and its subsidiaries.
4.20 OFFICERS, DIRECTORS AND EMPLOYEES. The Company Disclosure Letter
sets forth the name and current compensation of each officer, director or
employee of the Company and its subsidiaries whose current annual rate of
compensation from the Company (including bonuses but excluding commission-only
compensation) exceeds $50,000.
4.21 ENVIRONMENTAL PROTECTION. Except as set forth on the Company
Disclosure Letter, the Company and each of its subsidiaries have obtained all
material permits, certificates, licenses, approvals and other authorizations
(collectively "Environmental Permits") relating to pollution or protection of
the environment, including those relating to emissions, discharges, releases of
pollutants, contaminants or chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitation,
ambient air, surface water, ground water, or land) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or
<PAGE>
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chemicals, or industrial, toxic or hazardous substances or wastes, except where
the failure to have obtained any Environmental Permits shall not have a Material
Adverse Effect on the Company. To the best knowledge of the Company, except as
set forth on the Company Disclosure Letter, the Company and each of its
subsidiaries is in material compliance with all terms and conditions of the
Environmental Permits, and the Company and each of its subsidiaries is also in
material compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in all applicable environmental laws or contained in any regulation,
code, plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder, if any ("Pertinent Environmental
Laws"), except where the failure to have complied shall not have a Material
Adverse Effect on the Company. Except as set forth on the Company Disclosure
Letter, to the best knowledge of the Company, there are no past, present or
future events, conditions, circumstances, activities, practices, incidents,
actions or plans which may materially interfere with or prevent material
compliance or continued compliance with Pertinent Environmental Laws, or which
may give rise to any material common law or legal liability, or otherwise form
the basis of any material claim, action, demand, suit, proceeding, hearing,
study or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or the
emission, discharge, release or threatened release into the environment, of any
pollutant, contaminant or chemical, or industrial, toxic or hazardous substance
or waste. Except as set forth on the Company Disclosure Letter, there is no
civil, criminal or administrative action, suit, demand, claim, hearing, notice
or demand letter, notice of violation, investigation, or proceeding pending or,
to the Company's knowledge, threatened against the Company or any subsidiary
relating in any way to any Pertinent Environmental Laws.
4.22 BROKERS AND FINDERS. Neither the Company or its subsidiaries nor
any of their respective officers, directors or employees has employed any
broker, finder or investment banker or incurred any liability for any brokerage
fees, commissions, finders' fees or investment banking fees in connection with
the transactions contemplated herein, except that the Company has employed, and
will pay the fees and expenses of, PaineWebber Incorporated as its financial
advisor, the arrangements with which have been disclosed in writing to the
Parent prior to the date hereof.
4.23 RIGHTS AGREEMENT. The Company Rights Agreement has been amended
to provide that the execution and delivery of this Agreement and the Stockholder
Tender Agreement and the consummation of the transactions contemplated hereby
and thereby will not cause (a) Parent or Purchaser to become an "Acquiring
Person" (as such term is defined in the Company Rights Agreement), (b) the
"Distribution Date" (as such term is defined in the
<PAGE>
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Company Rights Agreement) to occur, (c) the provisions of Section 13(a) of the
Company Rights Agreement to be applicable in respect of capital stock of the
Purchaser or the Parent or the capital stock of any affiliate of the Purchaser
or the Parent or (d) any adjustment under the provisions of Section 11(a) of the
Company Rights Agreement.
4.24 RESPIRATORY MEDICAL PRODUCTS SALE. The Asset Purchase Agreement,
dated as of December 4, 1995, between Medical Molding Corporation of America, a
California corporation and wholly owned subsidiary of the Company ("MMCA"), and
Vital Signs CA, Inc. ("VSCA"), a California corporation and wholly owned
subsidiary of Vital Signs, Inc., a New Jersey corporation, provides for (i) the
assumption by VSCA of all substantial liabilities known to the Company, whether
absolute or contingent, arising out of the Respiratory Medical Products business
of MMCA and (ii) aggregate cash consideration paid by VSCA to MMCA of no less
than $2,151,000, and at least $113,000 of liabilities assumed by VSCA, taking
into account all provisions for adjustment of such cash consideration.
$2,000,000 of the cash consideration paid by VSCA to MMCA in connection with the
sale of the Respiratory Medical Products business of MMCA was used to reduce the
indebtedness of the Company provided pursuant to the Company's existing Credit
Agreement with Wells Fargo Bank, National Association ("Wells Fargo"), as the
same may be amended from time to time (the "Credit Agreement").
4.25 NO OTHER REPRESENTATIONS OR WARRANTIES. Subject solely to the
information set forth in the Company Disclosure Letter, each of the
representations and warranties of the Company in this Agreement is true and
correct as of the date of this Agreement. Any document delivered by the Company
pursuant to this Agreement is a true, correct and complete copy of such
document, and has not been modified or amended unless such amendment or
modification is included with such document or has been delivered to Parent on
or prior to the date hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE PARENT AND THE PURCHASER
5.01 CORPORATION ORGANIZATION. The Parent is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Delaware and the Purchaser is a corporation duly organized and validly
existing and in good standing under the laws of the State of Delaware. The
Parent and the Purchaser each has all requisite corporate power and authority to
own its assets and carry on its business as now being conducted or proposed to
be conducted. Each of the Parent and the Purchaser has delivered to the Company
complete and correct copies of its
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Certificate of Incorporation and By-Laws as in effect on the date hereof.
5.02 AUTHORIZED CAPITAL. The authorized capital stock of the
Purchaser consists of 10,000 shares of Common Stock, without par value, of which
100 shares are outstanding as of the Effective Time and are owned, beneficially
or of record, by Parent. All of the issued and outstanding shares of capital
stock of the Purchaser are validly issued, fully paid, nonassessable and free of
preemptive rights and all liens.
5.03 CORPORATION AUTHORITY. Each of the Parent and the Purchaser has
the necessary corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement by each of the Parent and the Purchaser, the performance by the Parent
and the Purchaser of their respective obligations hereunder and the consummation
by the Parent and the Purchaser of the transactions contemplated hereby have
been duly authorized by its Board of Directors and approved by the Parent as
sole stockholder of the Purchaser, and no other corporate proceeding on the part
of the Parent or the Purchaser is necessary for the execution and delivery of
this Agreement by the Parent and the Purchaser and the performance by the Parent
and the Purchaser of their respective obligations hereunder and the consummation
by the Parent and the Purchaser of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of the Parent and the
Purchaser and, assuming the due authorization, execution and delivery hereof by
the Company, is a legal, valid and binding obligation of the Parent and the
Purchaser, enforceable against each of the Parent and the Purchaser in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally or by
general equitable principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
5.04 NO PRIOR ACTIVITIES. The Purchaser has not incurred, directly or
indirectly, any liabilities or obligations, except those incurred in connection
with its incorporation or with the negotiation of this Agreement, the Offer
Documents and the consummation of the transactions contemplated hereby and
thereby. The Purchaser has not engaged, directly or indirectly, in any business
or activity of any type or kind, or entered into any agreement or arrangement
with any person or entity, and is not subject to or bound by any obligation or
undertaking, that is not contemplated by or in connection with this Agreement,
the Offer Documents and the transactions contemplated hereby and thereby.
5.05 NO FINANCING CONTINGENCY. The Parent has sufficient funds to
consummate all of the transactions contemplated by this Agreement and will make
available to the Purchaser sufficient funds in sufficient time to consummate the
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Offer and the Merger in accordance with the terms of this Agreement.
5.06 GOVERNMENTAL FILINGS; NO VIOLATIONS. (a) No notices, reports or
other filings are required to be made by the Parent or the Purchaser with, nor
are any consents, registrations, approvals, permits or authorizations required
to be obtained by the Parent or the Purchaser from, any governmental or
regulatory authorities of the United States, the several States or any foreign
jurisdictions in connection with the execution and delivery of this Agreement by
the Parent and the Purchaser and the consummation by the Parent and the
Purchaser of the transactions contemplated hereby, the failure to make or obtain
any or all of which could prevent, materially delay or materially burden the
transactions contemplated by this Agreement, except (A) in connection with the
HSR Act, and (B) in connection with the Exchange Act.
(b) Neither the execution and delivery of this Agreement by the
Parent or the Purchaser nor the consummation by the Parent or the Purchaser of
the transactions contemplated hereby nor compliance by the Parent or the
Purchaser with any of the provisions hereof will: (i) conflict with or result
in any breach of any provision of its Certificate of Incorporation or By-Laws,
(ii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or require any consent under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which the Parent or the Purchaser is a party or by which it or any of its
properties or assets may be bound, (iii) require the creation or imposition of
any lien upon or with respect to the properties of the Parent or the Purchaser
or (iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Parent or the Purchaser or any of its properties or assets,
excluding from the foregoing clauses (iii) and (iv) violations, breaches or
defaults which in the aggregate, would neither have a material adverse effect on
the business, financial condition or operations of the Parent or the Purchaser
nor prevent, materially delay or materially burden the transactions contemplated
by this Agreement.
5.07 BROKERS AND FINDERS. Neither the Parent, the Purchaser nor any
of its officers, directors or employees has employed any broker, finder or
investment banker or incurred any liability for any brokerage fees, commissions,
finders fees or investment banking fees in connection with the transactions
contemplated herein, except that the Parent has employed and will pay the fees
and expenses of Salomon Brothers Inc.
5.08 OFFER DOCUMENTS; PROXY STATEMENT; OTHER INFORMATION. None of the
information included in the Offer Documents (including any amendments or
supplements thereto) or any
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schedules required to be filed with the SEC in connection therewith and
described therein as being supplied by the Parent or the Purchaser will, at the
respective times that the Offer Documents or any amendments or supplements
thereto or any such schedules are filed with the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of the
information supplied in writing by the Parent or the Purchaser specifically for
inclusion in the Proxy Statement, Schedule 14D-9 or any statement required
pursuant to Section 14(f) of the Exchange Act or any other schedules or
statements required to be filed with the SEC in connection therewith will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.
5.09 NO OTHER REPRESENTATIONS OR WARRANTIES. Each of the
representations and warranties of the Parent and the Purchaser in this Agreement
is true and correct as of the date of this Agreement. Any document delivered by
the Parent or the Purchaser pursuant to this Agreement is a true, correct and
complete copy of such document, and has not been modified or amended unless such
amendment or modification is included with such document or has been delivered
to the Company on or prior to the date hereof.
ARTICLE VI
COVENANTS OF THE PARTIES
6.01 CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by
this Agreement or as set forth on the Company Disclosure Letter, during the
period from the date of this Agreement to the Effective Time, the Company and
its subsidiaries will conduct their business and operations only in the ordinary
and usual course of business consistent with past practice. Without limiting
the generality of the foregoing, and, except as contemplated in this Agreement
or as set forth on the Company Disclosure Letter, prior to the Effective Time,
without the advance written consent of the Parent (which consent will not be
unreasonably withheld with respect to the incurrence of indebtedness by the
Company under the revolving facility provided by Wells Fargo pursuant to the
Credit Agreement, as currently evidenced by the Promissory Note made by the
Company in favor of Wells Fargo, dated as of June 9, 1995, in the original
principal amount of $6,758,500 (the "Line of Credit Note") and the Promissory
Note made by the Company in favor of Wells Fargo, dated as of August 24, 1995,
in the original principal amount of $1,800,000 (the "Bridge Note"), but
excluding all of the Company's other indebtedness to Wells Fargo (the "Revolving
Line") pursuant to Section 6.01(b)(i)), neither the Company nor any of its
subsidiaries will:
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(a) Amend its Certificate of Incorporation or By-Laws or similar
governing documents;
(b) (i) Create, incur or assume any indebtedness for money borrowed,
including obligations in respect of capital leases, except (A) purchase money
mortgages granted in connection with past practice, (B) in the case of the
Company, indebtedness for borrowed money incurred in the ordinary course of
business not aggregating in excess of $7,000,000 outstanding at any time under
the Revolving Line, reduced by the net proceeds of any sale of assets by the
Company or any subsidiary out of the ordinary course of business, PROVIDED that
the proceeds of any borrowing are not distributed to the stockholders of the
Company; or (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person; PROVIDED, HOWEVER, that the Company and its subsidiaries may
endorse negotiable instruments in the ordinary course of business consistent
with past practice;
(c) Declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
the Common Stock of the Company or any capital stock of any subsidiary;
(d) Issue, sell, grant, purchase or redeem, or issue or sell any
securities convertible into, or options with respect to, or warrants to purchase
or rights to subscribe to, or subdivide or in any way reclassify, any Shares,
except in any case above pursuant to the Stock Option Plans;
(e) (i) Increase the aggregate amount of compensation payable or to
become payable by the Company or any subsidiary to its directors, officers or
employees, whether by salary or bonus, by more than two percent in the aggregate
on an annual basis (excluding commission-only compensation, the rate of which
shall not be increased); or (ii) increase the rate or term of, or otherwise
alter, any bonus (other than any bonus permitted by clause (i) of this Section
6.01(e)), insurance, pension, severance or other employee benefit plan, payment
or arrangement made to, for or with any such directors, officers or employees;
(f) Enter into any agreement, commitment or transaction (other than
borrowings permitted by Section 6.01(b)), except agreements, commitments or
transactions in the ordinary course of business consistent with past practice;
(g) Sell, transfer, mortgage, pledge, grant any security interest or
permit the imposition of any lien or other encumbrance on any asset other than
in the ordinary course of business consistent with past practice and except (i)
pursuant to the Credit Agreement, (ii) in connection with purchase money
mortgages permitted by Section 6.01(b) or (iii) for any lien or other
encumbrance as to which the Company has a valid defense;
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(h) Waive any right under any contract or other agreement identified
on the Company Disclosure Letter if such waiver would have a Material Adverse
Effect;
(i) Other than as required by any change in generally accepted
accounting principles, make any material change in its accounting methods or
practices or make any material change in depreciation or amortization policies
or rates adopted by it for accounting purposes or, other than normal writedowns
or writeoffs consistent with past practices, make any writedowns of inventory or
writeoffs of notes or accounts receivable;
(j) Make any loan or advance to any of its stockholders, officers,
directors, employees (other than advances to field sales personnel, vacation
advances, relocation advances and travel advances in each case made in the
ordinary course of business in a manner consistent with past practice) or make
any other loan or advance to any other person or group otherwise than in the
ordinary course of business consistent with past practice;
(k) Terminate or fail to renew, where such renewal is at the
Company's or a subsidiary's option, any contract or other agreement (excluding
customer leases or contracts), the termination or failure of which to renew
would have a Material Adverse Effect;
(l) Enter into any collective bargaining agreement;
(m) Make any addition to or modification of the Company Benefits
Plans;
(n) Take, agree to take, or do or, with respect to anything within
the Company's or its subsidiaries control, knowingly permit to be done or to be
taken anything in the conduct of its business which (i) would cause any of the
representations of the Company to be or become untrue in any material respect,
and (ii) would reasonably be expected to have a Material Adverse Effect,
PROVIDED, HOWEVER,that nothing in this Section 6.01(n) shall affect the
generality of any provision of Annex A hereto; or
(o) Agree to do any of the foregoing.
6.02 NOTIFICATION OF CERTAIN MATTERS. (a) The Company shall give
prompt notice to the Parent of: (i) any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement; (ii) any
notice or other communication from any regulatory authority in connection with
the transactions contemplated by this Agreement; and (iii) the occurrence of any
event having, or which insofar as can be reasonably foreseen would have, a
Material Adverse Effect.
(b) Between the date of this Agreement and the Effective Time, the
Company shall give prompt notice to the Parent of any
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proposed settlement or similar agreement ("Settlement") with the Internal
Revenue Service or any other state, local or foreign governmental taxing
authority providing for any adjustment with respect to any Tax Return or any
additional liability for Taxes, and shall not enter into any Settlement without
the prior written consent of the Parent, which consent shall not be unreasonably
withheld.
6.03 ACCESS TO INFORMATION. (a) Between the date of this Agreement
and the Effective Time, the Company will during ordinary business hours and upon
reasonable advance notice, (i) give the Parent and the Parent's authorized
representatives all access the Parent shall reasonably request to all of its and
its subsidiaries' books, records (including, without limitation, the workpapers
of the Company's outside accountants), contracts, commitments, plants, offices
and other facilities and properties, and its and its subsidiaries' personnel,
representatives, accountants and agents; PROVIDED, HOWEVER, that all such access
shall take place after appropriate prior consultation with the officers of the
Company, (ii) permit the Parent to make such inspections thereof as it may
reasonably request (including, without limitation, observing the Company's or a
subsidiary's physical inventory of its assets), (iii) cause its and its
subsidiaries' officers and advisors to furnish to the Parent its financial and
operating data and such other existing information with respect to its business,
properties, assets, liabilities and personnel (including, without limitation,
title insurance reports, real property surveys and environmental reports, if
any), as the Parent may from time to time reasonably request, (iv) take such
actions as the Parent reasonably deems appropriate to verify the existence and
condition of equipment leased by the Company or any of its subsidiaries to its
customers, and (v) permit the Parent's accountants to conduct such confirmation
and testing procedures with respect to the receivables of the Company and its
subsidiaries as the Parent reasonably deems appropriate; PROVIDED, HOWEVER, that
(A) any such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operation of the business of the Company, (B)
neither the Company nor any of its subsidiaries shall be required to take any
action which would constitute a waiver of the attorney-client privilege, (C)
neither the Company nor any of its subsidiaries need supply the Parent with any
information which it is under a legal obligation not to supply, and (D) until
such time as the Parent and/or its affiliates are the beneficial owners of a
majority of the Shares, any such activities by the Parent prior to the purchase
by the Purchaser of Shares pursuant to the Offer shall be for the purposes of
verifying the accuracy of representations and warranties of the Company and the
compliance by the Company with its covenants contained in this Agreement.
(b) Any information provided pursuant to this Agreement shall be held
by the Parent in accordance with and shall be subject to the terms of the
Confidentiality Agreement dated September 2, 1994 between the Company and the
Parent (the
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"Confidentiality Agreement"), the term of which the parties hereby agree to
extend to December 31, 1996. Notwithstanding anything herein or in the
Confidentiality Agreement to the contrary, the Parent, the Purchaser or the
Company may disclose any information required to be disclosed pursuant to the
Exchange Act, or otherwise required or requested to be disclosed by the SEC.
6.04 FURTHER INFORMATION. The Company and the Parent shall give
prompt written notice to the other of (i) any representation or warranty made by
it contained in this Agreement becoming untrue or inaccurate in any material
respect (including the Company, the Parent or the Purchaser receiving knowledge
of any fact, event or circumstance which may cause any representation qualified
as to knowledge to be or become untrue in any material respect) or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; PROVIDED, HOWEVER, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
6.05 FURTHER ASSURANCES. Consistent with the terms and conditions
hereof, each party hereto will execute and deliver such instruments and take
such other action as the other parties hereto may reasonably require in order to
carry out this Agreement and the transactions contemplated hereby.
6.06 INTERIM FINANCIAL STATEMENTS. Within 45 days after the end of
each fiscal quarter and 90 days after the end of any fiscal year after the date
of this Agreement, and until the Effective Time, the Company will deliver to the
Parent its Form 10-Q's or 10-K's, as the case may be, for such quarter or year.
The financial statements contained therein shall fairly present their respective
financial condition, results of operations and cash flows as at the date or for
the periods indicated in accordance with generally accepted accounting
principles consistently applied in accordance with past practice (except as may
be indicated in the notes thereto and except, in the case of unaudited
statements, as may be permitted by Form 10-Q of the Exchange Act), and shall be
prepared in conformity with the requirements of Regulation S-X under the
Exchange Act and Item 303 of Regulation S-K.
6.07 FAIRNESS OPINION. Within three business days of the execution of
this Agreement, the Company shall provide to the Parent a signed copy of the
written opinion of PaineWebber Incorporated that the Offer is fair to the
Company stockholders from a financial point of view, which PaineWebber
Incorporated has advised the Company it fully expects to be able to deliver at
such time.
6.08 BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use their best
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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 to consummate and make effective the transactions contemplated by
this Agreement and shall use its best efforts to satisfy the conditions to the
transactions contemplated hereby and to obtain all waivers, permits, consents
and approvals and to effect all registrations, filings and notices with or to
third parties or governmental or public bodies or authorities which are
necessary or desirable in connection with the transactions contemplated by this
Agreement, including, but not limited to, filings to the extent required under
the Exchange Act and HSR Act, and obtaining consent to the Merger from Wells
Fargo Bank, National Association pursuant to the Credit Agreement. If at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers or directors of
each of the parties hereto shall take such action. Without limiting the
generality of the foregoing, the Parent as the sole stockholder of the
Purchaser, and the Purchaser as a stockholder of the Company, will consent
and/or vote in favor of the transactions contemplated hereunder, and Company,
the Parent, and the Purchaser will vigorously defend against any lawsuit or
proceeding, whether judicial or administrative, challenging this Agreement or
the consummation of any of the transactions contemplated hereby. Subject to the
terms and conditions of this Agreement, from time to time after the date hereof,
without further consideration, the Company will, at its own expense, execute and
deliver such documents to the Parent as the Parent may reasonably request in
order to consummate the transactions contemplated by this Agreement. Subject to
the terms and conditions of this Agreement, from time to time after the date
hereof, without further consideration, each of the Parent and the Purchaser
will, at its own expense, execute and deliver such documents to the Company as
the Company may reasonably request in order to consummate the transactions
contemplated by this Agreement.
6.09 FILINGS. The Company and the Parent will file, or cause to be
filed, as promptly as possible and, in the case of the Parent in no event later
than five business days after the date hereof, with the United States Federal
Trade Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice (the "Department of Justice") pursuant to the HSR Act the
notification required by the HSR Act, including all requisite documents,
materials and information therefor, and request early termination of the waiting
period under the HSR Act. Each of the Company and the Parent shall furnish to
the other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission which is
necessary under the HSR Act. The Company and the Parent shall each keep the
other apprised of the status of any inquiries or requests for additional
information made by any governmental authority and shall comply promptly with
any such inquiry or request.
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6.10 PUBLIC ANNOUNCEMENTS. The initial press release with respect to
the transactions contemplated hereby shall be a joint press release, and
thereafter the Company and the Parent shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated hereby and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with a national securities
exchange or with National Association of Securities Dealers, Inc., or in order
to carry out the fiduciary duties of the Board, as advised by counsel.
6.11 INDEMNITY; D&O INSURANCE. (a) The Parent shall cause all rights
to indemnification by the Company now existing in favor of each present and
former director or officer of the Company (hereinafter referred to in this
Section as the "Indemnified Parties") as provided in the Company's By-Laws to
survive the Merger and to continue in full force and effect as rights to
indemnification by the Surviving Corporation for a period of five years
following the Effective Time. The Parent shall not permit the indemnification
agreements between the Company and each of the Indemnified Parties that are in
existence as of the date of this Agreement to be amended during the term of such
indemnification agreements without the consent of the respective parties
thereto.
(b) Subject to the terms set forth herein, the Surviving Corporation
shall indemnify and hold harmless, to the fullest extent permitted under
applicable law (and shall also advance expenses as incurred by an Indemnified
Party to the extent permitted under applicable law, provided the person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification), each
Indemnified Party against any costs or expenses (including attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to any action, alleged action, omission or alleged omission
occurring on or prior to the Effective Time in their capacity as director or
officer (including, without limitation, any claims, actions, suits, proceedings
and investigations which arise out of or relate to the transactions contemplated
by this Agreement) for a period of five years after the Effective Time, provided
that, in the event any claim or claims are asserted or made within such five
year period, all rights to indemnification in respect of any such claim or
claims shall continue until final disposition of any and all such claims.
(c) Any Indemnified Party wishing to claim indemnification under this
Section 6.11, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Surviving Corporation thereof, but the
failure to so
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notify shall not relieve the Surviving Corporation of any obligation to
indemnify such Indemnified Party or of any other obligation imposed by this
Section 6.11 unless and to the extent that such failure prejudices the Parent or
the Surviving Corporation; it being understood that it shall be deemed to
materially prejudice the Parent or the Surviving Corporation, as the case may
be, if, as a result of such failure to notify, the Parent or the Surviving
Corporation is not given an opportunity to assume the defense of such claim,
action, suit, proceeding or investigation within a reasonably prompt time after
such claim, action, suit, proceeding or investigation is asserted or initiated.
In the event of any such claim, action, suit, proceeding or investigation,
(i) the Surviving Corporation or the Parent shall have the right to assume the
defense thereof and shall not be liable to such Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Party in connection with the defense hereof, except that if the
Parent or Surviving Corporation elects not to assume such defense or counsel for
the Indemnified Party advises that there are issues which raise conflicts of
interest between the Parent or Surviving Corporation and the Indemnified Party,
the Indemnified Party may retain counsel satisfactory to it, and the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Party promptly as statements therefore are received; PROVIDED,
HOWEVER, that in no event shall the Parent or Surviving Corporation be required
to pay fees and expenses, including disbursements and other charges, for more
than one firm of attorneys in any one legal action or group of related legal
actions unless (A) counsel for the Indemnified Party advises that there are
issues which raise conflicts of interest that require more than one firm of
attorneys, or (B) local counsel of record is needed in any jurisdiction in which
any such action is pending, (ii) the Parent and the Indemnified Party shall
cooperate in the defense of any such matter, and (iii) the Parent and the
Surviving Corporation shall not be liable for any settlement effected without
the prior written consent of one of them (which consent shall not be
unreasonably withheld); and PROVIDED, FURTHER, that the Parent and Surviving
Corporation shall not have any obligation hereunder to any Indemnified Party if
and to the extent a court of competent jurisdiction ultimately determines, and
such determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
(d) For two years after the Effective Time, the Parent shall cause
the Surviving Corporation to use reasonable efforts to maintain, if available
for an annual premium not in excess of $150,000, the officers' and directors'
liability insurance covering the Indemnified Parties who are presently covered
by the Company's officers' and directors' liability insurance (copies of which
have been delivered to the Parent), with respect to acts or omissions occurring
at or prior to the Effective Time, on terms no less favorable than those in
effect on the date hereof or at the Effective Time, or if such insurance
coverage is not available for
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an annual premium not in excess of $150,000, to obtain the amount of coverage
that is available for an annual premium of $150,000.
(e) In the event 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 all or substantially all of its properties and assets
to any person (except for any sale of the Company's molding business whether
through a merger, sale of assets, sale of stock or otherwise), then and in each
such case, proper provisions shall be made so that the successors and assigns of
the Surviving Corporation, or at Parent's option, Parent, shall assume the
obligations set forth in this Section 6.11. Notwithstanding the foregoing, if a
majority of the shares of common stock of the Company or Surviving Corporation
are sold or transferred to a third party, but the Parent, or any subsidiary of
Parent, retains ownership either of any of Company's subsidiaries that
immediately prior to the date hereof were engaged in, or substantially all of
the assets that prior to the date hereof were used in, the plastics compounding
business of the Company, the Parent shall assume the obligations of the
Surviving Corporation set forth in this Section 6.11.
(f) In the event that any of the provisions of Section 6.11(a), (b)
or (c) above would conflict with any of the provisions of the Company's By-Laws
or the indemnification agreements referenced in Section 6.11(a) above in a
manner that, if held applicable, would limit or restrict, or impose conditions
or obligations on the exercise by any of the Indemnified Parties of, any of the
indemnification rights granted to them under the Company's By-Laws or such
indemnification agreements, then, in any such event or circumstance the
applicable provisions of the Company's By-Laws or the indemnification agreements
shall control, as it is the intention of the parties that the Indemnified
Parties shall have indemnification rights no less favorable than those which
they have under the Company's By-Laws and such indemnification agreements, as in
effect on the date hereof.
(g) The covenants contained in this Section 6.11 shall survive the
Effective Time until fully discharged and are intended to benefit each of the
Indemnified Parties.
6.12 OTHER POTENTIAL BIDDERS. The Company, its affiliates and their
respective officers, directors, employees, investment bankers, attorneys and
other representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore with
respect to any acquisition of all or any material portion of the assets of, or
any equity interest in, the Company or any business combination with the
Company. Prior to the acceptance for payment of Shares, the Company, directly
or indirectly, (a) may furnish information and access, in each case only in
response to unsolicited requests therefor, to any corporation, partnership,
person or other entity
<PAGE>
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or group pursuant to confidentiality agreements that do not prohibit or restrict
disclosure to the Parent of any matter other than confidential information
regarding any such corporation, partnership, person or other entity or group and
(b) may participate in discussions and negotiate with such entity or group
concerning any proposed merger, sale of assets, sale of shares of capital stock,
acquisition of Shares other than pursuant to the Offer or the Merger or similar
transaction involving the Company or any division of the Company (an
"Acquisition Proposal"), only if such entity or group to which information or
access is furnished or discussions or negotiations are held has submitted a
written proposal to the Board relating to any such transaction and the Board by
a majority vote has determined in its good faith judgment, based as to legal
matters on the advice of legal counsel, that failing to take such action would
constitute a breach of the Board's fiduciary obligations under applicable law.
Except as set forth above, neither the Company or any of its affiliates, nor any
of its or their respective officers, directors, employees, representatives or
agents, shall, directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than the Parent
and the Purchaser, any affiliate or associate of the Parent and the Purchaser or
any designees of the Parent and the Purchaser) concerning any Acquisition
Proposal, or take any other action to facilitate the making of a proposal that
constitutes or could reasonably be expected to lead to an Acquisition Proposal.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any executive officer of the
Company or any of its subsidiaries shall be deemed to be a breach of this
Section 6.12 by the Company. The Company shall use its best efforts to ensure
that the officers, directors and employees of the Company and its subsidiaries
and any investment banker or other advisor or representatives retained by the
Company are aware of the restrictions set forth in the preceding sentences, and
the Company hereby represents that the Board has adopted resolutions directing
the officers, directors and employees of the Company and its subsidiaries to
comply with such restrictions. The Company promptly shall advise the Parent
orally and in writing of any Acquisition Proposal and any inquiries or
developments with respect thereto. Neither the Board nor any committee thereof
shall (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to the Parent or the Purchaser the approval or recommendation by the
Board of the Offer, the Merger or this Agreement, or (ii) approve or recommend,
or propose to approve or recommend, any Acquisition Proposal. Notwithstanding
the foregoing, nothing contained in this Agreement shall prevent the Board from
approving or recommending to the Company stockholders any unsolicited tender
offer or exchange offer by a third party as contemplated by Rules 14d-9 and
14e-2 promulgated under the Exchange Act (and, in connection therewith,
withdrawing or modifying the approval or recommendation by the Board of the
Offer, the Merger or this Agreement) in the event any unsolicited
<PAGE>
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takeover proposal shall have been made by a third party if, in the good faith
judgment of the Board, based as to legal matters on the advice of legal counsel,
withdrawing or modifying such approval or recommendation is required under
applicable law in the proper discharge of its fiduciary duties. Notwithstanding
the foregoing, nothing contained in this Section 6.12 shall prevent the Company
from negotiating and executing agreements relating to the sale by the Company of
its remaining parcel of real estate located in Corona, California as long as (i)
the terms and conditions of any such agreement shall be reasonably acceptable to
Parent and (ii) the proceeds (net of reasonable expenses of the Company relating
to such sale) of any such sale are used to reduce the indebtedness of the
Company under the revolving credit facility under the Credit Agreement.
ARTICLE VII
CONDITIONS TO THE MERGER
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to consummate the Merger
shall be subject to the following conditions, which have not been waived at or
prior to the Closing:
(a) The Purchaser shall have accepted for payment Shares tendered
pursuant to the Offer;
(b) This Agreement and the Merger shall have been approved and
adopted by the requisite vote or consent, if any is required, of the
stockholders of the Company required by the Company's Certificate of
Incorporation and the DGCL;
(c) Any waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have expired or been terminated; and
(d) No order, statute, rule, regulation, execution order, stay,
decree, judgment, or injunction shall have been enacted, entered, issued,
promulgated or enforced by any court or governmental authority which prohibits
or restricts the consummation of the Merger.
7.02 CONDITIONS TO THE OBLIGATIONS OF THE PARENT AND THE PURCHASER TO
EFFECT THE MERGER. The obligation of the Purchaser and the Parent to effect the
Merger shall be further subject to satisfaction of the conditions, unless waived
by the Parent, that (i) the Company shall have performed and complied in all
material respects with the agreements and obligations contained in Section 1.03,
(ii) the Company shall have performed and complied in all material respects with
the agreements and obligations contained in this Agreement (other than in
Section 1.03) required to be performed and complied with by it at or prior to
the Effective
<PAGE>
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Time, except where the failure to have so performed and complied is not
reasonably expected to have a Material Adverse Effect, (iii) all outstanding
Options shall have been surrendered to the Company as provided in Section 3.05
of this Agreement and cancelled by the Company, and (iv) the Parent shall have
received a comfort letter, in form and substance reasonably requested by the
Parent, from Grant Thornton or another nationally recognized public accounting
firm regarding the updating of the Company's most recent financial statements.
7.03 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be further
subject to the Parent and the Purchaser having performed and complied in all
material respects with the agreements and obligations contained in this
Agreement required to be performed and complied with by each of them at or prior
to the Effective Time, except where the failure to have so performed or complied
is not reasonably expected to have a material adverse effect on the ability of
the Parent or the Purchaser to consummate the transactions contemplated by this
Agreement.
ARTICLE VIII
CLOSING
8.01 TIME AND PLACE. The closing of the Merger (the "Closing") shall
take place at the offices of Jones, Day, Reavis & Pogue, North Point, 901
Lakeside Avenue, Cleveland, Ohio 44114, at 10:00 a.m. local time on a date to be
specified by the parties which shall be no later than the third business day
after the date on which the last of the closing conditions set forth in
Article VII is satisfied or waived (if waivable) unless another time, date or
place is agreed upon in writing by the parties hereto. The date on which the
Closing actually occurs is herein referred to as the "Closing Date."
8.02 FILINGS AT THE CLOSING. At the Closing, the Purchaser shall
cause the Delaware Certificate of Merger to be filed and recorded with the
Secretary of State of the State of Delaware in accordance with the provisions of
Section 103 of the DGCL, and shall take any and all other lawful actions and do
any and all other lawful things necessary to cause the Merger to become
effective.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
9.01 TERMINATION. This Agreement may be terminated and the Offer (if
Purchaser has not accepted Shares for payment) and the Merger may be abandoned
at any time prior to the Effective Time:
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(a) by mutual written consent of the Parent, the Purchaser and the
Company;
(b) by the Parent and the Purchaser or the Company if any court of
competent jurisdiction in the United States or other United States governmental
body shall have issued an order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the Merger or the
acceptance for payment and payment for the Shares in the Offer and such order,
decree, ruling or other action is or shall have become nonappealable;
(c) by the Parent and the Purchaser if, due to an occurrence or
circumstance which would result in a failure to satisfy any of the conditions
set forth in Annex A hereto, the Purchaser shall have (A) failed to commence the
Offer within five business days following the date of the initial public
announcement of the Offer, (B) terminated the Offer or allowed the Offer to
expire without the purchase of any Shares thereunder, or (C) failed to pay for
Shares pursuant to the Offer within 75 days following the commencement of the
Offer;
(d) by the Company if (i) there shall not have been a material breach
of any representation, warranty, covenant or agreement on the part of the
Company which would entitle the Parent or the Purchaser to terminate this
Agreement pursuant to Section 9.01(e) and, due to an occurrence or circumstance
which would result in a failure to satisfy any of the conditions set forth in
Annex A hereto, the Purchaser shall have (A) failed to commence the Offer within
five business days following the date of the initial public announcement of the
Offer, (B) terminated the Offer or allowed the Offer to expire without the
purchase of any Shares thereunder, or (C) failed to pay for Shares pursuant to
the Offer within 75 days following the commencement of the Offer, or (ii) prior
to the purchase of Shares pursuant to the Offer, a corporation, partnership,
person or other entity or group shall have made a bona fide offer with respect
to an Acquisition Proposal that the Board by a majority vote determines in its
good faith judgment and in the exercise of its fiduciary duties, based as to
legal matters on the advice of legal counsel and as to financial matters on the
written fairness opinion of an investment banking firm of national reputation,
is more favorable to the Company's stockholders than the Offer and the Merger
and that the failure to terminate this Agreement and accept such offer would be
inconsistent with the proper exercise of the Board's fiduciary duties, provided
that such termination under this clause (ii) shall not be effective until
payment of the fee required by Section 9.03(b) hereof;
(e) by the Parent and the Purchaser prior to the purchase of Shares
pursuant to the Offer, if (i) there shall have been a breach of any
representation or warranty on the part of the Company having a Material Adverse
Effect or materially adversely affecting (or materially delaying) the
consummation of the Offer, (ii) there shall have been a breach of any covenant
or agreement
<PAGE>
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on the part of the Company resulting in a Material Adverse Effect or materially
adversely affecting (or materially delaying) the consummation of the Offer,
(iii) the Company shall engage in negotiations with any entity or group (other
than the Parent or the Purchaser) that has proposed a Third Party Acquisition
(as defined below), (iv) the Board shall have withdrawn or modified (including
by amendment of the Schedule 14D-9) in a manner adverse to the Purchaser, its
approval or recommendation of the Offer, this Agreement or the Merger or shall
have recommended another offer, or shall have adopted any resolution to effect
any of the foregoing, or (v) a majority of the Shares on a fully diluted basis
shall not have been tendered in the Offer by the expiration date of the Offer
and on or prior to such date an entity or group (other than the Parent or the
Purchaser) shall have made and not withdrawn a proposal with respect to a Third
Party Acquisition; or
(f) by the Company if (i) there shall have been a breach of any
representation or warranty on the part of the Parent or the Purchaser which
materially adversely affects (or materially delays) the consummation of the
Offer or (ii) there shall have been a material breach of any covenant or
agreement on the part of the Parent or the Purchaser and which materially
adversely affects (or materially delays) the consummation of the Offer.
"Third Party Acquisition" means the occurrence of any of the following
events (i) the acquisition of the Company by merger or otherwise by any person
(which includes a "person" as such term is defined in Section 13(d)(3) of the
Exchange Act) or entity other than the Parent, the Purchaser or any affiliate
thereof (a "Third Party"); (ii) the acquisition by a Third Party of more than
30% of the total assets of the Company, taken as a whole; (iii) the acquisition
by a Third Party of 30% or more of the Shares; (iv) the adoption by the Company
of a plan of liquidation or the declaration or payment of an extraordinary
dividend; or (v) the repurchase by the Company of more than 20% of the Shares.
9.02 EFFECT OF TERMINATION. In the event of the termination of this
Agreement and the abandonment of the Offer and the Merger pursuant to
Section 9.01, this Agreement shall forthwith become void and have no effect,
without any liability on the part of any party hereto or its affiliates,
directors, officers or stockholders, provided that no such termination shall
relieve any of the Company, the Parent or the Purchaser from liability for
damages arising (a) from any willful or intentional breach of this Agreement or
(b) from their obligations under Sections 4.22, 5.07, 6.03(b) and 9.03, this
Section 9.02 and Article X. If this Agreement is terminated as provided herein,
upon request therefor each party (the "Redelivering Party") shall redeliver all
documents, work papers and other materials obtained (whether before or after
execution of this Agreement) by the Redelivering Party from the requesting party
in connection with the transaction contemplated hereby, together with all copies
thereof in the possession of the Redelivering Party.
<PAGE>
- 42 -
9.03 FEES AND EXPENSES. (a) In the event the Parent and the
Purchaser terminate this Agreement pursuant to Section 9.01(c) (other than any
such termination based upon the failure to satisfy clause (iii)(d) of Annex A)
or 9.01(e)(i) hereof, or the Company terminates this Agreement pursuant to
Section 9.01(d)(i), or in the event that this Agreement is terminated in a
manner described in Section 9.03(b), the Company shall reimburse the Parent, the
Purchaser and their affiliates (not later than one business day after submission
of statements therefor) for all actual documented out-of-pocket fees and
expenses, not to exceed $750,000, actually and reasonably incurred by any of
them or on their behalf in connection with the Offer and the Merger and the
consummation of all transactions contemplated by this Agreement (including,
without limitation, attorneys' fees, fees payable to financing sources,
investment bankers, counsel to any of the foregoing, and accountants and filing
fees and printing costs). Upon the termination of this Agreement pursuant to
any provision described in the first sentence of this Section 9.01(a), Parent
and Purchaser will promptly provide the Company with an estimate of the amount
of such fees and expenses and a request for reimbursement hereunder, and will
provide the Company in due course with invoices or other reasonable evidence of
such expenses upon request. The Company shall in any event pay the amount
requested (not to exceed $750,000) within one business day of such request,
subject to the Company's right to demand a return of any portion as to which
invoices are not received in due course.
(b) In the event the Company terminates this Agreement pursuant to
Section 9.01(d)(ii) or in the event the Parent and the Purchaser terminate this
Agreement pursuant to 9.01(e)(ii), (iii), (iv) or (v) hereof, the Parent and the
Purchaser would suffer direct and substantial damages, which damages cannot be
determined with reasonable certainty. To compensate the Parent and the
Purchaser for such damages, the Company shall pay to the Purchaser the amount of
$1,400,000 as liquidated damages immediately upon such a termination as well as
all amounts to which the Parent and the Purchaser would be entitled pursuant to
Section 9.03(a); PROVIDED, HOWEVER, that if the Parent and the Purchaser
terminate this Agreement pursuant to 9.01(e)(iii) hereof, the Company shall pay
to the Purchaser the amount of $700,000 as liquidated damages immediately upon
such a termination (as well as all amounts to which the Parent and the Purchaser
would be entitled pursuant to Section 9.03(a)), and if within 12 months
thereafter the Company enters into an agreement with respect to a Third Party
Acquisition, or a Third Party Acquisition occurs, the Company shall pay to the
Purchaser the amount of $700,000 within one business day following the execution
of such an agreement or such occurrence, as the case may be; PROVIDED FURTHER,
HOWEVER, that Parent and Purchaser will only be entitled to recover only one
$1,400,000 payment or two $700,000 payments of liquidated damages under this
Section 9.03(b) (and one payment of fees and expenses pursuant to Section
9.03(a)) even if this Agreement is or may be terminated under more than one of
the provisions of Section 9.01
<PAGE>
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described in the first sentence of this Section 9.03(b). It is specifically
agreed that the amount to be paid pursuant to this Section 9.03 represents
liquidated damages and not a penalty.
(c) Except as specifically provided in this Section 9.03 each party
shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
ARTICLE X
MISCELLANEOUS
10.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The representations, warranties and agreements of the parties
contained in Sections 2.06, 3.01, 3.02 (but only to the extent that such Section
expressly relates to actions to be taken after the Effective Time), 3.03, 3.04,
3.05, 6.05, 6.08, 6.09, 6.11 and Article X hereof, shall survive the
consummation of the Offer and the Merger. The agreements of the parties
contained in Sections 6.03(b), 9.02, 9.03 and Article X hereof and the
representations and warranties in Sections 4.22 and 5.07 shall survive the
termination of this Agreement without termination. All other representations,
warranties, agreements and covenants in this Agreement shall not survive the
consummation of the Offer and the Merger or the termination of this Agreement.
10.02 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement of
the Parent (for itself and the Purchaser) and the Company at any time prior to
the Effective Time with respect to any of the terms contained herein executed by
duly authorized officers of the respective parties, except that after the
earlier of (a) the purchase by the Purchaser of a majority of the Shares on a
fully diluted basis, and (b) the meeting of stockholders to approve the Merger
contemplated by this Agreement, the price per Share to be paid pursuant to this
Agreement to the holders of Shares shall in no event be decreased and the form
of consideration to be received by the holders of such Shares in the Merger
shall in no event be altered without the approval of such holders.
10.03 WAIVER OF COMPLIANCE; CONSENTS. At any time prior to the
Effective Time, the parties hereto may extend the time for performance of any of
the obligations or other acts or waive any inaccuracies in the representations
and warranties contained herein or in the documents delivered pursuant hereto.
Any failure of the Parent (for itself and the Purchaser), on the one hand, or
the Company, on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived in writing by the Parent (for itself
and the Purchaser) or the Company, respectively, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of or estoppel with
<PAGE>
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respect to any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto or any extensions, such
consent or extension shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 10.03.
10.04 COUNTERPARTS. This Agreement may be executed in any number
of counterparts each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
10.05 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
its conflicts of laws rules.
10.06 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or mailed
by registered or certified mail (return receipt requested) or by overnight
courier service to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to the Company, to:
Prior to the Effective Time,
CIMCO, Inc.
265 Briggs Avenue
Costa Mesa, California 92626-4555
Attention: Chief Executive Officer
After the Effective Time,
CIMCO, Inc.
c/o M.A. Hanna Company
Suite 36-5000
200 Public Square
Cleveland, Ohio 44114-2304
Attention: General Counsel
with copies to:
Stradling, Yocca, Carlson & Rauth, P.C.
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660-6441
Attention: Nick E. Yocca, Esq.
(b) if to the Parent or the Purchaser, to:
M. A. Hanna Company
Suite 36-5000
200 Public Square
Cleveland, Ohio 44114-2304
Attention: General Counsel
<PAGE>
- 45 -
with copies to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Lyle G. Ganske, Esq.
10.07 ENTIRE AGREEMENT, ASSIGNMENT ETC. This Agreement, which
hereby incorporates the Company Disclosure Letter, the Parent Disclosure Letter,
the Confidentiality Agreement and the Stockholder Tender Agreement, embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter hereof and, except for Section 6.11, is not intended to confer
upon any other person any rights or remedies hereunder. This Agreement
supersedes all prior agreements and understanding of the parties with respect to
the subject matter hereof other than the Confidentiality Agreement. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interest or
obligations hereunder shall be assigned by any party hereto without the prior
written consent of the other parties hereto, except that the Parent shall have
the right to assign the rights of the Purchaser to any other (directly or
indirectly) wholly-owned subsidiary of the Parent without the prior written
consent of the Company.
10.08 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
10.09 HEADINGS; CERTAIN DEFINITIONS. The Articles and Section
headings contained in this Agreement are solely for the purpose of reference,
are not part of the agreement of the parties and shall not affect in any way the
meaning or interpretation of this Agreement. Every reference herein to the word
"days," if not preceded by the word "business," shall mean calendar days, and
every reference herein to the words "business days" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday that is not a day on which banking
institutions in the city of New York are authorized or obligated by law to
close.
10.10 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this
<PAGE>
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being in addition to any other remedy to which they are entitled at law or in
equity.
[INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first above
written.
CIMCO, INC.
By: /s/ Russell T. Gilbert
--------------------------------------
Name: Russell T. Gilbert
Title: President and Chief Executive
Officer
M.A. HANNA COMPANY
By: /s/ Michael S. Duffey
--------------------------------------
Name: Michael S. Duffey
Title: Vice President
HANWEST, INC.
By: /s/ Michael S. Duffey
--------------------------------------
Name: Michael S. Duffey
Title: Vice President
47
<PAGE>
ANNEX A
The capitalized terms used herein have the meanings
set forth in the Agreement and Plan of Merger
to which this Annex A is attached
Notwithstanding any other provision of the Agreement and Plan of
Merger to which this ANNEX A is attached (the "MERGER AGREEMENT") or the Offer,
the Purchaser shall not be required to accept for payment, purchase or pay for
any Shares of the Company tendered, and may terminate or, subject to the terms
of the Merger Agreement, amend the Offer and may postpone the acceptance for
payment of and payment for any Shares, if prior to the time of acceptance for
payment of Shares tendered pursuant to the Offer:
(i) at least a majority of the Shares on a fully diluted basis
shall not have been validly tendered and, if tendered, not withdrawn
immediately prior to the expiration of the Offer (the "MINIMUM CONDITION");
(ii) any waiting period applicable to the Offer pursuant to the HSR
Act shall not have expired or been terminated;
(iii) at any time before the time of acceptance for payment for any
such Shares any of the following shall occur or exist:
(a) there shall have been instituted or be pending any action,
proceeding, application, claim or counterclaim by any government or
governmental authority or agency, domestic or foreign, before any
court or governmental regulatory or administrative agency, authority
or tribunal, domestic or foreign, (i) challenging the acquisition by
the Parent or the Purchaser of the Shares, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or
seeking to obtain from the Parent or the Purchaser any damages that
would result in a Material Adverse Effect if such were assessed
against the Company, (ii) seeking to prohibit or materially limit the
ownership or operation by the Parent or the Surviving Corporation of
all or any material portion of the business or assets of the Company
or compel the Parent or the Surviving Corporation to dispose of or to
hold separate all or any material portion of the business or assets of
the Company, or to impose any material limitation on the ability of
the Company or the Surviving Corporation to conduct such business or
own such assets, or (iii) seeking to impose material limitations on
the ability of the Parent (or any other affiliate of the Parent) to
acquire or hold or to exercise full rights of ownership of the Shares,
including, but not limited to,
<PAGE>
the right to vote the Shares purchased by them on all matters properly
presented to the stockholders of the Company; or
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, promulgated, entered, enforced or deemed
applicable to the Offer, the Merger or the Merger Agreement, or any
other action shall have been taken by any government, governmental
authority or court, domestic or foreign, other than the routine
application to the Offer or the Merger of waiting periods under the
HSR Act, that has, or has a substantial likelihood of resulting in,
any of the consequences referred to in clauses (i) through (iii) of
paragraph (a) above; or
(c) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements
contained in the Merger Agreement, or any of the representations and
warranties of the Company set forth in the Merger Agreement shall not
have been true and correct in any material respect when made or,
except for any representations and warranties made as of a specific
date, shall have ceased to be true and correct in any material respect
as if made on and as of the scheduled expiration of the Offer, as it
may be extended from time to time (the "EXPIRATION DATE") (or, in the
case of representations and warranties that are specifically qualified
as to materiality, shall not have been true and correct when made or
shall have ceased to be true and correct on and as of the Expiration
Date); or
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange, Inc. (ii) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States
(whether or not mandatory), (iii) the commencement of a war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States and having a Material Adverse
Effect on or materially adversely affecting (or materially delaying)
the consummation of the Offer, (iv) any limitation (whether or not
mandatory), by any U.S. governmental authority or agency on, or any
other event that, in the judgment of the Parent, is substantially
likely to materially adversely affect, the extension of credit by
banks or other financial institutions, or (v) from the date of the
Merger Agreement through the date of termination or expiration of the
Offer, a decline of at least 25% in the Standard & Poor's 500 Index;
or
<PAGE>
(e) the Merger Agreement shall have been terminated in
accordance with its terms; or
(f) prior to the purchase of Shares pursuant to the Offer, the
Company Board of Directors shall have withdrawn or modified (including
by amendment of the Schedule 14D-9) in a manner adverse to the Parent
its approval or recommendation of the Offer, the Merger Agreement or
the Merger or shall have recommended another offer for the purchase of
the Shares, which, in the sole judgment of the Parent in any such
case, and regardless of the circumstances (including any action or
omission by the Parent) giving rise to such condition, makes it
inadvisable to proceed with such acceptance for payment except where
as a result of the Company's receipt of an unsolicited acquisition
proposal from a third party (A) the Company issues to its stockholders
a communication that contains only the statements permitted by Rule
14d-9(e) under the Securities Exchange Act of 1934 (and does not
otherwise withdraw, modify or amend its approval or recommendation of
the transactions contemplated hereby) and (B) within five business
days of issuing such communication the Company publicly reconfirms its
approval and recommendation of the transactions contemplated by the
Offer and the Merger Agreement;
(g) There shall have occurred since July 31, 1995, a change,
occurrence or circumstance in the Company's business having a Material
Adverse Effect thereon; or
(h) The failure of the Company to obtain any of the waivers or
consents of Wells Fargo pursuant to the letter dated December 19, 1995
from Wells Fargo to the Company, Compounding Technology, Inc., and
Medical Molding Corporation of America.
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
STOCKHOLDER TENDER AGREEMENT
by and between
HANWEST, INC.
and RUSSELL T. GILBERT
Dated as of December 19, 1995
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
STOCKHOLDER TENDER AGREEMENT
STOCKHOLDER TENDER AGREEMENT, dated as of December 19, 1995 (this
"Agreement"), by and between Hanwest, Inc., a Delaware corporation
("Purchaser"), and Russell T. Gilbert ("Stockholder").
WHEREAS, the Stockholder is the owner of 539,734 shares (the "Shares")
of Common Stock, $.01 par value per share (the "Common Stock"), of CIMCO, Inc.,
a Delaware corporation (the "Company"), including 4,394 Shares owned of record
by Stockholder for the benefit of his grandchildren and 10,257 Shares (the "ESOP
Shares") credited under the Company's Employee Stock Ownership Plan (the "ESOP")
to the account of Stockholder as of the date hereof, and holds stock options
(the "Options") to acquire an aggregate of 76,250 shares of Common Stock granted
pursuant to the Company's 1991 Incentive Stock Option Plan and the Company's
1988 Incentive Stock Option Plan; and
WHEREAS, M.A. Hanna Company, a Delaware corporation ("Parent"), the
Purchaser and the Company, have entered into an Agreement and Plan of Merger,
dated as of the date hereof (as amended from time to time, the "Merger
Agreement"), which provides, among other things, that, upon the terms and
subject to the conditions therein, Purchaser will make a cash tender offer (the
"Offer") for all of the outstanding shares of Common Stock and will merge with
the Company (the "Merger"); and
WHEREAS, as a condition to the willingness of Parent and Purchaser to
enter into the Merger Agreement, Purchaser has requested that the Stockholder
agree, and in order to induce Parent and Purchaser to enter into the Merger
Agreement, the Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the terms and conditions set forth herein,
the parties hereto hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to the Purchaser as follows:
(a) The Stockholder is the sole record (except for the ESOP
Shares) and beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which meaning will apply
for all purposes of this Agreement) of, and has good title to, all of the
Shares, and there exist no liens, claims, security interests, options, proxies,
voting agreements, charges or encumbrances of whatever
<PAGE>
nature ("Liens") affecting the Shares, subject, in the case of the ESOP Shares,
to the terms of the ESOP.
(b) Upon transfer to the Purchaser by the Stockholder of the
Shares upon consummation of the Offer or the Merger (whichever is earlier),
Purchaser will have good title to the Shares, free and clear of all Liens.
(c) Other than the Options, the Shares constitute all of the
securities (as defined in Section 3(10) of the Exchange Act, which definition
will apply for all purposes of this Agreement) of the Company beneficially
owned, directly or indirectly, by the Stockholder (excluding any securities
beneficially owned by any of his affiliates or associates (as such terms are
defined in Rule 12b-2 under the Exchange Act, which definition will apply for
all purposes of this Agreement) as to which he does not have voting or
investment power).
(d) Except for the Shares and the Options, the Stockholder does
not, directly or indirectly, beneficially own or have any option, warrant or
other right to acquire any securities of the Company that are or may by their
terms become entitled to vote or any securities that are convertible or
exchangeable into or exercisable for any securities of the Company that are or
may by their terms become entitled to vote, nor is the Stockholder subject to
any contract, commitment, arrangement, understanding or relationship (whether or
not legally enforceable) that allows or obligates him to vote or acquire any
securities of the Company.
(e) The execution and delivery of this Agreement by the
Stockholder does not, and the performance by the Stockholder of his obligations
hereunder will not, constitute a violation of, conflict with, result in a
default (or an event which, with notice or lapse of time or both, would result
in a default) under, or result in the creation of any Lien on any Shares under,
(i) any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which Stockholder is a party or by which the
Stockholder is bound or (ii) any judgment, writ, decree, order or ruling
applicable to the Stockholder.
(f) Neither the execution and delivery of this Agreement nor the
performance by the Stockholder of his obligations hereunder will (i) violate any
order, writ, injunction or judgment applicable to the Stockholder or (ii) to the
best knowledge of Stockholder, violate any law, decree, statute, rule or
regulation applicable to the Stockholder or require any consent, authorization
or approval of, filing with or notice to, any court, administrative agency or
other governmental body or authority, other than any required notices or filings
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the "HSR Act") or
the federal securities laws.
2
<PAGE>
2. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to the Stockholder as follows:
(a) Purchaser is duly organized and validly existing and in good
standing under the laws of the State of Delaware, has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement. This
Agreement has been duly and validly executed and delivered by Purchaser and
constitutes the legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except that (i) the
enforceability hereof may be subject to applicable bankruptcy, insolvency or
other similar laws, now or hereinafter in effect, affecting creditors' rights
generally, and (ii) the availability of the remedy of specific performance or
injunctive or other forms of equitable relief may be subject to equitable
defenses and would be subject to the discretion of the court before which any
proceeding therefor may be brought.
(b) The execution and delivery of this Agreement by Purchaser
does not, and the performance by Purchaser of its obligations hereunder will
not, constitute a violation of, conflict with, or result in a default (or an
event which, with notice or lapse of time or both, would result in a default)
under, its certificate of incorporation or bylaws or any contract, commitment,
agreement, understanding, arrangement or restriction of any kind to which
Purchaser is a party or by which Purchaser is bound or any judgment, writ,
decree, order or ruling applicable to Purchaser.
(c) Neither the execution and delivery of this Agreement nor the
performance by Purchaser of its obligations hereunder will violate any order,
writ, injunction, judgment, law, decree, statute, rule or regulation applicable
to Purchaser or require any consent, authorization or approval of, filing with,
or notice to, any court, administrative agency or other governmental body or
authority, other than any required notices or filings pursuant to the HSR Act or
the federal securities laws.
3. TENDER OF SHARES. The Stockholder will tender and sell (and not
withdraw) pursuant to and in accordance with the terms of the Offer all of the
Shares. Upon the purchase of all the Shares pursuant to the Offer in accordance
with this Section 3, this Agreement will terminate. In the event,
notwithstanding the provisions of the first sentence of this Section 3, any
Shares are for any reason withdrawn from the Offer or are not purchased pursuant
to the Offer, such Shares will remain subject to the terms of this Agreement.
The Stockholder acknowledges that Purchaser's obligation to accept for payment
and pay for the Shares in the Offer is subject to all the terms and conditions
of the Offer.
3
<PAGE>
4. TRANSFER OF THE SHARES. During the term of this Agreement,
except as otherwise provided herein, the Stockholder will not (a) offer to sell,
sell, pledge or otherwise dispose of or transfer any interest in or encumber
with any Lien any of the Shares, (b) acquire any shares of Common Stock or other
securities of the Company (otherwise than in connection with a transaction of
the type described in Section 7 and any such additional shares or securities
will be deemed Shares and included in the Shares subject to this Agreement),
including, without limitation, by exercising any of the Options, (c) deposit the
Shares into a voting trust, enter into a voting agreement or arrangement with
respect to the Shares or grant any proxy or power of attorney with respect to
the Shares, or (d) enter into any contract, option or other arrangement or
undertaking with respect to the direct or indirect acquisition or sale,
assignment or other disposition of or transfer of any interest in or the voting
of any shares of Common Stock or any other securities of the Company.
5. VOTING OF SHARES. The Stockholder, by this Agreement, does
hereby constitute and appoint Purchaser, or any nominee thereof, with full power
of substitution, during and for the term of this Agreement, as his true and
lawful attorney and proxy for and in his name, place and stead, to vote each of
such Shares at any annual, special or adjourned meeting of the stockholders of
the Company (and this appointment will include the right to sign his name (as
stockholder) to any consent, certificate or other document relating to the
Company which the laws of the State of Delaware may require or permit) (a) in
favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the approval and adoption of the terms thereof and hereof; (b)
against any action or agreement that would result in a breach in any respect of
any covenant, agreement, representation or warranty of the Company under the
Merger Agreement; and (c) against the following actions (other than the Merger
and the other transactions contemplated by the Merger Agreement): (i) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or its subsidiaries; (ii) a sale,
lease or transfer of a material amount of assets of the Company or one of its
subsidiaries, or a reorganization, recapitalization, dissolution or liquidation
of the Company or its subsidiaries; (iii) (A) any change in a majority of the
persons who constitute the board of directors of the Company as of the date
hereof; (B) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or By-Laws, as amended
to date; (C) any other material change in the Company's corporate structure or
business; or (D) any other action which, in the case of each of the matters
referred to in clauses (iii)(A), (B), (C) and (D), is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, or adversely
affect the Merger and the other transactions contemplated by this Agreement and
the Merger Agreement. This proxy and power of attorney is a proxy and power
4
<PAGE>
coupled with an interest, and the Stockholder declares that it is irrevocable.
The Stockholder hereby revokes all and any other proxies with respect to the
Shares that he may have heretofore made or granted.
6. ENFORCEMENT OF THE AGREEMENT. The Stockholder acknowledges that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that Purchaser will be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which it is entitled at law or in equity, including without limitation
under Section 12 hereof.
7. ADJUSTMENTS. The number and type of securities subject to this
Agreement will be appropriately adjusted in the event of any stock dividends,
stock splits, recapitalizations, combinations, exchanges of shares or the like
or any other action that would have the effect of changing the Stockholder's
ownership of the Company's capital stock or other securities.
8. COMPLIANCE WITH MERGER AGREEMENT. Stockholder shall comply with
the requirements of Section 6.12 of the Merger Agreement.
9. TERMINATION. Except for Section 12 hereof which will only
terminate as and when provided therein, this Agreement will terminate on the
earlier of (a) the date the Merger Agreement is terminated in accordance with
its terms, (b) the purchase of all the Shares pursuant to the Offer in
accordance with Section 3, and (c) March 31, 1996.
10. EXPENSES. All fees and expenses incurred by either of the
parties hereto will be borne by the party incurring such fees and expenses.
11. BROKERAGE. Purchaser and the Stockholder represent and warrant
to the other that the negotiations relevant to this Agreement have been carried
on by Purchaser, on the one hand, and the Stockholder, on the other hand,
directly with the other, and that there are no claims for finder's fees or
brokerage commissions or other like payments in connection with this Agreement
or the transactions contemplated hereby. Purchaser, on the one hand, and the
Stockholder, on the other hand, will indemnify and hold harmless the other from
and against any and all claims or liabilities for finder's fees or brokerage
commissions or other like payments incurred by reason of action taken by him, it
or any of them, as the case may be.
12. FEE. If (a) Parent and Purchaser or the Company terminates the
Merger Agreement pursuant to Section 9.01(c), (d)
5
<PAGE>
or (e) thereof and (b) on or after the date hereof and not later than one year
from the date of such termination, (i) the Board of Directors of the Company
approves or recommends any proposal or offer (an "Acquisition Proposal")
concerning any merger, sale of assets, sale of shares of capital stock or
similar transaction involving the Company other than from Purchaser, or (ii) the
Company enters into an agreement with respect to a merger, acquisition,
consolidation, recapitalization, liquidation, dissolution or similar transaction
involving, or any purchase of all or a substantial portion of the assets or
equity securities of, the Company, or (iii) Stockholder disposes of any or all
of his Shares to any person not an affiliate or an associate of Purchaser or to
the Company or any affiliate thereof (or realizes cash proceeds in respect of
such Shares as a result of a distribution to the Stockholder by the Company
following the sale of a material amount of the Company's assets) in connection
with a transaction proposed, described or set forth in such Acquisition Proposal
or agreement or pursuant to such acquisition or (iv) the Company undergoes a
recapitalization, dissolution, liquidation or similar transaction proposed,
described or set forth in such Acquisition Proposal or agreement or the Company
issues an extraordinary dividend or other distribution in accordance with such
Acquisition Proposal or agreement (each, a "Subsequent Transaction") at a per
share price or with equivalent per share proceeds, as the case may be (the
"Subsequent Price"), with a value in excess of $10.50 (the "Offer Price"), then
the Stockholder will promptly pay to Purchaser an amount equal to one-half of
the product of (x) the excess of the Subsequent Price over the Offer Price and
(y) the number of Shares disposed of or otherwise participating in the
Subsequent Transaction. In the event of any stock dividends, stock splits,
recapitalizations, combinations, exchanges of shares or the like or any other
action that would have the effect of changing the Stockholder's ownership of the
Company's capital stock or other securities, the Offer Price will be
appropriately adjusted for the purpose of this Section 12.
13. MISCELLANEOUS.
(a) All representations and warranties contained herein will
survive for one year after the termination hereof.
(b) Any provision of this Agreement may be waived at any time by
the party that is entitled to the benefits thereof. No such waiver, amendment
or supplement will be effective unless in a writing and is signed by the party
or parties sought to be bound thereby. Any waiver by any party of a breach of
any provision of this Agreement will not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Agreement. The failure of a party to insist upon strict
adherence to any term of this Agreement or one or more sections hereof will not
be considered a waiver or deprive that party of the right thereafter
6
<PAGE>
to insist upon strict adherence to that term or any other term of this
Agreement.
(c) This Agreement contains the entire agreement among Purchaser
and the Stockholder with respect to the subject matter hereof, and supersedes
all prior agreements among Purchaser and the Stockholder with respect to such
matters. This Agreement may not be amended, changed, supplemented, waived or
otherwise modified, except upon the delivery of a written agreement executed by
the parties hereto.
(d) This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and performed in that state.
(e) The descriptive headings contained herein are for
convenience and reference only and will not affect in any way the meaning or
interpretation of this Agreement.
(f) All notices and other communications hereunder will be in
writing and will be given (and will be deemed to have been duly given upon
receipt) by delivery in person, by telecopy, or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
If to the Stockholder to:
Mr. Russell T. Gilbert
c/o Cimco, Inc.
265 Briggs Avenue
Costa Mesa, California 92626-4555
Telecopier: (714) 549-1167
With a copy to:
O'Melveny & Myers
Suite 1700
610 Newport Center Drive
Newport Beach, California 92660
Attention: David A. Krinsky, Esq.
Telecopier:(714) 669-6994
If to the Purchaser to:
Hanwest, Inc.
c/o M.A. Hanna Company
Suite 36-5000
200 Public Square
Cleveland, Ohio 44114-2304
Attention: General Counsel
Telecopier: (216) 589-4200
7
<PAGE>
with copies to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Lyle G. Ganske, Esq.
Telecopier: (216) 579-0212
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.
(g) This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one agreement.
(h) This Agreement is binding upon and is solely for the benefit
of the parties hereto and their respective successors, legal representatives and
assigns. Neither this Agreement nor any of the rights, interests or obligations
under this Agreement will be assigned by any of the parties hereto without the
prior written consent of the other parties, except that Purchaser will have the
right to assign to Purchaser or any other direct or indirect wholly owned
subsidiary of Parent any and all rights and obligations of Purchaser under this
Agreement, including the right to purchase Shares tendered by the Stockholder
pursuant to the terms hereof and the Offer, provided that any such assignment
will not relieve Purchaser from any of its obligations hereunder.
(i) If any term or other provision of this Agreement is
determined to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party hereto. Upon any such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
will negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated by this Agreement are consummated to
the extent possible.
(j) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity will be
cumulative and not alternative, and the exercise of any thereof by either party
will not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first above written.
HANWEST, INC.
By: /s/ Michael S. Duffy
----------------------------------
Name: Michael S. Duffy
Title: Vice President
Stockholder
/s/ Russell T. Gilbert
--------------------------------------
Russell T. Gilbert
9
<PAGE>
M.A. HANNA COMPANY
Suite 36-5000
200 Public Square
Cleveland, Ohio 44114-2304
(216) 589-4000
(216) 489-4200 (Facsimile)
September 2, 1994
CONFIDENTIAL
CIMCO, Inc.
265 Briggs Avenue
Costa Mesa, CA 92626-4555
Attention: Mr. Russell T. Gilbert, President and Chief Operating Officer
Gentlemen:
In connection with our discussion of a possible transaction involving our
respective companies (the "Transaction"), each party hereto will be furnishing
the other with certain information with respect to its respective businesses
(the "Business") which is either non-public, confidential or proprietary in
nature. All information furnished to each party hereto, its respective
directors, employees, attorneys, accountants and financial advisors
(collectively "representatives") (whether before or after the date of this
Agreement), together with analyses, compilations, studies or other documents
prepared by each party or its respective representatives which contain or
otherwise reflect such information or our review of, or interest in, the
Business or the Transaction is hereafter referred to as the "Information." In
consideration of each party being furnished with the Information, each party
agrees that:
1. The information will be kept confidential and will not, without the prior
written consent of the disclosing party, be disclosed by the receiving
party, or by its representatives, in any manner whatsoever, in whole or in
part, and shall not be used by the receiving party or its representatives
for any purpose other than evaluating the Transaction, except as and to the
extent required by a court or regulatory order. Moreover, the receiving
party agrees to transmit the Information only to its representatives who
need to know the Information for the purpose of evaluating the Transaction
and who are informed by the receiving party of the confidential nature of
the Information and who agree to be bound by the terms of this Agreement.
2. Without the prior written consent of the other party and except as
required by a court or regulatory order, each party and its respective
representatives will not disclose to any other corporation, partnership or
other entity or any other individual the fact that Information has been made
available or that discussions or negotiations are taking place concerning a
possible Transaction.
3. The Information which is furnished to each party, or to its respective
representatives, will be destroyed or returned to the disclosing party
immediately upon its request without retaining any copies thereof. That
portion of the Information which consists of analyses, compilations, studies
or other documents prepared by each party, or by its respective
representatives, will be destroyed or held by each party and kept
confidential and subject to the terms of this Agreement.
4. This Agreement shall be inoperative as to such portions of the
Information which (i) are or become generally available to the public
through no fault or action by the receiving party or by its representatives;
(ii) become available to the receiving party or to the general public on a
non-confidential basis from a source, other than the disclosing such
portions by a contractual, legal or fiduciary obligation; or (iii) were
known to the receiving party on a non-confidential basis prior to its
disclosure to the receiving party by the disclosing party or one of its
representatives or are developed independently by the receiving party
without reference to any of the Information disclosed to the receiving
party.
<PAGE>
5. Except as otherwise provided therein, this Agreement supersedes all
previous agreements and shall terminate on December 31, 1995, unless
mutually extended.
If the foregoing is acceptable, please sign and return the enclosed copy of this
letter, whereupon this will become a binding Agreement.
Sincerely,
M.A. HANNA COMPANY
By /s/_John S. Pyke, Jr.______________
John S. Pyke, Jr.
Vice President, General Counsel
and Secretary
Enclosure
Agreed this 13th day of September, 1994
CIMCO, Inc.
By /s/_Russell T. Gilbert_____________
Russell T. Gilbert
President and CEO
2
<PAGE>
M.A. HANNA COMPANY
Suite 36-5000
200 Public Square
Cleveland, Ohio 44114-2304
(216) 589-4000
(216) 489-4200 (Facsimile)
HIGHLY CONFIDENTIAL
VIA TELECOPIER AND OVERNIGHT COURIER
November 2, 1995
The Board of Directors
CIMCO, Inc.
265 Briggs Avenue
Costa Mesa, CA 92626-4555
Dear Madam and Sirs:
We hereby offer to acquire all of the capital stock of CIMCO for $10.50 per
share in cash on the following terms and conditions:
1. Subject to the conditions set forth in this letter, Hanna will promptly
negotiate with CIMCO a Merger Agreement containing provisions standard in
such agreements. After approval of the Merger Agreement by the Boards of
Directors of Hanna and CIMCO, Hanna will make a tender offer to acquire all of
the outstanding stock of CIMCO (the "Acquisition"). Concurrently with the
approval of the Merger Agreement, the CIMCO Board will also approve the Hanna
option to acquire in the tender the CIMCO shares owned by Russell T. Gilbert and
the CIMCO shares subject to acquisition by exercise of stock options held by Mr.
Gilbert, and the amendment of CIMCO's stockholder rights plan to exclude Hanna's
transaction from its operation. It is understood that the proposed acquisition
is not contingent upon Mr. Gilbert's purchase of the molding division.
2. For purposes of this offer, we have assumed that (a) the Phase 1
environmental audits of CIMCO's properties being prepared for CIMCO will
not indicate any actual or potential substantial liabilities, (b) the
Respiratory Medical Products business will be sold for a cash consideration of
at least $2,568,000, the purchaser will assume trade liabilities relating to the
business of no less than $290,000 and CIMCO will not retain any substantial
liabilities arising out of that business and (c) the two Corona properties of
CIMCO will be sold for at least a gross price of $1,130,000 and $650,000 each
and the cash proceeds of the sales will be used to reduce CIMCO's indebtedness
and the purchaser of the Corona property now occupied by Compounding Technology,
Inc. will enter into a lease with Compounding Technology, Inc. on arms-length,
commercial terms.
3. Hanna reserves the right to complete its due diligence investigation and
requests delivery of definitive documentation reflecting the audits and
transactions referred to in paragraph 2 above.
4. After reviewing the PaineWebber engagement letter dated August 16, 1995,
Hanna requests that CIMCO obtain written confirmation from PaineWebber that
it agrees that in the event that the transaction described in this letter is
consummated, its M&A Advisory Fee will not apply to transactions executed
subsequent to the date of acceptance of this letter.
5. For a period of 30 days commencing with the acceptance of this letter
subject to customary fiduciary out provisions based upon advice of counsel,
CIMCO will work exclusively with Hanna on the Acquisition and will not directly
or indirectly encourage, invite, pursue or take any action to facilitate other
offers to purchase CIMCO and/or its subsidiaries or any assets of CIMCO and/or
its subsidiaries or effect any other business combination involving CIMCO and/or
its subsidiaries. In the event CIMCO shall receive such an offer, it will
immediately notify Hanna and provide details of the offer. For a period of one
year after the date of this letter CIMCO also agrees to reimburse Hanna for its
<PAGE>
expenses incurred in connection with the transactions proposed in this letter,
not to exceed $500,000, if CIMCO closes an alternative transaction within such
year and Hanna has not terminated its participation for a reason other than the
fault of CIMCO.
6. From and after the date of receipt of this letter CIMCO agrees to conduct
its businesses in the ordinary course consistent with past practice and
will grant Hanna the right to review and veto any disposal or acquisition of
stock or assets having a value in excess of $500,000 proposed to be made after
the acceptance of this letter which veto rights shall not be used unreasonably.
7. CIMCO will not make any press release, announcement, report, disclosure, or
filing with respect to the transaction described in this letter without the
prior written consent of Hanna, except as required by law based on the advice of
counsel.
8. Closing of the Acquisition transaction described in this letter is subject
among other things to:
- Approval by the governmental agencies and regulatory authorities; and
- the absence at the time of the Acquisition of any environmental, health,
safety, product or other liabilities known to CIMCO's management which,
if realized, would have a material adverse affect on the financial
condition of CIMCO.
9. It is the intention of Hanna, and by signing this letter CIMCO acknowledges
that it is CIMCO's intention as well, that this letter and any actions of
the parties with respect hereto, not be deemed to constitute legally binding
obligations except with respect to the matters described in paragraphs 5, 6 and
7 above, or an obligation or commitment to enter into any definitive agreements.
Any legal obligations binding upon the parties hereto with respect to the
transactions described in this letter, except with respect to paragraphs 5, 6
and 7 above, is subject to, and shall exist only upon the due execution and
delivery of the definitive agreements with respect to such transactions, and all
obligations and rights of the parties hereto (except as aforesaid) shall be
governed by such agreements.
Your signature below shall indicate your intentions and obligations with respect
to the matters discussed above; please return a fully signed copy to us. Upon
your execution of this letter, we will deliver to you a draft Merger Agreement
which we have already prepared.
If we have not received a fully signed copy of this letter by 5:00 p.m. EST on
Friday, November 3, 1995, this offer will expire and the intentions stated in
this letter shall be null and void.
Whether or not you elect to accept this letter, please be kind enough to provide
a written response.
Very truly yours,
M. A. HANNA COMPANY
/s/ Martin D. Walker
- ---------------------------------------------
Martin D. Walker
Chairman and Chief Executive Officer
cc: PaineWebber, Incorporated, Attention: G.R. Brundage
Accepted this 3rd day of
November, 1995.
CIMCO, Inc.
/s/ Russell T. Gilbert
- ---------------------------------------------
Russell T. Gilbert
President and Chief Executive Officer
<PAGE>
M.A. HANNA COMPANY
Suite 36-5000
200 Public Square
Cleveland, Ohio 44114-2304
(216) 589-4000
(216) 589-4200 (Facsimile)
HIGHLY CONFIDENTIAL
December 15, 1995
The Board of Directors
CIMCO, Inc.
265 Briggs Avenue
Costa Mesa, CA 92626-4555
Attention: Mr. Russell T. Gilbert
President and Chief Executive Officer
Dear Madam and Sirs:
Please reference our letter dated November 2, 1995 to you, accepted by CIMCO,
Inc. on November 3, 1995, as amended by our letters dated December 4, 1995 and
December 11, 1995.
This will confirm our agreement reached today to amend the first sentence of
paragraph 5 of the letter to extend the period of exclusivity to and including
December 22, 1995. All other provisions of the November 2, 1995 letter shall
remain in full force and effect.
Your signature below shall indicate your obligations with respect to the matters
discussed above; please return a fully signed copy to us.
Thank you.
Very truly yours,
M. A. HANNA COMPANY
/s/ John S. Pyke, Jr.
- ---------------------------------------------
John S. Pyke, Jr.
Vice President, General Counsel and Secretary
Accepted this 15th day of
December, 1995.
CIMCO, Inc.
/s/ Russell T. Gilbert
- ---------------------------------------------
Russell T. Gilbert
President and Chief Executive Officer
<PAGE>
M.A. HANNA COMPANY
Suite 36-5000
200 Public Square
Cleveland, Ohio 44114-2304
(216) 589-4000
(216) 589-4200 (Facsimile)
HIGHLY CONFIDENTIAL
December 11, 1995
The Board of Directors
CIMCO, Inc.
265 Briggs Avenue
Costa Mesa, CA 92626-4555
Attention: Mr. Russell T. Gilbert
President and Chief Executive Officer
Dear Madam and Sirs:
Please reference our letter dated November 2, 1995 to you, accepted by CIMCO,
Inc. on November 3, 1995, as amended by our letter dated December 4, 1995.
This will confirm our agreement reached today to amend the first sentence of
paragraph 5 of the letter to extend the period of exclusivity to and including
December 15, 1995. All other provisions of the November 2, 1995 letter shall
remain in full force and effect.
Your signature below shall indicate your obligations with respect to the matters
discussed above; please return a fully signed copy to us.
Thank you.
Very truly yours,
M. A. HANNA COMPANY
/s/ Michael S. Duffey
- ---------------------------------------------
Michael S. Duffey
Vice President, Chief Financial Officer and Treasurer
Accepted this 11th day of
December, 1995.
CIMCO, Inc.
/s/ Russell T. Gilbert
- ---------------------------------------------
Russell T. Gilbert
President and Chief Executive Officer
<PAGE>
M.A. HANNA COMPANY
Suite 36-5000
200 Public Square
Cleveland, Ohio 44114-2304
(216) 589-4000
(216) 589-4200 (Facsimile)
HIGHLY CONFIDENTIAL
December 4, 1995
The Board of Directors
CIMCO, Inc.
265 Briggs Avenue
Costa Mesa, CA 92626-4555
Attention: Mr. Russell T. Gilbert
President and Chief Executive Officer
Dear Madam and Sirs:
Please reference our letter dated November 2, 1995 to you, accepted by CIMCO,
Inc. on November 3, 1995.
This will confirm our agreement reached on December 1, 1995 to amend the first
sentence of paragraph 5 of the letter to extend the period of exclusivity to and
including December 11, 1995. All other provisions of the November 2, 1995 letter
shall remain in full force and effect.
Your signature below shall indicate your obligations with respect to the matters
discussed above; please return a fully signed copy to us.
Thank you.
Very truly yours,
M. A. HANNA COMPANY
/s/ John S. Pyke, Jr.
- ---------------------------------------------
John S. Pyke, Jr.
Vice President, General Counsel and Secretary
Accepted this 4th day of
December, 1995.
CIMCO, Inc.
/s/ Russell T. Gilbert
- ---------------------------------------------
Russell T. Gilbert
President and Chief Executive Officer