<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
-----------------------
LEARONAL, INC.
(Name of Subject Company)
LIGHTNING ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
(BIDDERS)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
522016104
(CUSIP NUMBER OF CLASS OF SECURITIES)
-----------------------
ROBERT P. VOGEL
ROHM AND HAAS COMPANY
100 INDEPENDENCE MALL WEST
PHILADELPHIA, PENNSYLVANIA 19106
(215) 592-3000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
WITH A COPY TO:
WILLIAM G. LAWLOR
DECHERT PRICE & RHOADS
4000 BELL ATLANTIC TOWER
1717 ARCH STREET
PHILADELPHIA, PENNSYLVANIA 19103
(215) 994-4000
-----------------------
CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
$471,173,564 $94,235
* ESTIMATED FOR PURPOSES OF CALCULATING THE AMOUNT OF THE FILING FEE ONLY.
THE FILING FEE CALCULATION ASSUMES THE PURCHASE OF 13,858,046 SHARES OF
COMMON STOCK, $1.00 PAR VALUE PER SHARE (THE "SHARES"), OF LEARONAL, INC.
AT A PRICE OF $34.00 PER SHARE IN CASH, WITHOUT INTEREST. SUCH NUMBER OF
SHARES INCLUDES ALL OUTSTANDING SHARES AS OF DECEMBER 20, 1998, AND ASSUMES
THE EXERCISE OF ALL STOCK OPTIONS TO PURCHASE SHARES WHICH WERE OUTSTANDING
AS OF DECEMBER 20, 1998.
** THE AMOUNT OF THE FILING FEE CALCULATED IN ACCORDANCE WITH REGULATION
240.0-11 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EQUALS 1/50TH
OF ONE PERCENT OF THE VALUE OF THE TRANSACTION.
[_] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE AND THE DATE OF ITS FILING.
AMOUNT PREVIOUSLY PAID: NOT APPLICABLE. FILING PARTY: NOT APPLICABLE.
FORM OR REGISTRATION NO.: NOT APPLICABLE. DATE FILED: NOT APPLICABLE.
<PAGE>
CUSIP NO. 522016104
PAGE 1 OF 2
14D-1
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS. S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS
LIGHTNING ACQUISITION CORP. (E.I.N.: 51-0386069)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(A) [_]
(B) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC, BK
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(E) OR 2(F) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,702,464
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [_]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
29.3%
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
* Other than 100 shares of common stock owned by Parent (as hereinafter
defined), beneficial ownership is based on the provisions of the Tender
and Option Agreement dated as of December 20, 1998 among Parent,
Purchaser (as hereinafter defined) and certain stockholders (the
"Certain Stockholders") of the Company (as hereinafter defined),
pursuant to which each Certain Stockholder has agreed to grant the
Purchaser an option to purchase the Shares subject to the occurrence of
certain events and to tender in the Offer, and not to withdraw
therefrom, the Shares owned by such Certain Stockholders, as well as any
other Shares acquired prior to the expiration of the Offer.
<PAGE>
CUSIP NO. 522016104
PAGE 2 OF 2
14D-1
- --------------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS. S.S. OR I.R.S. IDENTIFICATION
NOS. OF ABOVE PERSONS
ROHM AND HAAS COMPANY (E.I.N.: 23-1028370)
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
WC, BK
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) OR 2(f) [_]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,702,464*
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [_]
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
29.3%*
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
* Other than 100 shares of common stock owned by Parent (as hereinafter
defined), beneficial ownership is based on the provisions of the Tender
and Option Agreement dated as of December 20, 1998 among Parent,
Purchaser (as hereinafter defined) and certain stockholders (the
"Certain Stockholders") of the Company (as hereinafter defined),
pursuant to which each Certain Stockholder has agreed to grant the
Purchaser an option to purchase the Shares subject to the occurrence of
certain events and to tender in the Offer, and not to withdraw
therefrom, the Shares owned by such Certain Stockholders, as well as any
other Shares acquired prior to the expiration of the Offer.
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Lightning Acquisition Corp., a New York corporation ("Purchaser")
and a wholly owned subsidiary of Rohm and Haas Company, a Delaware corporation
("Parent"), to purchase all of the outstanding shares of common stock, par value
$1.00 per share (the "Shares"), of LeaRonal, Inc., a New York corporation (the
"Company"), at $34.00 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 23, 1998 (the "Offer to Purchase"), a copy of which is attached
hereto as Exhibit (a)(1), and in the related Letter of Transmittal, a copy of
which is attached hereto as Exhibit (a)(2) (which, as amended or supplemented
from time to time, together constitute the "Offer").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is LeaRonal, Inc., and the address of
its principal executive offices is 272 Buffalo Avenue, Freeport, New York 11520.
The telephone number of the Company at such location is (516) 868-8800.
(b) The information set forth in the Introduction of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in "Price Range of the Shares; Dividends on
the Shares" of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) through (d), (g): This Statement is being filed by Purchaser and
Parent. The information set forth in the "Introduction" and "Certain
Information Concerning Parent and Purchaser" of the Offer to Purchase is
incorporated herein by reference. The name, business address, present principal
occupation or employment, the material occupations, positions, offices or
employments for the past five years and citizenship of each director and
executive officer of Parent and Purchaser and the name, principal business and
address of any corporation or other organization in which such occupations,
positions, offices and employments are or were carried on are set forth in
Schedule I to the Offer to Purchase and incorporated herein by reference. The
information set forth in Items 2(a)-(c), 4 and 6 of the Schedule 13G filings of
John C. Haas, John O. Haas, Thomas Willaman Haas and William David Haas, filed
with the Securities and Exchange Commission on February 13, 1998, is hereby
incorporated by reference.
(e) through (f): During the last five years, neither Purchaser nor Parent
nor, to the best knowledge of Purchaser and Parent, any of the persons referred
to in the preceding paragraph (i) have been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
as a result of which any such person was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)(1) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons referred to in Item 2 above have entered into any transaction with
the Company, or any of the Company's affiliates which are corporations, since
the commencement of the Company's third full fiscal year preceding the date of
this Statement, the aggregate amount of which was equal to or greater than one
percent of the consolidated revenues of the Company for (i) the fiscal year in
which such transaction occurred or (ii) the portion of the current fiscal year
which has occurred if the transaction occurred in such year.
<PAGE>
(a)(2) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons referred to in Item 2 above have entered into any transaction since
the commencement of the Company's third full fiscal year preceding the date of
this Statement with the executive officers, directors or affiliates of the
Company which are not corporations, in which the aggregate amount involved in
such transaction or in a series of similar transactions, including all periodic
installments in the case of any lease or other agreement providing for periodic
payments or installments, exceeded $40,000.
(b) The information set forth in the "Introduction," "Certain Information
Concerning Parent and Purchaser," "Background of the Offer; Contacts with the
Company" and "Plans for the Company; Other Matters" of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b): The information set forth in the "Introduction" and "Sources
and Amount of Funds" of the Offer to Purchase is incorporated herein by
reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a) through (e): The information set forth in the "Introduction," "Purpose
of the Offer and the Merger; the Merger Agreement and Certain Other Agreements,"
"Plans for the Company; Other Matters" and "Dividends and Distributions" of the
Offer to Purchase is incorporated herein by reference.
(f) and (g): The information set forth in the "Introduction" and "Effect
of the Offer on the Market for the Shares; Stock Listing; Exchange Act
Registration; Margin Regulations" of the Offer to Purchase is incorporated
herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b): The information set forth in the "Introduction," "Certain
Information Concerning Parent and Purchaser" and "Background of the Offer;
Contacts with the Company" of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "Introduction," "Sources and Amount of
Funds," "Background of the Offer; Contacts with the Company," "Purpose of the
Offer and the Merger; the Merger Agreement and Certain Other Agreements," "Plans
for the Company; Other Matters" and "Fees and Expenses" of the Offer to Purchase
is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "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 "Certain Information Concerning Parent and
Purchaser" of the Offer to Purchase is incorporated herein by reference.
<PAGE>
ITEM 10. ADDITIONAL INFORMATION.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between Purchaser or Parent, or to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I to the Offer to Purchase, and the
Company or any of its executive officers, directors, controlling persons or
subsidiaries.
(b) and (c): The information set forth in the "Introduction," "Certain
Conditions of the Offer," "Certain Legal Matters and Regulatory Approvals" and
"Miscellaneous" of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in "Effect of the Offer on the Market for
the Shares; Stock Listing; Exchange Act Registration; Margin Regulations" and
"Certain Legal Matters and Regulatory Approvals" of the Offer to Purchase is
incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated December 23, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Press Release dated December 21, 1998.
(a)(8) Press Release dated December 23, 1998.
(a)(9) Summary Advertisement.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of December 20, 1998, by and
among Parent, Purchaser and the Company.
(c)(2) Confidentiality Agreement, dated as of October 21, 1998, by and
between Parent and the Company.
(c)(3) Tender and Option Agreement, dated as of December 20, 1998, by and
among Parent, Purchaser and certain stockholders of the Company.
<PAGE>
(c)(4) Form of Employment Agreement, dated as of December 20, 1998.
(d) None.
(e) Not applicable.
(f) None.
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: December 23, 1998
LIGHTNING ACQUISITION CORP.
BY: /s/ Michael S. Foster
------------------------------------------
NAME: Michael S. Foster
TITLE: Vice President
ROHM AND HAAS COMPANY
BY: /s/ Robert P. Vogel
------------------------------------------
NAME: Robert P. Vogel
TITLE: Vice President and General Counsel
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
- -------
(a)(1) Offer to Purchase, dated December 23, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Press Release dated December 21, 1998.
(a)(8) Press Release dated December 23, 1998.
(a)(9) Summary Advertisement.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of December 20, 1998, by and
among Parent, Purchaser and the Company.
(c)(2) Confidentiality Agreement, dated as of October 21, 1998, by and between
Parent and the Company.
(c)(3) Tender and Option Agreement, dated as of December 20, 1998, by and among
Parent, Purchaser and certain stockholders of the Company.
(c)(4) Form of Employment Agreement, dated as of December 20, 1998.
(d) None.
(e) Not applicable.
(f) None.
<PAGE>
Exhibit (a)(1)
Offer to Purchase, dated December 23, 1998
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
LEARONAL, INC.
AT
$34.00 NET PER SHARE
BY
LIGHTNING ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JANUARY 22, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF DECEMBER 20, 1998 (THE "MERGER AGREEMENT"), BY AND AMONG ROHM AND HAAS
COMPANY, LIGHTNING ACQUISITION CORP. AND LEARONAL, INC. (THE "COMPANY"). THE
BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND
THE MERGER (EACH AS DEFINED HEREIN), AND DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS
AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES (AS
DEFINED HEREIN) PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES REPRESENTING AT LEAST TWO-THIRDS OF THE FULLY DILUTED SHARES (AS
DEFINED HEREIN) (THE "MINIMUM CONDITION") AND (II) ANY APPLICABLE WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO THE
OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 15.
---------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the enclosed Letter of Transmittal
(or a facsimile thereof) in accordance with the Instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed (if required
by Instruction 1 to the Letter of Transmittal), mail or deliver the Letter of
Transmittal (or a facsimile thereof) and any other required documents to the
Depositary (as defined herein) and either deliver the certificates for such
Shares to the Depositary along with the Letter of Transmittal (or such
facsimile) or, in the case of a book-entry transfer effected pursuant to the
procedures described in Section 3 of this Offer to Purchase, deliver an
Agent's Message (as defined herein) and any other required documents to the
Depositary and deliver such Shares pursuant to the procedure for book-entry
transfer set forth in Section 3 of this Offer to Purchase or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for such stockholder. Any stockholder whose Shares
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee must contact such broker, dealer, commercial bank, trust
company or other nominee to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, or who cannot
deliver all required documents to the Depositary prior to the expiration of
the Offer, may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent (as defined herein) or the Dealer Manager (as defined herein) at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase,
the Letter of Transmittal, the Notice of Guaranteed Delivery and other tender
offer materials may be directed to the Information Agent or the Dealer
Manager, or to brokers, dealers, commercial banks or trust companies.
---------------
THE DEALER MANAGER FOR THE OFFER IS:
DEUTSCHE BANK SECURITIES INC.
December 23, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION............................................................. 1
THE OFFER................................................................ 4
1. Terms of the Offer................................................... 4
2. Acceptance for Payment and Payment................................... 6
3. Procedures for Tendering Shares...................................... 7
4. Withdrawal Rights.................................................... 11
5. Certain U.S. Federal Income Tax Consequences......................... 11
6. Price Range of the Shares; Dividends on the Shares................... 12
7. Effect of the Offer on the Market for the Shares; Stock Listing;
Exchange Act Registration; Margin Regulations........................ 13
8. Certain Information Concerning the Company........................... 14
9. Certain Information Concerning Parent and Purchaser.................. 17
10. Sources and Amount of Funds.......................................... 19
11. Background of the Offer; Contacts with the Company................... 19
12. Purpose of the Offer and the Merger; the Merger Agreement and Certain
Other Agreements..................................................... 22
13. Plans for the Company; Other Matters................................. 37
14. Dividends and Distributions.......................................... 40
15. Certain Conditions of the Offer...................................... 41
16. Certain Legal Matters and Regulatory Approvals....................... 43
17. Fees and Expenses.................................................... 47
18. Miscellaneous........................................................ 47
SCHEDULE I INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER AND CERTAIN OTHER PERSONS I-1
SCHEDULE II CERTAIN INFORMATION ABOUT PARENT REQUIRED BY NEW YORK LAW II-1
</TABLE>
<PAGE>
To the Holders of Common Stock of
LeaRonal, Inc.:
INTRODUCTION
Lightning Acquisition Corp., a New York corporation ("Purchaser") and a
wholly owned subsidiary of Rohm and Haas Company, a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $1.00 per share (the "Common Stock" or the "Shares"), of LeaRonal,
Inc., a New York corporation (the "Company"), at a price of $34.00 per Share,
net to the seller in cash, without interest (the "Offer Price"), upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, as amended or supplemented from time
to time, collectively constitute the "Offer").
Tendering stockholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
purchase of Shares by Purchaser pursuant to the Offer. However, any tendering
stockholder or other payee who fails to complete and sign the Substitute Form
W-9 included in the Letter of Transmittal may be subject to backup federal
income tax withholding of 31% of the gross proceeds payable to such
stockholder or other payee pursuant to the Offer. See Section 3. Stockholders
who hold their Shares through a bank or broker should check with such
institution as to whether they charge any service fees. Purchaser will pay all
fees and expenses of Deutsche Bank Securities Inc. ("Deutsche Bank
Securities") which is acting as Dealer Manager (in such capacity, the "Dealer
Manager"), ChaseMellon Shareholder Services, L.L.C. which is acting as the
Depositary (in such capacity, the "Depositary") and D.F. King & Co., Inc.,
which is acting as the Information Agent (in such capacity, the "Information
Agent"), incurred in connection with the Offer and in accordance with the
terms of the agreements entered into between Purchaser and/or Parent and each
such person. See Section 17.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER (AS DEFINED BELOW), AND DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
STOCKHOLDERS AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
THE BEACON GROUP CAPITAL SERVICES LLC ("BEACON"), FINANCIAL ADVISOR TO THE
COMPANY, HAS DELIVERED TO THE COMPANY BOARD ITS WRITTEN OPINION, DATED
DECEMBER 20, 1998 (THE "FINANCIAL ADVISOR OPINION"), TO THE EFFECT THAT, AS OF
SUCH DATE, THE CONSIDERATION TO BE RECEIVED BY THE HOLDERS OF SHARES PURSUANT
TO THE OFFER AND THE MERGER IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO SUCH
HOLDERS OF SHARES. A COPY OF THE FINANCIAL ADVISOR OPINION IS ATTACHED AS AN
EXHIBIT TO THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE
14D-9 (THE "SCHEDULE 14D-9"), WHICH HAS BEEN FILED BY THE COMPANY WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IN CONNECTION WITH THE
OFFER AND WHICH IS BEING MAILED TO HOLDERS OF SHARES HEREWITH. HOLDERS OF
SHARES ARE URGED TO, AND SHOULD, READ THE FINANCIAL ADVISOR OPINION CAREFULLY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES REPRESENTING AT LEAST TWO-THIRDS OF THE FULLY DILUTED SHARES (THE
"MINIMUM CONDITION") AND (II) ANY APPLICABLE WAITING PERIOD UNDER THE HART-
SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"),
HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO THE OTHER
CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE SECTIONS 1 AND 15.
1
<PAGE>
Purchaser reserves the right (subject to the terms of the Merger Agreement
and the applicable rules and regulations of the Commission) to waive or reduce
the Minimum Condition and to elect to purchase, pursuant to the Offer, fewer
than the minimum number of Shares necessary to satisfy the Minimum Condition;
provided that, without the prior written consent of the Company, Purchaser may
not waive the Minimum Condition or reduce the Minimum Condition except to the
extent set forth in Section 1. The Purchaser currently does not intend to
waive or reduce the Minimum Condition. In addition, Purchaser reserves the
right, subject only to the applicable rules and regulations of the Commission,
to waive each of the other conditions (other than the Minimum Condition) to
the obligations of Purchaser to consummate the Offer, the Merger and the other
transactions contemplated by the Merger Agreement and the Tender and Option
Agreement (as defined below) (the "Transactions").
The Company has advised Parent and Purchaser that each member of the Company
Board and each of the Company's executive officers intends to tender all
Shares owned by such persons pursuant to the Offer. In addition,
simultaneously with the execution and delivery of the Merger Agreement, Parent
and Purchaser, on the one hand, and certain stockholders on the other hand
(the "Certain Stockholders"), entered into a Tender and Option Agreement dated
as of December 20, 1998 (the "Tender and Option Agreement"). The Tender and
Option Agreement relates to the 3,619,664 issued and outstanding Shares owned
by the Certain Stockholders, as well as 778,896 Shares subject to Options (as
defined below), of which 82,800 such Options are presently exercisable. The
issued and outstanding Shares subject to the Tender and Option Agreement
currently represent approximately 29% of the issued and outstanding Shares.
The issued and outstanding Shares and presently exercisable Options subject to
the Tender and Option Agreement together represent approximately 27% of the
Fully Diluted Shares. Pursuant to the Tender and Option Agreement, each
Certain Stockholder has agreed, among other things, to grant the Purchaser an
option to purchase the Shares subject thereto upon the occurrence of certain
"Trigger Events" (as defined below) and to tender in the Offer, and not to
withdraw therefrom, the Shares owned by such Certain Stockholders, as well as
any other Shares acquired prior to the expiration of the Offer including
pursuant to the exercise of Options. See Section 12.
As used in this Offer to Purchase, "Fully Diluted Shares" means all
outstanding securities entitled generally to vote in the election of directors
of the Company on a fully diluted basis, after giving effect to the exercise
or conversion of all options (including the Options), warrants, rights and
securities exercisable or convertible into such voting securities; provided
that Parent may, at its option exercisable in its sole discretion, exclude
from the calculation of Fully Diluted Shares any Options which are not
exercisable at the time such calculation is made and which will not become
exercisable by their terms prior to April 30, 1999 (consisting of, according
to the Company, approximately 972,508 Shares in respect of such Options as of
December 20, 1998). Parent has currently not elected to exercise such option
but reserves the right to do so. The Company has represented and warranted to
Parent and Purchaser that, as of December 20, 1998, (i) the authorized capital
stock of the Company consists of 35,000,000 Shares, (ii) 12,544,682 Shares are
issued and outstanding, and (iii) 1,313,364 Shares are issuable pursuant to
the exercise of the Company's outstanding stock options ("Options"). The
Merger Agreement provides, among other things, that the Company will not,
without the prior written consent of Parent, issue any shares of capital stock
of any class of the Company, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of such capital stock of the
Company (except for the issuance of Shares issuable pursuant to Options
outstanding on the date hereof). See Section 12. Based on the foregoing and
assuming that there are an aggregate of 13,858,046 Fully Diluted Shares, the
Minimum Condition will be satisfied if 9,238,698 Shares are validly tendered
and not withdrawn prior to the Expiration Date. See Section 3 under "--
Options."
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The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 20, 1998 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company. Pursuant to the Merger Agreement and in accordance
with the New York Business Corporation Law (the "NYBCL"), as promptly as
practicable after the completion of the Offer and satisfaction or waiver, if
permissible, of all conditions, including the purchase of Shares pursuant to
the Offer (sometimes referred to herein as the "consummation" of the Offer)
and the approval and adoption of the Merger Agreement by the stockholders of
the Company (if required by applicable law), Purchaser will be merged with and
into the Company (the "Merger") and the Company will be the surviving
corporation in the Merger (the "Surviving Corporation") and a wholly owned
subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), each Share then outstanding, other than Shares held by (i) the Company
or any of its subsidiaries, (ii) Parent or any of its subsidiaries, including
Purchaser and (iii) stockholders who properly perfect their dissenters' rights
under the NYBCL, if applicable, will be converted into the right to receive
$34.00 in cash (the "Merger Consideration"), without interest. The Merger
Agreement is more fully described in Section 12.
The Merger Agreement provides that immediately upon the purchase by
Purchaser of Shares pursuant to the Offer, Purchaser shall be entitled to
designate such number of directors, rounded up to the next whole number, on
the Company Board as shall give Purchaser representation on the Company Board
equal to the product of the total number of directors on the Company Board
(giving effect to the directors elected pursuant to this sentence) multiplied
by the percentage that the number of votes represented by Shares beneficially
owned by Purchaser and its affiliates (including Shares so accepted for
payment and purchased) bears to the number of votes represented by Shares then
outstanding, and the Company shall, at such time, use its best efforts
promptly to cause Purchaser's designees to be elected as directors of the
Company, including increasing the size of the Company Board or securing the
resignations of incumbent directors or both.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of stockholders of the Company of
the Merger Agreement and the Merger, if required by applicable law and the
Company's Certificate of Incorporation (the "Certificate of Incorporation").
See Section 12. Under the NYBCL and the Certificate of Incorporation, the
affirmative vote of the holders of two-thirds of the outstanding Shares is the
only vote of any class or series of the Company's capital stock that would be
necessary to approve the Merger Agreement and the Merger at a meeting of the
Company's stockholders. If the Minimum Condition is satisfied and Purchaser
purchases at least two-thirds of the outstanding Shares in the Offer,
Purchaser will be able to effect the Merger without the affirmative vote of
any other stockholder. Pursuant to the Merger Agreement, Parent and Purchaser
have agreed to vote the Shares acquired by them pursuant to the Offer in favor
of the Merger. See Section 13. In the event Purchaser reduces the Minimum
Condition as described in Section 1 and purchases less than two-thirds of the
Fully Diluted Shares, the Company shall convene a meeting of its shareholders
to amend the Certificate of Incorporation to provide that the requisite vote
of the Company's shareholders on any merger or consolidation (including the
Merger) shall be a majority of the Shares outstanding. Parent and Purchaser
have agreed to vote any Shares owned by them in favor with such amendment at
any such meeting. The Merger Agreement is more fully described in Section 12.
Under Section 905 of the NYBCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary, without any action or vote on the part of the board of directors
or the stockholders of such other corporation (a "short-form merger"). In the
event that Purchaser acquires in the aggregate at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, Parent and Purchaser could effect a
short-form merger without any further approval of the Company Board or the
stockholders of the Company. Parent
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and Purchaser presently intend to effect a short-form merger, if permitted to
do so under the NYBCL, pursuant to which Purchaser will be merged with and
into the Company. See Section 13.
Certain Federal income tax consequences of the sale of Shares pursuant to
the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE OFFER
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), Purchaser will accept for payment
and pay for all Shares validly tendered prior to the Expiration Date, and not
properly withdrawn in accordance with Section 4. The term "Expiration Date"
shall mean 12:00 Midnight, New York City time, on Friday, January 22, 1999,
unless and until Purchaser, in accordance with the terms of the Merger
Agreement, shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date at which the Offer, as so extended by Purchaser, shall expire.
The Offer is conditioned upon the satisfaction of the Minimum Condition, the
expiration or termination of any waiting period imposed by the HSR Act, and
the other conditions set forth in Section 15. If such conditions are not
satisfied at or prior to the Expiration Date, Purchaser reserves the right,
subject to the terms of the Merger Agreement and subject to complying with
applicable rules and regulations of the Commission, to (i) decline to purchase
any Shares tendered in the Offer and terminate the Offer and return all
tendered Shares to the tendering stockholders, (ii) waive any or all
conditions to the Offer (except the Minimum Condition; provided that Purchaser
may, in its sole discretion, reduce the Minimum Condition under certain
circumstances to not less than a majority of the Fully Diluted Shares as
described below) and, subject to complying with applicable rules and
regulations of the Commission, purchase all Shares validly tendered, (iii)
extend the Offer and, subject to the right of stockholders to withdraw Shares
until the Expiration Date, retain all Shares which have been tendered during
the period or periods for which the Offer is extended or (iv) subject to the
provisions of next paragraph, amend the Offer.
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the Commission may, under certain circumstances, (a) extend the
period of time during which the Offer is open and thereby delay acceptance for
payment of and the payment for any Shares, by giving oral or written notice of
such extension to the Depositary and (b) amend the Offer in any other respect
by giving oral or written notice of such amendment to the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR TENDERED SHARES,
WHETHER OR NOT PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
Under the Merger Agreement, the Purchaser has the right, in its sole
discretion, to modify and make changes to the terms and conditions of the
Offer, provided that without the prior consent of the Company, no modification
or change may be made which (i) decreases the consideration payable in the
Offer, (ii) changes the form of consideration payable in the Offer (other than
by adding consideration), (iii) changes the Minimum Condition, provided that
Purchaser may reduce the Minimum Condition to an amount of Shares which is not
less than a
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<PAGE>
majority of the Fully Diluted Shares so long as the affirmative vote of such
amount of Shares would provide the requisite shareholder approval for an
amendment to the Company's Certificate of Incorporation reducing the vote
required to approve a merger to a majority of the outstanding Shares, (iv)
decreases the maximum number of Shares sought pursuant to the Offer, (v)
adversely changes any conditions to the Offer, or (vi) imposes additional
conditions to the Offer. Notwithstanding the foregoing, Purchaser may, without
the consent of the Company, (i) extend the Offer on one or more occasions for
such period as may be determined by Purchaser in its sole discretion (each
such extension period not to exceed 10 business days at a time), if at the
then scheduled Expiration Date any of the conditions to Purchaser's
obligations to accept for payment and pay for Shares shall not be satisfied or
waived, (ii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Commission or the staff thereof applicable
to the Offer, and (iii) extend the Offer on one occasion for a period of not
more than 10 business days if the Minimum Condition has been satisfied but
less than 90% of the Fully Diluted Shares have been validly tendered and not
properly withdrawn. Notwithstanding the foregoing, Purchaser may not, without
the Company's prior written consent, extend the Offer pursuant to clause (i)
of the preceding sentence if the events or circumstances set forth in Section
15 shall have occurred as a result of Parent or Purchaser's breach of the
Merger Agreement. The conditions to the Offer are for the benefit of Purchaser
and, except with respect to the Minimum Condition, may be waived by Purchaser,
in whole or in part at any time and from time to time, in its sole discretion.
Any extension, delay, waiver, amendment or termination of the Offer will be
followed as promptly as practicable by public announcement thereof, the
announcement in the case of an extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under
the Exchange Act, which require that material changes be promptly disseminated
to holders of Shares. Subject to applicable law and without limiting the
obligation of Purchaser under such Rules or the manner in which Purchaser may
choose to make any public announcement, Purchaser will not have any obligation
to publish, advertise or otherwise communicate any such public announcement
other than by making a press release to the Dow Jones News Service. As used in
this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1
under the Exchange Act.
If Purchaser extends the Offer, or if Purchaser (whether before or after its
acceptance for payment of Shares) is delayed in its purchase of, or payment
for, Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of Purchaser, and such Shares
may not be withdrawn except to the extent tendering stockholders are entitled
to the withdrawal rights described in Section 4. However, the ability of
Purchaser to delay the payment for Shares which Purchaser has accepted for
payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by, or on behalf of, holders of securities promptly after the termination or
withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. In a
public release, the Commission has stated its view that an offer must remain
open for a minimum period of time following a material change in the terms of
such
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<PAGE>
offer and that waiver of a material condition, such as the Minimum Condition,
is a material change in the terms of such offer. The release states that an
offer should remain open for a minimum of five business days from the date a
material change is first published, or sent or given to security holders and
that, if material changes are made with respect to information not materially
less significant than the offer price and the number of shares being sought, a
minimum of 10 business days may be required to allow adequate dissemination
and investor response. The requirement to extend the Offer will not apply to
the extent that the number of business days remaining between the occurrence
of the change and the then scheduled Expiration Date equals or exceeds the
minimum extension period that would be required because of such amendment. If,
prior to the Expiration Date, Purchaser increases the consideration offered to
holders of Shares pursuant to the Offer, such increased consideration will be
paid to all holders whose Shares are purchased in the Offer whether or not
such Shares were tendered prior to such increase.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished
to brokers, dealers, commercial banks, trust companies and similar persons
whose names, or the names of whose nominees, appear on the stockholder lists
or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), Purchaser will
accept for payment and will pay for all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 4
promptly after the later to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions of the Offer set forth in Section 15
related to regulatory matters. Any determination concerning the satisfaction
of such terms and conditions shall be within the sole discretion of Purchaser.
See Section 4.
The Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Shares in order to comply in whole
or in part with any applicable law, including without limitation the HSR Act.
See Section 16. If Purchaser is delayed in its acceptance for payment of, or
payment for (whether before or after its acceptance for payment of Shares),
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to Purchaser's rights under the
Offer (including such rights as are set forth in Sections 1 and 15) (but
subject to compliance with Rule 14e-1(c) under the Exchange Act, which
requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 4.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary of its acceptance for payment of such Shares. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after
timely
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<PAGE>
receipt by the Depositary of (i) certificates for such Shares (or a timely
Book Entry Confirmation (as defined below) with respect thereto), (ii) a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message (as defined below) and (iii) any other
documents required by the Letter of Transmittal. Accordingly, payment may be
made to tendering stockholders at different times if delivery of the Shares
and other required documents occur at different times. The per Share
consideration paid to any holder of Shares pursuant to the Offer will be the
highest per Share consideration paid to any other holder of such Shares
pursuant to the Offer.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE
PAID BY PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering stockholder, or such other person
as the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3, such Shares will be credited to such
account maintained at the Book-Entry Transfer Facility as the tendering
stockholder shall specify in the Letter of Transmittal, as promptly as
practicable following the expiration, termination or withdrawal of the Offer.
If no such instructions are given with respect to Shares delivered by book-
entry transfer, any such Shares not tendered or not purchased will be returned
by crediting the account at the Book-Entry Transfer Facility designated in the
Letter of Transmittal as the account from which such Shares were delivered.
Purchaser reserves the right to transfer or assign, in whole or, from time
to time, in part, to one or more of its affiliates, the right to purchase
Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve Purchaser of its obligations under the Offer and will in no
way prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date
and either certificates evidencing tendered Shares must be received by the
Depositary at one of such addresses or such Shares must be delivered to the
Depositary pursuant to the procedures for book-entry transfer set forth below
and a Book-Entry Confirmation must be received by the Depositary, in each case
prior to the Expiration Date, or (ii) the tendering stockholder must comply
with the guaranteed delivery procedures described below.
If certificates evidencing tendered Shares are forwarded to the Depositary
in multiple deliveries, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) must accompany each delivery. No
alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer
7
<PAGE>
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing the Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
in accordance with such Book-Entry Transfer Facility's procedures for such
transfer. However, although delivery of Shares may be effected through book-
entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's
Message, and any other required documents must, in any case, be transmitted
to, and received by, the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation."
THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENT MUST BE
TRANSMITTED TO AND RECEIVED BY THE DEPOSITARY AT ONE OF ITS ADDRESSES SET
FORTH ON THE BACK COVER PAGE OF THIS OFFER TO PURCHASE. DELIVERY OF THE LETTER
OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER
FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the Letter of Transmittal or (ii) if such Shares are tendered for the account
of a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program or by any
other "eligible guarantor institution," as such term is defined in Rule 17Ad-
15 under the Exchange Act (each, an "Eligible Institution" and, collectively,
"Eligible Institutions"). In all other cases, all signatures on Letters of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If the certificates for Shares are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made, or certificates for Shares not
tendered or not accepted for payment are to be returned, to a person other
than the registered holder of the certificates surrendered, then the tendered
certificates for such Shares must be endorsed or accompanied by appropriate
stock powers, in either case, signed exactly as the name or names of the
registered holders or owners appear
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<PAGE>
on the certificates, with the signatures on the certificates or stock powers
guaranteed as described above. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates, in proper form for transfer, for (or a Book-Entry
Confirmation with respect to) such tendered Shares, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other required documents,
are received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day
on which the New York Stock Exchange (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mailed to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
such Shares are actually received by the Depositary.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering stockholder
will irrevocably appoint designees of Parent as such stockholder's attorneys-
in-fact and proxies in the manner set forth in the Letter of Transmittal, each
with full power of substitution, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted
for payment by Purchaser and with respect to any and all non-cash dividends,
distributions, rights, other Shares or other securities issued or issuable in
respect of such Shares on or after December 20, 1998 (collectively,
"Distributions"). However, cash dividends that the Company is permitted to
declare and pay prior to the consummation of the Offer, including the $0.14
per Share dividend payable on January 15, 1999 to stockholders of record on
January 4, 1999, will be paid to tendering stockholders to the extent so
declared and paid. All such proxies will be considered coupled with an
interest in the tendered Shares. Such appointment will be effective if, as and
when, and only to the extent that, Purchaser accepts for payment Shares
tendered by such stockholder as provided herein. All such powers of attorney
and proxies will be irrevocable and
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<PAGE>
will be deemed granted in consideration of the acceptance for payment by
Purchaser of Shares tendered in accordance with the terms of the Offer. Upon
such appointment, all prior powers of attorney, proxies and consents given by
such stockholder with respect to such Shares (and any and all Distributions)
will, without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given by such stockholder (and, if
given, will not be deemed effective). The designees of Purchaser will thereby
be empowered to exercise all voting and other rights with respect to such
Shares (and any and all Distributions), including, without limitation, in
respect of any annual or special meeting of the Company's stockholders (and
any adjournment or postponement thereof), actions by written consent in lieu
of any such meeting or otherwise, as each such attorney-in-fact and proxy or
his substitute shall in his sole discretion deem proper. Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon Purchaser's acceptance for payment of such Shares, Purchaser
must be able to exercise full voting, consent and other rights with respect to
such Shares (and any and all Distributions), including voting at any meeting
of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. Purchaser reserves the absolute
right to reject any or all tenders of any Shares determined by it not to be in
proper form or the acceptance for payment of which, or payment for which, may,
in the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves
the absolute right, in its sole discretion, to waive any defect or
irregularity in any tender of Shares of any particular stockholder, whether or
not similar defects or irregularities are waived in the case of other
stockholders. No tender of Shares will be deemed to have been validly made
until all defects or irregularities relating thereto have been cured or
waived. None of Purchaser, Parent, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will
be final and binding.
Backup Withholding. In order to avoid "backup withholding" of Federal income
tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer, or its assignee (in either case, the "Payee") must,
unless an exemption applies, provide the Depositary with such Payee's correct
taxpayer identification number ("TIN") on a Substitute Form W-9 and certify
under penalties of perjury that such TIN is correct and that such Payee is not
subject to backup withholding. If a Payee does not provide such Payee's
correct TIN or fails to provide the certifications described above, the
Internal Revenue Service (the "IRS") may impose a penalty on such Payee and
payment of cash to such Payee pursuant to the Offer may be subject to backup
withholding of 31%. All stockholders surrendering Shares pursuant to the Offer
and other Payees should complete and sign the Substitute Form W-9 included as
part of the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists
and is proved in a manner satisfactory to the Purchaser and the Depositary).
Certain Payees (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding. Noncorporate
foreign stockholders should complete and sign a Form W-8, Certificate of
Foreign Status, a copy of which may be obtained from the Depositary, in order
to avoid backup withholding. See Instruction 10 to the Letter of Transmittal.
Options. Holders of currently exercisable Options may exercise such Options
pursuant to their terms and tender the Shares received upon such exercise
pursuant to the Offer. Alternatively, holders of unexercised Options will
receive cash payments after the Effective Time in respect of such unexercised
Options. See Section 12 under "--Options."
10
<PAGE>
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4 or as
provided by applicable law, tenders of Shares are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn pursuant to the procedures set forth
below at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn
at any time after February 20, 1999.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name
of the registered holder of the Shares to be withdrawn, if different from the
name of the person who tendered the Shares. If certificates evidencing Shares
to be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such certificates, the serial numbers
shown on such certificates must be submitted to the Depositary and, unless
such Shares have been tendered by an Eligible Institution, the signatures on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedures for book-entry transfer
as set forth in Section 3, any notice of withdrawal must also specify the name
and number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Shares and otherwise comply with such Book-Entry Transfer
Facility's procedures.
Withdrawals of tendered Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 3 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES. The following is a general
summary of certain U.S. Federal income tax consequences of the Offer and the
Merger relevant to a beneficial holder of Shares whose Shares are tendered and
accepted for payment pursuant to the Offer or whose Shares are converted to
cash in the Merger (a "Holder"). The discussion is based on the Internal
Revenue Code of 1986, as amended (the "Code"), regulations issued thereunder,
judicial decisions and administrative rulings, all of which are subject to
change, possibly with retroactive effect. The following discussion does not
address the U.S. Federal income tax consequences to all categories of Holders
that may be subject to special rules (e.g., holders who acquired their Shares
pursuant to the exercise of employee stock options or other compensation
arrangements with the Company, holders who perfect applicable appraisal rights
under the NYBCL, foreign holders, insurance companies, tax-exempt
organizations, dealers in securities and persons who have acquired the Shares
as part of a straddle, hedge, conversion transaction or other integrated
investment), nor does it address the Federal income tax consequences to
persons who do not hold the Shares as "capital assets" within the meaning of
Section 1221 of the Code (generally, property held for investment). Holders
should consult their own tax advisors regarding the U.S. Federal, state, local
and foreign income and other tax consequences of the Offer and the Merger.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for U.S. Federal income tax purposes and may also be a
taxable transaction under
11
<PAGE>
applicable state, local and foreign income and other tax laws. In general, a
Holder who sells Shares pursuant to the Offer or receives cash in exchange for
Shares pursuant to the Merger will recognize gain or loss for Federal income
tax purposes equal to the difference, if any, between the amount of cash
received and the Holder's adjusted tax basis in the Shares sold pursuant to
the Offer or surrendered for cash pursuant to the Merger. Gain or loss will be
determined separately for each block of Shares (i.e., Shares acquired at the
same cost in a single transaction) tendered pursuant to the Offer or
surrendered for cash pursuant to the Merger. Such gain or loss will be long-
term capital gain or loss if the Holder has held the Shares for more than one
year at the time of the consummation of the Offer or the Merger. Capital gains
recognized by an individual investor (or an estate or certain trusts) upon a
disposition of a Share that has been held for more than one year generally
will be subject to a maximum tax rate of 20% or, in the case of a Share that
has been held for one year or less, will be subject to tax at ordinary income
rates. Certain limitations apply to the use of capital losses.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES. The Shares are listed
on the NYSE under the symbol "LRI". The following table sets forth, for each
of the fiscal quarters indicated, the high and low sales price per Share on
the NYSE and the amount of cash dividends paid per Share, as reported in
published financial sources.
<TABLE>
<CAPTION>
SALES PRICE
------------- CASH
HIGH LOW DIVIDENDS
------ ------ ---------
<S> <C> <C> <C>
FISCAL YEAR ENDED FEBRUARY 28, 1997:
First Quarter ended May 31, 1996...................... $19.33 $16.17 $0.12
Second Quarter ended August 31, 1996.................. 19.17 14.42 0.12
Third Quarter ended November 30, 1996................. 15.83 14.00 0.12
Fourth Quarter ended February 28, 1997................ 17.00 14.58 0.12
FISCAL YEAR ENDED FEBRUARY 28, 1998:
First Quarter ended May 31, 1997...................... $18.08 $14.50 $0.13
Second Quarter ended August 31, 1997.................. 22.75 17.50 0.13
Third Quarter ended November 30, 1997................. 27.63 21.50 0.13
Fourth Quarter ended February 28, 1998................ 29.00 22.44 0.13
FISCAL YEAR ENDING FEBRUARY 28, 1999:
First Quarter ended May 31, 1998...................... $31.00 $27.50 $0.14
Second Quarter ended August 31, 1998.................. 32.00 18.44 0.14
Third Quarter ended November 30, 1998................. 23.75 16.25 0.14
Fourth Quarter (through December 22, 1998)............ 33.75 23.25 0.14
</TABLE>
Note: Share prices and dividend amounts reflect the 3-for-2 stock split
effective August 19, 1997.
On December 18, 1998, the last full trading day prior to the public
announcement of the execution of the Merger Agreement by the Company, Parent
and Purchaser, the last reported closing sales price of the Shares on the NYSE
was $26.81 per Share. On December 22, 1998, the last full trading day prior to
the commencement of the Offer, the last reported sales price of the Shares on
the NYSE was $33.75 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE SHARES.
Under the terms of the Merger Agreement, the Company is not permitted to
declare or pay dividends with respect to the Shares without the prior written
consent of Parent except that the Company may declare and pay to holders of
Shares regular quarterly cash dividends not to exceed $0.14 per Share per
fiscal quarter, including the quarterly cash dividend of $0.14 per Share
declared on December 20, 1998 and scheduled to be paid on January 15, 1999 to
stockholders of record on January 4, 1999.
12
<PAGE>
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of holders of Shares and the number of Shares
that might otherwise trade publicly and, depending upon the number of Shares
so purchased, could adversely affect the liquidity and market value of the
remaining Shares held by the public.
Stock Listing. The Shares are listed on the NYSE. Depending upon the number
of Shares purchased pursuant to the Offer, the Shares may no longer meet the
requirements for continued listing on the NYSE and may therefore be delisted
from the NYSE. According to the NYSE's published guidelines, the NYSE would
consider delisting the Shares if, among other things: (i) the number of record
holders of 100 or more Shares should fall below 1,200; (ii) the number of
publicly held Shares (exclusive of holdings of Parent and Purchaser and any
other subsidiaries or affiliates of Parent and of officers or directors of the
Company or their immediate families or other concentrated holdings of 10% or
more ("Excluded Holdings")) should fall below 600,000; or (iii) the aggregate
market value of such publicly held Shares (exclusive of Excluded Holdings)
should fall below $5,000,000.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on other securities exchanges or in the over-the-counter
market and that price quotations would be reported by such exchanges or
through the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or other sources. However, the extent of the public market
for the Shares and the availability of such quotations would depend upon such
factors as the number of stockholders and/or the aggregate market value of the
publicly-traded Shares remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms, the possible termination
of registration under the Exchange Act as described below and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a national securities exchange, quoted on an automated inter-
dealer quotation system or held by 300 or more holders of record. Termination
of registration of the Shares under the Exchange Act would substantially
reduce the information required to be furnished by the Company to its
stockholders and to the Commission and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing
profit recovery provisions of Section 16(b), the requirement of furnishing a
proxy statement pursuant to Section 14(a) in connection with stockholders'
meetings and the related requirement of furnishing an annual report to
stockholders and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), may be impaired or eliminated.
Purchaser currently intends not to seek delisting of the Shares from the
NYSE and the termination of the registration of the Shares under the Exchange
Act prior to the Effective Time, although such Shares may be delisted by the
NYSE as described above. If the NYSE listing and the Exchange Act registration
of the Shares are not terminated prior to the Merger, then the Shares will be
delisted from the NYSE and the registration of the Shares under the Exchange
Act will be terminated following the consummation of the Merger. See Section
13 with respect to the interrelationship of the status of the listing of the
Shares and the availability of appraisal rights with respect to the Merger.
13
<PAGE>
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding stock exchange listing
and market quotations, it is possible that, following the Offer, the Shares
would no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers. In addition, if registration of the
Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning
the Company contained in this Offer to Purchase, including that set forth
below under "--Summary of Selected Financial Data," has been furnished by the
Company or has been taken from or based upon publicly available documents and
records on file with the Commission and other public sources. The summary
information concerning the Company in this Section 8 and elsewhere in this
Offer to Purchase is derived from the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1998 and the Company's Quarterly Report on
Form 10-Q for the six months ended August 31, 1998, as filed with the
Commission pursuant to the Exchange Act, and other publicly available
information. The summary information set forth below is qualified in its
entirety by reference to such reports (which may be obtained and inspected as
described below) and should be considered in conjunction with the more
comprehensive financial and other information in such reports and other
publicly available reports and documents filed by the Company with the
Commission and other publicly available information. Although Purchaser and
Parent do not have any knowledge that would indicate that any statements
contained herein based upon such reports are untrue, neither Parent nor
Purchaser assumes responsibility for the accuracy or completeness of the
information concerning the Company contained in such documents and records or
for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to Parent or Purchaser.
General. The Company is a New York corporation with principal executive
offices located at 272 Buffalo Avenue, Freeport, New York 11520. The telephone
number of the Company at such offices is (516) 868-8800. The business of the
Company consists of the development, production, sale and worldwide
distribution of specialty chemical additives and other products used by the
connector, printed circuit board, semiconductor, and industrial metal
finishing industries. The Company's specialty chemical additives are
proprietary and the majority of them are patented.
Selected Financial Information. Set forth below is a summary of certain
consolidated financial information with respect to the Company, excerpted or
derived from the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1998 and the Company's Quarterly Report on Form 10-Q for
the six months ended August 31, 1998, as filed with the Commission pursuant to
the Exchange Act.
More comprehensive financial information is included in such reports
(including management's discussion and analysis of financial condition and
results of operations) and in other documents filed by the Company with the
Commission. The Company has advised Parent that it currently intends to file a
quarterly report on Form 10-Q for the nine months ended November 30, 1998 by
January 14, 1999. The following summary is qualified in its entirety by
reference to such reports and other documents and all of the financial
information (including any related notes) contained therein. Such reports,
documents and financial information may be inspected and copies may be
obtained from the Commission in the manner set forth below under "--Available
Information."
14
<PAGE>
LEARONAL, INC.
SUMMARY OF SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, FEBRUARY 29, (UNAUDITED)
----------------- ------------ -----------------
1998 1997 1996 1998 1997
-------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................... $241,697 $210,258 $211,625 $114,226 $121,134
Income before income taxes.. 30,104 23,585 23,729 12,338 12,785
Net income.................. 21,020 16,465 15,595 8,967 8,956
Net income per share(1)..... 1.64 1.26 1.18 0.71 0.70
Net income per share
assuming dilution(1)....... 1.61 1.24 1.16 0.69 0.69
BALANCE SHEET DATA (AT PERIOD
END):
Current assets.............. $115,593 $103,234 $101,304 $114,987 $107,760
Total assets................ 171,040 151,265 145,698 171,725 157,928
Current liabilities......... 37,238 27,411 24,188 37,521 32,438
Long-term debt, less current
portion.................... 2,422 3,152 3,066 2,037 2,798
Stockholders' equity........ 121,932 113,044 111,667 122,125 114,375
</TABLE>
- --------
(1) Restated for the 3-for-2 stock split effective August 19, 1997.
Other Financial Information. During the course of the discussions between
Parent and the Company that led to the execution of the Merger Agreement, the
Company provided Parent or its representatives with certain information about
the Company and its financial performance which is not publicly available. The
information provided included financial projections for the Company as an
independent company (i.e., without regard to the impact to the Company of a
transaction with Parent and Purchaser). The following is a summary of selected
projected financial information provided to Parent by the Company.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FEBRUARY 28,
--------------------------------
PROJECTED
--------------------------------
1999 2000 2001
---------- ---------- ----------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Total revenue............................ $ 240.8 $ 266.2 $ 297.7
Total gross profit....................... 74.4 83.4 97.0
Earnings before interest and taxes....... 25.6 33.4 42.5
Pretax income............................ 26.3 34.0 43.2
Net income............................... 18.4 23.6 30.0
Shares outstanding (fully diluted)*...... 12.8 12.5 12.2
Earnings per share (fully diluted)....... $ 1.44 $ 1.89 $ 2.47
Earnings before interest, taxes,
depreciation and amortization........... 31.6 40.0 49.8
Capital expenditures..................... 9.8 10.5 11.1
</TABLE>
- --------
* Assumes repurchase of 300,000 shares per year.
The Company has advised Purchaser and Parent that it does not as a matter of
course make public any projections as to future performance or earnings, and
the projections set forth above are included in this Offer only because the
information was provided to Parent and Purchaser.
15
<PAGE>
The projections were not prepared with a view to public disclosure or
compliance with the published guidelines of the Commission or the guidelines
established by the American Institute of Certified Public Accountants
regarding projections or forecasts. The Company has advised Parent and
Purchaser that its internal operating projections are, in general, prepared
solely for internal use and capital budgeting and other management decisions
and are subjective in many respects and thus susceptible to various
interpretations and periodic revision based on actual experience and business
developments. The projections were based on a number of assumptions some of
which are beyond the control of the Company, Purchaser or Parent or their
respective financial advisors and representatives and some of which inevitably
will prove to be incorrect. Such assumptions include, but are not limited to
(i) the Company's gross profit margin increasing consistently over the periods
covered by the projections, (ii) significant increases in process sales and
precious metal content sales over the periods covered by the projections,
(iii) sales, general and administrative expenses as a percentage of sales
decreasing over the period covered by the projections, and (iv) an effective
tax rate of 28% through 2001. Although the Company has advised Parent and
Purchaser that it believes the assumptions used in preparing this information
were reasonable when made, no prediction can be made as to whether such
assumptions were or will be accurate; accordingly, there can be no assurance,
and no representation or warranty is made, that actual results will not vary
materially from those described above. The foregoing information is forward-
looking in nature and inherently subject to significant uncertainties and
contingencies, many of which are beyond the control of the Company, including
industry performance, general business and economic conditions, currency
exchange rates, customer requirements, competition, adverse changes in
applicable laws, regulations or rules governing environmental, tax and
accounting matters and other matters. The inclusion of this information should
not be regarded as an indication that Parent, Purchaser, the Company or anyone
who received this information then considered, or now considers, it a reliable
prediction of future events, and this information should not be relied on as
such. None of Parent or Purchaser or any of their respective financial
advisors or the Dealer Manager assumes any responsibility for the validity,
reasonableness, accuracy or completeness of the projections, and the Company
has made no representation to Parent or Purchaser regarding the projections
described above. None of the Company, Purchaser, Parent or any of their
respective financial advisors or the Dealer Manager intends to update, revise
or correct such projections if they become inaccurate (even in the short
term). The projections have not been adjusted to reflect the effects of the
Offer or the Merger.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information
as of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
website on the Internet at http://www.sec.gov that contains reports, proxy
statements and other information relating to the Company which have been filed
via the Commission's EDGAR System.
16
<PAGE>
9. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
Parent and Purchaser. Parent is a Delaware corporation with its principal
executive offices located at 100 Independence Mall West, Philadelphia,
Pennsylvania 19106. The telephone number of Parent at such location is (215)
592-3000. Parent produces a variety of chemicals, including specialty polymers
and resins.
Purchaser is a newly incorporated New York corporation organized in
connection with the Offer and the Merger and has not carried on any
significant activities other than in connection with the Offer and the Merger.
The principal offices of Purchaser are located at Rodney Building, Suite 104,
3411 Silverside Road, Wilmington, Delaware 19810. The telephone number of
Purchaser at such location is (302) 478-7278. All of the outstanding capital
stock of Purchaser is owned directly by Parent. Until immediately prior to the
time Purchaser purchases Shares pursuant to the Offer, it is not anticipated
that Purchaser will have any significant assets or liabilities or engage in
any significant activities other than those incident to its formation and
capitalization and the transactions contemplated by the Offer and the Merger.
Financial Information. Set forth below is a summary of certain consolidated
financial information with respect to Parent and its subsidiaries for its
fiscal years ended December 31, 1997, 1996 and 1995, and for the nine months
ended September 30, 1998, excerpted from financial statements presented in
Parent's Annual Reports on Form 10-K for the years ended December 31, 1997 and
December 31, 1996 and Parent's Quarterly Report on Form 10-Q for the period
ended September 30, 1998, each as filed with the Commission. More
comprehensive financial information is included in such reports (including
management's discussion and analysis of results of operations and financial
position) and other documents filed by Parent with the Commission, and the
financial information summary set forth below is qualified in its entirety by
reference to such reports, which are incorporated herein by reference, and all
the financial information and related notes contained therein.
17
<PAGE>
ROHM AND HAAS COMPANY
SUMMARY OF SELECTED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED SEPTEMBER 30,
DECEMBER 31, (UNAUDITED)
-------------------- -----------------
1997 1996 1995 1998 1997
------ ------ ------ -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................. $3,999 $3,982 $3,884 $ 2,836 $ 3,049
Earnings before income taxes and
extraordinary item................... 611 530 441 594 464
Earnings before extraordinary item.... 410 363 292 378 312
Net earnings.......................... 410 363 292 365 312
Net earnings applicable to common
shareholders......................... 403 356 285 360 306
Earnings per common share before
extraordinary item:(1)
--Basic............................. 2.17 1.82 1.41 2.09 1.64
--Diluted........................... 2.13 1.79 1.40 2.05 1.61
Net earnings per common share:(1)
--Basic............................. 2.17 1.82 1.41 2.02 1.64
--Diluted........................... 2.13 1.79 1.40 1.98 1.61
BALANCE SHEET DATA (AT PERIOD END):
Total current assets.................. $1,397 $1,456 $1,421 $ 1,334 $ 1,391
Total assets.......................... 3,900 3,933 3,916 3,629 3,883
Total current liabilities............. 850 886 828 990 787
Long-term debt........................ 509 562 606 388 551
Total stockholders' equity............ 1,797 1,728 1,781 1,502 1,784
</TABLE>
- --------
(1) Restated for the 3-for-1 stock split effective September 1, 1998.
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information
as of particular dates concerning Parent's directors and officers, their
remuneration, options granted to them, the principal holders of Parent's
securities and any material interests of such persons in transactions with
Parent is required to be disclosed in proxy statements distributed to Parent's
stockholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Commission located at Seven World
Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, IL 60661. Copies of such information
should be obtainable by mail, upon payment of the Commission's customary
charges, by writing to the Commission's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains a website on the
Internet at http://www.sec.gov that contains reports, proxy statements and
other information relating to Parent which have been filed via the
Commission's EDGAR System.
The name, citizenship, business address, present principal occupation and
material positions held during the past five years of each of the executive
officers and directors of Parent and Purchaser are set forth in Schedule I to
this Offer to Purchase.
18
<PAGE>
Except as set forth in this Offer to Purchase and except for 100 Shares
acquired by Parent on October 5, 1998 at a price per Share of $18.87, none of
Purchaser, Parent, or to the best knowledge of Purchaser and Parent, any of
the persons listed on Schedule I hereto or any associate or majority owned
subsidiary of Purchaser, Parent or any of the persons so listed, beneficially
owns or has a right to acquire, directly or indirectly, any Shares, and none
of Purchaser or Parent, or to the best knowledge of Purchaser and Parent, any
of the persons or entities referred to above, nor any of the respective
executive officers, directors or subsidiaries of any of the foregoing, has
effected any transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent or,
to the best knowledge of Purchaser and Parent, any of the persons listed on
Schedule I hereto, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any
securities of the Company, joint ventures, loan or option arrangements, puts
or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent,
any of their respective affiliates, nor, to the best knowledge of Purchaser or
Parent, any of the persons listed on Schedule I, has had, since March 1, 1995,
any business relationships or transactions with the Company or any of its
executive officers, directors or affiliates that would be required to be
reported under the rules of the Commission applicable to the Offer. Except as
set forth in this Offer to Purchase, since March 1, 1995 there have been no
contacts, negotiations or transactions between Purchaser, Parent, any of their
respective affiliates or, to the best knowledge of Purchaser or Parent, any of
the persons listed on Schedule I, and the Company or its affiliates concerning
a merger, consolidation or acquisition, tender offer or other acquisition of
securities, election of directors or a sale or other transfer of a material
amount of assets.
10. SOURCES AND AMOUNT OF FUNDS.
The Offer is not conditioned upon any financing arrangements. Purchaser
estimates that the total amount of funds required by Purchaser to consummate
the Offer and the Merger, including the fees and expenses of the Offer and the
Merger and refinancing of existing indebtedness of the Company, is
approximately $460 million. Purchaser will obtain all such funds from Parent
in the form of capital contributions or advances. Parent anticipates funding
the capital contributions or advances through one or more of a combination of
cash on hand and other internally generated funds, commercial paper, privately
placed notes, and arranged bank credit facilities.
It is anticipated that any indebtedness incurred by Parent in connection
with the Offer and the Merger will be repaid from funds generated internally
by Parent and its subsidiaries (including, after the Merger, if consummated,
funds generated by the Surviving Corporation and its subsidiaries), proceeds
of dispositions, through other sources which may include the proceeds of
future bank refinancings, dispositions or the public or private sale of debt
or equity securities, or through a combination of two or more such sources. No
final decisions have been made, however, concerning the method Parent will
employ to repay any such indebtedness. Such decisions, when made, will be
based on Parent's review from time to time of the advisability of particular
actions, as well as on prevailing interest rates and financial and other
economic conditions.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
Shipley Company ("Shipley"), a wholly owned subsidiary of Parent
headquartered in Marlboro, Massachusetts, is the cornerstone of Parent's
Electronics Materials business, which
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reported sales of approximately $400 million in 1997. Shipley is a leading
supplier of specialized products and technology to producers of both
semiconductors and printed wiring boards. As part of its strategy to
significantly grow the Electronics Materials business, Parent identified the
Company as an attractive acquisition candidate in view of the complementary
fit of products, technologies, geographic reach and culture between Shipley
and the Company.
On June 4, 1998, Michael S. Foster, Vice President of Shipley, raised with
Richard Kessler, Executive Vice President and Chief Operating Officer of the
Company, the possibility of exploring a business combination or other
opportunity for cooperation between the Company and Parent.
On June 17 and 18, Mr. Foster and Mr. Kessler discussed further the
potential benefits of a possible transaction between Parent and the Company.
On July 22, 1998, Mr. Kessler called Mr. Foster to advise him that the
Company Board had authorized informal discussions regarding the possible
acquisition of the Company by Parent.
On July 29, 1998, Mr. Foster and Pierre R. Brondeau, President of Shipley,
met for lunch in New York City with Mr. Kessler and David Rosenthal, Vice
President--Finance and Treasurer of the Company, to follow up on the June 17-
18 conversations. Messrs. Foster and Brondeau stated that Parent was
interested in exploring on a preliminary basis the potential merits of a
business combination.
On August 25, 1998, Ronald F. Ostrow, President and Chief Executive Officer
of the Company, and Messrs. Kessler and Rosenthal visited the Shipley facility
in Marlboro, Massachusetts. During that visit, Messrs. Brondeau and Foster
discussed the possible acquisition of the Company by Parent. Mr. Ostrow stated
that any transaction should involve a price representing a premium above the
recent stock market high for the Shares ($32 per Share). The parties also
explored the strategic and cultural fit between the two companies and agreed
to meet again the following month.
On September 16, 1998, Messrs. Brondeau and Foster visited the Company's
facilities in Freeport, New York. A tour of the facilities was held, followed
by a meeting between Messrs. Ostrow and Brondeau during which the Company's
valuation and strategic expectations were reviewed. In addition, Mr. Brondeau
and Mr. Ostrow discussed the opportunities for the Company's existing
management team if a business combination occurred.
On October 19, 1998, Messrs. Ostrow and Rosenthal met with Mr. Brondeau and
with Rajiv L. Gupta, Vice Chairman-elect of Parent, and continued discussions
concerning a possible acquisition of the Company by Parent.
On October 21, 1998, the Company and Parent entered into the Confidentiality
Agreement. Thereafter, Parent began its due diligence investigation of the
Company, and the Company furnished to Parent detailed information concerning
the Company's business and future prospects. See Sections 8 and 12.
On November 16 and 17, 1998, meetings were held between representatives of
the Company and Parent, including representatives of Beacon, the Company's
financial advisor, and Deutsche Bank Securities, Parent's financial advisor.
Over the course of the two-day period, the Company's business was discussed in
detail, including its product line, facilities, sales projections and
financial results.
On November 20, 1998, representatives of Beacon and Deutsche Bank Securities
discussed the Company's valuation expectations.
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On December 3, 1998, Mr. Brondeau indicated in a telephone conversation with
Mr. Ostrow that certain analyses performed by Parent suggested that an
appropriate valuation for the Company was $28 per Share. Mr. Ostrow said that
did not meet the Company's valuation expectations. Between December 3-6,
representatives of Beacon and Deutsche Bank Securities held further
discussions concerning valuation issues.
On December 7, 1998, Parent's Board of Directors authorized Deutsche Bank
Securities to present, on Parent's behalf, a proposal for a potential
acquisition of the Company. The following day, Deutsche Bank Securities
presented a term sheet containing proposed terms for a potential acquisition
by Parent of the Company for $33.50 per Share in cash. Parent's proposal was
conditioned upon receipt of the Tender and Option Agreements from certain
stockholders of the Company and upon the Company's entering into satisfactory
employment agreements with certain key executives and satisfactory amendments
to existing agreements between the Company and the holder of certain minority
interests in two foreign subsidiaries.
On December 10, 1998, Mr. Ostrow and other senior executives of the Company
met in Tokyo with Mr. Brondeau to discuss the terms of the possible
acquisition of the Company, as well as the terms of the Employment Agreements
and the agreements relating to the foreign minority interests.
On December 12, 1998, Parent's counsel furnished drafts of the Merger
Agreement and the Tender and Option Agreement to counsel for the Company.
Thereafter, the parties negotiated the terms of the Merger Agreement, the
Tender and Option Agreement and the Employment Agreements and the agreements
relating to the foreign minority interests.
Between December 14-18, 1998, the terms of the transaction agreements were
negotiated by representatives of Parent and of the Company, including the
amount of the Termination Fee and Expenses (as hereinafter defined) and the
circumstances in which they would be payable, the nature of the restrictions
on the Company's ability to enter into a competing transaction and the
conditions to the Offer.
On December 15, 1998, Mr. Ostrow met with Mr. Gupta. Also present were
representatives of Beacon and Deutsche Bank Securities. At this meeting, Mr.
Gupta indicated that Parent would be willing to increase its offer to $34.00
per Share in cash, subject to the negotiation of satisfactory terms and
conditions in the transaction agreements.
On December 18, 1998, the Company's Board of Directors held a meeting at the
Company's headquarters to consider the proposed transaction.
On December 20, 1998, the Company's Board of Directors met again to consider
the proposed transaction. Beacon delivered its opinion to the effect that the
proposed purchase price of $34.00 per Share in cash in the Offer and the
Merger is fair from a financial point of view to the holders of the Shares. At
the meeting, the Company's Board of Directors unanimously approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and
the Merger, and determined that the Offer and Merger are fair to, and in the
best interests of, the Company's stockholders and recommended that
stockholders accept the Offer and tender their Shares pursuant to the Offer.
Later on December 20, 1998, the Company, Parent and Purchaser executed the
Merger Agreement; Parent, the Company and certain stockholders of the Company
executed the Tender and Option Agreement; and the Company and certain
executives of the Company entered into the Employment Agreements and the
relevant parties entered into the agreements relating to the foreign minority
interests.
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On December 21, 1998, Parent and the Company issued a joint press release
announcing the transactions contemplated by the Merger Agreement.
On December 23, 1998, Purchaser commenced the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; THE MERGER AGREEMENT AND CERTAIN
OTHER AGREEMENTS.
Purpose of the Offer and the Merger. The purpose of the Offer and the Merger
is to enable Parent to acquire control of, and the entire equity interest in,
the Company. The Offer is being made pursuant to the Merger Agreement and is
intended to increase the likelihood that the Merger will be effected. The
purpose of the Merger is to acquire all of the outstanding Shares not
purchased pursuant to the Offer. Following the Offer, Purchaser and Parent
intend to acquire any remaining equity interest in the Company not acquired in
the Offer by consummating the Merger. Upon consummation of the Merger, the
Company will become a wholly owned subsidiary of Parent.
Merger Agreement.
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full
text of the Merger Agreement filed with the Commission as an exhibit to the
Tender Offer Statement on Schedule 14D-1 filed by Parent and Purchaser (the
"Schedule 14D-1") and is incorporated herein by reference. Capitalized terms
not otherwise defined below shall have the meanings set forth in the Merger
Agreement. The Merger Agreement may be examined, and copies obtained, as set
forth in Section 8 of this Offer to Purchase.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that upon the terms and subject to prior satisfaction or waiver
(to the extent permitted to be waived) of the conditions of the Offer, the
Purchaser will purchase all Shares validly tendered pursuant to the Offer. The
Merger Agreement provides that the Purchaser has the right, in its sole
discretion, to modify and make certain changes to the terms and conditions of
the Offer as described in Section 1.
The Company's Board of Directors. The Merger Agreement provides that
immediately upon the acceptance for payment of and payment for any Shares by
Purchaser or any of its affiliates pursuant to the Offer, Purchaser will be
entitled to designate such number of directors, rounded up to the next whole
number, on the Company Board as will give Purchaser, subject to compliance
with Section 14(f) of the Exchange Act, representation on the Company Board
equal to the product of (i) the total number of directors on the Company Board
(giving effect to the increase in the size of the Company Board pursuant to
this paragraph) and (ii) the percentage that the number of votes represented
by Shares beneficially owned by Purchaser and its affiliates (including Shares
so accepted for payment and purchased) bears to the number of votes
represented by Shares then outstanding. In furtherance thereof, concurrently
with such acceptance for payment and payment for such Shares the Company will,
upon request of Parent and compliance with Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder, use its best efforts promptly either to
increase the size of its the Company Board or to secure the resignations of
such number of its incumbent directors, or both, as is necessary to enable
such designees of Parent to be so elected or appointed to the Company Board,
and the Company will take all actions available to the Company to cause such
designees of Parent to be so elected or appointed. The Merger Agreement
provides that at such time, the Company will, if requested by Parent, also use
its reasonable best efforts to cause persons designated by Parent to
constitute at least the same percentage (rounded up to the next whole number)
as is
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on the Company Board of (i) each committee of the Company Board, (ii) each
board of directors (or similar body) of each subsidiary of the Company and
(iii) each committee (or similar body) of each such board. Notwithstanding the
foregoing, the Company will use its reasonable best efforts to ensure that, in
the event that Purchaser's designees are elected to the Company Board, the
Company Board will have, at all times prior to the Effective Time, at least
three directors who are directors on the date of the Merger Agreement and who
are not officers of the Company, Parent or any of their respective
subsidiaries (the "Independent Directors"); and provided further, that, in
such event, if the number of Independent Directors shall be reduced below
three for any reason whatsoever any remaining Independent Directors (or
Independent Director, if there shall be only one remaining) may designate
persons to fill such vacancies who will be deemed to be Independent Directors
for purposes of the Merger Agreement or, if no Independent Directors then
remain, the other directors may designate three persons to fill such vacancies
who will not be officers or affiliates of the Company, Parent or any of their
respective subsidiaries, and such persons will be deemed to be Independent
Directors for purposes of the Merger Agreement. Subject to applicable law, the
Company will promptly take all action requested by Parent necessary to effect
any such election, including mailing to its shareholders the information
required by Section 14(f) of the Exchange Act and Rule 14(f)-1 promulgated
thereunder (or, at Parent's request, furnishing such information to Parent for
inclusion in the offer documents initially filed with the Commission and
distributed to the stockholders of the Company) as is necessary to enable
Parent's designees to be elected to the Company Board. From and after the
time, if any, that Parent's designees constitute a majority of the Company
Board, any amendment of the Merger Agreement, any termination of the Merger
Agreement by the Company, any extension of time for performance of any of the
obligations of Parent or Purchaser thereunder, any waiver of any condition to
the Company's obligations thereunder or any of the Company's rights thereunder
or other action by the Company thereunder may be effected only by the action
of a majority of the Independent Directors of the Company, which action will
be deemed to constitute the action of any committee specifically designated by
the Company Board to approve the actions contemplated thereby and the full
Company Board; provided, that, if there shall be no Independent Directors,
such actions may be effected by majority vote of the entire Company Board,
except that no such action will amend the terms of the Merger Agreement or
modify the terms of the Offer or the Merger in a manner materially adverse to
the holders of Shares.
The Merger. Pursuant to the Merger Agreement and the NYBCL, as promptly as
practicable after the completion of the Offer and satisfaction or waiver, if
permissible, of all conditions, including the purchase of Shares pursuant to
the Offer and the approval and adoption of the Merger Agreement by the
stockholders of the Company (if required by applicable law), Purchaser will be
merged with and into the Company and the Company will be the Surviving
Corporation and a wholly owned subsidiary of Parent. At the Effective Time,
each Share then outstanding, other than Shares held by (i) the Company or any
of its subsidiaries, (ii) Parent or any of its subsidiaries, including
Purchaser and (iii) stockholders who properly perfect their dissenters' rights
under the NYBCL, will be converted into the right to receive the Merger
Consideration, without interest. Purchaser's Certificate of Incorporation will
become the Certificate of Incorporation of the Surviving Corporation, and
Purchaser's By-laws will be the By-Laws of the Surviving Corporation.
Options. The Merger Agreement provides that prior to the Effective Time, the
Board of Directors of the Company (or, if appropriate, any committee thereof)
will adopt appropriate resolutions and take all other actions necessary to
provide that each outstanding Option granted under the Company's 1990
Nonqualified Stock Option Plan, dated June 1, 1990 (the "1990 Plan") and the
Company's 1996 Long-Term Incentive Plan (the "1996 Plan," and together with
the 1990 Plan, the "Company Stock Option Plans"), whether or not then vested
or exercisable, will, at the Effective Time, be cancelled, and each holder
thereof will be entitled to receive a
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payment in cash from the Company (subject to any applicable withholding taxes,
the "Cash Payment"), upon cancellation, equal to the product of (x) the total
number of Shares subject or related to such Option, whether or not then vested
or exercisable, and (y) the excess, if any, of the Merger Consideration over
the exercise price or purchase price, as the case may be, per Share subject or
related to such Option, each such Cash Payment to be paid to each holder of an
outstanding Option upon cancellation. Notwithstanding the foregoing, if
requested by Purchaser, the Company Board (or, if appropriate, any committee
thereof) will adopt appropriate resolutions providing for such cancellation
and a cash payment equal to 101.8% of the Cash Payment to occur, in respect of
any or all Options held by certain employees of the Company who have entered
into employment agreements with the Company, on the 78th day after the date on
which the Effective Time occurs. The executives that have executed the
Employment Agreements have agreed to receive the payments referred to in the
preceding sentence. If Parent or Purchaser and an Option holder mutually
agree, such Option holder may receive in lieu of such Cash Payment an option
to acquire shares of common stock of Parent on terms providing such Option
holder with value substantially equivalent to the value of such Cash Payment.
In the Merger Agreement, the Company agreed that upon the exercise of any
Option it will issue such Shares as such Option holder may be entitled to
receive upon such exercise and will not exercise any rights it may have under
the Company Stock Option Plans or otherwise to settle such Option with a cash
payment without the written consent of Parent. Subject to the contractual
rights of participants therein, the Company Stock Option Plans and any benefit
plan (or other plan, program or arrangement) providing for the issuance or
grant of any other interest in respect of the capital stock of the Company or
any subsidiary will terminate as of the Effective Time. The Company will take
all steps necessary to ensure that none of the Company or any of its
subsidiaries is or will be bound by any Options, other options, warrants,
rights or agreements which would entitle any person, other than the current
shareholders of Purchaser or its affiliates, to acquire any capital stock of
the Surviving Corporation or any of its subsidiaries or, except as otherwise
provided in this paragraph, to receive any payment in respect thereof and to
cause such Options to be cancelled or cause the holders of the Options to
agree to such cancellation thereof.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, corporate organization, subsidiaries,
capitalization, authority to enter into the Merger Agreement, the absence of
certain changes, required consents, no conflicts between the Merger Agreement
and applicable laws and certain agreements to which the Company or its assets
may be subject, financial statements, filings with the Commission, disclosures
in proxy statements and tender offer documents, absence of certain changes or
events, litigation, insurance, labor and employment matters, employee benefit
plans, tax matters, compliance with applicable laws, Year 2000 compliance,
brokers' and finders' fees, environmental matters, material contracts,
intellectual property, applicability of state takeover statutes, undisclosed
liabilities, the vote required to approve the Merger Agreement and its receipt
of the Financial Advisor Opinion.
In the Merger Agreement, each of Parent and Purchaser has made customary
representations and warranties to the Company with respect to, among other
things, corporate organization, authority to enter into the Merger Agreement,
required consents, no conflicts between the Merger Agreement and applicable
laws and certain agreements to which Parent or Purchaser or their assets may
be subject, financing, disclosures in proxy statements and tender offer
documents, brokers' and finders' fees, operations of Purchaser and ownership
of Shares by Parent and its affiliates.
Interim Operations. Pursuant to the Merger Agreement, the Company has agreed
that, prior to the Effective Time, unless otherwise expressly contemplated by
the Merger Agreement or consented to in writing by Parent, it will and will
cause each of its subsidiaries to (i) operate
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its business in the usual and ordinary course substantially consistent with
past practices; (ii) use its commercially reasonable efforts to preserve
intact its business organization, maintain its rights and franchises, retain
the services of its respective key employees and maintain its relationships
with its respective customers and suppliers and others having business
dealings with it to the end that its goodwill and ongoing business will be
unimpaired at the Effective Time; and (iii) use its commercially reasonable
efforts to keep in full force and effect insurance and bonds comparable in
amount and scope of coverage to that currently maintained.
Except as set forth in the disclosure schedules to the Merger Agreement, the
Company has agreed that, except as expressly contemplated by the Merger
Agreement or otherwise consented to in writing by Parent, from the date of the
Merger Agreement until the Effective Time, it will not do, and will not permit
any of its subsidiaries to (a) (i) increase the compensation (or benefits)
payable to or to become payable to any director or employee, except for
increases in salary or wages of employees in the ordinary course of business
and consistent with past practice; (ii) grant any severance or termination pay
(other than pursuant to the normal severance policy or practice of the Company
or its subsidiaries as disclosed in the disclosure schedules to the Merger
Agreement) to, or enter into or amend in any material respect any employment
or severance agreement with, any employee; (iii) establish, adopt, enter into
or amend any collective bargaining agreement or benefit plan of the Company or
any subsidiary; or (iv) take any action to accelerate any rights or benefits,
or make any determinations not in the ordinary course of business consistent
with past practice, under any collective bargaining agreement or benefit plan
of the Company or any subsidiary; (b) declare, set aside or pay any dividend
on, or make any other distribution in respect of (whether in cash, stock or
property), outstanding shares of capital stock, except for (i) dividends by a
wholly owned subsidiary of the Company to the Company or another wholly owned
subsidiary of the Company and (ii) regular quarterly cash dividends by the
Company consistent with past practices (including as to declaration, record
and payment dates) in no event to exceed $0.14 per Share per fiscal quarter;
provided that the Company may declare and pay the regular quarterly cash
dividend of $0.14 per Share declared on December 20, 1998 and scheduled to be
paid on January 15, 1999 to stockholders of record on January 4, 1999; (c)
redeem, purchase or otherwise acquire, or offer or propose to redeem, purchase
or otherwise acquire, any outstanding shares of capital stock of, or other
equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests in,
or any outstanding options, warrants or rights of any kind to acquire any
shares of capital stock of, or other equity interests in, the Company or any
of its subsidiaries (other than (i) any such acquisition by the Company or any
of its wholly owned subsidiaries directly from any wholly owned subsidiary of
the Company in exchange for capital contributions or loans to such subsidiary,
or (ii) any purchase, forfeiture or retirement of Shares or the Options
occurring pursuant to the terms (as in effect on the date of the Merger
Agreement) of any existing benefit plan of the Company or any of its
subsidiaries, in a manner otherwise consistent with the terms of the Merger
Agreement; (d) effect any reorganization or recapitalization; or split,
combine or reclassify any of the capital stock of, or other equity interests
in, the Company or any of its subsidiaries or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of such capital stock or such equity interests; (e)
offer, sell, issue or grant, or authorize or propose the offering, sale,
issuance or grant of, any shares of capital stock of, or other equity
interests in, any securities convertible into or exchangeable for (or
accelerate any right to convert or exchange securities for) any shares of
capital stock of, or other equity interest in, or any options, warrants or
rights of any kind to acquire any shares of capital stock of, or other equity
interests in, or any voting company debt or other voting securities of, the
Company or any of its subsidiaries, or any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock-based performance units, other than
issuances of Shares upon the exercise of the Options outstanding at the date
of the Merger Agreement in accordance with the terms thereof (as in effect on
the date of the Merger Agreement); (f) acquire
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or agree to acquire, by merging or consolidating with, by purchasing an equity
interest in or a portion of the assets of, or in any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire any assets of any other
person if the aggregate consideration is in excess of $500,000 for any
individual transaction, and $5,000,000 for all such transactions (other than
the purchase of assets from suppliers or vendors in the ordinary course of
business); (g) sell, lease, exchange or otherwise dispose of, or grant any
lien with respect to, any of the properties or assets of the Company or any of
its subsidiaries that are, individually or in the aggregate, material to the
business of the Company and its subsidiaries, except for (i) dispositions of
excess or obsolete assets and sales of inventories in the ordinary course of
business, and (ii) dispositions of properties or assets with a value not in
excess of $500,000 for any individual transaction and $5,000,000 for all such
transactions; (h) propose or adopt any amendments to its certificate of
incorporation or bylaws or other organizational documents; (i) effect any
change in any accounting methods, principles or practices in effect as of
February 28, 1998 affecting the reported consolidated assets, liabilities or
results of operations of the Company, except as may be required by a change in
generally accepted accounting principles; (j) incur any indebtedness for
borrowed money in excess of an aggregate of $5,000,000, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of the
Company or any of its subsidiaries, guarantee any such indebtedness or debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, or make any
loans, advances (other than to employees of the Company and its subsidiaries
in the ordinary course of business) or capital contributions to, or
investments in, any other person, other than to or in the Company or any
subsidiary of the Company; (k) enter into certain contracts described in the
Merger Agreement; (l) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business or in accordance with their
terms, of liabilities reflected or reserved against in the most recent
consolidated financial statements (or the notes thereto) of the Company
included in the Company's public filings with the Commission or incurred since
the date of such financial statements in the ordinary course of business; (m)
take certain other actions set forth in the Merger Agreement; (n) settle the
terms of any material litigation affecting the Company or any of its
subsidiaries; (o) make any material tax election (unless required by law or
unless consistent with prior practice) or settle or compromise any material
tax liability except, in each case, if Parent is given reasonable prior notice
thereof; or (p) make or agree to make any new capital expenditures except for
capital expenditures which are consistent with the capital expenditure budget
previously provided to Parent and which do not individually exceed $500,000
and do not, in the aggregate, exceed $5,000,000.
No Solicitation. In the Merger Agreement, the Company has agreed that from
and after the date of the Merger Agreement until the Effective Time or the
termination of the Merger Agreement, neither the Company or any of its
subsidiaries, nor any of their respective officers, directors, employees,
representatives, agents or affiliates will directly or indirectly initiate,
solicit or encourage (including by way of furnishing non-public information or
assistance), or take any other action to facilitate, any inquiries or the
making or submission of any Acquisition Proposal (as hereinafter defined), or
enter into or maintain or continue discussions or negotiate with any person or
group in furtherance of such inquiries or to obtain or induce any person or
group to make or submit an Acquisition Proposal or agree to or endorse any
Acquisition Proposal or assist or participate in, facilitate or encourage, any
effort or attempt by any other person or group to do or seek any of the
foregoing or authorize or permit any of its officers, directors or employees
or any of its subsidiaries or affiliates or any investment banker, financial
advisor, attorney, accountant or other representative or agent retained by it
or any of its subsidiaries to
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take any such action; provided, however, that nothing contained in the Merger
Agreement will prohibit the Company Board from, prior to the earlier to occur
of acceptance for payment of Shares pursuant to the Offer or adoption of the
Merger Agreement by the requisite vote of the stockholders of the Company,
furnishing information to or entering into discussions or negotiations with
any person or entity that makes an unsolicited written, bona fide Acquisition
Proposal that constitutes, or may reasonably be expected to lead to, any
Superior Proposal (as hereinafter defined) if, and only to the extent that (i)
the Company Board after consultation with independent legal counsel,
reasonably determines in good faith that the failure to do so would be
reasonably likely to result in a breach of the fiduciary duty of the Company
Board under applicable law and (ii) prior to taking such action the Company
(x) delivers to Parent and Purchaser the notice required pursuant to the
Merger Agreement stating that it is taking such action and (y) receives from
such person or group an executed confidentiality agreement that contains
customary confidentiality and standstill restrictions.
Except as expressly permitted by the Merger Agreement, neither the Board of
Directors of the Company nor any committee thereof will (i) withdraw, modify
or fail to make, or propose to withdraw, modify or fail to make its approval
or recommendation of the Offer or the Merger or of the Tender and Option
Agreement and the other Transactions, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal, (iii) take any action to
render the provisions of any anti-takeover statute, rule or regulation
(including Section 912 of the NYBCL) inapplicable to any person (other than
Parent, Purchaser or their affiliates) or group or to any Acquisition Proposal
or (iv) cause the Company or any of its subsidiaries to accept such
Acquisition Proposal and/or enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, an
"Acquisition Agreement") related to any Acquisition Proposal; provided
however, that prior to the earlier to occur of acceptance for payment of
Shares pursuant to the Offer or adoption of the Merger Agreement by the
requisite vote of the stockholders of the Company, the Board of Directors of
the Company may terminate the Merger Agreement if, and only to the extent that
(A) such Acquisition Proposal is a Superior Proposal, (B) the Board of
Directors of the Company, after consultation with independent legal counsel,
reasonably determines in good faith that the failure to do so would be
reasonably likely to result in a breach of the fiduciary duty of the Board of
Directors of the Company under applicable law, (C) the Company will, prior to
or simultaneously with the taking of such action, have paid or pay to Parent
or Purchaser or their designee the Termination Fee and the Expenses, (D) the
Company is not in breach of any provision of the Merger Agreement relating to
the solicitation and negotiation of Acquisition Proposals, (E) the Company
will have complied with its obligations relating to termination of the Merger
Agreement in this situation and (F) concurrently with such termination, the
Company enters into an Acquisition Agreement with respect to such Superior
Proposal.
In addition to the obligations of the Company set forth in the two preceding
paragraphs above, the Company will promptly (and in any event, within 24
hours) advise Parent orally and in writing of any request for information or
the submission or receipt of any Acquisition Proposal, the material terms and
conditions of such Acquisition Proposal, and the identity of the person making
any such Acquisition Proposal. The Company will keep Parent fully informed of
the material developments with respect to any such Acquisition Proposal. The
Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted prior to
the Merger Agreement with respect to any of the foregoing.
"Acquisition Proposal" means an inquiry, offer or proposal regarding any of
the following (other than the Transactions contemplated by the Merger
Agreement) involving the Company: (i) any merger, consolidation, share
exchange, recapitalization, liquidation, dissolution, business
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combination or other similar transaction; (ii) any sale, lease, exchange, or
other disposition of 20% or more of the assets of the Company and its
subsidiaries, taken as a whole, or of any Material Business (as hereinafter
defined) or of any subsidiary or subsidiaries responsible for a Material
Business in a single transaction or series of related transactions; (iii) any
tender offer (including a self tender offer) or exchange offer that, if
consummated, would result in any person or group beneficially owning more than
20% of the outstanding shares of any class of equity securities of the
Company; (iv) any acquisition of 20% or more of the outstanding shares of
capital stock of the Company; or (v) any public announcement by the Company or
any third party of a proposal, plan or intention to do any of the foregoing or
any agreement to engage in any of the foregoing. "Superior Proposal" means any
proposal made by a third party to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation, share
exchange, business combination, recapitalization, liquidation, dissolution or
other similar transaction, all the Shares then outstanding or all or
substantially all of the assets of the Company and its subsidiaries which the
Board of Directors of the Company reasonably determines in good faith (after
consultation with its independent financial advisor and after taking into
account any changes to the terms of the Merger Agreement and the Offer that
have been proposed by Parent in response to such proposal) to be more
favorable to the Company and the Company's stockholders. "Material Business"
means any business (or the assets needed to carry out such business) that
contributed or represented 20% or more of the net sales, the net income or the
assets (including equity securities) of the Company and its subsidiaries taken
as a whole.
The Merger Agreement provides that nothing contained therein will prohibit
the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act (dealing with
responses to a tender offer) or from making any disclosure to the Company's
stockholders if the Board of Directors of the Company, after consultation with
independent legal counsel, reasonably determines in good faith that the
failure to take such action would be reasonably likely to result in a breach
of the fiduciary duty of the Board of Directors under applicable law; provided
that neither the Board of Directors of the Company nor any committee thereof
withdraws or modifies, or proposes to withdraw or modify, the approval or
recommendation of the Board of Directors of the Company of the Offer or the
Merger or approves or recommends, or publicly proposes to approve or
recommend, an Acquisition Proposal unless the Company and the Board of
Directors of the Company have complied with all the provisions of the Merger
Agreement relating to the solicitation and negotiation of Acquisition
Proposals.
Indemnification. In the Merger Agreement, Purchaser has agreed that all
rights to indemnification for acts or omissions occurring prior to the
Effective Time existing as of the date of the Merger Agreement in favor of the
current or former directors or officers of the Company and its subsidiaries as
provided in their respective certificates of incorporation or bylaws will
survive the Merger and will continue in full force and effect in accordance
with their terms for a period of six years from the Effective Time. Parent
will cause to be maintained, if available, for a period of six years from the
Effective Time the Company's current directors' and officers' insurance and
indemnification policy (the "D&O Insurance") (provided that Parent may
substitute therefor policies or financial guarantees with the same carriers or
other obligors as insure Parent's directors and officers of at least the same
coverage and amounts containing terms and conditions which are substantially
similar to the existing D&O Insurance) to the extent that such insurance
policies provide coverage for events occurring prior to the Effective Time for
all persons who were directors and officers of the Company on December 20,
1998, so long as the annual premium to be paid by the Company after the date
of the Merger Agreement for such D&O Insurance during such six-year period
would not exceed 200% of the current annual premium therefor. If, during such
six-year period, such insurance coverage
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cannot be obtained at all or can only be obtained for an amount in excess of
200% of the current annual premium therefor, Parent will use all reasonable
efforts to cause to be obtained as much D&O Insurance as can be obtained for
an amount equal to 200% of the current annual premium therefor, on terms and
conditions substantially similar to the existing D&O Insurance.
Employee Plans and Benefits and Agreements. In the Merger Agreement, the
Surviving Corporation agreed, from and after the Effective Time, to honor in
accordance with their terms all existing employment, severance, consulting or
other compensation agreements or benefit contracts between the Company or any
of its subsidiaries and any officer, director or employee of the Company or
any of its subsidiaries, as the same may be modified by the Employment
Agreements, and all benefits or other amounts earned or accrued through the
Effective Time under the benefit plans disclosed in Company's disclosure
schedules to the Merger Agreement.
The Merger Agreement provides that for a period of not less than two years
from the Effective Time, Parent will, or will cause the Surviving Corporation
to, maintain employee benefit plans, programs and arrangements for former
employees of the Company and its subsidiaries who remain employees of the
Surviving Corporation after the Effective Time that are, in the aggregate, no
less favorable than those provided by the Company and any of its subsidiaries
immediately prior to the Effective Time. From and after the Effective Time,
for purposes of determining eligibility and vesting (but not for purposes of
benefit accrual) under any severance, compensation, welfare, pension, or other
benefit plan or arrangement of Parent or any of its subsidiaries which, at the
election of Parent, employees of the Company or any of its subsidiaries become
eligible to participate in, service with the Company or any of its
subsidiaries (whether before or after the Effective Time) will be credited as
if such services had been rendered to Parent or such subsidiary; provided that
Parent and Purchaser shall have no obligation to (i) employ any individual,
(ii) include any individual in any stock option or other equity based
compensation or benefit plan or arrangement or (iii) include any such
employees of the Company and its subsidiaries in any benefit plan of Parent or
its subsidiaries.
Reasonable Best Efforts. In the Merger Agreement, subject to the terms and
conditions thereof, each of the parties has agreed to use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective as soon as reasonably
practicable the Transactions. In the case that at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
the Merger Agreement, the proper officers and directors of each party to the
Merger Agreement will take all such necessary action. such reasonable best
efforts include (i) the obtaining of all necessary consents, approvals or
waivers from third parties and governmental authorities necessary to the
consummation of the Transactions and (ii) opposing vigorously any litigation
or administrative proceeding relating to the Merger Agreement or the
Transactions, including promptly appealing any adverse court or agency order.
Notwithstanding the foregoing or any other provisions contained in the Merger
Agreement to the contrary, neither Parent or the Company nor any of their
respective affiliates will be under any obligation of any kind to (i) litigate
against any federal, state or local government or any court, administrator or
regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), including but not limited to
any governmental or regulatory authority with jurisdiction over the
enforcement of any applicable federal, state, local and foreign antitrust,
competition or other similar laws or (ii) otherwise agree with any
Governmental Entity or any other party to sell or otherwise dispose of, agree
to any material limitations on the ownership or control of, or hold separate
(through the establishment of a trust or otherwise) a material portion of the
assets or businesses of any of the Company, its subsidiaries, Parent or any of
Parent's affiliates.
Pursuant to the Merger Agreement, the Company and its Board of Directors
will (i) take all action necessary to ensure that no state takeover statute or
similar statute or regulation is or
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becomes applicable to the Offer, the Merger, the Merger Agreement, the Tender
and Option Agreement or any of the other Transactions and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to the
Transactions take all action necessary to ensure that the Transactions may be
consummated as promptly as practicable on the terms contemplated by the Merger
Agreement and the Tender and Option Agreement and otherwise to minimize the
effect of such statute or regulation on the Transactions.
Standstill Agreements. DURING THE PERIOD FROM THE DATE OF THE MERGER
AGREEMENT THROUGH THE EFFECTIVE TIME, THE MERGER AGREEMENT PROVIDES THAT THE
COMPANY WILL NOT TERMINATE, AMEND, MODIFY OR WAIVE ANY PROVISION OF ANY
CONFIDENTIALITY OR STANDSTILL OR SIMILAR AGREEMENT TO WHICH THE COMPANY OR ANY
OR ITS SUBSIDIARIES IS A PARTY (OTHER THAN ANY INVOLVING PARENT). SUBJECT TO
THE FOREGOING, DURING SUCH PERIOD, THE COMPANY HAS AGREED TO ENFORCE, TO THE
FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, THE PROVISIONS OF ANY SUCH
AGREEMENTS, INCLUDING OBTAINING INJUNCTIONS TO PREVENT ANY BREACHES OF SUCH
AGREEMENTS AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS THEREOF IN ANY
COURT OR OTHER TRIBUNAL HAVING JURISDICTION.
Stockholder Meeting. The Merger Agreement provides that to the extent
required by applicable law, the Company will promptly take all action
necessary in accordance with the NYBCL and its Certificate of Incorporation
and Bylaws to convene a meeting of the stockholders of the Company to consider
and vote on the Merger and the Merger Agreement. At such stockholder meeting,
all of the Shares then owned by Parent, Purchaser or any other subsidiary of
Parent will be voted to approve the Merger and the Merger Agreement. The Board
of Directors of the Company will recommend that the Company's stockholders
vote to approve the Merger and the Merger Agreement if such vote is sought,
will use its best efforts to solicit from shareholders of the Company proxies
in favor of the Merger and will take all other action in its judgment
necessary and appropriate to secure the vote of stockholders required by the
NYBCL to effect the Merger.
Notwithstanding the foregoing, in the event that Purchaser acquires at least
90% of the then outstanding Shares, at the request of Purchaser, the parties
to the Merger Agreement will take all necessary and appropriate action to
effect the Merger as a "short-form" merger. See Section 13.
The Merger Agreement also provides that in the event that Purchaser reduces
the Minimum Condition as described in Section 1 and accepts for payment the
Shares tendered pursuant to the Offer, which Shares are less than two-thirds
of the Fully Diluted Shares, the Company will convene a meeting of its
stockholders, or take or permit Purchaser to take such action as may be
necessary or desirable, to amend the Certificate of Incorporation to provide
that the requisite vote of the Company's stockholders on any merger or
consolidation (including the Merger) will be a majority of the Shares
outstanding. At such meeting, all of the Shares then owned by Parent,
Purchaser or any other subsidiary of Parent shall be voted to approve such
amendment.
Conditions to the Merger. The respective obligations of each party to effect
the Merger are subject to the satisfaction or waiver, where permissible, prior
to the Effective Time, of the following conditions: (i) if required by the
NYBCL, the Merger Agreement shall have been approved by the affirmative vote
of the stockholders of the Company by the requisite vote in accordance with
applicable law; (ii) no statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated, or enforced by any
court or Governmental Entity which is in effect and has the effect of
prohibiting the consummation of the Merger; and (iii) the waiting period (and
any extension thereof) applicable to the consummation of the Merger under the
HSR Act, if any, shall have expired or been terminated.
The obligations of Parent and Purchaser to effect the Merger are further
subject to the satisfaction or waiver, prior to the Effective Time, of the
conditions that Purchaser shall have
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accepted for payment and paid for Shares tendered pursuant to the Offer;
provided, however, that neither Parent nor Purchaser will be entitled to
assert the failure of this condition if the failure of such condition results
from a breach by Parent or Purchaser of any of their obligations under the
Merger Agreement.
The obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver, prior to the Effective Time, of the conditions that
Purchaser shall have accepted for payment and paid for Shares tendered
pursuant to the Offer; provided, however, that the Company will not be
entitled to assert the failure of this condition if the failure of such
condition results from a breach by the Company of any of its obligations under
the Merger Agreement.
Termination. The Merger Agreement may be terminated and the Merger
contemplated thereby may be abandoned at any time (notwithstanding approval
thereof by the shareholders of the Company) prior to the Effective Time:
(i) by mutual written consent duly authorized by the Boards of Directors
of the Company, Parent and Purchaser;
(ii) by Parent, Purchaser or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued a final order,
decree or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the consummation of the Offer or the Merger and such
order, decree or ruling or other action is or shall have become
nonappealable;
(iii) by Parent or Purchaser if due to an occurrence or circumstance
which would result in the occurrence and continued existence of any of the
conditions to the Offer, Purchaser shall have (A) failed to commence the
Offer within the time required by Regulation 14D under the Exchange Act,
(B) terminated the Offer without purchasing any Shares pursuant to the
Offer or (C) failed to accept for payment Shares pursuant to the Offer
prior to April 30, 1999; provided, however, that the right to terminate the
Merger Agreement under this provision will not be available to Parent or
Purchaser if the occurrence and continued existence of any of the
conditions to the Offer results from the breach by Parent or Purchaser of
any of their respective obligations under the Merger Agreement;
(iv) by the Company (A) if Purchaser shall have (1) failed to commence
the Offer within the time required by Regulation 14D under the Exchange
Act, (2) terminated the Offer without purchasing any Shares pursuant to the
Offer or (3) failed to accept for payment Shares pursuant to the Offer
prior to April 30, 1999; provided, however, that the right to terminate the
Merger Agreement under this provision will not be available to the Company
if such failure results from the breach by the Company of any of its
obligations under the Merger Agreement or if there shall have occurred any
of the events described in paragraph (g) in Section 15 and the right to
terminate this Agreement under this provision also will not be available to
the Company prior to April 30, 1999 if there shall have occurred any of the
events set forth in paragraph (i) of Section 15 or (B) prior to the
purchase of Shares pursuant to the Offer, concurrently with the execution
of an Acquisition Agreement under the circumstances permitted by the
provisions of the Merger Agreement relating to the solicitation and
negotiation of Acquisition Proposals, provided that such termination under
this clause (B) will not be effective unless (x) the Company and its Board
of Directors shall have also complied with all their obligations under the
provisions relating to solicitation of Acquisition Proposals and shall have
paid the Termination Fee and the Expenses and (y) the Company provides
Purchaser with at least five business days' prior written notice prior to
terminating the Merger Agreement, which notice will be accompanied by (1) a
copy of the
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proposed Acquisition Agreement with respect to the Superior Proposal that
the Company proposes to accept and (2) the Company's written certification
that it has made the determinations with respect to such Superior Proposal
required pursuant to the Merger Agreement and representation that the
Company will, in the absence of any other superior Acquisition Proposal,
execute such Acquisition Agreement unless Parent or Purchaser modify the
Offer or the Merger Agreement such that the Company's Board of Directors
reasonably believes in good faith after consultation with its independent
legal counsel and financial advisors that the Offer and the Merger (as so
modified) are at least as favorable as such Superior Proposal; or
(v) by the Company prior to the purchase of Shares pursuant to the Offer
if (A) there shall have been a material breach of any representation or
warranty in the Merger Agreement on the part of Parent or Purchaser which
materially adversely affects (or materially delays) the consummation of the
Offer or (B) Parent or Purchaser shall not have performed or complied with,
in all material respects (without reference to any materiality
qualifications therein), each covenant or agreement contained in the Merger
Agreement and required to be performed or complied with by them, and such
breach materially adversely affects (or materially delays) the consummation
of the Offer, and which breach, in the case of clause (A) and clause (B)
above, shall not have been cured prior to the earlier of 10 days following
notice of such breach and two business days prior to the Expiration Date;
provided, however, that Parent and Purchaser will have no right to cure
such breach and the Company may immediately terminate the Merger Agreement
in the event that such breach by Parent or Purchaser was willful or
intentional.
In the event of the termination and abandonment of the Merger Agreement
pursuant to the above provisions, the Merger Agreement, except for certain
enumerated provisions, will become void and have no effect, without any
liability on the part of any party or its affiliates, directors, officers or
stockholders. Nothing in this provision will relieve any party to the Merger
Agreement of liability for breach of the Merger Agreement.
Termination Fee. Except as provided in the following paragraph below, the
Merger Agreement provides that all fees and expenses incurred by the parties
to the Merger Agreement will be borne solely and entirely by the party which
has incurred such fees and expenses.
If:
(i) Parent or Purchaser terminate the Merger Agreement pursuant to
paragraph (iii) under "--Termination" above (in circumstances other than
those described in paragraph (ii) below) or the Company terminates the
Merger Agreement pursuant to paragraph (iv)(A) under "--Termination" above,
in either case, in circumstances when, prior to such termination any third
party shall have acquired beneficial ownership of 20% or more of the
outstanding Shares or shall have consummated an Acquisition Proposal (or
with respect to any proposal that may be existing on December 20, 1998 and
which becomes publicly known prior to such termination, not withdrawn such
Acquisition Proposal) or such third party has publicly made or announced an
intention to make or consummate an Acquisition Proposal (or the making of
such Acquisition Proposal or such intention has otherwise become publicly
known), and, in any such case, within 12 months of such termination
thereafter (x) the Company or any of its subsidiaries enters into an
Acquisition Agreement with respect to an Acquisition Proposal with such
party, or (y) such party or any other party otherwise consummates an
Acquisition Proposal;
(ii) Parent or Purchaser terminates the Merger Agreement pursuant to
paragraph (iii) under "--Termination" above and (x) the Company shall have
willfully and intentionally breached its obligations under the provisions
described under "--No Solicitation" above, or (y) there shall have occurred
any of the events set forth in paragraph (g) of Section 15 of this Offer to
Purchase; or
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(iii) the Company terminates the Merger Agreement pursuant to paragraph
(iv)(B) under "--Termination."
then, in each case, the Company (A) will pay to Parent, within one business
day following the execution and delivery of such agreement or such occurrence,
as the case may be, or simultaneously with such termination pursuant to clause
(iv)(B) under "--Termination," a fee, in cash, of $11 million (the
"Termination Fee"); provided, that the Company in no event will be obligated
to pay more than one such Termination Fee with respect to all such agreements
and occurrences and such termination and (B) will reimburse Parent and
Purchaser for all their out-of-pocket fees and expenses actually incurred by
Parent, Purchaser or their respective affiliates in connection with the Merger
Agreement, the Offer, the Merger, the Tender and Option Agreement and the
other transactions contemplated by the Merger Agreement, including all fees
and expenses of counsel, accountants, investment bankers, experts and
consultants to each of Parent or Purchaser and their respective affiliates and
the expenses of the preparation, printing, filing and mailing of the Offer
Documents, such fees and expenses not to exceed $2 million (the "Expenses").
Any payment required to be made pursuant to this paragraph will be made to
Parent by wire transfer of immediately available funds to an account
designated by Parent. These provisions will not derogate from any other rights
or remedies which Parent or Purchaser may possess under the Merger Agreement
or under applicable law.
Tender and Option Agreement.
The following is a summary of certain provisions of the Tender and Option
Agreement. This summary is not a complete description of the terms and
conditions of the Tender and Option Agreement and is qualified in its entirety
by reference to the full text of the Tender and Option Agreement filed with
the Commission as an exhibit to the Schedule 14D-1 and is incorporated herein
by reference. Capitalized terms not otherwise defined below shall have the
meanings set forth in the Tender and Option Agreement. The Tender and Option
Agreement may be examined, and copies obtained, as set forth in Section 8 of
this Offer to Purchase.
Pursuant to the Tender and Option Agreement, each Certain Stockholder agreed
to validly tender (or cause the record owner of such shares to validly tender)
and sell (and not withdraw, except in the event the Purchase Option (as
hereinafter defined) is exercised, in which case such withdrawal will be for
the limited purpose of consummating the Purchase Option) pursuant to and in
accordance with the terms of the Offer not later than the fifth business day
after commencement of the Offer (or the earlier of the Expiration Date and the
fifth business day after such Shares are acquired by such Certain Stockholder
if the Certain Stockholder acquires Shares after the date hereof), or, if the
Certain Stockholder has not received this Offer to Purchase and the related
Letter of Transmittal by such time, within two business days following receipt
of such documents, all of the then outstanding Shares beneficially owned by
such Certain Stockholder.
Each Certain Stockholder (other than Mr. Ronald Ostrow's three children)
agreed (a) to appear (or not appear, if requested by Parent or Purchaser) at
any annual, special, postponed or adjourned meeting of the stockholders of the
Company or otherwise cause the Shares such Certain Stockholder beneficially
owns to be counted as present (or absent, if requested by Parent or Purchaser)
thereat for purposes of establishing a quorum and to vote or consent, and (b)
to constitute and appoint Parent and Purchaser, or any nominee thereof, with
full power of substitution, during and for the term of the Tender and Option
Agreement, as his true and lawful attorney and proxy for and in his name,
place and stead, to vote all the Shares such Certain Stockholder beneficially
owns at the time of such vote, at any annual, special, postponed 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
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document relating to the Company that laws of the State of New York may
require or permit), in the case of both (a) and (b) above, (x) in favor of
approval and adoption of the Merger Agreement and approval and adoption of the
Merger and the other transactions contemplated thereby and (y) against (1) any
Acquisition Proposal, (2) 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 (3) 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 any of
its subsidiaries; (ii) a sale, lease or transfer of a material amount of
assets of the Company or any of its subsidiaries, or a reorganization,
recapitalization, dissolution or liquidation of the Company or any of its
subsidiaries; (iii) (A) any change in a majority of the persons who constitute
the Board of Directors of the Company or any of its subsidiaries as of the
date hereof; (B) any change in the present capitalization of the Company or
any amendment of the Company's or any of its subsidiaries' certificate of
incorporation or bylaws, as amended to date; (C) any other material change in
the Company's or any of its subsidiaries' corporate structure or business; or
(D) any other action that is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone, or adversely affect the Offer, the
Merger and the other transactions contemplated by the Tender and Option
Agreement and the Merger Agreement.
Each Certain Stockholder granted to Parent and Purchaser an irrevocable
option (the "Purchase Option") to purchase for cash, in a manner set forth
below, any or all of the Shares (and including Shares acquired after the date
hereof by such Certain Stockholder) beneficially owned by the Certain
Stockholder at a price (the "Exercise Price") per Share equal to $34.00. In
the event of any stock dividends, stock splits, recapitalizations,
combinations, exchanges of shares or the like, the Exercise Price will be
appropriately adjusted for this purpose.
The Tender and Option Agreement provides that subject to the conditions set
forth below, the Purchase Option may be exercised by Parent or Purchaser, in
whole or in part, at any time or from time to time after the occurrence of any
Trigger Event (as defined below). A "Trigger Event" means any one of the
following: (i) the Merger Agreement becomes terminable under circumstances
that entitle Parent or Purchaser to receive the Termination Fee or the
Expenses under the Merger Agreement (regardless of whether the Merger
Agreement is actually terminated and whether such Termination Fee or Expenses
are then actually paid), (ii) the Offer is consummated but, due to the failure
of the Certain Stockholder to validly tender and not withdraw all of the then
outstanding Shares beneficially owned by such Certain Stockholder, the
Purchaser has not accepted for payment or paid for all of such Shares, (iii) a
tender or exchange offer for at least 20% of the Shares shall have been
publicly proposed to be made or shall have been made by another person, or
(iv) it shall have been publicly disclosed or Parent or Purchaser shall have
otherwise learned that (A) any person or "group" (as defined in Section
13(d)(3) of the Exchange Act) (other than Parent or Purchaser) shall have
acquired or proposed to acquire beneficial ownership of more than 20% of any
class or series of capital stock of the Company (including Shares), through
the acquisition of stock, the formation of a group or otherwise, or shall have
been granted any option, right or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 20% of any class or series of
capital stock of the Company or any of its subsidiaries, or (B) any person or
group (other than Parent and Purchaser) shall have entered into or publicly
offered to enter into a definitive agreement or an agreement in principle with
respect to a merger, consolidation or other business combination with the
Company or any of its subsidiaries.
Pursuant to the Tender and Option Agreement, if requested by Parent and
Purchaser in the Exercise Notice, such Certain Stockholder will exercise all
Options (to the extent exercisable)
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and other rights (including conversion or exchange rights) beneficially owned
by such Certain Stockholder and will sell or, if directed by Parent and
Purchaser, tender the Shares acquired pursuant to such exercise to Parent or
Purchaser as provided in the Tender and Option Agreement.
The Purchase Option will terminate (a) as it relates to a Certain
Stockholder, upon purchase by Parent or Purchaser of the Shares owned by such
Certain Stockholder pursuant to the Offer or (b) upon the earliest of: (i) the
Effective Time; (ii) termination of the Merger Agreement other than upon,
during the continuance of or after a Trigger Event; or (iii) 90 days following
any termination of the Merger Agreement upon, during the continuance of or
after a Trigger Event (or if, at the expiration of such 90 day period the
Purchase Option cannot be exercised by reason of any applicable judgment,
decree, order, injunction, law or regulation, 10 business days after such
impediment to exercise has been removed or has become final and not subject to
appeal).
The Tender and Option Agreement provides that in the event (i) Parent or
Purchaser exercises the Purchase Option and purchases Shares representing at
least 20% of the then outstanding Shares on a fully diluted basis (the
"Purchase Event"), (ii) no Acquisition Proposal shall have been consummated
and (iii) the Merger Agreement shall have terminated and the Company shall not
have been in material breach of the Merger Agreement at the time of such
termination, upon the written request of the Company made within five business
days after the Purchase Event, Parent will cause Purchaser or another
subsidiary of Parent to commence, as soon as reasonably practicable, a tender
offer for all Shares at a cash price equal to the Exercise Price, on terms and
subject to conditions substantially similar to those contained in the Merger
Agreement.
The Tender and Option Agreement provides that if, within twelve months
following the exercise of the Purchase Option by Parent or Purchaser, Parent
or Purchaser sells any or all of the Shares acquired upon exercise of the
Purchase Option to an unaffiliated third party (a "Subsequent Sale") at a per
Share price in excess of the Exercise Price (the "Subsequent Sale Price"),
then Parent or Purchaser will pay to each Certain Stockholder, within five
days of receipt of payment by Parent or Purchaser, an amount equal to such
Certain Stockholder's pro rata share of 50% of the excess of the Subsequent
Sale Price over the Exercise Price multiplied by the number of shares sold in
the Subsequent Sale.
In the Tender and Option Agreement, the obligation of each Certain
Stockholder to sell such Certain Stockholder's Shares to Parent or Purchaser
hereunder is subject to the conditions that (i) all waiting periods, if any,
under the HSR Act, applicable to the sale of the Shares or the acquisition of
the Shares by Parent or Purchaser, as the case may be, hereunder have expired
or have been terminated; (ii) all consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any court,
administrative agency or other Governmental Entity, if any, required in
connection with sale of the Shares or the acquisition of the Shares by Parent
or Purchaser hereunder have been obtained or made; and (iii) no preliminary or
permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such sale or acquisition is in effect.
Under the Tender and Option Agreement, the Company has agreed to provide
Parent and Purchaser certain registration rights with respect to the Shares
purchased pursuant to the Purchase Option.
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The Tender and Option Agreement will terminate (a) as to any Certain
Stockholder upon the purchase of all the Shares beneficially owned by such
Certain Stockholder pursuant to the Offer, (b) except as specifically provided
for in certain sections of the Tender and Option Agreement relating to the
Puchase Option, which will only terminate as and when provided therein, on the
earlier to occur of (i) the Effective Time or (ii) the date the Merger
Agreement is terminated in accordance with its terms, or (c) by the mutual
consent of each Certain Stockholder as to its rights and obligations
hereunder, the Board of Directors of the Company and the Board of Directors of
Parent.
Confidentiality Agreement.
The following is a summary of certain provisions of the Confidentiality
Agreement entered into on October 21, 1998 by Parent and the Company (the
"Confidentiality Agreement"). This summary is not a complete description of
the terms and conditions of the Confidentiality Agreement and is qualified in
its entirety by reference to the full text of the Confidentiality Agreement
filed with the Commission as an exhibit to the Schedule 14D-1 and is
incorporated herein by reference. Capitalized terms not otherwise defined
below have the meanings set forth in the Confidentiality Agreement. The
Confidentiality Agreement may be examined, and copies obtained, as set forth
in Section 8 of this Offer to Purchase.
Pursuant to the terms of the Confidentiality Agreement that Parent and
Purchaser entered into on October 21, 1998, the Company and Parent agreed to
provide, among other things, for the confidential treatment of their
discussions regarding the Offer and the Merger and the exchange of certain
confidential information concerning the Company. In addition, each party
agreed to certain standstill provisions which terminated upon the execution of
the Merger Agreement. The Company also agreed for a limited period to enter
into exclusive discussions with Parent regarding a possible transaction,
terminable by the Company upon two business days' notice.
Employment Agreements.
The following is a summary of certain provisions of the employment
agreements entered into by nine executives of the Company, including Ronald D.
Ostrow, President, Chief Executive Officer and Director, Richard Kessler,
Executive Vice President, Chief Operating Officer and Director, David
Rosenthal, Vice President-Finance and Treasurer, and six other employees of
the Company, which will become effective upon the earlier of the consummation
of the Offer or the Merger (the "Employment Agreements"). This summary is not
a complete description of the terms and conditions of the Employment
Agreements and is qualified in its entirety by reference to the full text of
the Employment Agreements filed with the Commission as an exhibit to the
Tender Offer Statement on Schedule 14D-1 filed by Parent and Purchaser (the
"Schedule 14D-1") and is incorporated herein by reference. Capitalized terms
not otherwise defined below shall have the meanings set forth in the
Employment Agreements. The Employment Agreements may be examined, and copies
obtained, as set forth in Section 8 of this Offer to Purchase.
In connection with the negotiation of the Merger Agreement, Parent requested
that certain executives of the Company amend their existing employment
agreements with the Company, including elimination of certain benefits
potentially available to such executives as a result of a change in control
(such as the consummation of the Offer or Merger), and an extension of the
term of the Employment Agreement. The Employment Agreements are for a fixed
term of three years. The individual's duties under the Employment Agreements
are substantially the same as his pre-Merger duties as those duties may
evolve, in a manner consistent with the position held by the individual, over
time and are to generally be performed at the Company's current headquarters
or within 25 miles thereof.
The compensation, including the opportunity to earn performance based
bonuses, benefits and perquisites payable under the Employment Agreements are
equal to those in effect at the date of the Merger Agreement, subject to
increase at the Company's option over the term of the
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Employment Agreements. In addition, to induce the executives to remain in the
employ of the Company and as additional compensation for critical services to
be rendered during the difficult period of integration and transition after
the Merger, each executive will be entitled on the first anniversary of the
effective date of the Employment Agreement to an amount equal to 60% of his
annual compensation, provided he is employed by the Company as of such date,
or if the executive is terminated without Cause or with Good Reason (both as
defined) prior to such time, a ratable portion of such payment.
The executives also agreed to a defined cash payout in cancellation of
Options (whether or not such Options are exercisable) they own. See "--Merger
Agreement--Options" above.
Under the Employment Agreements, the employment relationship can be
terminated by either the individual or the Company during the term of the
contracts. If an individual is terminated for Cause, or by the individual's
own volition, the only payments due are compensation and benefits earned
through the date of termination. If an individual is terminated by the Company
without Cause, or by the individual for Good Reason, the individual is
entitled to receive the agreed compensation and benefits through the then
remaining term of the Employment Agreement.
The Employment Agreements contain confidentiality provisions with respect to
proprietary information, and prohibit competition with the Company for a
period of 18 months (12 if the individual is terminated without Cause)
following termination of employment.
Other Agreements. In connection with the negotiation of the Merger
Agreement, Parent requested that the Company enter into amendments to existing
shareholder agreements between the Company and one of its employees with
respect to certain minority shareholdings in the Company's Swiss and Asian
subsidiaries. Such amendments, which will become effective upon the
consummation of the Merger, provide the Company with the right to repurchase
such minority interests at any time and also clarify the existing terms of the
formula purchase price for the minority interests.
13. PLANS FOR THE COMPANY; OTHER MATTERS.
Plans for the Company. Parent intends to combine the operations of the
Company with the printed wiring board business of Parent's Shipley division to
create a new Shipley Ronal division which will be part of Parent's Electronic
Materials business group. Parent intends to reduce costs by leveraging common
assets, operations, sales and technical organizations. Parent will continue to
evaluate and review the Company and its business, assets, corporate structure,
capitalization, operations, properties, policies, management and personnel
with a view towards determining how to optimally realize any potential
benefits which arise from the combination of the operations of the Company
with those of Parent. Such evaluation and review is ongoing and is not
expected to be completed until after the consummation of the Offer and the
Merger. If, as and to the extent that Purchaser acquires control of the
Company, Parent and Purchaser will complete such evaluation and review of the
Company and will determine what, if any, changes would be desirable in light
of the circumstances which then exist. Such changes could include, among other
things, changes in the Company's business, corporate structure, certificate of
incorporation, by-laws, capitalization or management or involve consolidating
and streamlining certain operations and reorganizing other businesses and
operations. In addition, subject to the terms of the Merger Agreement, Parent
currently intends to terminate the declaration of the Company's regular
quarterly dividend after the consummation of the Offer.
Assuming the Minimum Condition is satisfied and Purchaser purchases Shares
pursuant to the Offer, Parent intends to promptly exercise its rights under
the Merger Agreement to obtain majority representation on, and control of, the
Company Board. See Section 12. Purchaser
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presently intends to exercise its rights to cause the Company to elect to the
Company Board its designees, and Purchaser intends to select such designees
from among the individuals (who are currently officers or directors of Parent)
identified in Schedule I hereto and in the Schedule 14D-9. The Merger
Agreement also provides that the directors of Purchaser immediately prior to
the Effective Time shall be the directors of the Surviving Corporation at and
after the Effective Time. Purchaser or an affiliate of Purchaser may,
following the consummation or termination of the Offer, seek to acquire
additional Shares through open market purchases, privately negotiated
transactions, a tender offer or exchange offer or otherwise, upon such terms
and at such prices as it shall determine, which may be more or less than the
Offer Price. Purchaser and its affiliates also reserve the right to dispose of
any or all Shares acquired by them, subject to the terms of the Merger
Agreement.
Except as disclosed in this Offer to Purchase, and except as may be effected
in connection with the integration of operations referred to above, neither
Parent nor Purchaser has any present plans or proposals that would result in
an extraordinary corporate transaction, such as a merger, reorganization,
liquidation, or sale or transfer of a material amount of assets, involving the
Company or any of its subsidiaries, or any material changes in the Company's
capitalization, corporate structure, business or composition of its management
or the Company Board.
Stockholder Approval. Under the NYBCL and the Company's Certificate of
Incorporation, the approval of the Company Board and the affirmative vote of
the holders of two-thirds of the outstanding Shares are required to adopt and
approve the Merger Agreement and the Merger. The Company has represented in
the Merger Agreement that the execution and delivery of the Merger Agreement
by the Company and the consummation by the Company of the transactions
contemplated by the Merger Agreement have been duly authorized by all
necessary corporate action on the part of the Company, subject to the approval
of the Merger and the Merger Agreement by the Company's stockholders in
accordance with the NYBCL. In addition, the Company has represented that the
affirmative vote of the holders of two-thirds of the outstanding Shares is the
only vote of the holders of any class or series of the Company's capital stock
which is necessary to approve the Merger Agreement and the transactions
contemplated thereby, including the Merger. Therefore, unless the Merger is
consummated pursuant to the short-form merger provisions under the NYBCL
described below (in which case no further corporate action by the stockholders
of the Company will be required to complete the Merger), the only remaining
required corporate action of the Company will be the approval of the Merger
Agreement and the Merger by the affirmative vote of the holders of two-thirds
of the outstanding Shares. The Merger Agreement provides that Parent will
vote, or cause to be voted, all of the Shares then owned by Parent, Purchaser
or any of Parent's other subsidiaries and affiliates in favor of the approval
of the Merger and the adoption of the Merger Agreement. In the event that
Parent, Purchaser and Parent's other subsidiaries acquire in the aggregate at
least two-thirds of the Shares entitled to vote on the approval of the Merger
and the Merger Agreement, they would have the ability to effect the Merger
without the affirmative votes of any other stockholders. The Merger Agreement
also provides that, in the event Purchaser reduces the Minimum Condition as
described in Section 1 and purchases less than two-thirds of the Fully Diluted
Shares, the Company will hold a meeting of its stockholders to amend the
Certificate of Incorporation to provide that the requisite vote of the
Company's stockholders on any merger or consolidation (including the Merger)
will be a majority of the Shares outstanding. Parent and Purchaser have agreed
to vote any Shares owned by them in favor of such amendment at any such
meeting.
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Short-Form Merger. Section 905 of the NYBCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may either merge such other
corporation into itself or merge itself into such other corporation, in either
case, without any action or vote on the part of the board of directors or the
stockholders of such other corporation (a "short-form merger"). In the event
that Parent, Purchaser and any other subsidiaries of Parent acquire in the
aggregate at least 90% of the outstanding Shares, pursuant to the Offer or
otherwise, then, at the election of Parent, a short-form merger could be
effected without any approval of the Company Board or the stockholders of the
Company, subject to compliance with the provisions of Section 905 of the
NYBCL. In the Merger Agreement, Parent, Purchaser and the Company have agreed
that, notwithstanding that all conditions to the Offer are satisfied or waived
as of the scheduled Expiration Date, Purchaser may extend the Offer on one
occasion for a period not to exceed 10 business days, if the Minimum Condition
has been satisfied but less than 90% of the Fully Diluted Shares have been
validly tendered and not properly withdrawn. Even if Parent and Purchaser do
not own 90% of the outstanding Shares following consummation of the Offer,
Parent and Purchaser could seek to purchase additional shares in the open
market or otherwise in order to reach the 90% threshold and employ a short-
form merger. The per Share consideration paid for any Shares so acquired may
be greater or less than that paid in the Offer. Parent presently intends to
effect a short-form merger if permitted to do so under the NYBCL.
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
record date for determining stockholders entitled to vote on the Merger will
have certain rights pursuant to the provisions of Section 623 and 910 of the
NYBCL ("Sections 623 and 910") to dissent and demand appraisal of their Shares
unless the Listing Exception (as hereinafter defined) is applicable. In
addition, if the Merger is accomplished without a vote of the Company's
stockholders, such as a short-form merger (see the immediately preceding
paragraph), the minority stockholders will have certain rights to dissent and
demand appraisal of their Shares. Under Sections 623 and 910, stockholders who
have the right to dissent in either of the two situations described above, and
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
proposed 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. If the Merger is accomplished with a vote of the
Company's stockholders, minority stockholders will not have the right to
dissent and demand appraisal of their Shares, if on the record date for
determining stockholders entitled to vote on the Merger the Shares remain
listed on the NYSE or another national securities exchange or are designated
as a national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. (the "Listing Exception").
Parent anticipates that such record date will be after the date the Offer is
consummated. Parent currently intends to avail itself of the Listing Exception
if it is available and Parent cannot effect a short-form merger under the
NYBCL. Parent currently intends not to seek delisting of the Shares from the
NYSE prior to the Effective Time, although such Shares may be delisted by the
NYSE. See Section 7. The foregoing summary of Sections 623 and 910 does not
purport to be complete and is qualified in its entirety by reference to
Sections 623 and 910.
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THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE
NYBCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY HOLDERS OF SHARES DESIRING TO EXERCISE ANY APPRAISAL RIGHTS
AVAILABLE UNDER THE NYBCL AND IS QUALIFIED IN ITS ENTIRETY BY THE FULL TEXT OF
SECTION 623 OF THE NYBCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS
REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE NYBCL. FAILURE TO
FOLLOW THE STEPS REQUIRED BY SECTION 623 OF THE NYBCL FOR PERFECTING APPRAISAL
RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may
under certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer in which
Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes, however, that Rule 13e-3 will not be applicable to the Merger
because it is anticipated that the Merger would be effected within one year
following consummation of the Offer and in the Merger stockholders would
receive the same price per Share as paid in the Offer. If Rule 13e-3 were
applicable to the Merger, it would require, among other things, that certain
financial information concerning the Company, and certain information relating
to the fairness of the proposed transaction and the consideration offered to
minority stockholders in such a transaction, be filed with the Commission and
disclosed to minority stockholders prior to consummation of the transaction.
The purchase of a substantial number of Shares pursuant to the Offer may
result in the Company being able to terminate its Exchange Act registration,
although Parent has no current intention to do so prior to the Effective Time.
See Section 7. If such registration were terminated, Rule 13e-3 would be
inapplicable to any such future Merger or such alternative transaction.
14. DIVIDENDS AND DISTRIBUTIONS.
The Company and its subsidiaries have agreed not to, without the prior
written consent of Parent, declare or pay any dividend or other distribution
with respect to any of its capital stock except that the Company may declare
and pay to holders of Shares regular quarterly cash dividends not to exceed
$0.14 per Share per fiscal quarter, including the regular quarterly cash
dividend of $0.14 per Share declared on December 20, 1998 and scheduled to be
paid on January 15, 1999 to stockholders of record on January 4, 1999.
If, on or after December 20, 1998, the Company should (a) split, combine or
otherwise change the Shares or its capitalization, (b) acquire or otherwise
cause a reduction in the number of outstanding Shares or other securities or
(c) issue or sell additional Shares (other than the issuance of Shares upon
the exercise of Options outstanding at December 20, 1998 in accordance with
the terms thereof (as in effect on December 20, 1998)), shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options, conditional or otherwise, to acquire,
any of the foregoing, then, subject to the provisions of Section 15,
Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including,
without limitation, the number or type of securities offered to be purchased.
If, on or after December 20, 1998, the Company should declare or pay any
cash dividend on the Shares or other distribution on the Shares (other than
regular quarterly dividends not to exceed $0.14 per Share per fiscal quarter),
or issue with respect to the Shares or any additional Shares, shares of any
other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, payable or distributable to stockholders of
record on a date prior to the transfer of Shares purchased pursuant to the
Offer to the Purchaser or its nominee or transferee on the Company's stock
transfer records, then, subject to the provisions of Section 15, (a) the Offer
Price may, in the sole discretion of Purchaser, be reduced by the amount of
any such cash dividend or cash distribution and (b) the whole of any such
noncash dividend, distribution or
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issuance to be received by the tendering stockholders will (i) be received and
held by the tendering stockholders for the account of Purchaser and will be
required to be promptly remitted and transferred by each tendering stockholder
to the Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer, or (ii) at the direction of Purchaser, be exercised
for the benefit of Purchaser, in which case the proceeds of such exercise will
promptly be remitted to Purchaser. Pending such remittance and subject to
applicable law, Purchaser will be entitled to all rights and privileges as
owner of any such noncash dividend, distribution, issuance or proceeds and may
withhold the entire Offer Price or deduct from the Offer Price the amount or
value thereof, as determined by Purchaser in its sole discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two preceeding paragraphs, and
nothing herein shall constitute a waiver by Purchaser or Parent of any of its
rights under the Merger Agreement or a limitation of remedies available to
Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
15. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer but subject to the terms
and conditions of the Merger Agreement, in addition to (and not in limitation
of) Purchaser's rights pursuant to the Merger Agreement to extend and amend
the Offer in accordance with the Merger Agreement, Purchaser shall not be
required to accept for payment or, subject to Rule 14e-1(c) of the Exchange
Act, pay for and may delay the acceptance for payment of or, subject to Rule
14e-1(c) of the Exchange Act, the payment for, any Shares not theretofore
accepted for payment or paid for, and may terminate or amend the Offer if (i)
the Minimum Condition has not been satisfied, (ii) any applicable waiting
period under the HSR Act shall not have expired or been terminated or (iii) at
any time on or after December 20, 1998 and prior to the time of acceptance of
such Shares for payment or the payment therefor, any of the following
conditions has occurred and continues to exist (and in the case of the
conditions set forth in paragraph (c), continue to exist as of the scheduled
expiration date of the Offer or have continued to exist for at least the
previous 10 business days), other than as a result of a breach by Parent or
Purchaser of its obligations under the Merger Agreement (including, without
limitation, the provisions described under "--Reasonable Best Efforts" in
Section 12):
(a) the representation and warranty set forth in the Merger Agreement
with regard to capitalization of the Company shall not be true and correct
in all material respects or any other representations and warranties of the
Company in the Merger Agreement (without regard to any materiality
qualifiers contained therein) shall not be true and correct as of such time
(other than to the extent such representations and warranties expressly
relate to an earlier date, in which case such representations and
warranties shall not be true and correct as of such date) except where the
failure of such representations and warranties to be true and correct would
not be reasonably likely to have a Material Adverse Effect (as defined
below) on the Company and except where such failure shall have been cured
prior to the earlier of (i) 10 business days following notice of such
breach and (ii) two business days prior to the date on which the Offer
expires; provided, however, that the Company shall have no right to cure
such breach in the event that such breach by the Company was willful or
intentional;
(b) the Company shall not have performed and complied with, in all
material respects (without reference to any materiality qualifications
therein), all material covenants or agreements contained in the Merger
Agreement and required to be performed or complied with by it and which
breach shall not have been cured prior to the earlier of (i) 10 business
days following notice of such breach and (ii) two business days prior to
the date on which the Offer expires; provided, however, that the Company
shall have no right to cure such
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breach in the event that such breach by the Company was willful or
intentional or if such breach involves a breach of the provisions of the
Merger Agreement relating to the solicitation and negotiation of
Acquisition Proposals;
(c) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on the
New York Stock Exchange (excluding any coordinated trading halt triggered
as a result of a specified decrease in a market index), (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks
in the United States by any Governmental Entity, (iii) any mandatory
limitation by any Governmental Entity on, or other event that materially
and adversely affects, the extension of credit by banks or other lending
institutions, (iv) a commencement of a war, armed hostilities or other
national or international calamity directly or indirectly involving the
United States, (v) any material adverse change in United States currency
exchange rates or a suspension of, or limitation on, the markets therefor
or (vi) in the case of any of the foregoing existing on the date of the
Merger Agreement, a material acceleration or worsening thereof;
(d) there shall have been instituted or pending any suit, action,
investigation or proceeding ("Actions") by any Governmental Entity, or
Parent, Purchaser or the Company shall have been notified by any
Governmental Entity (or a representative thereof) of its present intention
to commence, or recommend the commencement of, such an Action, (i)
challenging the acquisition by Parent or Purchaser of any Shares, seeking
to make illegal, materially delay, make materially more costly or otherwise
directly or indirectly restrain or prohibit the making or consummation of
the Offer and the Merger or any of the other Transactions, or seeking to
obtain from the Company, Parent or Purchaser any damages that are material
in relation to the Company and its subsidiaries taken as whole, (ii)
seeking to prohibit or materially limit the ownership or operation by the
Company, Parent or any of their respective subsidiaries or affiliates of a
material portion of the businesses or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a
whole, or to compel the Company, Parent or any of their respective
subsidiaries or affiliates to dispose of or hold separate a material
portion of the businesses or assets of the Company and its subsidiaries,
taken as a whole, or Parent and its subsidiaries, taken as a whole, or any
of their respective subsidiaries or affiliates, as a result of the Offer,
the Merger or any of the other Transactions, (iii) seeking to impose
material limitations on the ability of Parent or Purchaser to acquire or
hold, or exercise full rights of ownership of, any Shares accepted for
payment pursuant to the Offer including, without limitation, the right to
vote the Shares accepted for payment by it on all matters properly
presented to the shareholders of the Company, (iv) seeking to prohibit
Parent or any of its subsidiaries or affiliates from effectively
controlling in any material respect a material portion of the business or
operations of the Company and its subsidiaries, taken as a whole, (v)
requiring divestiture by Purchaser or any of its affiliates of any Shares
or (vi) which otherwise is reasonably likely to have a Material Adverse
Effect on the Company or Parent;
(e) there shall be any statute, rule, regulation, judgment, order or
injunction (including with respect to competition or antitrust matters)
enacted, entered, enforced, promulgated or issued with respect to or deemed
applicable to, or any consent or approval withheld, or any other action
shall be taken with respect to (i) Parent, the Company or any of their
respective subsidiaries or affiliates or (ii) the Offer or the Merger or
any of the other Transactions by any Governmental Entity or court,
including without limitation any required approvals or waiting periods
under German antitrust law (see Section 16), other than the application to
the Offer or the Merger or any of the other Transactions of applicable
waiting periods under the HSR Act, that has resulted or is reasonably
likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) though (v) of paragraph (d) above;
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(f) since the date of the Merger Agreement there shall have occurred any
event, change, effect or development that, individually or in the
aggregate, has had or is reasonably likely to have, a Material Adverse
Effect on the Company;
(g) the Board of Directors of the Company or any committee thereof shall
have (i) withdrawn, or modified, amended or changed (including by amendment
of the Schedule 14D-9), in a manner adverse to Parent or Purchaser, its
approval or recommendation of the Offer, the Merger Agreement and the
Merger or any of the other Transactions, (ii) approved or recommended to
the Company's stockholders an Acquisition Proposal or any other acquisition
of Shares other than the Offer and the Merger or (iii) adopted any
resolution to effect any of the foregoing;
(h) the Merger Agreement shall have been terminated in accordance with
its terms; or
(i) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Parent, Purchaser, any of
their affiliates, or any group of which any of them is a member, shall have
acquired beneficial ownership of more than 20 percent of the Shares or
shall have consummated or entered into a definitive agreement or an
agreement in principle to consummate an Acquisition Proposal;
which, in the sole judgment of Purchaser, in any such case, makes it
inadvisable to proceed with the Offer or with such acceptance for payment,
purchase of, or payment for Shares.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may, subject to the terms of the Merger Agreement, be waived by Purchaser
or Parent, in whole or in part, at any time and from time to time, in the sole
discretion of Purchaser or Parent. The failure by Purchaser or Parent or any
of their respective affiliates at any time to exercise any of the foregoing
rights will not be deemed a waiver of any right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances and each right will
be deemed an ongoing right which may be asserted at any time and from time to
time.
"Material Adverse Effect" means (i) any adverse change or effect in the
financial condition, assets, liabilities, business, properties or results of
operations of a specified person or its subsidiaries (other than changes or
effects relating to general economic, financial or industry conditions), which
change or effect is material, individually or in the aggregate, to the
specified person and its subsidiaries taken as a whole, or (ii) any event,
matter, condition or effect which prevents or materially delays consummation
of the Transactions.
16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. Except as described in this Section 16, based on a review of
publicly available filings made by the Company with the Commission and other
publicly available information concerning the Company, neither Purchaser nor
Parent is aware of any license or regulatory permit that appears to be
material to the business of the Company and its subsidiaries, taken as a
whole, that might be adversely affected by the acquisition of Shares by Parent
or Purchaser pursuant to the Offer, the Merger or otherwise, or of any
approval or other action by any governmental, administrative or regulatory
agency or authority, domestic or foreign, that would be required prior to the
acquisition of Shares by Purchaser pursuant to the Offer, the Merger or
otherwise. Should any such approval or other action be required, Purchaser and
Parent presently contemplate that such approval or other action will be
sought, except as described below under "--State Antitakeover Statutes."
While, except as otherwise described in this Offer to Purchase, Purchaser does
not presently intend to delay the acceptance for payment of, or payment for,
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if needed,
would
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be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of, or other substantial
conditions complied with, in the event that such approvals were not obtained
or such other actions were not taken or in order to obtain any such approval
or other action. If certain types of adverse action are taken with respect to
the matters discussed below, Purchaser could decline to accept for payment, or
pay for, any Shares tendered. See Section 15 for certain conditions to the
Offer, including conditions with respect to governmental actions.
State Antitakeover Statutes. The Company is incorporated under the laws of
New York. In general, Section 912 of the NYBCL prohibits a New York
corporation from engaging in a "Business Combination" (defined as any of a
variety of transactions including mergers) with an "Interested Shareholder"
(defined generally as a person owning shares entitled to cast at least 20% of
the voting power of a corporation) for a period of five years following the
date such person became an Interested Shareholder, unless, before such person
became an Interested Shareholder, the corporation's board of directors
approved either the Business Combination or the transaction in which the
stockholder became an Interested Shareholder. The Company has represented in
the Merger Agreement that the Company Board has taken all action necessary to
render Section 912 of the NYBCL inapplicable to Parent and Purchaser, the
Offer, the Merger, the Tender and Option Agreement, the Merger Agreement and
the other Transactions.
If an assertion is made that Parent or Purchaser has not complied with the
provisions of any state takeover statute, Parent and Purchaser reserve the
right to challenge the validity or applicability of any state law allegedly
applicable to the Merger and nothing in this Offer to Purchase nor any action
taken in connection herewith is intended as a waiver of that right.
Article 16 of the NYBCL requires the bidder for the shares of a New York
corporation to file a registration statement with the attorney general and to
satisfy certain disclosure requirements. Parent and Purchaser have filed such
a registration statement and this Offer to Purchase sets forth all of the
information required to be disclosed pursuant to Article 16 of the NYBCL.
A number of states have adopted takeover laws and regulations that purport,
to varying degrees, to apply to attempts to acquire corporations that are
incorporated in such states, or whose business operations have substantial
economic effects in such states, or which have substantial assets, security
holders, employees, principal executive offices or principal places of
business in such states. In EDGAR V. MITE CORP., the Supreme Court of the
United States (the "Supreme Court") invalidated on constitutional grounds the
Illinois Business Takeover statute, which, as a matter of state securities
law, made certain corporate acquisitions more difficult. However, in 1987, in
CTS CORP. V. DYNAMICS CORP. OF AMERICA, the Supreme Court held that the State
of Indiana may, as a matter of corporate law and, in particular, with respect
to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of
a target corporation without the prior approval of the remaining stockholders.
The state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of stockholders in the state and
were incorporated there. Subsequently, a number of Federal courts have ruled
that various state takeover statutes were unconstitutional insofar as they
apply to corporations incorporated outside the state of enactment.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of New York will by their terms
apply to the Offer, and, except as set forth above with respect to the NYBCL,
neither Parent nor Purchaser has attempted to comply with any state
antitakeover statute or regulation. Purchaser reserves the right to challenge
the
44
<PAGE>
applicability or validity of any state law purportedly applicable to the Offer
or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state antitakeover statute is applicable to the
Offer or the Merger and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, Purchaser might
be required to file certain information with, or to receive approvals from,
the relevant state authorities, and Purchaser might be unable to accept for
payment or pay for Shares tendered pursuant to the Offer or may be delayed in
continuing or consummating the Offer or the Merger. In such case, Purchaser
may not be obligated to accept for payment, or pay for, any Shares tendered
pursuant to the Offer. See Section 15.
The Company has agreed in the Merger Agreement that it and its Board of
Directors will (i) take all action necessary to ensure that no state takeover
statute or similar statute or regulation is or becomes applicable to the
Transactions and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Transactions, take all action necessary
to ensure that the Transactions may be consummated as promptly as practicable
on the terms contemplated by the Merger Agreement and the Tender and Option
Agreement and otherwise to minimize the effect of such statute or regulation
on the Transactions.
United States Antitrust. The Offer and the Merger are subject to the HSR
Act, which provides that certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
and the United States Federal Trade Commission (the "FTC") and certain waiting
period requirements have been satisfied.
The rules promulgated by the FTC require the filing by each of Parent and
the Company of a Notification and Report Form with respect to the Offer under
the HSR Act. Parent expects to make the required filing on or about December
23, 1998. The waiting period under the HSR Act with respect to the Offer will
expire at 11:59 p.m., New York City time, on the fifteenth day after the date
Parent's form was filed unless early termination of the waiting period is
granted. However, the Antitrust Division or the FTC may extend the waiting
period by requesting additional information or documentary material from
Parent. If such a request is made, such waiting period will expire at 11:59
p.m., New York City time, on the tenth day after substantial compliance by
Parent with such request. Only one extension of the waiting period pursuant to
a request for additional information is authorized by the HSR Act. Thereafter,
such waiting period may be extended only by court order or with the consent of
Parent. In practice, complying with a request for additional information or
material can take a significant amount of time. In addition, if the Antitrust
Division or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and
may agree to delay consummation of the transaction while such negotiations
continue. The Purchaser will not accept for payment Shares tendered pursuant
to the Offer unless and until the waiting period requirements imposed by the
HSR Act with respect to the Offer have been satisfied. See Section 15.
The Notification and Report Form filed described above is also applicable to
the Purchase Option granted to Parent and Purchaser pursuant to the Tender and
Option Agreement. Under the provisions of the HSR Act applicable to the
Purchase Option, the purchase of Shares pursuant to the Purchase Option may
not be consummated until the expiration of a 30-calendar day waiting period
following the filing by Parent, unless both the Antitrust Division and the FTC
terminate the waiting period thereto. If, within such 30-calendar day waiting
period, either the Antitrust Division or the FTC requests additional
information or documentary material from
45
<PAGE>
Parent or the Company, the waiting period would be extended for an additional
20 calendar days following substantial compliance by Parent or the Company, as
the case may be, with such request. Thereafter, the waiting period could be
extended only by court order. Only one extension of such waiting period
pursuant to a request for additional information is authorized by the HSR Act
and the rules promulgated thereunder, except by court order. Pursuant to the
Tender and Option Agreement, if the Purchase Option becomes exercisable, it
would continue to be exercisable until 10 days after the waiting period
(including as extended) under the HSR Act has expired.
The FTC and the Antitrust Division frequently scrutinize the legality under
the Antitrust Laws (as defined below) of transactions such as Purchaser's
acquisition of Shares pursuant to the Offer and the Merger. At any time before
or after Purchaser's acquisition of Shares, the Antitrust Division or the FTC
could take such action under the Antitrust Laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition
of Shares pursuant to the Offer or otherwise seeking divestiture of Shares
acquired by Purchaser or divestiture of substantial assets of Parent or its
subsidiaries. Private parties, as well as state governments, may also bring
legal action under the Antitrust Laws under certain circumstances. Based upon
an examination of publicly available information provided by the Company
relating to the businesses in which the Company and its subsidiaries are
engaged, Parent and Purchaser believe that the acquisition of Shares by
Purchaser will not violate the Antitrust Laws. Nevertheless, there can be no
assurance that a challenge to the Offer or other acquisition of Shares by
Purchaser on antitrust grounds will not be made or, if such a challenge is
made, of the result. See Section 15 for certain conditions to the Offer,
including conditions with respect to litigation and certain government
actions.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal, state and
foreign statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines, and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade.
German Antitrust. Under German laws and regulations relating to the
regulation of monopolies and competition, certain acquisition transactions may
not be consummated in Germany unless certain information has been furnished to
the German Federal Cartel Office (the "FCO") and certain waiting period
requirements have been satisfied without issuance by the FCO of an order to
refrain. The purchase of Shares by Purchaser pursuant to the Offer and the
consummation of the Merger may be subject to such requirements. Under such
laws, the FCO has one month (unless earlier terminated by the FCO) from the
time of filing of such information with the FCO to advise the parties of its
intention to investigate the Offer and the Merger, in which case the FCO has
four months from the date of filing in which to take steps to oppose the Offer
and the Merger. Parent intends to file promptly the required notification with
the FCO, if applicable, and request early termination of the one-month waiting
period. While Parent does not believe that there is any basis for the FCO to
investigate the Offer and the Merger, there can be no assurance that the FCO
will not investigate or oppose the transactions or that early termination of
the waiting period will be granted.
OTHER FOREIGN APPROVALS. According to publicly available information, the
Company conducts business in a number of other foreign countries and
jurisdictions. In connection with the acquisition of the Shares pursuant to
the Offer or the Merger, the laws of certain of those foreign countries and
jurisdictions may require the filing of information with, or the obtaining of
the approval or consent of, governmental authorities in such countries and
jurisdictions. The governments in such countries and jurisdictions might
attempt to impose additional conditions on the Company's operations conducted
in such countries and jurisdictions as a result of the
46
<PAGE>
acquisitions of the Shares pursuant to the Offer or the Merger. If such
approvals or consents are found to be required the parties intend to make the
appropriate filings and applications. In the event such a filing or
applications is made for the requisite foreign approvals or consents, there
can be no assurance that such approvals or consents will be granted and, if
such approvals or consents are received, there can be no assurance as to the
date of such approvals or consents. In addition, there can be no assurance
that Purchaser will be able to cause the Company or its subsidiaries to
satisfy or comply with such laws or that compliance or noncompliance will not
have adverse consequences for the Company or any subsidiary after purchase of
the Shares pursuant to the Offer or the Merger.
17. FEES AND EXPENSES.
Purchaser and Parent have retained D. F. King & Co., Inc. to serve as the
Information Agent and ChaseMellon Shareholder Services, L.L.C. to serve as the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by personal interview, mail, telephone, telex, telegraph and
other methods of electronic communication and may request brokers, dealers,
banks, trust companies and other nominees to forward the Offer materials to
beneficial holders. The Information Agent and the Depositary will each receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection with their services, including certain
liabilities under the Federal securities laws.
Parent has engaged Deutsche Bank Securities to act as its financial advisor
and as the Dealer Manager. Pursuant to a letter agreement dated November 2,
1998, Parent has agreed to pay Deutsche Bank Securities for its services,
including its services as Dealer Manager, (i) $200,000 upon the execution of
such letter agreement (the "Upfront Fee") and (ii) $2,200,000 upon the
consummation of the Offer (against which the Upfront Fee will be credited),
for its services as financial advisor to Parent. Parent has also agreed to
reimburse Deutsche Bank Securities for all reasonable expenses, and to
indemnify Deutsche Bank Securities against liabilities and expenses in
connection with its services, including liabilities under Federal securities
laws.
Except as set forth above, neither Parent nor Purchaser will pay any fees or
commissions to any broker or dealer or other person or entity in connection
with the solicitation of tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies will, upon request, be
reimbursed by Purchaser for customary mailing and handling expenses incurred
by them in forwarding the Offer materials to their customers.
18. MISCELLANEOUS.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. Purchaser is
not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of
the Offer or the acceptance of the Shares pursuant thereto, Purchaser shall
make a good faith effort to comply with such statute or seek to have such
statute declared inapplicable to the Offer. If, after such good faith effort,
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) holders of Shares in such
state. In those jurisdictions where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of Purchaser by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdictions.
47
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed with the Commission the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, setting forth its
recommendation with respect to the Offer and the reasons for its
recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the same manner set forth in
Section 8 of this Offer to Purchase (except that such material will not be
available at the regional offices of the Commission).
Lightning Acquisition Corp.
December 23, 1998
48
<PAGE>
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND
EXECUTIVE OFFICERS OF PARENT AND PURCHASER AND CERTAIN OTHER PERSONS
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each director and executive officer of Parent. Unless otherwise indicated,
each such person is a citizen of the United States of America and the business
address of each such person is c/o Rohm and Haas Company, 100 Independence
Mall West, Philadelphia, Pennsylvania 19106. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with
Parent. Unless otherwise indicated, each such person has held his or her
present occupation as set forth below, or has been an executive officer at
Parent for the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE
NAME AND ADDRESS YEARS
---------------- --------------------------------------------
<C> <S>
William J. Avery............... Director since 1997. Mr. Avery, 58, chairman,
chief executive officer and director of Crown
Cork & Seal Company, Inc.
Daniel B. Burke................ Director since 1986. Mr. Burke, 69, director
of Capital Cities/ABC, Inc. until February
1996; previously chief executive officer,
president and director of Capital Cities/ABC,
Inc. from 1990 to 1994; director of
Consolidated Rail Corporation, Darden
Restaurants and Morgan Stanley, Dean Witter,
Discover & Co.
Earl G. Graves................. Director since 1984. Mr. Graves, 63, chairman
and chief executive officer of Earl G. Graves
Ltd.; chairman and chief executive officer of
Pepsi-Cola of Washington, D.C., L.P.;
publisher and editor of Black Enterprise
magazine; General Partner, Black
Enterprise/Greenwich Street Fund; director of
Aetna Life and Casualty Company, AMR
Corporation/American Airlines, Inc. and
Federated Department Stores.
James A. Henderson............. Director since 1989. Mr. Henderson, 64,
chairman, chief executive officer and
director of Cummins Engine Company, Inc.
since 1995; chief executive officer,
president and director of Cummins Engine
Company, Inc. from 1994 to 1995 and
previously president, chief operating officer
and director of Cummins Engine Company, Inc.;
director of Ameritech Corporation, Inland
Steel Industries, Inc. and Ryerson Tull, Inc.
John H. McArthur............... Director since 1977. Mr. McArthur, 64,
consultant, George F. Baker Professor of
Business Administration Emeritus, Harvard
Business School; formerly dean of Harvard
Business School until retirement in 1995;
director of BCE, Inc., Cabot Corporation,
Glaxo Wellcome Plc., Springs Industries,
Inc., The AES Corporation and Vincam Group,
Inc.
Jorge P. Montoya............... Director since 1996. Mr. Montoya, 52,
executive vice president, The Procter &
Gamble Company and president, Procter &
Gamble Latin America since 1995; group vice
president, The Procter & Gamble Company and
president, Procter & Gamble Latin America
from 1991 to 1995.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE
NAME AND ADDRESS YEARS
---------------- --------------------------------------------
<C> <S>
Sandra O. Moose................ Director since 1981. Dr. Moose, 56, senior
vice president and director of The Boston
Consulting Group, Inc.; director of GTE
Corporation and twenty-three investment
companies sponsored by The New England Funds.
John P. Mulroney............... Director from 1982 through 1998. Mr.
Mulroney, 63, president and chief operating
officer of Rohm and Haas from 1986 until his
retirement on December 31, 1998; director of
Teradyne Inc. and Aluminum Company of
America.
Gilbert S. Omenn............... Director since 1987. Dr. Omenn, 57, executive
vice president for medical affairs, The
University of Michigan since 1997; dean of
the School of Public Health and Community
Medicine at the University of Washington,
Seattle and Professor of Medicine and
Professor of Environmental Health from 1982
until 1997; director of Amgen Inc., Immune
Response Corp., Nutraceutix, Inc. and Ostex
International, Inc.
Ronaldo H. Schmitz............. Director since 1992. Dr. Schmitz, 60, member
of the Board of Managing Directors of
Deutsche Bank AG since 1991; vice chairman of
Supervisory Board of Bertelsmann AG and
director of Glaxo Wellcome Plc.
Alan Schriesheim............... Director since 1989. Dr. Schriesheim, 68,
director emeritus of Argonne National
Laboratory since 1996; chief executive
officer and director of Argonne National
Laboratory from 1984 to 1996; director of
HEICO Corporation.
Marna C. Whittington........... Director since 1989. Dr. Whittington, 51,
chief operating officer, Morgan Stanley Dean
Witter Investment Management since 1996;
partner of the investment management firm of
Miller, Anderson & Sherrerd from 1994 until
acquired by Morgan Stanley in 1996; head of
the business core of Miller, Anderson &
Sherrerd from 1992 to 1993; director of
Federated Department Stores.
J. Lawrence Wilson............. Director since 1977. Mr. Wilson, 62, chairman
and chief executive officer of Rohm and Haas
since 1988; director of Mead Corporation, The
Vanguard Group of Investment Companies and
Cummins Engine Company, Inc.
Robert Andrew.................. Mr. Andrew, 45, vice president since 1998;
director of building products since 1997;
previously director for paper from 1995 to
1996; European business manager, specialty
industrial polymers and adhesives from 1992
to 1995.
William C. Andrews............. Mr. Andrews, 52, vice president since 1997;
business director of monomers since 1998;
previously corporate controller from 1995 to
1998; assistant controller from 1992 to 1995
and director of finance and customer service
for the European region from 1989 to 1994.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- ----------------------------------------------------------------------------------------------
<C> <S>
Thomas L. Archibald............ Mr. Archibald, 49, vice president, director of engineering and manufacturing since 1997;
previously plant manager for the Louisville, Kentucky plant from 1990 to 1996.
Paul J. Baduini................ Mr. Baduini, 51, vice president and director of ion exchange resins since 1993.
Alan Barton.................... Dr. Barton, 42, vice president since 1998; director of coatings since 1997; previously
director of industrial coatings from 1996 to 1997; European business manager of architectural
coatings from 1993 to 1996.
Bradley J. Bell................ Mr. Bell, 46, vice president and chief financial officer since 1997; treasurer from 1997 to
1998; previously vice president and treasurer of Whirlpool Corporation from 1987 to 1997. Mr.
Bell will become a senior vice president effective January 1, 1999.
Pierre Brondeau................ Dr. Brondeau, 41, vice president since 1998; president of Shipley Company since 1998;
previously vice president, chief operating officer of Shipley Company from 1997 to 1998;
director of sales, marketing and research of Shipley Company from 1995 to 1996; research
director of plastic additives from 1993 to 1995.
A. Wayne Carney................ Mr. Carney, 50, vice president since 1995; director of formulation chemicals since 1990.
Patrick R. Colau............... Dr. Colau, 53, vice president since 1995; director of polymers and resins from 1996 through
1998; previously chief operating officer from 1994 to 1995 and chief executive officer from
1992 to 1994 of Shipley Company. Dr. Colau will become a senior vice president and director of
the performance polymers business group effective January 1, 1999.
Nance K. Dicciani.............. Dr. Dicciani, 51, vice president since 1993; director of monomers and chairman of RohMax from
1996 to 1998; previously director for petroleum chemicals from 1991 to 1996. Dr. Dicciani will
become a senior vice president, director of the specialty chemicals business group and
director of the European region effective January 1, 1999.
David T. Espenshade............ Mr. Espenshade, 60, vice president since 1993; director of materials management since 1990.
Carlos Estevez................. Mr. Estevez, 55, vice president since 1996; regional director for Latin America from 1996
through 1998; previously business director for agricultural chemicals in Latin America from
1995 to 1996 and general manager of Rohm and Haas Brazil and Southern Cone countries from 1992
to 1996. Mr. Estevez will become director of agricultural chemicals effective January 1, 1999.
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE
NAME AND ADDRESS YEARS
---------------- --------------------------------------------
<C> <S>
J. Michael Fitzpatrick......... Dr. Fitzpatrick, 52, vice president since
1993; chief technology officer from 1996
through 1998; previously director of research
from 1993 to 1995 and general manager of Rohm
and Haas (UK) Limited and European regional
business director for polymers and resins
from 1990 to 1993. Dr. Fitzpatrick will join
the Board of Directors and become president
and chief operating officer effective January
1, 1999.
Maria L. Guerin................ Dr. Guerin, 46, vice president and director
of human resources since 1994; previously
manager of training and development from 1991
to 1994.
Rajiv L. Gupta................. Mr. Gupta, 53, vice president and regional
director of Asia-Pacific from 1993 through
1998; previously director of plastics
additives from 1989 to 1993. Mr. Gupta will
become a director of Rohm and Haas Company
and Vice Chairman effective January 1, 1999.
Nicholas Gutwein............... Mr. Gutwein, 38, vice president since 1998;
director of specialty polymers since 1997;
previously director of fiber and textile
polymers from 1996 to 1997; director, leather
chemicals from 1992 to 1996.
Howard C. Levy................. Mr. Levy, 55, vice president from 1993 and
director of biocides from 1989 until his
retirement on December 31, 1998.
Philip G. Lewis................ Dr. Lewis, 48, vice president since 1993;
director of safety, health and environmental
affairs and product integrity since 1993.
Francis Maher.................. Mr. Maher, 55, vice president since 1998;
business director of ion exchange resins
Asia-Pacific and area director for Japan and
Korea from 1996 through 1998; previously
business manager, separations and area
director for Japan and Korea from 1993 to
1996. Mr. Maher will become director of Asia-
Pacific region on January 1, 1999.
Steve Rauscher................. Mr. Rauscher, 51, vice president since 1998;
supply chain director of performance polymers
since 1996; previously business director,
polymers & resins Europe and General Manager
Rohm and Haas UK 1993 to 1996.
Richard C. Shipley............. Mr. Shipley, 53, vice president since 1995;
Chairman and CEO of Shipley Company since
1998; previously president of Shipley Company
from 1985 to 1998.
William H. Staas............... Mr. Staas, 54, vice president from 1993 until
his retirement in early 1999; director of
research from 1996 until his retirement in
early 1999; previously director for monomers
from 1990 to 1996.
</TABLE>
I-4
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE
NAME AND ADDRESS YEARS
---------------- --------------------------------------------
<C> <S>
David A. Stitely............... Mr. Stitely, 58, vice president since 1995;
director of information technology and chief
information officer since 1990.
John F. Talucci................ Mr. Talucci, 59, vice president and director
of agricultural chemicals from 1989 until his
retirement on December 31, 1998.
Gerard Tarzia.................. Mr. Tarzia, 38, vice president since 1998;
business manager, building products North
America from 1997 to 1998; director,
construction products from 1996 to 1997;
director general, Rohm and Haas Espana and
business manager, fibers, textiles, nonwovens
and adhesives Europe from 1995 to 1996;
business manager, industrial coatings Europe
from 1993 to 1995. Mr. Tarzia will become
director for biocides on January 1, 1999.
Charles M. Tatum............... Dr. Tatum, 51, vice president since 1990;
director of plastics additives from 1994
through 1998; previously director of research
from 1989 to 1994. Dr. Tatum will become a
senior vice president and the chief
technology officer effective January 1, 1999.
David Underwood................ Mr. Underwood, 41, vice president since 1998;
North American business manager of plastic
additives from 1996 through 1998; previously
business manager, systems for polymers &
resins from 1995 to 1996; general manager
Rohm and Haas Spain from 1991 to 1995. Mr.
Underwood will become director of plastics
additives effective January 1, 1999.
Basil A. Vassiliou............. Mr. Vassiliou, 63, senior vice president from
1998 until his retirement on December 31,
1998; vice president and regional director of
Europe from 1986 until his retirement;
business group executive of plastics from
1991 through 1995.
Robert P. Vogel................ Mr. Vogel, 54, vice president since 1994;
general counsel responsible for legal, tax
and regulatory matters since 1994; previously
associate general counsel, regulatory counsel
and director of safety, health and
environment and product integrity from 1991
to 1993.
</TABLE>
I-5
<PAGE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each director and executive officer of Purchaser. Each such person is a
citizen of the United States of America, and the business address of each such
person is c/o Rohm and Haas Company, Rodney Building, Suite 104, 3411
Silverside Road, Wilmington, Delaware 19810.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL
NAME AND ADDRESS POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- ----------------------------------------------------
<C> <S>
Bradley J. Bell................ Director and president of Purchaser since 1998. See Part 1
of the Schedule I.
Rajiv L. Gupta................. Director and Chairman of Purchaser since 1998. See Part 1 of
this Schedule I.
Stephen J. Robinson............ Director of Purchaser since 1998. Mr. Robinson, 48, director
of strategic planning and licensing services of Parent, 1996
to 1998; operations director, animal sciences, Monsanto,
1995-1996; director, corporate planning, Monsanto, 1993 to
1995.
Pierre Brondeau................ President of Purchaser since 1998. See Part 1 of this
Schedule I.
Michael S. Foster.............. Vice president of Purchaser since 1998. Mr. Foster, 54, vice
president and business unit director, printing wiring
boards/interconnect of Shipley Company since 1990.
</TABLE>
I-6
<PAGE>
SCHEDULE II
CERTAIN INFORMATION ABOUT PARENT REQUIRED BY NEW YORK LAW
EDUCATIONAL OPPORTUNITIES
Parent provides assistance to eligible employees participating in study
programs leading to an undergraduate or an advanced degree. Such study
programs must be consistent with Parent's business goals and objectives and
applicable to the employees field of work. Parent may limit the reimbursement
of the academic costs of tuition.
RELOCATION ADJUSTMENTS
Parent may reimburse job applicants for reasonable and actual interview
expenses, and may reimburse new and existing employees for reasonable and
actual travel and relocation expenses in accordance with the provisions of
corporate policy.
CHARITABLE CONTRIBUTIONS
Parent supports a broad spectrum of public interest activities through a
gifts and grants program, with emphasis on recognized agencies in such fields
as health, education, civic affairs, and cultural activities. Individual
companies are authorized to make community contributions out of their
operating funds.
POST-EMPLOYMENT BENEFIT PLANS
Parent sponsors a number of retirement plans that cover substantially all
employees. They provide salaried and hourly employees with benefits based on
employees' years of service and average compensation in the years preceding
retirement. Certain health care and life insurance benefits are provided to
eligible retirees by Parent. The health benefits generally provide for cost-
sharing through participant contributions and co-payments.
STOCK OPTION AND SAVINGS PLAN
Effective January 1, 1999, Parent has enacted, subject to stockholder
approval, a Stock Plan under which selected employees may be granted stock
options or restricted stock. The terms of any options and restricted stock are
determined by the Executive Compensation Committee.
Parent sponsors an Employee Stock Ownership and Savings Plan that covers
substantially all employees. Parent provides a matching contribution of 60% of
the employee's contributions up to 6% of base compensation. Parent also
sponsors a non-qualified savings plan for which a limited number of employees
are eligible.
For information concerning Parent's obligations to provide employee benefits
under the Merger Agreement (which differ in certain respects from those
provided above), see Section 12 under the caption "Employee Plans and Benefits
and Agreements."
II-1
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary, at the applicable address set
forth below:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Registered Mail: By Overnight Courier: By Hand Delivery:
Reorganization Reorganization Reorganization
Department Department Department
Post Office Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 13th Floor Mail Stop-Reorg
07606 New York, NY 10271 Ridgefield Park, NJ
07660
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 296-4293
Confirm Facsimile by Telephone Only:
(201) 296-4860
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may be directed to the Information Agent or
the Dealer Manager at the address and telephone number set forth below.
Stockholders may also contact their broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 Water Street
New York, NY 10005
Call Toll Free (800) 829-6554
The Dealer Manager for the Offer is:
DEUTSCHE BANK SECURITIES INC.
31 West 52nd Street
New York, NY 10019
Call Toll Free (800) 334-1898
extension 8998
<PAGE>
Exhibit (a)(2)
Letter of Transmittal.
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF
COMMON STOCK
OF
LEARONAL, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED DECEMBER 23, 1998
BY
LIGHTNING ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JANUARY 22, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Hand: By Overnight Delivery:
Reorganization Reorganization Reorganization
Department Post Office Department 120 Broadway Department 85
Box 3301 South 13th floor New York, NY Challenger Road Mail
Hackensack, NJ 07606 10271 Stop-Reorg Ridgefield
Park, NJ 07660
By Facsimile Transmission: Confirm Receipt of Facsimile by
(For Eligible Institutions Only) Telephone Only:
(201) 296-4293 (201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of LeaRonal, Inc.
if certificates for Shares (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in Instruction 2 below) is utilized, if
delivery of Shares is to be made by book-entry transfer to an account
maintained by the Depositary at the Book-Entry Transfer Facility (as defined
in and pursuant to the procedures set forth in Section 3 of the Offer to
Purchase). Stockholders who deliver Shares by book-entry transfer are referred
to herein as "Book-Entry Stockholders" and other stockholders who deliver
shares are referred to herein as "Certificate Stockholders."
1
<PAGE>
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation
(as defined in Section 3 of the Offer to Purchase) with respect to, their
Shares and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender
their Shares pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS
TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution ______________________________________________
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) ___________________________________________
Window Ticket Number (if any) ____________________________________________
Date of Execution of Notice of Guaranteed Delivery _______________________
Name of Institution that Guaranteed Delivery _____________________________
If delivered by Book-Entry Transfer, check box: [_]
Account Number ___________________________________________________________
Transaction Code Number __________________________________________________
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------
SHARES TENDERED
(ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S) (PLEASE FILL IN, IF BLANK, SHARE TOTAL NUMBER OF
EXACTLY AS NAME(S) APPEAR(S) ON SHARE CERTIFICATE SHARES REPRESENTED NUMBER OF
CERTIFICATE(S)) NUMBER(S)(1) BY CERTIFICATE(S)(1) SHARES TENDERED(2)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) NEED NOT BE COMPLETED BY BOOK-ENTRY STOCKHOLDERS.
(2) UNLESS OTHERWISE INDICATED, ALL SHARES REPRESENTED BY SHARE CERTIFICATES
DELIVERED TO THE DEPOSITARY WILL BE DEEMED TO HAVE BEEN TENDERED. SEE
INSTRUCTION 4.
- --------------------------------------------------------------------------------
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN
THIS LETTER OF TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Lightning Acquisition Corp., a New York
corporation ("Purchaser") and a wholly owned subsidiary of Rohm and Haas
Company, a Delaware corporation ("Parent"), the above-described shares of
common stock, par value $1.00 per share (the "Shares"), of LeaRonal, Inc., a
New York corporation (the "Company"), pursuant to Purchaser's offer to
purchase all of the outstanding Shares at a price of $34.00 per Share, net to
the seller in cash, without interest (the "Offer Price") upon the terms and
subject to the conditions set forth in the Offer to Purchase dated December
23, 1998, and in this Letter of Transmittal (which, together with any
amendments or supplements thereto or hereto, collectively constitute the
"Offer"). The undersigned understands that Purchaser reserves the right to
transfer or assign, in whole at any time, or in part from time to time, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve Purchaser of its obligations under the Offer and will in no
way prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
Receipt of the Offer is hereby acknowledged.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 20, 1998 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and 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, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all non-cash dividends, distributions, rights, other
Shares or other securities issued or issuable in respect thereof on or after
December 20, 1998 (collectively, "Distributions")) and irrevocably constitutes
and appoints the Depositary the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Shares (and all Distributions), with full
power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (i) deliver certificates for
such Shares (and any and all Distributions), or transfer ownership of such
Shares (and any and all Distributions) on the account books maintained by the
Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares (and any and all Distributions) for
transfer on the books of the Company, and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Rajiv L. Gupta, Bradley J. Bell and Pierre Brondeau in their
respective capacities as officers or directors of Purchaser, and any
individual who shall thereafter succeed to any such office of Purchaser, and
each of them, and any other designees of Purchaser, the attorneys-in-fact and
proxies of the undersigned, each with full power of substitution, to vote at
any annual or special meeting of the Company's stockholders or any adjournment
or postponement thereof or otherwise in such manner as each such attorney-in-
fact and proxy or his substitute shall in his sole discretion deem proper with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, and to otherwise act as each such attorney-in-fact and
proxy or his substitute shall in his sole discretion deem proper with respect
to, all of the Shares (and any and all Distributions) tendered hereby and
accepted for payment by Purchaser. This appointment will be effective if and
when, and only to the extent that, Purchaser accepts such Shares for payment
pursuant to the Offer. This power of attorney and proxy are irrevocable and
are granted in consideration of the acceptance for payment of such Shares in
accordance with the terms of the Offer. Such acceptance for payment shall,
without further action, revoke any prior powers of attorney and proxies
granted by the undersigned at any
3
<PAGE>
time with respect to such Shares (and any and all Distributions), and no
subsequent powers of attorney, proxies, consents or revocations may be given
by the undersigned with respect thereto (and, if given, will not be deemed
effective). Purchaser reserves the right to require that, in order for Shares
or other securities to be deemed validly tendered, immediately upon
Purchaser's acceptance for payment of such Shares, Purchaser must be able to
exercise full voting, consent and other rights with respect to such Shares
(and any and all Distributions), including voting at any meeting of the
Company's stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned owns the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when
the same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances and the same will
not be subject to any adverse claims. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby and all Distributions. In addition, the
undersigned shall remit and transfer promptly to the Depositary for the
account of Purchaser all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and, pending
such remittance and transfer or appropriate assurance thereof, Purchaser shall
be entitled to all rights and privileges as owner of each such Distribution
and may withhold the entire purchase price of the Shares tendered hereby or
deduct from such purchase price, the amount or value of such Distribution as
determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in
the Instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer (and if the Offer is extended or amended, the terms or conditions of any
such extension or amendment). Without limiting the foregoing, if the price to
be paid in the Offer is amended in accordance with the terms of the Merger
Agreement, the price to be paid to the undersigned will be the amended price
notwithstanding the fact that a different price is stated in this Letter of
Transmittal. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return
any certificates for Shares not tendered or accepted for payment in the
name(s) of the registered holder(s) appearing above under "Description of
Shares Tendered." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price of all
Shares purchased and/or return any certificates for Shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and/or return
any certificates evidencing Shares not tendered or not accepted for payment
(and any accompanying documents, as appropriate) in the name(s) of, and
deliver such check and/or return any such certificates (and any accompanying
documents, as appropriate) to, the person(s) so indicated. Unless otherwise
indicated herein in the box entitled "Special Payment Instructions," please
credit any Shares tendered herewith by book-entry transfer that are not
accepted for payment by crediting the account at the Book-Entry Transfer
Facility designated above. The undersigned recognizes that Purchaser has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder thereof if Purchaser does not
accept for payment any of the Shares so tendered.
4
<PAGE>
[_] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES: _______
- ------------------------------------- -----------------------------------------
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the To be completed ONLY if certifi-
check for the purchase price of cates for Shares not tendered or
Shares accepted for payment is to not accepted for payment and/or
be issued in the name of someone the check for the purchase price
other than the undersigned, if of Shares accepted for payment is
certificates for Shares not ten- to be sent to someone other than
dered or not accepted for payment the undersigned or to the under-
are to be issued in the name of signed at an address other than
someone other than the under- that shown under "Description of
signed or if Shares tendered Shares Tendered."
hereby and delivered by book-en-
try transfer that are not ac- Mail check and/or Share certifi-
cepted for payment are to be re- cates to:
turned by credit to an account
maintained at a Book-Entry Trans- Name______________________________
fer Facility other than the ac- (PLEASE PRINT)
count indicated above.
Address __________________________
Issue check and/or Share certifi-
cate(s) to: __________________________________
(INCLUDE ZIP CODE)
Name _____________________________
(PLEASE PRINT) __________________________________
(TAXPAYER IDENTIFICATION OR
Address __________________________ SOCIAL SECURITY NUMBER) (SEE
SUBSTITUTE FORM W-9)
__________________________________
(INCLUDE ZIP CODE)
__________________________________
(TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER) (SEE
SUBSTITUTE FORM W-9)
[_] Credit Shares delivered by
book-entry transfer and not
purchased to the Book-Entry
Transfer Facility account.
Account number ___________________
- ------------------------------------- -----------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 BELOW)
________________________________________________________________________________
________________________________________________________________________________
(SIGNATURE(S) OF OWNER(S))
Name(s)________________________________________________________________________
Name of Firm __________________________________________________________________
(PLEASE PRINT)
Capacity (full title) _________________________________________________________
(SEE INSTRUCTION 5)
Address________________________________________________________________________
________________________________________________________________________
(ZIP CODE)
Area Code and Telephone Number ________________________________________________
Taxpayer Identification or Social Security Number _____________________________
(SEE SUBSTITUTE FORM W-9)
Dated: ________________, 199_
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by the person(s) authorized
to become registered holder(s) by certifi-cates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth full title and see
Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized signature(s) _______________________________________________________
Name(s)________________________________________________________________________
________________________________________________________________________
Name of Firm___________________________________________________________________
Address________________________________________________________________________
________________________________________________________________________
(ZIP CODE)
Area Code and Telephone Number_________________________________________________
Dated: ________________, 199_
- --------------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each, an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by stockholders of
the Company either if Share certificates are to be forwarded herewith or,
unless an Agent's Message is utilized, if delivery of Shares is to be made by
book-entry transfer pursuant to the procedures set forth herein and in Section
3 of the Offer to Purchase. For a stockholder validly to tender Shares
pursuant to the Offer, either (a) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with any required
signature guarantees or an Agent's Message (in connection with book-entry
transfer) and any other required documents, must be received by the Depositary
at one of its addresses set forth herein prior to the Expiration Date and
either (i) certificates for tendered Shares must be received by the Depositary
at one of such addresses prior to the Expiration Date or (ii) Shares must be
delivered pursuant to the procedures for book-entry transfer set forth herein
and in Section 3 of the Offer to Purchase and a Book-Entry Confirmation must
be received by the Depositary prior to the Expiration Date or (b) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth herein and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-
entry transfer procedures on a timely basis may tender their Shares by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth herein and in Section
3 of the Offer to Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all tendered Shares), together
with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message, and any other required documents
must be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the New York Stock Exchange is open for business.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
7
<PAGE>
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares that are to be tendered in the box entitled "Number of Shares
Tendered." In any such case, new certificate(s) for the remainder of the
Shares that were evidenced by the old certificates will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date or the
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 certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are held of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, 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 or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of the authority of such person so
to act must be submitted. If this Letter of Transmittal is signed by the
registered holder(s) of the Shares listed and transmitted hereby, no
endorsements of Share certificates or separate stock powers are required
unless payment or certificates for Shares not tendered or not accepted for
payment are to be issued in the name of a person other than the registered
holder(s). Signatures on any such Share certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share 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 Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
8
<PAGE>
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or
if tendered certificates are registered in the name of any person other than
the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered holder(s) or such other
person) payable on account of the transfer to such other person will be
deducted from the purchase price of such Shares purchased unless evidence
satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares accepted for payment is to be issued in the name of,
and/or Share certificates for Shares not accepted for payment or not tendered
are to be issued in the name of and/or returned to, a person other than the
signer of this Letter of Transmittal or if a check is to be sent, and/or such
certificates are to be returned, to a person other than the signer of this
Letter of Transmittal, or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. Any
stockholder(s) delivering Shares by book-entry transfer may request that
Shares not purchased be credited to such account maintained at the Book-Entry
Transfer Facility as such stockholder(s) may designate in the box entitled
"Special Payment Instructions." If no such instructions are given, any such
Shares not purchased will be returned by crediting the account at the Book-
Entry Transfer Facility designated above as the account from which such Shares
were delivered.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or Dealer Manager at the addresses and phone
numbers set forth below, or from brokers, dealers, commercial banks or trust
companies.
9. WAIVER OF CONDITIONS. Subject to the Merger Agreement, Purchaser reserves
the absolute right in its sole discretion to waive, at any time or from time
to time, any of the specified conditions of the Offer, in whole or in part, in
the case of any Shares tendered.
10. BACKUP WITHHOLDING. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify,
under penalties of perjury, that such TIN is correct and that such stockholder
is not subject to backup withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
If the tendering stockholder has not been issued a TIN and has applied for a
TIN or intends to apply for a TIN in the near future, such stockholder should
write "Applied For" in the space provided for the
9
<PAGE>
TIN in Part 1 of the Substitute Form W-9 and sign and date the Substitute Form
W-9, and the stockholder or other payee must also complete the Certificate of
Awaiting Taxpayer Identification Number below in order to avoid backup
withholding. Notwithstanding that the Certificate of Awaiting Taxpayer
Identification Number is completed, the Depositary will withhold 31% on all
payments made prior to the time a properly certified TIN is provided to the
Depositary. However, such amounts will be refunded to such stockholder if a
TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
10
<PAGE>
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
such stockholder's correct taxpayer identification number on Substitute Form
W-9 below. If such stockholder is an individual, the taxpayer identification
number is his social security number. If the Depositary is not provided with
the correct taxpayer identification number, the stockholder may be subject to
a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations, and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9
to the Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such stockholder is awaiting a taxpayer identification number).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the tendering stockholder has not been issued a TIN and
has applied for a TIN or intends to apply for a TIN in the near future, such
stockholder should write "Applied For" in the space provided for the TIN in
Part 1 of the Substitute Form W-9 and sign and date the Substitute Form W-9,
and the stockholder or other payee must also complete the Certificate of
Awaiting Taxpayer Identification Number below in order to avoid backup
withholding. Notwithstanding that the Certificate of Awaiting Taxpayer
Identification Number is completed, the Depositary will withhold 31% on all
payments made prior to the time a properly certified TIN is provided to the
Depositary. However, such amounts will be refunded to such stockholder if a
TIN is provided to the Depositary within 60 days.
11
<PAGE>
PAYOR'S NAME:
- -------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR TIN: __________________
TIN IN THE BOX AT THE RIGHT Social Security Number
AND CERTIFY BY SIGNING AND or Employer
SUBSTITUTE DATING BELOW. Identification Number
--------------------------------------------------------
PART 2--For Payees exempt from backup withholding,
FORM W-9 see the enclosed Guidelines for Certification of
DEPARTMENT OF Taxpayer Identification Number on Substitute Form W-9
THE TREASURY, and complete as instructed therein.
INTERNAL Certification--Under penalties of perjury, I certify
REVENUE that the number shown on this form is my correct TIN
SERVICE (or I am waiting for a number to be issued to me).
--------------------------------------------------------
PAYOR'S REQUEST FOR
TAXPAYER
IDENTIFICATION NUMBER
("TIN") SIGNATURE: ___________________ DATE: ________________
AND CERTIFICATION
- -------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS--See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for the appropriate TIN
and signature for the certification. Persons awaiting a taxpayer
identification number should complete the additional certification described
below. Foreign persons claiming exemption from these requirements should
consult the Depositary regarding proper establishment of the exemption.
NOTE: FAILURE TO COMPLETE AND RETURN THIS 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.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR
TIN.
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a TIN has not been issued to
me, and either (1) I have mailed or delivered an application to receive a
TIN to the appropriate IRS Center or Social Security Administration Office
or (2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a TIN by the time of payment, 31% of
all payments pursuant to the Offer made to me thereafter will be withheld
until I provide a number.
SIGNATURE: __________________________________________ Date: ______________
- -------------------------------------------------------------------------------
12
<PAGE>
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 Water Street
New York, New York 10005
CALL TOLL FREE: (800) 829-6554
The Dealer Manager for the Offer is:
DEUTSCHE BANK SECURITIES INC.
31 West 52nd Street
New York, New York 10019
CALL TOLL FREE: (800) 334-1898
extension 8998
<PAGE>
Exhibit (a)(3)
Notice of Guaranteed Delivery.
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
LEARONAL, INC.
TO
LIGHTNING ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
for Shares (as defined below) are not immediately available, if the procedure
for book-entry transfer cannot be completed prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase described below), or if time
will not permit all required documents to reach the Depositary prior to the
Expiration Date. Such form may be delivered by hand, transmitted by facsimile
transmission or mailed to the Depositary. See Section 3 of the Offer to
Purchase.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Hand: By Overnight Delivery:
Reorganization Reorganization Reorganization
Department Department 120 Broadway, Department 85 Challenger
Post Office Box 3301 13th Floor New York, NY RoadMail Stop-
South Hackensack, NJ 10271 ReorgRidgefield Park, NJ
07606 07660
By Facsimile Transmission: Confirm Receipt of Facsimile by
(For Eligible Institutions Only) Telephone Only:
(201) 296-4293 (201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE
INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST
APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF
TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Lightning Acquisition Corp., a New York
corporation ("Purchaser") and a wholly owned subsidiary of Rohm and Haas
Company, a Delaware corporation, upon the terms and subject to the conditions
set forth in Purchaser's Offer to Purchase dated December 23, 1998 (the "Offer
to Purchase") and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, constitute the "Offer"), receipt of which
is hereby acknowledged, the number of shares set forth below of common stock,
par value $1.00 per share (the "Shares"), of LeaRonal, Inc., a New York
corporation, pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
Signature(s) _______________________ Address(es) ________________________
____________________________________ ____________________________________
ZIP CODE
Name(s) of Record Holder(s) ________
Area Code and Tel. No.(s) __________
____________________________________
PLEASE PRINT OR TYPE Check box if Shares will be
tendered by book-entry transfer: [_]
____________________________________
Number of Shares ___________________ Account Number _____________________
Certificate No.(s) (If Available)
____________________________________
____________________________________
Dated _________________________ 199_
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program,
the Stock Exchange Medallion Program or an "eligible guarantor institution"
as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended, hereby guarantees to deliver to the Depositary either
certificates representing the Shares tendered hereby, in proper form for
transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's accounts at The Depository Trust Company, in each case with
delivery of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, or an Agent's
Message (as defined in the Offer to Purchase), and any other required
documents, within three trading days (as defined in the Offer to Purchase)
after the date hereof.
____________________________________ ____________________________________
NAME OF FIRM AUTHORIZED SIGNATURE
____________________________________ Name _______________________________
ADDRESS PLEASE PRINT OR TYPE
____________________________________ Title ______________________________
ZIP CODE
Date __________________________,199
Area Code and Tel. No. _____________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
Exhibit (a)(4)
Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF
COMMON STOCK
OF
LEARONAL, INC.
AT
$34.00 NET PER SHARE
BY
LIGHTNING ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JANUARY 22, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
December 23, 1998
To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees:
We have been appointed by Lightning Acquisition Corp., a New York
corporation ("Purchaser") and a wholly owned subsidiary of Rohm and Haas
Company, a Delaware corporation ("Parent"), to act as Dealer Manager in
connection with Purchaser's offer to purchase all outstanding shares of common
stock, par value $1.00 per share (the "Shares"), of LeaRonal, Inc., a New York
corporation (the "Company"), at $34.00 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 23, 1998 (the "Offer to Purchase") and in
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer") enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares representing at least two-thirds of the Fully Diluted Shares (as
defined in the Offer to Purchase) and (ii) any applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, having
expired or been terminated. The Offer is also subject to the other conditions
set forth in the Offer to Purchase. See Section 15 of the Offer to Purchase.
<PAGE>
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 23, 1998;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be
delivered to ChaseMellon Shareholder Services, L.L.C. (the "Depositary"),
or if the procedures for book-entry transfer cannot be completed, by the
Expiration Date (as defined in the Offer to Purchase);
4. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
5. A letter to stockholders of the Company from Ronald F. Ostrow,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 dated December 23,
1998, which has been filed by the Company with the Securities and Exchange
Commission;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for Shares which are
validly tendered prior to the Expiration Date (as defined in the Offer to
Purchase) and not theretofore properly withdrawn when, as and if Purchaser
gives oral or written notice to the Depositary of Purchaser's acceptance of
such Shares for payment pursuant to the Offer. Payment for Shares purchased
pursuant to the Offer will in all cases be made only after timely receipt by
the Depositary of (i) certificates for such Shares, or timely confirmation of
a book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company, pursuant to the procedures described in Section 3 of
the Offer to Purchase, (ii) a properly completed and duly executed Letter of
Transmittal (or a properly completed and manually signed facsimile thereof) or
an Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry transfer and (iii) all other documents required by the Letter of
Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary, the Information Agent and the Dealer
Manager as described in the Offer to Purchase) for soliciting tenders of
Shares pursuant to the Offer. Purchaser will, however, upon request, reimburse
brokers, dealers, commercial banks and trust companies for customary mailing
and handling costs incurred by them in forwarding the enclosed materials to
their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, except as otherwise provided
in Instruction 6 of the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JANUARY 22, 1999, UNLESS THE OFFER IS EXTENDED.
2
<PAGE>
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of Shares, and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and in
the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers
set forth on the back cover of the Offer to Purchase.
Very truly yours,
Deutsche Bank Securities Inc.
as Dealer Manager
31 West 52nd Street
New York, New York 10019
Call Toll Free: (800) 334-1898
extension 8998
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE DEALER MANAGER, THE
INFORMATION AGENT, THE DEPOSITARY, OR ANY AFFILIATE OF ANY OF THE FOREGOING,
OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT
ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
Exhibit (a)(5)
Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies
and Others Nominees.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF
COMMON STOCK
OF
LEARONAL, INC.
AT
$34.00 NET PER SHARE IN CASH
BY
LIGHTNING ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JANUARY 22, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
December 23, 1998
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated December 23,
1998 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") in connection with the offer by Lightning Acquisition Corp., a
New York corporation ("Purchaser"), and a wholly owned subsidiary of Rohm and
Haas Company, a Delaware corporation ("Parent"), to purchase all outstanding
shares of common stock, par value $1.00 per share (the "Shares"), of LeaRonal,
Inc., a New York corporation (the "Company"), at $34.00 per Share, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of Transmittal
enclosed herewith. WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR
ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE ENCLOSED LETTER OF TRANSMITTAL
IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO
TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase. Your attention is invited to
the following:
1. The offer price is $34.00 per Share, net to you in cash without
interest.
<PAGE>
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement (as defined in the Offer to Purchase) and the transactions
contemplated thereby, including the Offer and the Merger (each as defined
in the Offer to Purchase), and determined that the Offer and the Merger are
fair to, and in the best interests of, the Company's stockholders and
recommends that stockholders accept the Offer and tender their Shares
pursuant to the Offer.
4. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on Friday, January 22, 1999, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares representing at least two-thirds of the Fully Diluted Shares (as
defined in the Offer to Purchase) and any applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
having expired or been terminated. The Offer is also subject to the other
conditions set forth in the Offer to Purchase. See Section 15 of the Offer
to Purchase.
6. Any stock transfer taxes applicable to the sale of Shares to Purchaser
pursuant to the Offer will be paid by Purchaser, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of the Shares pursuant thereto, Purchaser shall make a good faith
effort to comply with such statute or seek to have such statute declared
inapplicable to the Offer. If, after such good faith effort, Purchaser cannot
comply with such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) holders of Shares in such state. In
those jurisdictions where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of Purchaser by the Dealer Manager for the Offer or one or
more registered brokers or dealers licensed under the laws of such
jurisdictions.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares
will be tendered unless otherwise specified on the reverse side of this
letter. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf prior to the expiration of the Offer.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK OF LEARONAL, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated December 23, 1998 and the related Letter of Transmittal in
connection with the Offer by Lightning Acquisition Corp., a New York
corporation and a wholly owned subsidiary of Rohm and Haas Company, a Delaware
corporation, to purchase all outstanding shares of common stock, par value
$1.00 per share (the "Shares"), of LeaRonal, Inc., a New York corporation.
This will instruct you to tender the number of Shares indicated below (or if
no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
- --------------------------------------------------------------------------------
Number of Shares Tendered:* _________________________________________________
Account No: _________________________________________________________________
Dated: ______________________________________________________________________
SIGN HERE
Signature(s): _______________________________________________________________
Please type or print address(es): ___________________________________________
Area Code and Telephone Number: _____________________________________________
Taxpayer Identification or Social Security Number(s): _______________________
- --------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
Exhibit (a)(6)
Guidelines for Certification of Taxpayer Identification Number on Substite Form
W-9.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------- ---------------------------------------------------------------
GIVE THE NAME AND GIVE THE NAME AND
SOCIAL SECURITY SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------------------------------------- ---------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 9. A valid trust, estate, or pension Legal entity (Do not
trust furnish the
2. Two or more individuals (joint The actual owner identifying number of
account) of the account or, if the personal
combined funds, any representative or
one of the trustee unless the
individuals(2) legal entity itself is
not designated in the
3. Husband and wife (joint account) The actual owner of account title.)(1)
the account or, if
joint funds, either 10. Corporate account The organization
person(2)
11. Religious, charitable, or The organization
4. Custodian account of a minor The minor(3) educational organization account
(Uniform Gift to
Minors Act) 12. Partnership account held in The partnership
the name of the business
5. Adult and minor (joint account) The adult or, if the
minor is only 13. Association, club, or other The organization
contributor, the tax-exempt organization
minor(1)
14. A broker or registered nominee The broker or
6. Account in the name of guardian The ward, minor, or nominee
or committee for a designated incompetent person(4)
ward, minor, or incompetent 15. Account with the Department of The public
person entity Agriculture in the name
of a public entity (such as a
7. a. The usual revocable The grantor-trustee(1) State or local government,
savings trust account school district, or prison)
(grantor is also that receives agricultural
trustee) program payments
---------------------------------------------------------------
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
8. Sole proprietorship account The owner(5)
- -------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the legal trust, estate, or pension trust.
(2) List first and circle the name of the person whose number you furnish.
(3) Circle the minor's name and furnish the minor's social security number.
(4) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(5) Show the name of the owner.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a TIN or you don't know your number, obtain Internal Revenue
Service Form SS-5, Application for a Social Security Number Card, or Form SS-
4, Application for Employer Identification Number, at your local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization, or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
. A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
Payments of dividends and patronage dividends not generally subject to backup
withholding 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 of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
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.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL
REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
Exhibit (a)(7)
Press Release dated December 21, 1998
<PAGE>
[LETTERHEAD OF ROHM AND HAAS COMPANY APPEARS HERE]
ROHM AND HAAS TO ACQUIRE LEARONAL;
WILL BE COMBINED WITH SHIPLEY OPERATIONS
Philadelphia, PA, December 21, 1998: Rohm and Haas Company (NYSE: ROH) and
LeaRonal, Inc. (NYSE: LRI) of Freeport, New York, announced today they have
signed a definitive merger agreement for Rohm and Haas to acquire all of the
outstanding shares of LeaRonal, a maker of specialty chemicals for the
electronics industry, for $34 per share. The value of the transaction is
approximately $460 million. LeaRonal will be combined with Shipley Company, the
cornerstone of Rohm and Haas's $400 million Electronic Materials business group.
LeaRonal, which reported $242 million in fiscal 1998 sales, is a rapidly growing
firm that develops and makes specialty chemical processes for the manufacture of
printed circuit boards, semiconductor packaging and for electronic connector
plating. LeaRonal also provides processes for metal-finishing applications.
Under the merger agreement, Rohm and Haas soon will commence a cash tender offer
for all the outstanding common shares of LeaRonal. Following the consummation of
the tender offer, Rohm and Haas will acquire through a merger all shares not
purchased in the tender offer at the same price.
"This is an excellent opportunity for LeaRonal because it will accelerate the
growth of our patented technologies into new markets around the world," said
Ronald Ostrow, President and CEO of LeaRonal. Added Rajiv L. Gupta, Vice
Chairman elect of Rohm and Haas and leader of the Electronic Materials business
group, "This is a wonderful marriage of complementary technologies, geographic
presence and cultures that share a strong entrepreneurial spirit. We are
fortunate LeaRonal wants to join forces with us, for they are our partner of
choice." Gupta continued, "We look forward to having LeaRonal and Shipley
management working side by side to create a new organization that will bring
cutting-edge technology and products to the electronics market faster and more
efficiently."
The boards of directors of both firms have approved the transaction. In
addition, holders
--more--
<PAGE>
of approximately 30 percent of outstanding LeaRonal shares have agreed to tender
their shares and have granted Rohm and Haas an option to purchase those shares.
The tender offer is contingent upon at least two-thirds of LeaRonal
fully-diluted shares being tendered and receipt of normal regulatory approvals.
The offer will expire 20 business days after it is begun, unless extended or
withdrawn.
# # #
Contacts: Laura L. Hadden Mr. Ronald F. Ostrow
Rohm and Haas Company President and CEO, LeaRonal, Inc.
215-592-3054 516-868-8800 x202
or [email protected]
Editor's Notes: Rohm and Haas is a Fortune 400 specialty chemical company with
nearly $4 billion in annual sales. The company's specialty products are found in
many of the items that improve the quality of life, including decorative and
industrial paints, semiconductors, shampoos and other personal care products,
and water purification systems. Shipley Company is the cornerstone of Rohm and
Haas's Electronic Materials division, which reported sales of $400 million in
1997. This business, which became wholly owned by Rohm and Haas in 1992, has
reported revenue growth at approximately 11 percent per year during the past
five years.
For more than 40 years, LeaRonal, Inc. has been a leader in the development and
marketing of specialty chemical additives used by the worldwide electronics and
metal finishing industries. The company has developed a number of patented
precious metal electoplating processes that are used in the production of
semiconductors, printed circuit boards and electrical contacts used in guidance
systems, telecommunications equipment, computers, consumer appliances,
electronic games, and so on. This technology also is used to make decorative
items including watches, spectacle frames and jewelry. The company reported $242
million in sales for its fiscal year 1998, which ended on February 28, 1998.
During the past five years, LeaRonal has reported average annual sales increases
of 12 percent per year, and earnings increases of 19 percent per year.
This press release contains statements that are forward looking, and that are
subject to certain risks and uncertainties. Actual results may vary because of
changing economic conditions in key geographic or product markets, fluctuating
currency exchange rates, acquisitions or divestitures, customer demand, product
mix, competitive products and pricing, technological innovation, litigation and
other factors. Details can be found in Rohm and Haas's March 27, 1998, 10-K
filing and LeaRonal's October 15, 1998, 10-Q filing with the Securities and
Exchange Commission.
This press release is neither an offer to purchase, nor a solicitation of an
offer to sell securities. The tender offer will be made only through an offer to
purchase and related letter of transmittal, which will be distributed to
LeaRonal shareholders.
<PAGE>
Contacts: For D.F. King & Company, Inc.
Robert Fraina: (212) 493-6941
For Deutsche Bank Securities
Naushad Madon: (212) 469-5764
For Rohm and Haas
Eric Norris: (215) 592-2664
<PAGE>
Exhibit (a)(8)
Press Release dated December 23, 1998.
<PAGE>
- --------------------------------------------------------------------------------
[LETTERHEAD OF ROHM AND HAAS COMPANY APPEARS HERE]
NEWS
RELEASE
- --------------------------------------------------------------------------------
PRESS CONTACT: Eric Norris FOR RELEASE: Immediately
215-592-2664
- --------------------------------------------------------------------------------
ROHM AND HAAS COMMENCES TENDER OFFER
FOR LEARONAL, INC.
Philadelphia, PA, December 23, 1998 - Rohm and Haas Company (NYSE:ROH) announced
today that a wholly owned subsidiary, Lightning Acquisition Corp., has commenced
a tender offer to acquire all of the outstanding shares of common stock of
LeaRonal, Inc. (NYSE:LRI) for $34.00 per share in cash.
On December 21st, Rohm and Haas announced it had signed a definitive merger
agreement with LeaRonal to acquire all of the outstanding shares of that
company, a maker of specialty chemicals for the electronics industry. The total
value of the transaction is approximately $460 million. Under the agreement,
LeaRonal will be combined with Shipley Company, the cornerstone of Rohm and
Haas's $400 million Electronic Materials business group.
The tender offer is being made pursuant to the merger agreement among Rohm and
Haas Company, Lightning Acquisition Corp. and LeaRonal, Inc. The offer is
subject to the terms and conditions set forth in that agreement.
Among other things, this offer is conditioned upon the valid tender of shares
representing at least two-thirds of LeaRonal fully diluted shares, and
expiration or termination of the waiting period applicable to the merger under
the Hart-Scott-Rodino Antitrust Improvements Act. The tender offer and
withdrawal rights will expire at 12:00 midnight New York City time on Friday,
January 22, 1999, unless the offer is extended.
Deutsche Bank Securities Inc. is the dealer manager for the offer. D.F. King &
Company, Inc., is the information agent.
# # #
Note: This press release is neither an offer to purchase, nor a solicitation of
an offer to sell securities. The tender offer is made only through the Offer to
Purchase and the related Letter of Transmittal which is being mailed to LeaRonal
stockholders today. Copies of the offering document may be obtained by
contacting D.F. King at 1-800-829-6554 or Deutsche Bank Securities Inc. at
1-800-334-1898, ext. 8998.
Contacts: For D.F. King & Company, Inc.
Robert Fraina: (212) 493-6941
<PAGE>
For Deutsche Bank Securities
Naushad Madon: (212) 469-5764
For Rohm and Haas
Eric Norris: (215) 592-2664
<PAGE>
Exhibit (a)(9)
Summary Advertisement.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
December 23, 1998 and the related Letter of Transmittal, and is being made to
all holders of Shares. Purchaser is not aware of any state where the making of
the Offer is prohibited by administrative or judicial action pursuant to any
valid state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of the Shares pursuant
thereto, Purchaser shall make a good faith effort to comply with such statute
or seek to have such statute declared inapplicable to the Offer. If, after
such good faith effort, Purchaser cannot comply with such state statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
holders of Shares in such state. In those jurisdictions where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer is being made on behalf of Purchaser by the Dealer Manager
or one or more registered brokers or dealers licensed under the laws of such
jurisdictions.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF
COMMON STOCK
OF
LEARONAL, INC.
AT
$34.00 NET PER SHARE
BY
LIGHTNING ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ROHM AND HAAS COMPANY
Lightning Acquisition Corp., a New York corporation ("Purchaser") and a
wholly owned subsidiary of Rohm and Haas Company, a Delaware corporation
("Parent"), is offering to purchase all of the outstanding shares of Common
Stock, par value $1.00 per share (the "Shares"), of LeaRonal, Inc., a New York
corporation (the "Company"), at a price of $34.00 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 23, 1998 (the "Offer to Purchase")
and in the related Letter of Transmittal (which, as amended or supplemented from
time to time, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JANUARY 22, 1999, UNLESS THE OFFER IS EXTENDED.
1
<PAGE>
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES REPRESENTING AT LEAST TWO-THIRDS OF THE FULLY DILUTED SHARES (AS
DEFINED IN THE OFFER TO PURCHASE) AND (ii) ANY APPLICABLE WAITING PERIOD UNDER
THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 HAVING EXPIRED OR
BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH
IN THE OFFER TO PURCHASE. SEE SECTION 15 OF THE OFFER TO PURCHASE.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as
of December 20, 1998 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. Pursuant to the Merger Agreement and in accordance with the New
York Business Corporation Law (the "NYBCL"), as promptly as practicable after
the completion of the Offer and satisfaction or waiver, if permissible, of all
conditions contained in the Merger Agreement, Purchaser will be merged with and
into the Company (the "Merger") and the Company will be the surviving
corporation in the Merger and a wholly owned subsidiary of Parent. At the
effective time of the Merger, each Share then outstanding, other than Shares
held by (i) the Company or any of its subsidiaries, (ii) the Parent or any of
its subsidiaries, including Purchaser, and (iii) stockholders who properly
perfect their dissenters' rights under the NYBCL, if applicable, will be
converted into the right to receive $34.00 in cash, without interest. The Merger
Agreement is more fully described in Section 12 of the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND
THE MERGER, AND DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN
THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Simultaneously with the execution and delivery of the Merger Agreement, Parent
and Purchaser, on the one hand, and certain stockholders, on the other hand (the
"Certain Stockholders"), entered into a Tender and Option Agreement dated as of
December 20, 1998 (the "Tender and Option Agreement"). The Tender and Option
Agreement relates to the 3,619,664 issued and outstanding Shares owned by the
Certain Stockholders, representing approximately 29% of the Company's issued and
outstanding Shares, as well as Shares in respect of certain stock options owned
by Certain Stockholders. Pursuant to the Tender and Option Agreement, each
Certain Stockholder has agreed, among other things, to grant Purchaser an option
to purchase the Shares subject thereto upon the occurrence of certain events,
and to tender in the Offer, and not to withdraw therefrom, the Shares owned by
such Certain Stockholders, as well as any other Shares acquired prior to the
expiration of the Offer including pursuant to the exercise of such stock
Options. The Tender and Option Agreement is more fully described in Section 12
of the Offer to Purchase.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary (as defined in the Offer to Purchase) of its acceptance for payment
of such Shares. Upon the terms and subject to the conditions of the Offer,
payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from
Purchaser and transmitting payment 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 (i) certificates for such
Shares
2
<PAGE>
(or a confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase)), (ii) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message (as defined in
the Offer to Purchase) and (iii) any other documents required by the Letter of
Transmittal. The per Share consideration paid to any stockholder pursuant to the
Offer will be the highest per Share consideration paid to any other stockholder
pursuant to the Offer.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID
BY PURCHASER FOR SUCH SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
The term "Expiration Date" shall mean 12:00 Midnight, New York City time, on
Friday, January 22, 1999, unless and until Purchaser (in accordance with the
terms of the Merger Agreement), shall have extended the period of time during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by Purchaser,
shall expire.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission, Purchaser may, under
certain circumstances, (a) extend the period of time during which the Offer is
open and thereby delay acceptance for payment of and the payment for any Shares,
by giving oral or written notice of such extension to the Depositary and (b)
amend the Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. Any extension, delay, waiver, amendment or
termination of the Offer will be followed as promptly as practicable by a public
announcement thereof, the announcement in the case of an extension to be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw such stockholder's
Shares.
Except as otherwise provided below, tenders of Shares made pursuant to the
Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date and, unless theretofore accepted for
payment pursuant to the Offer, may also be withdrawn at any time after Saturday,
February 20, 1999. For a withdrawal to be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth in the Offer to Purchase. Any
such notice of withdrawal must specify the name of the person having tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name
of the registered holder of the Shares to be withdrawn, if different from the
name of the person who tendered the Shares. If certificates evidencing such
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the
serial numbers shown on such certificates must be submitted to the Depositary
and, unless such Shares have been tendered for the account of an Eligible
Institution (as defined in the Offer to Purchase), the signatures on the
notice of withdrawal must be guaranteed by an Eligible Institution. If Shares
have been delivered pursuant to the procedures for book-entry transfer set
forth in Section 3 of the Offer to Purchase, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with
the Book-Entry Transfer Facility's procedures. Withdrawals of tenders of
Shares may not be rescinded, and any Shares properly withdrawn will thereafter
be deemed not validly tendered for purposes of the Offer. However, withdrawn
Shares may be retendered by again following one of the procedures described in
Section 3 of the Offer to Purchase at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding.
3
<PAGE>
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 under the Securities Exchange Act of 1934, as amended, is contained in
the Offer to Purchase and is incorporated herein by reference.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal
and other relevant documents will be mailed to record holders of Shares whose
names appear on the stockholder list, and will be furnished to brokers,
dealers, banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the Company's stockholder lists, or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer documents may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth below, and copies will be furnished
promptly at Purchaser's expense. Neither Parent nor Purchaser will pay any
fees or commissions to any broker or dealer or other person other than the
Information Agent and the Dealer Manager for soliciting tenders of Shares
pursuant to the Offer.
4
<PAGE>
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
Call Toll-Free (800) 829-6554
The Dealer Manager for the Offer is:
DEUTSCHE BANK SECURITIES, INC.
31 West 52nd Street
New York, NY 10019
Call Toll-Free (800) 334-1898
extension 8998
December 23, 1998
5
<PAGE>
Exhibit (c)(1)
Agreement and Plan of Merger, dated as of December 20, 1998, by and among
Parent, Purchaser and the Company.
<PAGE>
EXECUTION COPY
=====================================
AGREEMENT AND PLAN OF MERGER
AMONG
ROHM AND HAAS COMPANY,
LIGHTNING ACQUISITION CORP.
AND
LEARONAL, INC.
Dated as of December 20, 1998
=======================================
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I THE OFFER.............................................................................. 2
Section 1.1 The Offer............................................................ 2
Section 1.2 Company Actions...................................................... 3
Section 1.3 Stockholder Lists.................................................... 4
Section 1.4 Directors; Section 14(f)............................................. 5
ARTICLE II THE MERGER............................................................................. 6
Section 2.1 The Merger........................................................... 6
Section 2.2 Effective Time....................................................... 6
Section 2.3 Effects of the Merger................................................ 6
Section 2.4 Certificate of Incorporation; By-Laws................................ 7
Section 2.5 Directors and Officers............................................... 7
Section 2.6 Conversion of Securities............................................. 7
Section 2.7 Dissenting Shares.................................................... 7
Section 2.8 Surrender of Shares.................................................. 8
Section 2.9 No Further Transfer or Ownership Rights.............................. 9
Section 2.10 Treatment of Options................................................. 9
Section 2.11 Closing.............................................................. 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................... 11
Section 3.1 Organization and Qualification....................................... 11
Section 3.2 Capitalization....................................................... 12
Section 3.3 Authority Relative to this Agreement................................. 13
Section 3.4 Absence of Certain Changes........................................... 13
Section 3.5 Reports.............................................................. 14
Section 3.6 Proxy Statement...................................................... 15
Section 3.7 Consents and Approvals; No Violation................................. 15
Section 3.8 Brokerage Fees and Commissions....................................... 16
Section 3.9 Schedule 14D-9; Offer Documents...................................... 16
Section 3.10 Litigation........................................................... 17
Section 3.11 Insurance............................................................ 17
Section 3.12 ERISA Compliance..................................................... 17
Section 3.13 Taxes................................................................ 19
Section 3.14 Year 2000............................................................ 20
Section 3.15 Compliance with Applicable Laws...................................... 20
Section 3.16 State Takeover Statutes.............................................. 22
Section 3.17 Contracts............................................................ 23
Section 3.18 Labor Matters........................................................ 24
Section 3.19 Undisclosed Liabilities.............................................. 24
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 3.20 Opinion of Company Financial Advisor..................................... 24
Section 3.21 Intellectual Property.................................................... 24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER..................................... 25
Section 4.1 Organization and Qualification........................................... 25
Section 4.2 Authority Relative to this Agreement..................................... 25
Section 4.3 Proxy Statement.......................................................... 26
Section 4.4 Consents and Approvals; No Violation..................................... 26
Section 4.5 Financing................................................................ 27
Section 4.6 Brokerage Fees and Commissions........................................... 27
Section 4.7 Schedule 14D-1; Offer Documents.......................................... 27
Section 4.8 Operations of Purchaser.................................................. 27
Section 4.9 Ownership of Shares by Parent and Purchaser.............................. 27
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER..................................................... 28
Section 5.1 Conduct of Business of the Company Pending the Merger.................... 28
Section 5.2 Prohibited Actions by the Company........................................ 28
ARTICLE VI COVENANTS.................................................................................. 31
Section 6.1 No Solicitation.......................................................... 31
Section 6.2 Access to Information.................................................... 33
Section 6.3 Confidentiality Agreement................................................ 33
Section 6.4 Reasonable Best Efforts.................................................. 34
Section 6.5 Indemnification of Directors and Officers................................ 35
Section 6.6 Event Notices and Other Actions.......................................... 36
Section 6.7 Third Party Standstill Agreements........................................ 36
Section 6.8 Employee Stock Options; Employee Plans and Benefits and
Employment Contracts..................................................... 37
Section 6.9 Meeting of the Company's Shareholders.................................... 38
Section 6.10 Proxy Statement.......................................................... 39
Section 6.11 Public Announcements..................................................... 39
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER................................................... 39
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger................................................................... 39
Section 7.2 Conditions to Obligations of Parent and Purchaser to
Effect the Merger........................................................ 40
Section 7.3 Conditions to Obligations of the Company to Effect the
Merger................................................................... 40
ARTICLE VIII TERMINATION; AMENDMENT; WAIVER............................................................. 40
Section 8.1 Termination.............................................................. 40
Section 8.2 Effect of Termination.................................................... 41
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
Section 8.3 Termination Fee and Expense Fee.......................................... 42
Section 8.4 Amendment................................................................ 43
Section 8.5 Extension; Waiver........................................................ 43
ARTICLE IX MISCELLANEOUS.............................................................................. 43
Section 9.1 Non-Survival of Representations and Warranties........................... 43
Section 9.2 Entire Agreement; Assignment............................................. 43
Section 9.3 Enforcement of the Agreement............................................. 44
Section 9.4 Severability............................................................. 44
Section 9.5 Notices.................................................................. 44
Section 9.6 Failure or Indulgence Not Waiver; Remedies Cumulative.................... 45
Section 9.7 Governing Law............................................................ 46
Section 9.8 Descriptive Headings..................................................... 46
Section 9.9 Parties in Interest...................................................... 46
Section 9.10 Counterparts............................................................. 46
Section 9.11 Certain Definitions...................................................... 46
Section 9.12 Interpretation........................................................... 48
</TABLE>
ANNEX A
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS IS AN AGREEMENT AND PLAN MERGER (this "Agreement"), dated as of
December 20, 1998, among Rohm and Haas Company, a Delaware corporation
("Parent"), Lighting Acquisition Corp., a New York corporation and wholly owned
subsidiary of Parent ("Purchaser"), and LeaRonal, Inc., a New York corporation
(the "Company").
Background
----------
WHEREAS, the Board of Directors of the Company has determined that it
is fair to, advisable and in the best interests of the Company and the
shareholders of the Company to enter into and consummate this Agreement with
Purchaser, providing for the merger (the "Merger") of Purchaser with and into
the Company, with the Company as the Surviving Corporation, in accordance with
the New York Business Corporation Law (the "NYBCL") and the other transactions
contemplated hereby, upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of Purchaser has approved the Merger
of Purchaser with and into the Company and such other transactions in accordance
with the NYBCL upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company and Purchaser have agreed that, upon the terms
and subject to the conditions contained herein, Purchaser shall commence an
offer (as amended or supplemented in accordance with this Agreement, the
"Offer") to purchase for cash all of the issued and outstanding shares of common
stock, par value $1.00 per share (referred to herein as either the "Shares" or
"Company Common Stock"), of the Company at a price per Share of $34.00, net to
the seller in cash (the "Offer Price").
WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
the holders of such Shares and has resolved to recommend that the holders of
such Shares tender their Shares pursuant to the Offer and approve and adopt this
Agreement and the Merger upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and in order to induce Parent and Purchaser to enter into this
Agreement, certain stockholders of the Company (the "Certain Stockholders") have
executed and delivered to Parent and Purchaser an agreement (the "Tender and
Option Agreement") pursuant to which the Certain Stockholders have agreed to
take specified actions in furtherance of the transactions contemplated by this
Agreement, including tendering their Shares into the Offer and granting Parent
and Purchaser the
<PAGE>
Purchase Option (as defined in the Tender and Option Agreement) with respect to
such Shares; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement and in order to induce Parent and Purchaser to enter into this
Agreement, certain employees of the Company have entered into employment
agreements with the Company and certain stockholders of the Company's
subsidiaries have entered into shareholders agreements with the Company (the
"Other Agreements").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and
intending to be legally bound hereby, Parent, Purchaser and the Company hereby
agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
---------
(a) Subject to the provisions of this Agreement, and provided that
this Agreement shall not have been terminated in accordance with Section 8.1 and
so long as none of the events or circumstances set forth in Annex A hereto shall
have occurred and be existing, not later than the fifth business day from the
date of public announcement of the execution of this Agreement, Purchaser shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), the Offer at a price of $34.00 per Share
net to the seller in cash. The obligation of Purchaser to consummate the Offer,
to accept for payment and to pay for any Shares tendered pursuant to the Offer
shall be subject only to those conditions set forth in Annex A. Purchaser
expressly reserves the right, in its sole discretion, to waive any such
condition, provided that, without the consent of the Company, Purchaser shall
-------- ----
not waive the Minimum Condition (as defined in Annex A), subject to Section
1.1(b). The initial expiration date of the Offer shall be the 20th business day
following the commencement of the Offer (determined using Rule 14d-1(c)(6) under
the Exchange Act).
(b) Purchaser expressly reserves the right, in its sole discretion,
to modify and make changes to the terms and conditions of the Offer, provided
--------
that without the prior consent of the Company, no modification or change may be
- ----
made which (i) decreases the consideration payable in the Offer, (ii) changes
the form of consideration payable in the Offer (other than by adding
consideration), (iii) changes the Minimum Condition, provided that Purchaser may
-------- ----
reduce the Minimum Condition to an amount of Shares which is not less than a
majority of the Fully Diluted Shares so long as the affirmative vote of such
amount of Shares would provide the requisite shareholder approval for an
amendment to the Company's Certificate of Incorporation reducing the vote
required to approve a merger to a majority of the outstanding Shares, (iv)
decreases the maximum number of Shares sought pursuant to the Offer, (v)
adversely changes any
-2-
<PAGE>
conditions to the Offer, or (vi) imposes additional conditions to the Offer.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the Offer on one or more occasions for such period as may be
determined by Purchaser in its sole discretion (each such extension period not
to exceed 10 business days at a time), if at the then scheduled expiration date
of the Offer any of the conditions to Purchaser's obligations to accept for
payment and pay for Shares shall not be satisfied or waived, (ii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer, and (iii) extend the Offer on one occasion for
a period of not more than 10 business days if the Minimum Condition has been
satisfied but less than 90% of the Fully Diluted Shares have been validly
tendered and not properly withdrawn. Notwithstanding the foregoing, Purchaser
may not, without the Company's prior written consent, extend the Offer pursuant
to clause (i) of the preceding sentence if the events or circumstances set forth
in Annex A hereto shall have occurred as a result of Parent or Purchaser's
breach of this Agreement. It is agreed that the conditions to the Offer set
forth on Annex A are for the benefit of Purchaser and, except with respect to
the Minimum Condition as set forth in Section 1.1(a), may be waived by
Purchaser, in whole or in part at any time and from time to time, in its sole
discretion. On the terms and subject to the conditions of the Offer, Purchaser
shall pay for, and Parent shall cause Purchaser to pay for, all Shares validly
tendered and not withdrawn pursuant to the Offer promptly after the expiration
of the Offer.
(C) On the date of commencement of the Offer, Parent and Purchaser
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (together
with all amendments and supplements thereto and including the exhibits thereto,
the "Schedule 14D-1") with respect to the Offer which will comply in all
material respects with the provisions of applicable federal securities laws, and
will contain the offer to purchase relating to the Offer (the "Offer to
Purchase") and forms of related letters of transmittal and summary advertisement
(which documents, together with any supplements or amendments thereto and
including the exhibits thereto, are referred to herein collectively as the
"Offer Documents"). Parent shall deliver copies of the proposed forms of the
Schedule 14D-1 and the Offer Documents to the Company within a reasonable time
prior to the commencement of the Offer for review and comment by the Company and
its counsel. Parent agrees to provide the Company and its counsel in writing any
comments that Purchaser, Parent or their counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after the receipt thereof.
The Company, Parent and Purchaser shall promptly correct any information
provided by it for use in the Schedule 14D-1 or the Offer Documents that shall
have become false or misleading in any material respect and Parent and Purchaser
further agree to take all steps necessary to cause such Schedule 14D-1 or Offer
Documents as so corrected to be filed with the SEC and disseminated to the
shareholders of the Company, as and to the extent required by applicable federal
securities laws.
Section 1.2 Company Actions.
---------------
(a) The Company hereby consents to the Offer and represents that its
Board of Directors, at a meeting duly called and held on December 20, 1998, has
duly and by unanimous
-3-
<PAGE>
vote adopted resolutions approving the Offer, the Merger, this Agreement, the
Tender and Option Agreement and the Other Agreements and the other transactions
contemplated hereby and thereby (the "Transactions"), determining that the terms
of the Offer and the Merger are fair to, and in the best interests of, the
Company's shareholders and recommending acceptance of the Offer and adoption of
the Merger and this Agreement by the shareholders of the Company. The Company
hereby consents, subject to Section 6.1, to the inclusion in the Offer Documents
of the recommendations of the Company's Board of Directors described in this
Section 1.2. The Company has been advised that all of its directors and
executive officers intend either to tender their Shares pursuant to the Offer or
(solely in the case of directors and executive officers who would as a result of
the tender incur liability under Section 16(b) of the Exchange Act) to vote in
favor of the Merger.
(b) The Company shall file with the SEC on the date of the
commencement of the Offer a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall comply in all material
respects with the provisions of applicable federal securities laws, and will
contain such recommendations of the Board in favor of the Offer and the Merger,
and shall disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated
under the Exchange Act and shall mail such Schedule 14D-9 together with the
Offer Documents. The Company shall deliver the proposed forms of the Schedule
14D-9 and the exhibits thereto to Parent within a reasonable time prior to the
commencement of the Offer for review and comment by Parent and its counsel.
Parent and its counsel shall be given a reasonable opportunity to review any
amendments and supplements to the Schedule 14D-9 prior to their filing with the
SEC or dissemination to shareholders of the Company. The Company agrees to
provide Parent and its counsel in writing any comments that the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt thereof. Each of the Company, Parent and Purchaser shall
promptly correct any information provided by it for use in the Schedule 14D-9
that shall have become false or misleading in any material respect and the
Company further agrees to take all steps necessary to cause such Schedule 14D-9
as so corrected to be filed with the SEC and disseminated to the shareholders of
the Company, as and to the extent required by applicable federal securities
laws.
Section 1.3 Stockholder Lists. In connection with the Offer, the Company
-----------------
shall promptly furnish to, or cause to be furnished to, Parent and Purchaser
mailing labels, security position listings, any non-objecting beneficial owner
lists and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date and of those
Persons becoming record holders subsequent to such date (to the extent
available), together with all other information in the Company's possession or
control regarding the beneficial owners of Shares and shall furnish Parent and
Purchaser with such information and assistance as Parent, Purchaser or their
respective 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 to disseminate the Offer Documents and
any other documents necessary to consummate the Merger, Parent and Purchaser
shall, and shall cause each of their affiliates to,
-4-
<PAGE>
hold the information contained in any of such labels and lists in confidence,
use such information only in connection with the Offer and the Merger, and, if
this Agreement is terminated, deliver to the Company all copies of such
information or extracts therefrom then in their possession or under their
control.
Section 1.4 Directors; Section 14(f). Immediately upon the acceptance
------------------------
for payment of and payment for any Shares by Purchaser or any of its affiliates
pursuant to the Offer, Purchaser shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as will give Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board of Directors of the Company equal to
the product of (i) the total number of directors on the Board of Directors of
the Company (giving effect to the increase in the size of such Board pursuant to
this Section 1.4) and (ii) the percentage that the number of votes represented
by Shares beneficially owned by Purchaser and its affiliates (including Shares
so accepted for payment and purchased) bears to the number of votes represented
by Shares then outstanding. In furtherance thereof, concurrently with such
acceptance for payment and payment for such Shares the Company shall, upon
request of Parent and compliance with Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder, use its best efforts promptly either to increase
the size of its Board of Directors or to secure the resignations of such number
of its incumbent directors, or both, as is necessary to enable such designees of
Parent to be so elected or appointed to the Company's Board of Directors, and
the Company shall take all actions available to the Company to cause such
designees of Parent to be so elected or appointed. At such time, the Company
shall, if requested by Parent, also use its reasonable best efforts to cause
persons designated by Parent to constitute at least the same percentage (rounded
up to the next whole number) as is on the Company's Board of Directors of (i)
each committee of the Company's Board of Directors, (ii) each board of directors
(or similar body) of each subsidiary of the Company and (iii) each committee (or
similar body) of each such board. Notwithstanding the foregoing, the Company
shall use its reasonable best efforts to ensure that, in the event that
Purchaser's designees are elected to the Board of Directors of the Company, such
Board of Directors shall have, at all times prior to the Effective Time, at
least three directors who are directors on the date of this Agreement and who
are not officers of the Company, Parent or any of their respective subsidiaries
(the "Independent Directors"); and provided further, that, in such event, if the
-------- -------
number of Independent Directors shall be reduced below three for any reason
whatsoever any remaining Independent Directors (or Independent Director, if
there shall be only one remaining) may designate persons to fill such vacancies
who shall be deemed to be Independent Directors for purposes of this Agreement
or, if no Independent Directors then remain, the other directors may designate
three persons to fill such vacancies who shall not be officers or affiliates of
the Company, Parent or any of their respective subsidiaries, and such persons
shall be deemed to be Independent Directors for purposes of this Agreement.
Subject to applicable law, the Company shall promptly take all action requested
by Parent necessary to effect any such election, including mailing to its
shareholders the information required by Section 14(f) of the Exchange Act and
Rule 14(f)-1 promulgated thereunder (or, at Parent's request, furnishing such
information to Parent for inclusion in the Offer Documents initially filed with
the SEC and distributed to the stockholders of the Company) as is necessary to
-5-
<PAGE>
enable Parent's designees to be elected to the Company's Board of Directors.
From and after the time, if any, that Parent's designees constitute a majority
of the Company's Board of Directors, any amendment of this Agreement, any
termination of this Agreement by the Company, any extension of time for
performance of any of the obligations of Parent or Purchaser hereunder, any
waiver of any condition to the Company's obligations hereunder or any of the
Company's rights hereunder or other action by the Company hereunder may be
effected only by the action of a majority of the Independent Directors of the
Company, which action shall be deemed to constitute the action of any committee
specifically designated by the Board of Directors of the Company to approve the
actions contemplated hereby and the full Board of Directors of the Company;
provided, that, if there shall be no Independent Directors, such actions may be
- -------- ----
effected by majority vote of the entire Board of Directors of the Company,
except that no such action shall amend the terms of this Agreement or modify the
terms of the Offer or the Merger in a manner materially adverse to the holders
of Shares.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
----------
hereof, and in accordance with the relevant provisions of the NYBCL, Purchaser
shall be merged with and into the Company as soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VII. Following the
Merger, the Company shall continue as the surviving corporation (the "Surviving
Corporation") under the name "LeaRonal, Inc." and shall continue its existence
under the laws of the State of New York, and the separate corporate existence of
Purchaser shall cease. At the election of Parent, any direct or indirect wholly
owned subsidiary of Parent may be substituted for Purchaser as a constituent
corporation in the Merger.
Section 2.2 Effective Time. As soon as practicable after the
--------------
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Department of State of the State
of New York (the "New York Department"), in such form as required by and
executed in accordance with the relevant provisions of the NYBCL (the date and
time of the filing of the Certificate of Merger with the New York Department (or
such later time as is specified in the Certificate of Merger) being the
"Effective Time").
Section 2.3 Effects of the Merger. The Merger shall have the effects set
---------------------
forth in the applicable provisions of the NYBCL. Without limiting the generality
of the foregoing and subject thereto, at the Effective Time all the property,
rights, privileges, immunities, powers and franchises of the Company and
Purchaser shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Purchaser shall become the debts, liabilities and
duties of the Surviving Corporation.
-6-
<PAGE>
Section 2.4 Certificate of Incorporation; By-Laws. (a) At the Effective
-------------------------------------
Time and without any further action on the part of the Company and Purchaser,
the Certificate of Incorporation of the Purchaser (the "Certificate of
Incorporation"), as in effect immediately prior to the Effective Time until
thereafter further amended as provided therein and under the NYBCL, shall be the
certificate of incorporation of the Surviving Corporation following the Merger.
(b) At the Effective Time and without any further action on the part
of the Company and Purchaser, the Bylaws of the Purchaser shall be the Bylaws of
the Surviving Corporation and thereafter may be amended or repealed in
accordance with their terms or the Certificate of Incorporation of the Surviving
Corporation and as provided by law.
Section 2.5 Directors and Officers. The directors of Purchaser
----------------------
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
Section 2.6 Conversion of Securities. At the Effective Time, by virtue
------------------------
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the following securities:
(i) Each share of common stock of Purchaser issued and
outstanding immediately prior to the Effective Time shall be converted into
one validly issued, fully paid and nonassessable share of common stock of
the Surviving Corporation.
(ii) Each Share held in the treasury of the Company and each
Share owned by Purchaser or any direct or indirect subsidiary of the
Company, in each case immediately prior to the Effective Time, shall be
cancelled and retired without any conversion thereof and no payment or
distribution shall be made with respect thereto.
(iii) Each issued and outstanding Share (other than Shares
cancelled pursuant to Section 2.6(ii) and any Dissenting Shares (as defined
in Section 2.7(a)) shall be converted into the right to receive $34.00 in
cash or any higher price that may be paid pursuant to the Offer (the
"Merger Consideration") payable to the holder thereof, without interest,
upon surrender of the certificate formerly representing such share in the
manner provided in Section 2.8, less any required withholding taxes.
Section 2.7 Dissenting Shares. (a) Notwithstanding anything in this
-----------------
Agreement to the contrary, Shares that are issued and outstanding immediately
prior to the Effective Time and which are held by shareholders who have not
voted such Shares in favor of the Merger (or consented thereto in writing), who
shall have delivered a written objection to the Merger and a demand for
appraisal of such Shares in accordance with Sections 623 and 910 of the NYBCL
-7-
<PAGE>
(insofar as such Sections are applicable to the Merger), and who shall not have
failed to perfect or shall not have effectively withdrawn or lost their rights
to appraisal and payment under the NYBCL (the "Dissenting Shares"), shall not be
converted into the right to receive the Merger Consideration, but shall instead
entitle the holder thereof to receive that consideration determined pursuant to
Sections 623 and 910 of the NYBCL; provided, however, that if such holder shall
have failed to perfect or shall have effectively withdrawn or lost such holder's
right to appraisal and payment under the NYBCL, such holder's Shares shall
thereupon be deemed to have been converted, at the Effective Time, into the
right to receive the Merger Consideration, without any interest thereon.
(b) The Company shall give Purchaser (i) prompt notice of any demands
for appraisal pursuant to the applicable provisions of the NYBCL received by the
Company, withdrawals of such demands, and any other instruments served pursuant
to the NYBCL and received by the Company and (ii) the opportunity to participate
in all negotiations and proceedings with respect to demands for appraisal under
the NYBCL. The Company shall not, except with the prior written consent of
Purchaser, make any payment with respect to any such demands for appraisal or
offer to settle or settle any such demands.
Section 2.8 Surrender of Shares. (a) Prior to the mailing of the Proxy
-------------------
Statement, Purchaser shall appoint a bank or trust company which is reasonably
satisfactory to the Company to act as paying agent (the "Paying Agent") for the
payment of the Merger Consideration. At the Effective Time, the Surviving
Corporation will deposit with the Paying Agent in separate trust for the benefit
of former holders of Shares sufficient funds to make all payments pursuant to
this Section 2.8. Such funds shall be invested by the Paying Agent as directed
by the Surviving Corporation. Any net profit resulting from, or interest or
income produced by, such investments will be payable to the Surviving
Corporation or as it directs.
(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented Shares (the "Certificates"), a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Paying Agent) and instructions for use in effecting the surrender of the
Certificates for payment of the Merger Consideration therefor. Upon surrender to
the Paying Agent of a Certificate, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
and such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor the
aggregate amount of Merger Consideration into which the number of Shares
previously represented by such Certificate or Certificates surrendered shall
have been converted pursuant to this Agreement. If any Merger Consideration is
to be remitted to a person whose name is other than that in which the
Certificate for Shares surrendered for exchange is registered, it shall be a
condition of such exchange that the Certificate so surrendered shall be properly
endorsed, with signature guaranteed, or otherwise in proper form for transfer,
and that the person requesting such
-8-
<PAGE>
exchange shall have paid any transfer and/or other taxes required by reason of
the remittance of Merger Consideration to a person whose name is other than that
of the registered holder of the Certificate surrendered, or the person
requesting such exchange shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not applicable.
No interest shall be paid or accrued, upon the surrender of the Certificates,
for the benefit of holders of the Certificates on any Merger Consideration.
(c) At any time following twelve months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including any interest received with respect thereto) which had
been deposited with the Paying Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to look
only to the Surviving Corporation (subject to abandoned property, escheat or
other similar laws) and only as general creditors thereof for payment of their
claim for Merger Consideration to which such holders may be entitled.
(d) Notwithstanding the provisions of Section 2.8(c), neither the
Surviving Corporation nor the Paying Agent shall be liable to any person in
respect of any Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(e) Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any former holder
of Shares such amounts as Parent (or any affiliate thereof) is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of any applicable state, local or foreign law, rule or
regulation. To the extent that amounts are so withheld by Parent and paid by
Parent to the applicable taxing authority, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the former
holder of Shares in respect of which such deduction and withholding was made by
Parent.
Section 2.9 No Further Transfer or Ownership Rights. After the Effective
---------------------------------------
Time, there shall be no further transfer on the records of the Company or its
transfer agent of certificates representing Shares which have been converted
pursuant to this Agreement into the right to receive Merger Consideration, and
if such certificates are presented to the Company for transfer, they shall be
cancelled against delivery of Merger Consideration. From and after the Effective
Time, the holders of Certificates evidencing ownership of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided for herein or by applicable
law. All Merger Consideration paid upon the surrender for exchange of
Certificates representing Shares in accordance with the terms of this Article II
shall be deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the Shares theretofore represented by such Certificates.
Section 2.10 Treatment of Options. Prior to the Effective Time, the
--------------------
Board of Directors of the Company (or, if appropriate, any committee thereof)
shall adopt appropriate
-9-
<PAGE>
resolutions and take all other actions necessary to provide that each
outstanding stock option (each "Option") heretofore granted under the Company's
1990 Nonqualified Stock Option Plan, dated June 1, 1990 (the "1990 Plan") and
the Company's 1996 Long-Term Incentive Plan (the "1996 Plan", and together with
the 1990 Plan, the "Company Stock Option Plans"), whether or not then vested or
exercisable, shall, at the Effective Time, be cancelled, and each holder thereof
shall be entitled to receive a payment in cash from the Company (subject to any
applicable withholding taxes, the "Cash Payment"), upon cancellation, equal to
the product of (x) the total number of Shares subject or related to such Option,
whether or not then vested or exercisable, and (y) the excess, if any, of the
Merger Consideration over the exercise price or purchase price, as the case may
be, per Share subject or related to such Option, each such Cash Payment to be
paid to each holder of an outstanding Option upon cancellation. Notwithstanding
the foregoing, if requested by Purchaser, the Board of Directors of the Company
(or, if appropriate, any committee thereof) shall adopt appropriate resolutions
providing for such cancellation and a cash payment equal to 101.8% of the Cash
Payment to occur, in respect of any or all Options held by certain employees of
the Company who have entered into employment agreements with the Company, on the
78th day after the date on which the Effective Time occurs. If Parent or
Purchaser and an Option holder mutually agree, such Option holder may receive in
lieu of such Cash Payment an option to acquire shares of common stock of Parent
on terms providing such Option holder with value substantially equivalent to the
value of such Cash Payment. The Company agrees that upon the exercise of any
Option it shall issue such Shares as such Option holder may be entitled to
receive upon such exercise and shall not exercise any rights it may have under
the Company Stock Option Plans or otherwise to settle such Option with a cash
payment without the written consent of Parent. As provided herein and subject to
the contractual rights of participants therein, the Company Stock Option Plans
and any Benefit Plan (or other plan, program or arrangement) providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary shall terminate as of the Effective Time. The Company
will take all steps necessary to ensure that none of the Company or any of its
subsidiaries is or will be bound by any Options, other options, warrants, rights
or agreements which would entitle any person, other than the current
shareholders of Purchaser or its affiliates, to acquire any capital stock of the
Surviving Corporation or any of its subsidiaries or, except as otherwise
provided in this Section 2.10, to receive any payment in respect thereof and to
cause such Options to be cancelled or cause the holders of the Options to agree
to such cancellation thereof as provided herein.
Section 2.11 Closing. Upon the terms and subject to the conditions
-------
hereof, as soon as practicable after consummation of the Offer, and to the
extent required by the NYBCL after the vote of the shareholders of the Company
in favor of the approval of the Merger and this Agreement has been obtained, the
Company and Purchaser (or Parent if appropriate) shall execute and file with the
New York Department of State the Certificate of Merger, and the parties shall
take all such other and further actions as may be required by law to make the
Merger effective. Prior to the filing referred to in this Section 2.11, a
closing (the "Closing") will be held at the offices of Dechert Price & Rhoads,
4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia, PA
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19103-2793 (or such other place as the parties may agree) for the purpose of
confirming all of the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule where the
relevance of such disclosure to the applicable representation and warranty is
readily apparent from such disclosure, the Company hereby represents and
warrants to Parent and Purchaser as follows:
Section 3.1 Organization and Qualification.
------------------------------
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York and has the requisite
corporate power and authority necessary to enable it to own, lease and operate
its properties and assets and to carry on its business as it is now being
conducted. The Company is duly qualified as a foreign corporation or licensed to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned or leased or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed and in good standing, individually or in the aggregate,
has not had and would not reasonably be expected to have a Material Adverse
Effect on the Company.
(b) The only subsidiaries of the Company are those named in Exhibit
21 to the Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1998 or set forth on Section 3.1(b) of the Company Disclosure
Schedule. Each Significant Subsidiary of the Company is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority necessary to enable it to own, lease and operate its properties and
assets and to carry on its business as it is now being conducted. Each other
subsidiary of the Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and has the
requisite power and authority necessary to enable it to own, lease and operate
its property and assets and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power and authority would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. Each subsidiary of the Company is duly qualified as a foreign
corporation or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or leased or the nature
of its activities makes such qualification or licensing necessary, except where
the failure to be so qualified or licensed or in good standing, individually or
in the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect on the Company. As used in this Agreement, "Significant
Subsidiary" shall have the meaning set forth in Rule 1-02 of Regulation S-X of
the SEC.
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(c) All of the outstanding shares of capital stock of each such
subsidiary have been validly issued and are fully paid and non-assessable and,
except as set forth in Section 3.1(b) of the Company Disclosure Schedule, are
owned by the Company, by another wholly owned subsidiary of the Company or by
the Company and another such wholly owned subsidiary, free and clear of all
pledges, claims, equities, options, liens, charges, rights of first refusal,
"tag" or "drag" along rights, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens"). Except for the capital stock of its
subsidiaries, the Company does not own, directly or indirectly, any capital
stock or other ownership interest in any corporation, partnership, limited
liability company, joint venture or other entity. The Company has delivered to
Parent complete and correct copies of its Certificate of Incorporation and
Bylaws and the comparable charters and bylaws or other organizational documents
of its subsidiaries, in each case as amended to the date of this Agreement.
Section 3.2 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of
35,000,000 Shares. All of the issued and outstanding Shares have been duly
authorized and validly issued and are fully paid and nonassessable and are not
subject to preemptive rights. As of the date hereof, 12,544,682 Shares were
issued and outstanding, 1,313,364 Shares were reserved for issuance pursuant to
outstanding Options of a like number issued under the Company Stock Option
Plans. Such Shares reserved for issuance under the Company Stock Option Plans
have not been issued and will not be issued prior to the Effective Time, and no
commitment has been or will be made for their issuance, other than under the
Options described in the preceding sentence and issued and outstanding under the
Company Stock Option Plans as of the date of this Agreement.
(b) Except as otherwise provided in Section 2.10 of this Agreement,
at the Effective Time, each Option shall be cancelled and the holder thereof
shall not be entitled to receive any consideration therefor other than the cash
payments provided by Section 2.10 of this Agreement. Section 3.2(b) of the
Company Disclosure Schedule sets forth the exercise prices and number of Shares
in respect of outstanding Options under the Company Stock Option Plans. There
are no bonds, debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which shareholders of the Company may vote
("Voting Company Debt"). Except as set forth above, there are no outstanding
securities, options, warrants, calls, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights, stock-based
performance units, commitments, agreements, arrangements or undertakings of any
kind to which the Company or any of its subsidiaries is a party or by which any
of them is bound obligating the Company or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company or any of its
subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
unit, commitment, agreement, arrangement or undertaking. There are not any
outstanding contractual obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire, or providing preemptive or registration
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rights with respect to, any shares of, or any outstanding options, warrants or
rights of any kind to acquire any shares of, or any outstanding securities that
are convertible into or exchangeable for any shares of, capital stock of the
Company or any of its subsidiaries. The Company and its subsidiaries do not have
outstanding any loans to any person in respect of the purchase of securities
issued by the Company and its subsidiaries.
(c) There are no voting trusts, proxies or other agreements,
commitments or understandings of any character to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
is bound with respect to the voting of any shares of capital stock of the
Company or any of its subsidiaries or with respect to the registration of the
offering, sale or delivery of any shares of capital stock of the Company or any
of its subsidiaries under the Securities Act of 1933, as amended (the
"Securities Act").
Section 3.3 Authority Relative to this Agreement. (a) The Company has
------------------------------------
all requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder, and to consummate the
Transactions (subject to the Company Shareholder Approval (as hereinafter
defined) with respect to the Merger). The execution and delivery of this
Agreement and the performance of its obligations hereunder and the consummation
by the Company of the Transactions have been duly and validly authorized by the
Board of Directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
Transactions (other than the Company Shareholder Approval and the filing and
recordation of appropriate merger documents as required by the NYBCL). This
Agreement has been duly and validly executed and delivered by the Company, and,
assuming this Agreement constitutes a valid and binding obligation of Parent and
Purchaser, this Agreement constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(b) The only vote of holders of any class or series of capital stock
of the Company or any of its subsidiaries necessary to adopt or approve this
Agreement and the Merger is the adoption of this Agreement by the holders of
two-thirds of the outstanding Shares (the "Company Shareholder Approval"),
subject to Section 6.9(d). The affirmative vote of the holders of any capital
stock of the Company or any of its subsidiaries, or any of them, is not
necessary to consummate the Offer or any transaction contemplated by this
Agreement other than as set forth in the preceding sentence.
Section 3.4 Absence of Certain Changes. Except as disclosed in the
--------------------------
Company's filings and reports under the Exchange Act filed and publicly
available prior to the date of this Agreement (the "Filed Company SEC
Documents") or as set forth in Section 3.4 of the Company Disclosure Schedule,
since August 31, 1998, the Company and its subsidiaries have conducted their
business only in the ordinary course in all material respects, and during such
period there has not been any event, change, effect or development that,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect on the Company. Except as disclosed in the Filed
Company SEC Documents or as set forth in Section 3.4 of the Company
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<PAGE>
Disclosure Schedule, since August 31, 1998 there has not been (a) any
declaration, setting aside or payment of any dividend (other than the
declaration and payment of regular quarterly cash dividends in an amount not in
excess of $0.14 per Share) or other distribution in respect of the capital stock
of the Company or any redemption or other acquisition by the Company of any
capital stock of the Company; (b) any entry into any agreement, commitment or
transaction by the Company or any of its subsidiaries which is material to the
Company and its subsidiaries taken as a whole, except agreements, commitments or
transactions in the ordinary course of business; (c) any split, combination or
reclassification of the Company's capital stock or of any other equity interests
in the Company, or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or of any other equity interests in the Company; (d)(i) any
granting by the Company or any of its subsidiaries to any officer, director or
key employee of the Company or any of its subsidiaries of any increase in
compensation, except in the ordinary course of business or as was required under
employment agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents, (ii) any
granting by the Company or any of its subsidiaries to any such officer, director
or key employee of any increase in severance or termination pay, except as was
required under employment, severance or termination agreements in effect as of
the date of the most recent audited financial statements included in the Filed
Company SEC Documents or (iii) any entry by the Company or any of its
subsidiaries into any employment, severance or termination agreement with any
such officer, director or key employee; (e) any damage, destruction or loss,
whether or not covered by insurance, that, individually or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect on the
Company; or (f) any change in accounting methods, principles or practices by the
Company or any subsidiary materially affecting the consolidated assets,
liabilities, results of operations or business of the Company, except insofar as
may have been required by a change in generally accepted accounting principles.
Section 3.5 Reports. Since March 1, 1996, the Company has timely filed
-------
all required forms, reports and documents with the SEC required to be filed by
it pursuant to the federal securities laws and the SEC rules and regulations
thereunder (collectively, the "Company SEC Documents"), all of which have
complied as of their respective filing dates in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, and the
rules promulgated thereunder. The Company has delivered copies of all such
forms, reports or documents to Parent. None of such forms, reports or documents
at the time filed (or at the time amended), contained any untrue statement of a
material fact or omitted to state a 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. The financial
statements of the Company included in the Company SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated financial position of the
Company and its consolidated subsidiaries
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<PAGE>
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (and include, in the case of any unaudited
interim financial statements, reasonable accruals for normal year-end
adjustments). No subsidiaries of the Company are required to file periodic
reports with the SEC under the Exchange Act.
Section 3.6 Proxy Statement. If a Proxy Statement is required for the
---------------
consummation of the Merger under applicable law, the Proxy Statement will comply
in all material respects with the Exchange Act, except that no representation is
made by the Company with respect to information supplied by or on behalf of
Parent or any affiliate of Parent specifically for inclusion in the Proxy
Statement. None of the information supplied by the Company specifically for
inclusion in the Proxy Statement shall, at the time the Proxy Statement is
mailed or at the time of the Shareholder Meeting or at the Effective Time,
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; provided, however, that the Company makes no representation or
warranty as to any of the information relating to and supplied by or on behalf
of Parent and Purchaser specifically for inclusion in the Proxy Statement. The
letter to shareholders, notice of meeting, proxy statement and form of proxy, or
the information statement, as the case may be, to be distributed to shareholders
in connection with the Merger, or any schedule required to be filed with the SEC
in connection therewith, together with any amendments or supplements thereto,
are collectively referred to herein as the "Proxy Statement." If, at any time
prior to the Effective Time, any event relating to the Company or any of its
affiliates, officers or directors is discovered by the Company that shall be set
forth in a supplement to the Proxy Statement, the Company will promptly inform
Parent and Purchaser and prepare, file and disseminate such supplement as may be
required by applicable law.
Section 3.7 Consents and Approvals; No Violation. Subject to obtaining
------------------------------------
the Company Shareholder Approval (if required under the NYBCL) and the taking of
the actions described in the immediately succeeding sentence, the execution,
delivery and performance of this Agreement do not, and the consummation of the
Transactions (including the changes in ownership of Shares or the composition of
the Board of Directors of the Company) and compliance with the provisions of
this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse to time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of a material benefit under, or result in the creation of any Lien upon any
of the material properties or assets of the Company or any of its subsidiaries
under, or result in the termination of, or require that any consent be obtained
or any notice be given with respect to, (i) the Certificate of Incorporation or
Bylaws of the Company or the comparable charter or organizational documents of
any of its subsidiaries, (ii) any loan or credit agreement note, bond, mortgage,
indenture, lease, license or other agreement, instrument, Contract or Permit
applicable to the Company or any of its subsidiaries or their respective
properties or assets, (iii) any judgment, order, writ, injunction, decree, law,
statute, ordinance, rule or regulation applicable to the Company or any of its
subsidiaries
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<PAGE>
is a party, other than, in the case of clauses (ii), (iii) or (iv), any such
conflicts, violations, defaults, rights, Liens, losses of a material benefit,
consents or notices that, individually or in the aggregate, have not and would
not reasonably be expected to have a Material Adverse Effect on the Company. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Federal, state or local government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity") is required by the Company or any
of its subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the Transactions,
except for (i) the filing of a premerger notification and report form by the
Company under the HSR Act (as hereinafter defined), the filing of a notice with
the German Federal Cartel Office under the German Act Against Restraints of
Competition (the "GWB Act") or in connection with any other foreign antitrust or
competition laws, (ii) the filing with the SEC of (x) the Schedule 14D-9, (y) if
required, the Proxy Statement relating to the approval by the Company's
shareholders of this Agreement and (z) such reports under Section 13(a) of the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the filing of the Certificate
of Merger pursuant to the NYBCL and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect on the Company or where
the requirement to obtain such consent, approval, authorization or permit, or to
make such filing or notification arises solely from the regulatory status of
Parent or Purchaser.
Section 3.8 Brokerage Fees and Commissions. Except for those fees and
------------------------------
expenses payable to The Beacon Group Capital Services LLC (the "Company
Financial Advisor") and Eugene Nadel pursuant to the letter agreement, dated
September 24, 1998, no person is entitled to receive any investment banking,
brokerage or finder's fee or commission in connection with this Agreement or the
Transactions based upon arrangements made by or on behalf of the Company or any
of its subsidiaries or by any affiliate of the Company or any of its
subsidiaries. A copy of the above agreement has previously been delivered to
Parent.
Section 3.9 Schedule 14D-9; Offer Documents. Neither the Schedule 14D-9,
-------------------------------
any other document required to be filed by the Company with the SEC in
connection with the Transactions, nor any information supplied by the Company in
writing specifically for inclusion in the Offer Documents or the Schedule 14D-1
shall, at the respective times the Schedule 14D-9, any such of other filings by
the Company, the Schedule 14D-1, the Offer Documents or any amendments or
supplements thereto are filed with the SEC or are first published, sent or given
to stockholders of the Company, as the case may be, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Schedule 14D-9 and
any other document required to be filed by the Company with the SEC in
connection with the Transactions will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the
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foregoing, no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by or on behalf of Parent or Purchaser specifically for inclusion or
incorporation by reference therein.
Section 3.10 Litigation. Except as disclosed in the Company SEC
----------
Documents, there is no claim, suit, action or proceeding (including arbitration
proceedings) pending or, to the knowledge of the Company, threatened against the
Company or any of its subsidiaries that, individually or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect on the
Company, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any of its
subsidiaries which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.11 Insurance. The Company and its subsidiaries maintain
---------
policies of fire and casualty, liability and other forms of insurance in such
amounts, with such deductibles and against such risks and losses as are, in the
Company's judgment, reasonable for the assets and properties of the Company and
its subsidiaries and customary in the Company's industry. As of the date of this
Agreement, except as set forth in Section 3.11 of the Company's Disclosure
Schedule, all material insurance policies are in full force and effect, all
premiums due and payable thereon have been paid, and no notice of cancellation
or termination has been received with respect to any such policy.
Section 3.12 ERISA Compliance. (a) Section 3.12(a) of the Company
----------------
Disclosure Schedule sets forth a complete list of all "employee benefit plans"
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), and each material employment contract, bonus,
pension, profit sharing, deferred compensation, incentive compensation, excess
benefit, stock, stock option, severance, termination pay, change in control or
other material employee benefit plan, program or arrangement, whether written or
unwritten, qualified or unqualified, funded or unfunded, foreign or domestic
currently maintained, or contributed to, or required to be maintained or
contributed to, by the Company or any subsidiary for the benefit of any current
or former employees, officers or directors of the Company or any of its
subsidiaries or with respect to which the Company or any of its subsidiaries has
any liability (collectively, the "Benefit Plans"), except for Benefit Plans that
are maintained or contributed to by a subsidiary other than a Specified
Subsidiary and which the executive officers of the Company located at the
Company's headquarters do not have actual knowledge of as of the date of this
Agreement. For purposes of the preceding sentence, an employment agreement shall
be deemed material if the Company or a subsidiary may not terminate the contract
or the employment of the individual who is a party to the contract without
incurring a liability in excess of $100,000, and an employee benefit plan,
program or arrangement will be material if the aggregate annual cost associated
therewith exceeds $250,000. As used herein, "Specified Subsidiary" shall mean
LeaRonal (UK) plc, LeaRonal AG and LeaRonal (S.E. Asia) Ltd.
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<PAGE>
(b) Each Benefit Plan has been maintained, operated and administered
in all material respects in accordance with its terms. The Company, each
subsidiary and all the Benefit Plans are all in compliance in all material
respects with the applicable provisions of ERISA, the Internal Revenue Code of
1986, as amended (the "Code") and any other applicable law, rule or regulation,
domestic or foreign.
(c) No event has occurred and, to the knowledge of the Company, there
exists no condition or set of circumstances in connection with which the Company
or any subsidiary could be subject to any liability under the terms of any
Benefit Plan, or under ERISA, or, with respect to any Benefit Plan, under ERISA,
the Code or any other applicable law, rule or regulation, domestic or foreign,
other than any condition or set of circumstances that, individually or in the
aggregate, has not had and would not reasonably be expected to have a Material
Adverse Effect on the Company. Neither the Company nor any subsidiary has
incurred or would reasonably be expected to incur any liability in respect of
any employee benefit plan maintained by any person other than the Company or a
subsidiary which would be treated as a single employer with the Company or a
subsidiary under Section 414(b) or (c) of the Code.
(d) The Benefit Plans which are "employee pension benefit plans"
within the meaning of Section 3(2) of ERISA and which are intended to meet the
qualification requirements of Section 401(a) of the Code (each a "Pension Plan")
now meet, and at all times since their inception have met the requirements for
such qualification, and the related trusts are now, and at all times since their
inception have been, exempt from taxation under Section 501(a) of the Code. All
Pension Plans have received determination letters from the IRS to the effect
that such Pension Plans are qualified and the related trust are exempt from
federal income taxes and no determination letter with respect to any Pension
Plan has been revoked nor, to the best knowledge of the Company is there any
reason for such revocation, nor has any Pension Plan been amended since the date
of its most recent determination letter in any respect which would adversely
affect its qualification.
(e) No Benefit Plan is now or at any time has been subject to Part 3,
Subtitle B of Title I of ERISA or Title IV of ERISA.
(f) There are no investigations, audits, actions, suits or claims
pending (other than routine claims for benefits) or, to the knowledge of the
Company, threatened against, or with respect to, any Benefit Plan or its assets,
any fiduciary thereof or service provider thereto nor to the knowledge of the
Company is there any reasonable basis for any such claim, suit or proceeding
that, individually or in the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect on the Company.
(g) To the knowledge of the Company, there is no matter pending
(other than routine qualification determination filings) with respect to any
Benefit Plan before the IRS, the Department of Labor or the Pension Benefit
Guaranty Corporation ("PBGC").
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<PAGE>
(h) All contributions to, and payments from, any Benefit Plan, except
those to be made from a trust qualified under Section 401(a) of the Code, for
any period ending before the Effective Time that are not yet, but will be,
required are properly accrued and reflected on the most recent financial
statements contained in the Filed Company SEC Documents.
(i) Except as set forth on Section 3.12(i) of the Company Disclosure
Schedule or as otherwise contemplated by this Agreement, and except for Benefit
Plans maintained or contributed to by a subsidiary other than a Specified
Subsidiary which the executive officers of the Company located at the Company's
headquarters do not have actual knowledge of as of the date of this Agreement,
the execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not (i) require the Company or any of its
subsidiaries to pay greater compensation or make a larger contribution to, or
pay greater benefits or accelerate payment or vesting of a benefit under, any
Benefit Plan or any other program, agreement, policy or arrangement or (ii)
create or give rise to any additional vested rights or service credits under any
Benefit Plan or any other program, agreement, policy or arrangement.
(j) Except as set forth in Section 3.12(j) of the Company Disclosure
Schedule, and except for Benefit Plans maintained or contributed to by a
subsidiary other than a Specified Subsidiary which the executive officers of the
Company located at the Company's headquarters do not have actual knowledge of as
of the date of this Agreement, no Benefit Plan provides benefits, including
without limitation, death or medical benefits, beyond termination of employment
or retirement other than (A) coverage mandated by law or (B) death or retirement
benefits under a Benefit Plan qualified under Section 401(a) of the Code.
Neither the Company nor any of its subsidiaries is contractually or otherwise
obligated (whether or not in writing) to provide any person with life, medical,
dental or disability benefits for any period of time beyond retirement or
termination of employment, other than as required by the provisions of Sections
601 through 608 of ERISA and Section 4980B of the Code.
(k) With respect to any Benefit Plan that is an employee welfare
benefit plan (as defined in Section 3(1) of ERISA), (i) no such Benefit Plan in
funded through a "welfare benefit fund", as such term is defined in Section
419(e) of the Code, (ii) each such Benefit Plan that is a "group health plan",
as such term is defined in Section 5000(b)(l) of the Code, complies in all
material respects with the applicable requirements of Sections 601 through 608
of ERISA and Section 4980B(f) of the Code, and (iii) each such Benefit Plan
(including any such Plan covering retirees or other former employees) may be
amended or terminated without material liability to the Company or any of its
subsidiaries on or at any time after the consummation of the Offer.
Section 3.13 Taxes. The Company and each of its subsidiaries has timely
-----
filed all material Tax Returns required to be filed by any of them. All such Tax
Returns are true, correct and complete, except for such instances which
individually or in the aggregate would not have a Material Adverse Effect on the
Company. All material Taxes of the Company and its subsidiaries which are due on
or before the Effective Time, have been paid, except for those Taxes which are
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being contested in good faith for which adequate reserves have been established
in the financial statements included in the Company SEC Documents in accordance
with generally accepted accounting principles and which are described in Section
3.13 of the Company Disclosure Statement. The Company does not know of any
proposed or threatened Tax claims or assessments which, if upheld, would
individually or in the aggregate have a Material Adverse Effect on the Company.
The Company and each subsidiary has withheld and paid over to the relevant
Taxing authority all Taxes required to have been withheld and paid in connection
with payments to employees, independent contractors, creditors, stockholders or
other third parties, except for such Taxes which individually or in the
aggregate would not have a Material Adverse Effect on the Company.
As used herein, "Tax Returns" shall mean all returns and reports of
or with respect to any Tax which are required to be filed by or with respect to
the Company or any of its subsidiaries, and "Taxes" shall mean all taxes,
charges, imposts, tariffs, fees, levies or other similar assessments or
liabilities, including income taxes, ad valorem taxes, excise taxes, withholding
taxes, stamp taxes or other taxes of or with respect to gross receipts,
premiums, real property, personal property, windfall profits, sales, use,
transfers, licensing, employment, payroll and franchises imposed by or under any
statute, law, rule or regulation, and such terms shall include any interest,
fines, penalties, assessments or additions to tax resulting from, attributable
to or incurred in connection with any such tax or any contest or dispute
thereof.
Section 3.14 Year 2000. The software, operations, systems and processes
---------
(including, to the knowledge of the Company, software, operations, systems and
processes obtained from third parties) which, in whole or in part, are used,
operated, relied upon, or integral to, the Company's or any of its subsidiaries'
conduct of their business, are Year 2000 Compliant (as hereinafter defined),
except where the failure to be Year 2000 Compliant would not, individually or in
the aggregate, have a Material Adverse Effect on the Company, and the Company
has delivered to Parent true and correct copies of any consultant or other
third-party reports prepared on behalf of the Company with respect to such
compliance. For purposes of this Agreement, "Year 2000 Compliant" means the
ability to process (including calculate, compare, sequence, display or store),
transmit or receive data or data/time data from, into and between the twentieth
and twenty-first centuries, and the years 1999 and 2000, and leap year
calculations without error or malfunction.
Section 3.15 Compliance with Applicable Laws. Except as would not
-------------------------------
reasonably be expected to have a Material Adverse Effect on the Company: (a) the
Company and its subsidiaries have in effect all Federal, state, local and
foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits (including Environmental Permits (as
hereinafter defined)) and rights ("Permits") required under applicable
Environmental Laws and necessary for it to own, lease or operate its properties
and assets and to carry on its business as now conducted, and there has occurred
no default under any such Permit, and (b) each of the Company and its
subsidiaries is in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Entity, including in respect
of
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unlawful expenditures in violation of Section 30A of the Exchange Act.
"Environmental Permit" means any permit, license, approval or other
authorization under any applicable law, regulation and other requirement of any
country, state, municipality or other subdivision thereof relating to pollution
or protection of health or the environment, including laws, regulations or other
requirements relating to emissions, discharges, releases of pollutants,
contaminants, hazardous substances, toxic materials, or wastes into ambient air,
surface water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment storage, disposal, transport, or
handling of chemical substances, pollutants, contaminants or hazardous or toxic
materials or wastes.
(b) Except as would not reasonably be expected to have a Material
Adverse Effect on the Company, (i) each of the Company and its subsidiaries and
their respective properties, assets, businesses and operations is, and has been,
and (ii) each of the Company's former subsidiaries, while subsidiaries of the
Company and their respective properties, assets, businesses and operations, was,
in compliance with all applicable Environmental Laws (as hereinafter defined)
and Environmental Permits. The term "Environmental Laws" means any federal,
state, local or foreign statute, code, ordinance, rule, regulation, permit,
consent, approval, license, judgment, order, writ, decree, injunction or other
authorization, including the requirement to register underground storage tanks,
relating to: (i) emissions, discharges, releases or threatened releases of
Hazardous Material (as hereinafter defined) into the environment, including,
without limitation, into ambient air, soil, sediments, land surface or
subsurface, buildings or facilities, surface water, groundwater, publicly-owned
treatment works, septic systems or land; or (ii) the generation, treatment,
storage, disposal, use, handling, manufacturing, transportation or shipment of
Hazardous Material.
(c) Except as would not reasonably be expected to have a Material
Adverse Effect on the Company, (i) during the period of ownership or operation
by the Company and its subsidiaries of any of their respective current or
previously-owned properties, there have been no Releases (as hereinafter
defined) of Hazardous Material in, on, under, from such properties, or to its
knowledge any surrounding site or any off-site location, and (ii) to its
knowledge prior to the period of ownership by the Company and its subsidiaries
of any of their respective current or previously-owned properties there were no
releases of Hazardous Material in, on, under or affecting any such property, any
surrounding site or any off-site location. The term "Hazardous Material" means
(1) hazardous materials, pollutants or contaminants, medical, hazardous or
infectious wastes, hazardous waste constituents, hazardous chemicals, hazardous
or toxic pollutants, and hazardous or toxic substances as those terms are
defined in or regulated by any applicable Environmental Law, including without
limitation, the following statutes and their implementing regulations: the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq., the
-- ---
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the
-- ---
Comprehensive Environmental Response, Compensation and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act, 42 U.S.C. Section 9601 et
--
seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the
- --- -- ---
Clean Water Act, 33 U.S.C. Section 1251 et seq. and the Clean Air Act, 42 U.S.C.
-- ---
Section 7401 et seq., (2) petroleum, including
-- ---
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crude oil and any fractions thereof, (3) natural gas, synthetic gas and any
mixtures thereof, (4) radioactive materials including, without limitation,
source byproduct or special nuclear materials and (5) pesticides. "Releases"
means spills, leaks, discharges, disposal, pumping, pouring, emissions,
injection, emptying, leaching, dumping or allowing to escape.
(d) Except as would not reasonably be expected to have a Material
Adverse Effect on the Company, (i) the Company and its subsidiaries and their
respective properties, assets, businesses and operations are not subject to any
Environmental Claims (direct or contingent, and whether known or unknown) or
Environmental Liabilities (as such terms are hereinafter defined) arising from
or based upon any act, omission, event, condition or circumstance occurring or
existing on or prior to the date hereof or for which the Company and its
subsidiaries are responsible, including without limitation, any such
Environmental Claims or Environmental Liabilities arising from or based upon the
ownership or operation of assets, businesses or properties of the Company or any
subsidiary or their respective predecessors, and (ii) neither the Company nor
any of its subsidiaries has received any notice of any violation of any
Environmental Law or Environmental Permit or any Environmental Claim in
connection with their respective assets, properties, businesses or operations,
or, in each case, those of their respective predecessors. The Company has
provided to Purchaser and has disclosed on Section 3.15(d) of the Company
Disclosure Schedule all material environmental site assessment reports prepared
by, on behalf of or, to the extent in the Company's or any subsidiary's
possession, relating to the Company or any subsidiary since January 1, 1996
regarding the environmental condition of the Company's properties or the
environmental compliance of the Company or any subsidiary. The term
"Environmental Claim" means any third party (including governmental agencies,
regulatory agencies and employees) action, lawsuit, claim, proceeding (including
claims or proceedings under the Occupational Safety and Health Act or similar
laws relating to safety of employees) which seeks to impose liability for (i)
noise; (ii) pollution or contamination of the air, surface water, ground water
or land; (iii) solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation; (iv) exposure to hazardous or toxic
substances; (v) the safety or health of employees; or (vi) the manufacture,
processing, distribution in commerce, use, or storage of chemical or other
hazardous substances. An "Environmental Claim" includes, but is not limited to,
a common law action, as well as a proceeding to issue, modify or terminate an
Environmental Permit of the Company or any of its subsidiaries. The term
"Environmental Liabilities" includes all costs arising from any Environmental
Claim or violation or alleged violation or circumstance or condition which would
give rise to a violation or liability under any Environmental Permit or
Environmental Law under any theory of recovery, at law or in equity, and whether
based on negligence, strict liability or otherwise, including but not limited
to: remedial, removal, response, abatement, investigative, monitoring, personal
injury and damage to property, and any other related costs, expenses, losses,
damages, penalties, fines, liabilities and obligations, including attorneys'
fees and court costs.
Section 3.16 State Takeover Statutes. The Company has taken all action
-----------------------
necessary to render Section 912 of the NYBCL inapplicable to Parent and
Purchaser, the Offer, the Merger, the Tender and Option Agreement and this
Agreement and the other Transactions. No other "fair
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price," "moratorium," "control share acquisition" or other state takeover
statute or similar statute or regulation applies or purports to apply to the
Company, Parent, Purchaser, the Offer, the Merger, the Tender and Option
Agreement, this Agreement or any of the other Transactions. As a result of the
foregoing actions, the only action required to authorize the Merger is the
Company Shareholder Approval and no further action is required to authorize the
other Transactions.
Section 3.17 Contracts. Except for Benefit Plans, Contracts disclosed on
---------
Section 3.11 to the Company Disclosure Schedule and any Contracts filed as an
exhibit to any Filed Company SEC Document, Section 3.17 to the Company
Disclosure Schedule lists, under the relevant heading, all oral or written
contracts, agreements, arrangements, guarantees, leases and executory
commitments (each a "Contract") that exist as of the date hereof to which the
Company or any of its subsidiaries is a party or by which it is bound and which
fall within any of the following categories: (a) Contracts not entered into in
the ordinary course of the Company's and its subsidiaries' businesses other than
those that individually are not material to the business of the Company and its
subsidiaries, taken as a whole, (b) joint venture and partnership agreements,
(c) Contracts containing covenants purporting to limit the freedom of the
Company or any of its subsidiaries to compete in any line of business in any
geographic area, (d) Contracts which after the consummation of any of the
Transactions would have the effect of limiting the freedom of Parent or any of
its subsidiaries to compete in any line of business in any geographic area, (e)
Contracts providing for "earn-outs" or other contingent payments by the Company
involving more than $1,000,000 in the aggregate over the terms of all such
Contracts, (f) Contracts associated with off balance sheet financing in excess
of $1,000,000 in the aggregate, including but not limited to arrangements for
the sale of receivables, (g) stock purchase agreements, asset purchase
agreements or other acquisition or divestiture agreements where the
consideration in any individual transaction exceeds $1,000,000 since January 1,
1995, or (h) Contracts with respect to which a change in the ownership (whether
directly or indirectly) of the Shares or the composition of the Board of
Directors of the Company may result in a violation of or default under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of benefits under such Contract which termination, cancellation,
acceleration or loss of benefit would be material to the Company, except in the
case of clauses (a), (b) and (e) through (h) above for Contracts to which a
subsidiary other than a Specified Subsidiary is a party or by which it is bound
and which the executive officers of the Company located at the Company's
headquarters do not have actual knowledge of as of the date of this Agreement.
All Contracts (including those described in clauses (a) through (h) above) to
which the Company or any subsidiary is a party or by which it is bound are valid
and binding obligations of the Company or such subsidiary and, to the knowledge
of the Company, the valid and binding obligation of each other party thereto
except such Contracts which if not so valid and binding would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company. Neither the Company or such subsidiary nor, to the knowledge of the
Company, any other party thereto is in violation of or in default in respect of,
nor has there occurred an event or condition which with the passage of time or
giving of notice (or both) would constitute a default under or permit the
termination of, any such Contract except such violations or defaults under or
terminations which, individually or in the aggregate, would not reasonably be
expected to have a
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<PAGE>
Material Adverse Effect on the Company. Set forth in Section 3.17(i) to the
Company Disclosure Schedule is the amount of the annual premium currently paid
by the Company for its directors' and officers' liability insurance. The Company
has provided to Parent and Purchaser true and complete copies of each of the
Other Agreements.
Section 3.18 Labor Matters. Except to the extent set forth in Section
-------------
3.18 of the Company Disclosure Schedule, (a) no employee of the Company or any
of its subsidiaries is represented by any union or other labor organization; (b)
the Company and all of its subsidiaries are in compliance with applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and are not engaged in any unfair labor
practice; (c) there is no unfair labor practice complaint against the Company or
any of its subsidiaries pending or, to the knowledge of the Company, threatened
by or before the National Labor Relations Board or any other Governmental
Entity; (d) there is no labor strike, dispute, slowdown, representation campaign
or work stoppage pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its subsidiaries; (e) no grievance or
arbitration proceeding arising out of or under collective bargaining agreements
is pending and no claim therefor has been asserted against the Company or its
subsidiaries; and (f) neither the Company or any of its subsidiaries has
experienced any material work stoppage since August 31, 1996. The Company and
its subsidiaries are in material compliance with all applicable federal, state,
local or foreign labor laws, rule and regulations.
Section 3.19 Undisclosed Liabilities. Except as and to the extent
-----------------------
disclosed in the Filed Company SEC Documents, or as set forth in Section 3.19 of
the Company Disclosure Schedule, and except for liabilities incurred in the
ordinary course of business and otherwise not in contravention of this Agreement
which individually and in the aggregate are not material, the Company does not
have any liabilities or obligations of any nature (whether absolute, contingent
or otherwise) that would be required to be reflected or reserved against in a
consolidated balance sheet of the Company and its subsidiaries prepared in
accordance with United States generally accepted accounting principles.
Section 3.20 Opinion of Company Financial Advisor. The Company has
------------------------------------
received the opinion of the Company Financial Advisor, dated the date of this
Agreement, to the effect that, as of such date, the consideration to be received
in the Offer and the Merger by the Company's stockholders is fair to the
Company's stockholders from a financial point of view, a signed copy of which
opinion has been delivered to Parent, and such opinion has not been amended,
modified or revoked in a manner adverse to Parent or Purchaser. The Company has
been authorized by the Company Financial Advisor to permit the inclusion of such
fairness opinion (and, subject to prior review and consent by such Company
Financial Advisor, a reference thereto) in the Offer Documents and in the
Schedule 14D-9 and the Proxy Statement.
Section 3.21 Intellectual Property. Except to the extent the failure of
---------------------
any of the following would not, individually or in the aggregate, have a
Material Adverse Effect on the Company: (i) the Company and each of its
subsidiaries owns and/or is licensed to use (in each
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<PAGE>
case, free and clear of any Liens, claims or similar encumbrances) all patents,
patent applications, trademarks, trademark registrations and applications,
tradenames, service marks, copyright registrations and applications, technology,
inventions, know-how, trade secrets, processes and all agreements and other
rights with respect to intellectual property and computer programs
("Intellectual Property") used in or necessary for the conduct of its business
as currently conducted; (ii) all such patents, trademarks and copyrights owned
by the Company and each of its subsidiaries are valid and enforceable; (iii) the
use of such Intellectual Property by the Company and its subsidiaries and their
agents does not infringe on the rights of any person; (iv) to the knowledge of
the Company, no person is infringing on any right of the Company or any of its
subsidiaries with respect to any such Intellectual Property; (v) the Company and
its subsidiaries are not, and the consummation of the Transactions will not
cause them to be, in breach or violation of any agreement relating to the use of
any of its Intellectual Property, and they have not received any notification,
written or oral, from any third party that there is any such violation, breach
or inability to perform under any such agreement; and (vi) there are no
agreements, written or oral, which materially limit any rights by the Company or
its subsidiaries to use any of their Intellectual Property.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and warrant to
the Company as follows:
Section 4.1 Organization and Qualification. Each of Parent and Purchaser
------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority to carry on its business as it is now being conducted. Each
of Parent and Purchaser is duly qualified as a foreign corporation or licensed
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed and in good standing would not reasonably be expected
to prevent or materially delay the consummation of the Offer or the Merger.
Section 4.2 Authority Relative to this Agreement. Each of Parent and
------------------------------------
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder, and to consummate the
Transactions. The execution and delivery by Parent and Purchaser of this
Agreement and the performance of their respective obligations hereunder, and the
consummation by Parent and Purchaser of the Transactions have been duly and
validly authorized by the respective Boards of Directors of Parent and
Purchaser, and the shareholder of Purchaser, and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize this Agreement, or
commence the Offer or to consummate the Transactions (including the Offer) other
than filing and recordation of appropriate merger
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<PAGE>
documents as required by the NYBCL. This Agreement has been duly and validly
executed and delivered by each of Parent and Purchaser and, assuming this
Agreement constitutes a valid and binding obligation of the Company, this
Agreement constitutes a valid and binding agreement of each of Parent and
Purchaser, enforceable against each of Parent and Purchaser in accordance with
its terms.
Section 4.3 Proxy Statement. None of the information supplied in writing
---------------
by Parent, Purchaser and their respective affiliates specifically for inclusion
in the Proxy Statement, if required, shall, at the time the Proxy Statement is
mailed, at the time of the Shareholder Meeting or at the Effective Time, 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; provided, however, that Parent and Purchaser make no representation
or warranty as to any of the information supplied by or on behalf of the Company
specifically for inclusion in the Proxy Statement. If, at any time prior to the
Effective Time, any event relating to Parent or any of its affiliates, officers
or directors is discovered by Parent that should be set forth in a supplement to
the Proxy Statement, Parent will promptly inform the Company.
Section 4.4 Consents and Approvals; No Violation. Subject to the taking
------------------------------------
of the actions described in the immediately succeeding sentence, the execution
and delivery of this Agreement do not, and the consummation of the Transactions
will not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
material properties or assets of Parent under (i) the certificate of
incorporation or bylaws of Parent or Purchaser, (ii) any loan or credit
agreement, note, bond, indenture, lease or other agreement, instrument or Permit
applicable to Parent or Purchaser or their respective properties or assets,
(iii) any judgment, order, writ, injunction, decree, law, statute, ordinance,
rule or regulation applicable to Parent or Purchaser or their respective
properties or assets, other than, in the case of clause (ii) and (iii), any such
conflicts, violations, defaults, rights or Liens that individually or in the
aggregate would not (x) impair in any material respect the ability of Parent and
Purchaser to perform their respective obligation under this Agreement or (y)
prevent or impede the consummation of any of the Transactions. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity or any other person is required by Parent or
Purchaser in connection with the execution and delivery of this Agreement or the
consummation by Parent or Purchaser, as the case may be, of any of the
Transactions, except (A) in connection with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") or in connection with the
GWB Act or any other foreign antitrust or competition laws, (B) pursuant to the
Securities Act and the Exchange Act, (C) the filing of the Certificate of Merger
pursuant to the NYBCL, (D) such consents, approvals, orders, authorizations,
registrations and declarations as may be required under the law of any foreign
country in which the Parent or any of its subsidiaries conducts any business or
owns any assets, (E) such filings and approvals as may be required under the
"blue sky", takeover or securities laws of various states, or (F) where the
failure to obtain any
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<PAGE>
such consent, approval, authorization or permit, or to make any such filing or
notification, would not prevent or delay consummation of the Offer or the Merger
or would not otherwise prevent Parent from performing its obligations under this
Agreement or where the requirement to obtain such consent, approval,
authorization or permit, or to make such filing or notification arises from the
regulatory status of the Company or its subsidiaries.
Section 4.5 Financing. Parent will have at each of (i) the time of
---------
acceptance for purchase by Purchaser of Shares pursuant to the Offer and (ii)
the Effective Time, and will make available to Purchaser, the funds necessary to
consummate the Offer and the Merger.
Section 4.6 Brokerage Fees and Commissions. Except for those fees and
------------------------------
expenses payable to Deutsche Bank Securities Inc. no person is entitled to
receive any investment banking brokerage or finder's fee or commission in
connection with this Agreement or the Transactions based upon arrangements may
by or on behalf of Parent or Purchaser.
Section 4.7 Schedule 14D-1; Offer Documents. Neither the Schedule 14D-1,
-------------------------------
the Offer Documents nor any information supplied by or on behalf of Parent or
Purchaser in writing for inclusion in the Schedule 14D-9 shall, at the
respective times the Schedule 14D-9, the Schedule 14D-1, the Offer Documents or
any amendments or supplements thereto are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-1 and the Offer Documents will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder. Notwithstanding the foregoing, no representation or
warranty is made by Parent or Purchaser with respect to statements made or
incorporated by reference therein based on information supplied by the Company
specifically for inclusion or incorporation by reference therein.
Section 4.8 Operations of Purchaser. Purchaser (and any other wholly
-----------------------
owned subsidiary of Parent which may be used to effect the Offer and the Merger
pursuant to Section 2.1) was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated by this
Agreement.
Section 4.9 Ownership of Shares by Parent and Purchaser. As of the date
-------------------------------------------
hereof and excluding Shares subject to the Tender and Option Agreements, Parent
and Purchaser beneficially own 100 Shares.
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<PAGE>
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business of the Company Pending the Merger. The
-----------------------------------------------------
Company hereby covenants and agrees that, prior to the Effective Time, unless
otherwise expressly contemplated by this Agreement or consented to in writing by
Parent, it will and will cause each of its subsidiaries to:
(a) operate its business in the usual and ordinary course
substantially consistent with past practices;
(b) use its commercially reasonable efforts to preserve intact its
business organization, maintain its rights and franchises, retain the services
of its respective key employees and maintain its relationships with its
respective customers and suppliers and others having business dealings with it
to the end that its goodwill and ongoing business shall be unimpaired at the
Effective Time; and
(c) use its commercially reasonable efforts to keep in full force
and effect insurance and bonds comparable in amount and scope of coverage to
that currently maintained.
Section 5.2 Prohibited Actions by the Company. Without limiting the
---------------------------------
generality of Section 5.1, except as set forth in Section 5.2 of the Company
Disclosure Schedule, the Company covenants and agrees that, except as expressly
contemplated by this Agreement or otherwise consented to in writing by Parent,
from the date of this Agreement until the Effective Time, it will not do, and
will not permit any of its subsidiaries to do, any of the following:
(a) (i) increase the compensation (or benefits) payable to or to
become payable to any director or employee, except for increases in salary or
wages of employees in the ordinary course of business and consistent with past
practice; (ii) grant any severance or termination pay (other than pursuant to
the normal severance policy or practice of the Company or its subsidiaries as
disclosed in Section 3.12 of the Company Disclosure Schedule and in effect on
the date of this Agreement) to, or enter into or amend in any material respect
any employment or severance agreement with, any employee; (iii) establish,
adopt, enter into or amend any collective bargaining agreement or Benefit Plan
of the Company or any subsidiary; or (iv) take any action to accelerate any
rights or benefits, or make any determinations not in the ordinary course of
business consistent with past practice, under any collective bargaining
agreement or Benefit Plan of the Company or any subsidiary;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of (whether in cash, stock or property), outstanding
shares of capital stock, except for (i) dividends by a wholly owned subsidiary
of the Company to the Company or another wholly owned subsidiary of the Company
and (ii) regular quarterly cash dividends by the Company
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<PAGE>
consistent with past practices (including as to declaration, record and payment
dates) in no event to exceed $0.14 per Share per fiscal quarter; provided that
-------- ----
the Company may declare and pay, prior to the expiration date of the Offer, its
regular quarterly cash dividend of $0.14 per Share scheduled to be declared and
paid in February, 1999;
(c) redeem, purchase or otherwise acquire, or offer or propose to
redeem, purchase or otherwise acquire, any outstanding shares of capital stock
of, or other equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests in,
or any outstanding options, warrants or rights of any kind to acquire any shares
of capital stock of, or other equity interests in, the Company or any of its
subsidiaries (other than (i) any such acquisition by the Company or any of its
wholly owned subsidiaries directly from any wholly owned subsidiary of the
Company in exchange for capital contributions or loans to such subsidiary, or
(ii) any purchase, forfeiture or retirement of shares of Company Common Stock or
the Options occurring pursuant to the terms (as in effect on the date of this
Agreement) of any existing Benefit Plan of the Company or any of its
subsidiaries, in a manner otherwise consistent with the terms of this Agreement;
(d) effect any reorganization or recapitalization; or split, combine
or reclassify any of the capital stock of, or other equity interests in, the
Company or any of its subsidiaries or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of or in substitution for, shares
of such capital stock or such equity interests;
(e) offer, sell, issue or grant, or authorize or propose the
offering, sale, issuance or grant of, any shares of capital stock of, or other
equity interests in, any securities convertible into or exchangeable for (or
accelerate any right to convert or exchange securities for) any shares of
capital stock of, or other equity interest in, or any options, warrants or
rights of any kind to acquire any shares of capital stock of, or other equity
interests in, or any Voting Company Debt or other voting securities of, the
Company or any of its subsidiaries, or any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock-based performance units, other than
issuances of shares of Company Common Stock upon the exercise of the Options
outstanding at the date of this Agreement in accordance with the terms thereof
(as in effect on the date of this Agreement);
(f) acquire or agree to acquire, by merging or consolidating with,
by purchasing an equity interest in or a portion of the assets of, or in any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any assets of any
other person if the aggregate consideration is in excess of $500,000 for any
individual transaction, and $5,000,000 for all such transactions (other than the
purchase of assets from suppliers or vendors in the ordinary course of
business);
(g) sell, lease, exchange or otherwise dispose of, or grant any Lien
with respect to, any of the properties or assets of the Company or any of its
subsidiaries that are, individually or in the aggregate, material to the
business of the Company and its subsidiaries, except for (i)
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dispositions of excess or obsolete assets and sales of inventories in the
ordinary course of business, and (ii) dispositions of properties or assets with
a value not in excess of $500,000 for any individual transaction and $5,000,000
for all such transactions;
(h) propose or adopt any amendments to its certificate of
incorporation or bylaws or other organizational documents;
(i) effect any change in any accounting methods, principles or
practices in effect as of February 28, 1998 affecting the reported consolidated
assets, liabilities or results of operations of the Company, except as may be
required by a change in generally accepted accounting principles;
(j) (i) incur any indebtedness for borrowed money in excess of an
aggregate of $5,000,000, issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any of its subsidiaries,
guarantee any such indebtedness or debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing, or (ii) make any loans, advances (other than to employees
of the Company and its subsidiaries in the ordinary course of business) or
capital contributions to, or investments in, any other person, other than to or
in the Company or any subsidiary of the Company;
(k) enter into any Contract described in clauses (a) through (f) of
Section 3.17 or, in the case of any Contract described in Section 3.17(h), enter
into such Contract if the termination, cancellation, acceleration or loss of
benefits described in Section 3.17(h) would have a Material Adverse Effect on
the Company;
(l) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business or in accordance with their terms, of
liabilities reflected or reserved against in the most recent consolidated
financial statements (or the notes thereto) of the Company included in the Filed
Company SEC Documents or incurred since the date of such financial statements in
the ordinary course of business;
(m) take any of the actions set forth in Section 3.4 not otherwise
specified herein;
(n) settle the terms of any material litigation affecting the
Company or any of its subsidiaries;
(o) make any material Tax election (unless required by law or unless
consistent with prior practice) or settle or compromise any material Tax
liability except, in each case, if Parent is given reasonable prior notice
thereof; or
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(p) make or agree to make any new capital expenditures except for
capital expenditures which are consistent with the capital expenditure budget
previously provided to Parent and which do not individually exceed $500,000 and
do not, in the aggregate, exceed $5,000,000.
ARTICLE VI
COVENANTS
Section 6.1 No Solicitation.
---------------
(a) From and after the date hereof until the Effective Time or the
termination of this Agreement in accordance with Section 8.1, neither the
Company or any of its subsidiaries, nor any of their respective officers,
directors, employees, representatives, agents or affiliates (including, without
limitation, any investment banker, attorney or accountant retained by the
Company or any of its subsidiaries) will directly or indirectly initiate,
solicit or encourage (including by way of furnishing non-public information or
assistance), or take any other action to facilitate, any inquiries or the making
or submission of any Acquisition Proposal (as hereinafter defined), or enter
into or maintain or continue discussions or negotiate with any person or group
in furtherance of such inquiries or to obtain or induce any person or group to
make or submit an Acquisition Proposal or agree to or endorse any Acquisition
Proposal or assist or participate in, facilitate or encourage, any effort or
attempt by any other person or group to do or seek any of the foregoing or
authorize or permit any of its officers, directors or employees or any of its
subsidiaries or affiliates or any investment banker, financial advisor,
attorney, accountant or other representative or agent retained by it or any of
its subsidiaries to take any such action; provided, however, that nothing
-------- -------
contained in this Agreement shall prohibit the Board of Directors of the Company
from, prior to the earlier to occur of acceptance for payment of Shares pursuant
to the Offer or adoption of this Agreement by the requisite vote of the
stockholders of the Company, furnishing information to or entering into
discussions or negotiations with any person or entity that makes an unsolicited
written, bona fide Acquisition Proposal that constitutes, or may reasonably be
expected to lead to, any Superior Proposal (as hereinafter defined) if, and only
to the extent that (i) the Board of Directors of the Company, after consultation
with independent legal counsel, reasonably determines in good faith that the
failure to do so would be reasonably likely to result in a breach of the
fiduciary duty of the Board of Directors of the Company under applicable law and
(ii) prior to taking such action the Company (x) delivers to Parent and
Purchaser the notice required pursuant to Section 6.1(c) stating that it is
taking such action and (y) receives from such person or group an executed
confidentiality agreement that contains customary confidentiality and standstill
restrictions. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in this Section 6.1 by any officer,
director, employee or affiliate of the Company or any of its subsidiaries or any
investment banker, attorney, accountant or other advisor, agent or
representative of the Company or any of its subsidiaries, whether or not such
person is purporting to act on behalf of the Company or any of its subsidiaries
or otherwise, shall be deemed to be a breach of this Section 6.1 by the Company.
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(b) Except as expressly permitted by this Section 6.1, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw,
modify or fail to make, or propose to withdraw, modify or fail to make its
approval or recommendation of the Offer or the Merger or of the Tender and
Option Agreement and the other Transactions, (ii) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal, (iii) take any action
to render the provisions of any anti-takeover statute, rule or regulation
(including Section 912 of the NYBCL) inapplicable to any person (other than
Parent, Purchaser or their affiliates) or group or to any Acquisition Proposal
or (iv) cause the Company or any of its subsidiaries to accept such Acquisition
Proposal and/or enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Acquisition Proposal; provided however, that prior to
-------- -------
the earlier to occur of acceptance for payment of Shares pursuant to the Offer
or adoption of this Agreement by the requisite vote of the stockholders of the
Company, the Board of Directors of the Company may terminate this Agreement if,
and only to the extent that (A) such Acquisition Proposal is a Superior
Proposal, (B) the Board of Directors of the Company, after consultation with
independent legal counsel, reasonably determines in good faith that the failure
to do so would be reasonably likely to result in a breach of the fiduciary duty
of the Board of Directors of the Company under applicable law, (C) the Company
shall, prior to or simultaneously with the taking of such action, have paid or
pay to Parent or Purchaser or their designee the Termination Fee and the
Expenses referred to in Section 8.3, (D) the Company is not in breach of this
Section 6.1, (E) the Company shall have complied with its obligations under
Section 8.1(d)(ii) and (F) concurrently with such termination, the Company
enters into an Acquisition Agreement with respect to such Superior Proposal.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) above, the Company shall promptly (and in any event,
within 24 hours) advise Parent orally and in writing of any request for
information or the submission or receipt of any Acquisition Proposal, the
material terms and conditions of such Acquisition Proposal, and the identity of
the person making any such Acquisition Proposal. The Company will keep Parent
fully informed of the material developments with respect to any such Acquisition
Proposal. The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing.
(d) "Acquisition Proposal" means an inquiry, offer or proposal
regarding any of the following (other than the Transactions contemplated by this
Agreement) involving the Company: (i) any merger, consolidation, share exchange,
recapitalization, liquidation, dissolution, business combination or other
similar transaction; (ii) any sale, lease, exchange, or other disposition of 20%
or more of the assets of the Company and its subsidiaries, taken as a whole, or
of any Material Business (as hereinafter defined) or of any subsidiary or
subsidiaries responsible for a Material Business in a single transaction or
series of related transactions; (iii) any tender offer (including a self tender
offer) or exchange offer that, if consummated, would result in any person or
group beneficially owning more than 20% of the outstanding shares of any class
of equity securities of the Company; (iv) any acquisition of 20% or more of the
outstanding shares of capital stock of the Company; or (v) any public
announcement by the Company or any third party
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of a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing. "Superior Proposal" means any proposal made by a
third party to acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer, merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or other similar
transaction, all the shares of Company Common Stock then outstanding or all or
substantially all of the assets of the Company and its subsidiaries which the
Board of Directors of the Company reasonably determines in good faith (after
consultation with its independent financial advisor and after taking into
account any changes to the terms of this Agreement and the Offer that have been
proposed by Parent in response to such proposal) to be more favorable to the
Company and the Company's stockholders. "Material Business" means any business
(or the assets needed to carry out such business) that contributed or
represented 20% or more of the net sales, the net income or the assets
(including equity securities) of the Company and its subsidiaries taken as a
whole.
(e) Nothing contained in this Section 6.1 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if the Board of Directors of the
Company, after consultation with independent legal counsel, reasonably
determines in good faith that the failure to take such action would be
reasonably likely to result in a breach of the fiduciary duty of the Board of
Directors under applicable law; provided that neither the Board of Directors of
-------- ----
the Company nor any committee thereof withdraws or modifies, or proposes to
withdraw or modify, the approval or recommendation of the Board of Directors of
the Company of the Offer or the Merger or approves or recommends, or publicly
proposes to approve or recommend, an Acquisition Proposal unless the Company and
the Board of Directors of the Company have complied with all the provisions of
this Section 6.1.
Section 6.2 Access to Information. Between the date of this Agreement
---------------------
and the Effective Time, the Company shall, and shall cause its subsidiaries to
(a) afford to Parent and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives full access during
normal business hours and at all other reasonable times to the officers,
employees, agents, properties, offices and other facilities of the Company and
its subsidiaries and to their books and records (including all Tax Returns and
all books and records related to Taxes and such returns), (b) permit Parent to
make such inspections as it may require (and the Company shall cooperate with
Parent in any inspections, including, without limitation, environmental due
diligence), and (c) furnish promptly to Parent and its representatives a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of federal or state securities
laws and such other information concerning the business, properties, contracts,
records and personnel of the Company and its subsidiaries (including financial,
operating and other data and information) as may be reasonably requested, from
time to time, by or on behalf of Parent.
Section 6.3 Confidentiality Agreement. The parties agree that the
-------------------------
provisions of the Confidentiality Agreement dated October 21, 1998 between
Parent and the Company shall remain binding and in full force and effect;
provided, however, that any consents from the Company
- -------- -------
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<PAGE>
necessary under the Confidentiality Agreement for Parent and Purchaser to
consummate the transactions contemplated by this Agreement and the Tender and
Option Agreement shall be deemed to have been made and provided that the
provisions of the twelfth paragraph of the Confidentiality Agreement shall
terminate and be of no further force and effect after the date of this
Agreement. The parties shall comply with, and shall cause their respective
Representatives (as defined in the Confidentiality Agreement) to comply with,
all of their respective obligations under the Confidentiality Agreement until
the Effective Time, at which time the Confidentiality Agreement shall terminate
and be of no further force and effect.
Section 6.4 Reasonable Best Efforts. (a) Subject to the terms and
-----------------------
conditions herein, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective as soon as reasonably
practicable the transactions contemplated by this Agreement. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall take all such necessary action. Such reasonable
best efforts shall include, without limitation, (i) the obtaining of all
necessary consents, approvals or waivers from third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement and (ii) opposing vigorously any litigation or administrative
proceeding relating to this Agreement or the transactions contemplated hereby,
including, without limitation, promptly appealing any adverse court or agency
order. Notwithstanding the foregoing or any other provisions contained in this
Agreement to the contrary, neither Parent or the Company nor any of their
respective affiliates shall be under any obligation of any kind to (i) litigate
against any Governmental Entity, including but not limited to any governmental
or regulatory authority with jurisdiction over the enforcement of any applicable
federal, state, local and foreign antitrust, competition or other similar laws
or (ii) otherwise agree with any Governmental Entity or any other party to sell
or otherwise dispose of, agree to any material limitations on the ownership or
control of, or hold separate (through the establishment of a trust or otherwise)
a material portion of the assets or businesses of any of the Company, its
subsidiaries, Parent or any of Parent's affiliates.
(b) The Company shall give and make all required notices and
reports to the appropriate persons with respect to the Permits and Environmental
Permits that may be necessary for the sale and purchase of the business and the
ownership, operation and use of the assets of Surviving Corporation by Parent
and Purchaser after the Effective Time. Subject to the other terms of this
Agreement, each of the Company, Parent and Purchaser shall cooperate and use
their respective reasonable best efforts to make all filings, to obtain all
actions or nonactions, waivers, Permits and orders of Governmental Entities
necessary to consummate the transactions contemplated by this Agreement and to
take all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity. Each of
the parties hereto will furnish to the other parties such necessary information
and reasonable assistance as such other parties may reasonably request in
connection with the foregoing.
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(c) The Company and its Board of Directors shall (i) take all
action necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Offer, the Merger, this Agreement,
the Tender and Option Agreement or any of the other transactions contemplated by
the foregoing and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Offer, the Merger, this Agreement, the
Tender and Option Agreement or any other Transactions, take all action necessary
to ensure that the Offer, the Merger and the other Transactions, including the
Transactions contemplated by this Agreement and the Tender and Option Agreement
may be consummated as promptly as practicable on the terms contemplated by this
Agreement and the Tender and Option Agreement and otherwise to minimize the
effect of such statute or regulation on the Offer, the Merger and the other
Transactions, including the Transactions contemplated by this Agreement and the
Tender and Option Agreement.
Section 6.5 Indemnification of Directors and Officers.
-----------------------------------------
(a) Purchaser agrees that all rights to indemnification for acts or
omissions occurring prior to the Effective Time existing as of the date hereof
in favor of the current or former directors or officers of the Company and its
subsidiaries as provided in their respective certificates of incorporation or
bylaws shall survive the Merger and shall continue in full force and effect in
accordance with their terms for a period of six years from the Effective Time.
Parent shall cause to be maintained, if available, for a period of six years
from the Effective Time the Company's current directors' and officers' insurance
and indemnification policy (the "D&O Insurance") (provided that Parent may
substitute therefor policies or financial guarantees with the same carriers or
other obligors as insure Parent's directors and officers of at least the same
coverage and amounts containing terms and conditions which are substantially
similar to the existing D&O Insurance) to the extent that such insurance
policies provide coverage for events occurring prior to the Effective Time for
all persons who are directors and officers of the Company on the date of this
Agreement, so long as the annual premium to be paid by the Company after the
date of this Agreement for such D&O Insurance during such six-year period would
not exceed 200% of the current annual premium therefor. If, during such six-year
period, such insurance coverage cannot be obtained at all or can only be
obtained for an amount in excess of 200% of the current annual premium therefor,
Parent shall use all reasonable efforts to cause to be obtained as much D&O
Insurance as can be obtained for an amount equal to 200% of the current annual
premium therefor, on terms and conditions substantially similar to the existing
D&O Insurance.
(b) If any claim or claims shall, subsequent to the Effective Time
and within six years thereafter, be made in writing against any present or
former director or officer of the Company based on or arising out of the
services of such person prior to the Effective Time in the capacity of such
person as a director or officer of the Company (and such director or officer
shall have given Parent written notice of such claim or claims within such six
year period), the provisions of subsection (a) of this Section respecting the
rights to indemnify the current or
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former directors or officers under the certificate of incorporation and bylaws
of the Company and its subsidiaries shall continue in effect until the final
disposition of all such claims.
(c) The provisions of this Section 6.5 are intended to be for the
benefit of, and shall be enforceable by, each person entitled to indemnification
hereunder and the heirs and representatives of such person.
Section 6.6 Event Notices and Other Actions. (a) From and after the date
-------------------------------
of this Agreement until the Effective Time, each party hereto shall promptly
notify the other parties hereto of (i) the occurrence or nonoccurrence of any
event, the occurrence or nonoccurrence of which has resulted in, or would
reasonably be expected to result in, any condition to the Offer set forth in
Annex A, or any condition to the Merger set forth in Article VII, not being
satisfied, (ii) the failure of such party to comply with any covenant or
agreement to be complied with by it pursuant to this Agreement which has
resulted in, or would reasonably be expected to result in, any condition to the
Offer set forth in Annex A, or any condition to the Merger set forth in Article
VII, not being satisfied and (iii) any breach of any representation or warranty
made by it contained in this Agreement (excluding for this purpose any
materiality qualifications contained therein) that would be reasonably likely to
have a Material Adverse Effect on the breaching party. No delivery of any notice
pursuant to this Section 6.6(a) shall cure any breach of any representation or
warranty of such party contained in this Agreement or otherwise limit or affect
the remedies available hereunder to the party or parties receiving such notice.
(b) The Company and Parent shall not, and shall not permit any of
their respective subsidiaries to, take any action or nonaction that will, or
that would reasonably be expected to, result in (i) any breach of the
representations and warranties of such party (excluding for this purpose any
materiality qualifications contained therein) set forth in this Agreement that
would be reasonably likely to have a Material Adverse Effect on such party or
(ii) except as otherwise permitted by Section 6.1 and subject to Section 6.4(a),
any condition to the Offer set forth in Annex A, or any condition to the Merger
set forth in Article VII, not being satisfied.
Section 6.7 Third Party Standstill Agreements. During the period from
---------------------------------
the date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill or similar agreement to which the Company or any of its subsidiaries
is a party (other than any involving Parent). Subject to the foregoing, during
such period, the Company agrees to enforce, to the fullest extent permitted
under applicable law, the provisions of any such agreements, including obtaining
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court or other tribunal
having jurisdiction. Notwithstanding the foregoing, nothing in this Section 6.7
is intended to prevent the Company from exercising its rights under Section 6.1
in accordance with the provisions of such Section.
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Section 6.8 Employee Stock Options; Employee Plans and Benefits and
-------------------------------------------------------
Employment Contracts.
- --------------------
(a) Simultaneously with the execution of this Agreement, the Board
of Directors of the Company (or, if appropriate, any committee administering the
Company Stock Option Plans) shall adopt such resolutions or take such other
actions as are required to effect the transactions contemplated by the first
sentence of Section 2.10 in respect of all outstanding Options and thereafter
the Board of Directors of the Company (or any such committee) shall adopt any
such additional resolutions and take such additional actions as are required in
furtherance of the foregoing.
(b) All amounts payable pursuant to Section 2.10 and Section 6.8(a)
shall be subject to any required withholding of taxes and shall be paid without
interest.
(c) The Company Stock Option Plans shall terminate as of the
Effective Time, and the provision in any other Benefit Plan providing for the
potential issuance, transfer or grant of any capital stock of the Company or any
of its subsidiaries or any interest, or release of restrictions in respect of
any capital stock of the Company or any of its subsidiaries shall be deleted as
of the Effective Time, and the Company shall use its commercially reasonable
best efforts to ensure that following the Effective Time no holder of an
Employee Stock Option, stock appreciation right, restricted stock or derivative
security or any participant in the Company Stock Option Plans or other Benefit
Plan shall have any right thereunder to acquire any capital stock of the Company
or any of its subsidiaries or the Surviving Corporation, except as provided in
Section 2.10 in respect of the Company Stock Option Plans. No participant in the
Company Stock Option Plans shall be entitled to receive any other payment or
benefit thereunder except as provided in Section 2.10.
(d) From and after the Effective Time, the Surviving Corporation
agrees to honor in accordance with their terms all existing employment,
severance, consulting or other compensation agreements or benefit contracts
between the Company or any of its subsidiaries and any officer, director or
employee of the Company or any of its subsidiaries, as the same may be modified
by the Other Agreements, and all benefits or other amounts earned or accrued
through the Effective Time, under the Benefit Plans disclosed in Schedule
3.12(a) of the Company Disclosure Schedule.
(e) No benefits shall be accrued or otherwise earned under an
incentive compensation or bonus plan or arrangement sponsored by the Company or
any of its subsidiaries after the Effective Time.
(f) At, or as soon as practicable, but in any event within 90 days,
after the Effective Time, any bonuses or other incentive compensation accrued
under any plan or arrangement sponsored by the Company or any subsidiary shall
be paid to any officer, director or employee of the Company or any subsidiary
entitled thereto in accordance with the terms of such
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plan or arrangement, provided that in the event that a relevant calculation
-------- ----
period has not closed as of the Effective Time, the amount to be paid shall be a
pro rata portion of the otherwise payable amount (determined, where performance
criteria are applicable, at target levels of award).
(g) For a period of not less than two years from the Effective
Time, Parent shall, or shall cause the Surviving Corporation to, maintain
employee benefit plans, programs and arrangements for former employees of the
Company and its subsidiaries who remain employees of the Surviving Corporation
after the Effective Time that are, in the aggregate, no less favorable than
those provided by the Company and its subsidiaries immediately prior to the
Effective Time. From and after the Effective Time, for purposes of determining
eligibility and vesting (but not for purposes of benefit accrual) under any
severance, compensation, welfare, pension, or other benefit plan or arrangement
of Parent or any of its subsidiaries which, at the election of Parent, employees
of the Company or any of its subsidiaries become eligible to participate in,
service with the Company or any of its subsidiaries (whether before or after the
Effective Time) shall be credited as if such services had been rendered to
Parent or such subsidiary; provided that Parent and Purchaser shall have no
-------- ----
obligation to (i) employ any individual, (ii) include any individual in any
stock option or other equity based compensation or benefit plan or arrangement
or (iii) include any such employees of the Company and its subsidiaries in any
benefit plan of Parent or its subsidiaries.
Section 6.9 Meeting of the Company's Shareholders.
-------------------------------------
(a) To the extent required by applicable law, the Company shall
promptly take all action necessary in accordance with the NYBCL and its
Certificate of Incorporation and Bylaws to convene a meeting of the Company's
shareholders (the "Shareholder Meeting") to consider and vote on the Merger and
this Agreement. At the Shareholder Meeting, all of the Shares then owned by
Parent, Purchaser or any other subsidiary of Parent shall be voted to approve
the Merger and this Agreement. The Board of Directors of the Company shall
recommend that the Company's shareholders vote to approve the Merger and this
Agreement if such vote is sought, shall use its best efforts to solicit from
shareholders of the Company proxies in favor of the Merger and shall take all
other action in its judgment necessary and appropriate to secure the vote of
shareholders required by the NYBCL to effect the Merger.
(b) Parent and Purchaser shall not, and they shall cause their
subsidiaries not to, sell, transfer, assign, encumber or otherwise dispose of
the Shares acquired pursuant to the Offer or otherwise prior to the Shareholder
Meeting; provided, however, that this Section 6.9(b) shall not apply to the
-------- -------
sale, transfer, assignment, encumbrance or other disposition of any or all such
Shares in transactions involving solely Parent, Purchaser and/or one or more of
their wholly owned subsidiaries.
(c) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 90% of the then outstanding Shares, the parties hereto
agree, at the request of Purchaser, to take all necessary and appropriate action
to cause the Merger to become effective, in accordance
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with Section 905 of the NYBCL, as soon as reasonably practicable after such
acquisition, without a meeting of the shareholders of the Company.
(d) In the event that Purchaser reduces the Minimum Condition as
permitted by Section 1.1(b) and accepts for payment Shares tendered pursuant to
the Offer, which Shares are less than two-thirds of the Fully Diluted Shares,
the Company shall convene a meeting of its shareholders, or take or permit
Purchaser to take such action as may be necessary or desirable, to amend the
Certificate of Incorporation to provide that the requisite vote of the Company's
shareholders on any merger or consolidation (including the Merger) shall be a
majority of the Shares outstanding. At such meeting, all of the Shares then
owned by Parent, Purchaser or any other subsidiary of Parent shall be voted to
approve such amendment.
Section 6.10 Proxy Statement. If required under applicable law, the
---------------
Company and Parent shall prepare the Proxy Statement, file it with the SEC under
the Exchange Act as promptly as practicable after Purchaser purchases Shares
pursuant to the Offer, and use all reasonable efforts to have it cleared by the
SEC. As promptly as practicable after the Proxy Statement has been cleared by
the SEC, the Company shall mail the Proxy Statement to the shareholders of the
Company as of the record date for the Shareholder Meeting.
Section 6.11 Public Announcements. Parent and the Company shall to the
--------------------
fullest extent practicable consult with each other before issuing any press
release or otherwise making any public statement with respect to the Offer, the
Merger and the other Transactions 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.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) if required by the NYBCL, this Agreement shall have been
approved by the affirmative vote of the shareholders of the Company by the
requisite vote in accordance with applicable law;
(b) no statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated, or enforced by any
court or Governmental Entity which is in effect and has the effect of
prohibiting the consummation of the Merger; and
(c) the waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act, if any, shall have expired or
been terminated.
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Section 7.2 Conditions to Obligations of Parent and Purchaser to Effect
-----------------------------------------------------------
the Merger. The obligations of Parent and Purchaser to effect the Merger are
- ----------
further subject to the satisfaction or waiver, prior to the Effective Time, of
the following conditions:
(a) Purchaser shall have accepted for payment and paid for Shares
tendered pursuant to the Offer; provided, however, that neither Parent nor
Purchaser shall be entitled to assert the failure of this condition if the
failure of such condition results from a breach by Parent or Purchaser of any of
their obligations under this Agreement.
Section 7.3 Conditions to Obligations of the Company to Effect the
------------------------------------------------------
Merger. The obligation of the Company to effect the Merger is further subject
- ------
to the satisfaction or waiver, prior to the Effective Time, of the following
conditions:
(a) Purchaser shall have accepted for payment and paid for Shares
tendered pursuant to the Offer; provided, however, that the Company shall not be
entitled to assert the failure of this condition if the failure of such
condition results from a breach by the Company of any of its obligations under
this Agreement.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1 Termination. This Agreement may be terminated and the
-----------
Merger contemplated hereby may be abandoned at any time (notwithstanding
approval thereof by the shareholders of the Company) prior to the Effective
Time:
(a) by mutual written consent duly authorized by the Boards of
Directors of the Company, Parent and Purchaser;
(b) by Parent, Purchaser or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued a final order,
decree or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the consummation of the Offer or the Merger and such
order, decree or ruling or other action is or shall have become nonappealable;
(c) by Parent or Purchaser if due to an occurrence or circumstance
which would result in the occurrence and continued existence of any of the
conditions set forth in Annex A hereto, Purchaser shall have (i) failed to
commence the Offer within the time required by Regulation 14D under the Exchange
Act, (ii) terminated the Offer without purchasing any Shares pursuant to the
Offer or (iii) failed to accept for payment Shares pursuant to the Offer prior
to April 30, 1999; provided, however, that the right to terminate this Agreement
-------- -------
under this Section 8.1(c) shall not be available to Parent or Purchaser if the
occurrence and continued existence of any of the conditions set forth in Annex A
hereto results from the breach by Parent or Purchaser of any of their respective
obligations under this Agreement;
-40-
<PAGE>
(d) by the Company (i) if Purchaser shall have (A) failed to
commence the Offer within the time required by Regulation 14D under the Exchange
Act, (B) terminated the Offer without purchasing any Shares pursuant to the
Offer or (C) failed to accept for payment Shares pursuant to the Offer prior to
April 30, 1999; provided, however, that the right to terminate this Agreement
-------- -------
under this Section 8.1(d)(i) shall not be available to the Company if such
failure results from the breach by the Company of any of its obligations under
this Agreement or if there shall have occurred any of the events set forth in
paragraph (g) of Annex A, and the right to terminate this Agreement under this
Section 8.1(d)(i) shall not be available to the Company prior to April 30, 1999
if there shall have occurred any of the events set forth in paragraph (i) of
Annex A, or (ii) prior to the purchase of Shares pursuant to the Offer,
concurrently with the execution of an Acquisition Agreement under the
circumstances permitted by Section 6.1 provided, that such termination under
-------- ----
this clause (ii) shall not be effective unless (x) the Company and its Board of
Directors shall have also complied with all their obligations under Section 6.1
and shall have paid the Termination Fee and the Expenses pursuant to Section 8.3
and (y) the Company provides Purchaser with at least five business days' prior
written notice prior to terminating this Agreement, which notice shall be
accompanied by (1) a copy of the proposed Acquisition Agreement with respect to
the Superior Proposal that the Company proposes to accept and (2) the Company's
written certification that it has made the determinations with respect to such
Superior Proposal set forth in clauses (A) and (B) of the proviso in Section
6.1(b) and representation that the Company will, in the absence of any other
superior Acquisition Proposal, execute such Acquisition Agreement unless Parent
or Purchaser modify the Offer or this Agreement such that the Company's Board of
Directors reasonably believes in good faith after consultation with its
independent legal counsel and financial advisors that the Offer and the Merger
(as so modified) are at least as favorable as such Superior Proposal; or
(e) by the Company prior to the purchase of Shares pursuant to the
Offer if (i) there shall have been a material breach of any representation or
warranty in this Agreement on the part of Parent or Purchaser which materially
adversely affects (or materially delays) the consummation of the Offer or (ii)
Parent or Purchaser shall not have performed or complied with, in all material
respects (without reference to any materiality qualifications therein), each
covenant or agreement contained in this Agreement and required to be performed
or complied with by them, and such breach materially adversely affects (or
materially delays) the consummation of the Offer, and which breach, in the case
of clause (i) and clause (ii) above, shall not have been cured prior to the
earlier of (A) 10 days following notice of such breach and (B) two business days
prior to the date on which the Offer expires; provided, however, that Parent and
-------- -------
Purchaser shall have no right to cure such breach and the Company may
immediately terminate this Agreement in the event that such breach by Parent or
Purchaser was willful or intentional.
Section 8.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 8.1, this Agreement, except
for the provisions of Sections 6.3, 8.2, 8.3, 9.3, 9.4 and 9.7, shall forthwith
become void and have no effect, without any liability on the part of any party
or its affiliates, directors, officers or shareholders. Nothing in this Section
8.2 shall relieve any party to this Agreement of liability for breach of this
Agreement.
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<PAGE>
Section 8.3 Termination Fee and Expense Fee.
-------------------------------
(a) Except as provided in Section 8.3(b) of this Agreement, all
fees and expenses incurred by the parties hereto shall be borne solely and
entirely by the party which has incurred such fees and expenses.
(b) If:
(i) Parent or Purchaser terminate this Agreement pursuant
to Section 8.1(c) (in circumstances other than those described in clause
(ii) below) or the Company terminates this Agreement pursuant to Section
8.1(d)(i), in either case, in circumstances when, prior to such termination
any third party shall have acquired beneficial ownership of 20% or more of
the outstanding Shares or shall have consummated an Acquisition Proposal
(or with respect to any proposal that may be existing on the date hereof
and which becomes publicly known prior to such termination, not withdrawn
such Acquisition Proposal), or such third party has publicly made or
announced an intention to make or consummate an Acquisition Proposal (or
the making of such Acquisition Proposal or such intention has otherwise
become publicly known), and, in any such case, within 12 months of such
termination thereafter (x) the Company or any of its subsidiaries enters
into an Acquisition Agreement with respect to an Acquisition Proposal with
such party, or (y) such party or any other party otherwise consummates an
Acquisition Proposal;
(ii) Parent or Purchaser terminates this Agreement pursuant
to Section 8.1(c) and (x) the Company shall have willfully and
intentionally breached its obligations under Section 6.1, or (y) there
shall have occurred any of the events set forth in paragraph (g) of Annex A
of this Agreement; or
(iii) the Company terminates this Agreement pursuant to
Section 8.1(d)(ii).
then, in each case, the Company (A) shall pay to Parent, within one business day
following the execution and delivery of such agreement or such occurrence, as
the case may be, or simultaneously with such termination pursuant to Section
8.1(d)(ii), a fee, in cash, of $11 million (a "Termination Fee"); provided that
-------- ----
the Company in no event shall be obligated to pay more than one such Termination
Fee with respect to all such agreements and occurrences and such termination and
(B) shall reimburse Parent and Purchaser for all their out-of-pocket fees and
expenses actually incurred by Parent, Purchaser or their respective affiliates
in connection with this Agreement, the Offer, the Merger, the Tender and Option
Agreement and the other transactions contemplated by this Agreement, including
all fees and expenses of counsel, accountants, investment bankers, experts and
consultants to each of Parent or Purchaser and their respective affiliates and
the expenses of the preparation, printing, filing and mailing of the Offer
Documents, such fees and expenses not to exceed $2 million (the "Expenses"). Any
payment required to be made pursuant to this subsection (b) shall be made to
Parent by wire transfer of
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<PAGE>
immediately available funds to an account designated by Parent. The provisions
of this Section 8.3 shall not derogate from any other rights or remedies which
Parent or Purchaser may possess under this Agreement (including as provided in
Section 9.3) or under applicable law.
Section 8.4 Amendment. To the extent permitted by applicable law, this
---------
Agreement may be amended by action taken by or on behalf of the Boards of
Directors of the Company, Parent and Purchaser at any time before or after
approval of this Agreement by the shareholders of the Company but, after any
such shareholder approval, no amendment shall be made that by law requires the
further approval of such shareholders without the approval of such shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of all the parties.
Section 8.5 Extension; Waiver. At any time prior to the Effective Time,
-----------------
a party may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties of the other parties contained herein or in any
documents, certificate or writing delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions of the other parties hereto
contained herein; provided that (i) from and after the consummation of the
-------- ----
Offer, no extensions or waivers shall be made which materially adversely affect
the rights of the Company's shareholders hereunder without the approval of a
majority of the Independent Directors if at the time there shall be any
Independent Directors and (ii) after the approval of the Merger by the
shareholders of the Company, no extensions or waivers shall be made that by law
require further approval by such shareholders without the approval of such
shareholders. Any agreement on the part of any party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Non-Survival of Representations and Warranties. None of the
----------------------------------------------
representations and warranties made in this Agreement shall survive after the
Effective Time. This Section 9.1 shall not limit any covenant or agreement of
the parties hereto which by its terms contemplates performance after the
Effective Time.
Section 9.2 Entire Agreement; Assignment. This Agreement (including the
----------------------------
Company Disclosure Schedule), the Tender and Option Agreement, the Other
Agreements and, to the extent contemplated in Section 6.3, the Confidentiality
Agreement, (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof and (b) shall not be assigned by operation
of law or otherwise, provided that Parent or Purchaser may assign any of their
rights and obligations to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent
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<PAGE>
or Purchaser of its obligations hereunder. Any of Parent, Purchaser or any
direct or indirect wholly owned subsidiary of Parent may purchase Shares under
the Offer. Any attempted assignment in violation of this Section 9.2 shall be
void. Subject to the preceding sentences, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
Section 9.3 Enforcement of the Agreement. The parties agree that
----------------------------
irreparable damage would occur to the other parties hereto in the event that any
of the provisions of this Agreement were not performed by the parties hereto in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that each party 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 federal or state court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity including those set forth
in Section 8.3 of this Agreement. Each party further agrees to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief.
Section 9.4 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner.
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.
Section 9.5 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given upon receipt if
delivered personally, mailed by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
or sent by electronic transmission to the telecopier number specified below (or
at such other address or telecopy number of a party as shall be specified by
like notice):
if to Parent or Purchaser:
Rohm and Haas Company
100 Independence Mall West
Philadelphia, PA 19106
Attention: John S. Stroebel
Telecopy: 215-592-3227
-44-
<PAGE>
Lightning Acquisition Corp.
Suite 104 - Rodney Building
3411 Silverside Road
Wilmington, DE 19810
Attention: John S. Stroebel
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: William G. Lawlor
Telecopy: 215-994-2222
if to the Company:
LeaRonal, Inc.
272 Buffalo Avenue
Freeport, NY 11520
Attention: Ronald F. Ostrow
Telecopy: 516-867-5917
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attention: Robert F. Quaintance, Jr.
Telecopy: 212-909-6836
Notice given by telecopier shall be deemed received on the day the sender
receives telecopier confirmation that such notice was received at the telecopier
number of the addressee. Notice given by mail as set out above shall be deemed
received three days after the date the same is postmarked.
Section 9.6 Failure or Indulgence Not Waiver; Remedies Cumulative. No
-----------------------------------------------------
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right.
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<PAGE>
Section 9.7 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the substantive laws of the State of New York
regardless of the laws that might otherwise govern under principles of conflicts
of laws applicable thereto.
Section 9.8 Descriptive Headings. The descriptive headings herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 9.9 Parties in Interest. This Agreement shall be binding upon
-------------------
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this Agreement
except for Section 6.5 (which is intended to be for the benefit of the persons
entitled to therein, and may be enforced by such persons).
Section 9.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 9.11 Certain Definitions. For purposes of this Agreement
-------------------
(including Annex A hereto), the following terms shall have the meanings ascribed
to them below:
(a) "affiliate" of a person shall mean (i) a person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first-mentioned person and (ii) an
"associate", as that term is defined in Rule 12b-2 promulgated under the
Exchange Act as in effect on the date of this Agreement.
(b) "beneficial owner" (including the term "beneficially own" or
correlative terms) shall have the meaning ascribed to such term under Rule 13d-
3(a) under the Exchange Act.
(c) "business day" shall have the meaning ascribed to such term
under Rule 14d-1 of the Exchange Act.
(d) "Company Disclosure Schedule" shall mean a letter dated the
date of the Agreement delivered by the Company to Parent and Purchaser
concurrently with the execution of the Agreement, which, among other things,
shall identify exceptions to the Company's representations and warranties
contained in Article III and covenants contained in Article V.
(e) "control" (including the terms "controlling," "controlled by"
and "under common control with" or correlative terms) shall mean the possession,
directly or indirectly or as trustee or executor, of the power to direct or
cause the direction of the management and policies of a person, whether through
ownership of voting securities or as trustee or executor, by contract or credit
arrangement, or otherwise.
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<PAGE>
(f) "Fully Diluted Shares" means all outstanding securities
entitled generally to vote in the election of directors of the Company on a
fully diluted basis, after giving effect to the exercise or conversion of all
options (including the Options), warrants, rights and securities exercisable or
convertible into such voting securities; provided that Parent may, at its option
exercisable in its sole discretion, exclude from the calculation of Fully
Diluted Shares any Options which are not exercisable at the time such
calculation is made and which will not become exercisable by their terms prior
to April 30, 1999.
(g) "group" shall have the meaning ascribed to such term under
Section 13(d)(3) of the Exchange Act.
(h) "Material Adverse Effect" shall mean (i) any adverse change or
effect in the financial condition, assets, liabilities, business, properties or
results of operations of a specified person or its subsidiaries (other than
changes or effects relating to general economic, financial or industry
conditions), which change or effect is material, individually or in the
aggregate, to the specified person and its subsidiaries taken as a whole, or
(ii) any event, matter, condition or effect which prevents or materially delays
consummation of the Transactions.
(i) "person" shall mean a natural person, company, corporation,
partnership, association, trust or any unincorporated organization.
(j) "subsidiary" shall mean, when used with reference to a person
means a corporation the majority of the outstanding voting securities of which
are owned directly or indirectly by such person.
Each of the following terms is defined as set forth in the following
sections of this Agreement:
<TABLE>
<CAPTION>
Term Section Term Section
- ---- ------- ---- -------
<S> <C> <C> <C>
1990 Plan 2.10 Liens 3.1(c)
1996 Plan 2.10 Material Business 6.1(d)
Acquisition Agreement 6.1(b) Merger Background
Acquisition Proposal 6.1(d) Merger Consideration 2.6(iii)
Agreement Preamble New York Department 2.2
Benefit Plans 3.12(a) NYBCL Background
Cash Payment 2.10 Offer Background
Certain Stockholders Background Offer Documents 1.1(c)
Certificate of Incorporation 2.4(a) Offer Price Background
Certificate of Merger 2.2 Offer to Purchase 1.1(c)
Certificates 2.8(b) Option 2.10
Closing 2.11 Other Agreements Background
Code 3.12(b) Parent Preamble
Company Preamble Paying Agent 2.8(a)
</TABLE>
-47-
<PAGE>
<TABLE>
<S> <C> <C> <C>
Company Common Stock Background PBGC 3.12(g)
Company Financial Advisor 3.8 Pension Plan 3.12(d)
Company SEC Documents 3.5 Permits 3.15(a)
Company Shareholder Approval 3.3(b) Proxy Statement 3.6
Company Stock Option Plans 2.10 Purchaser Preamble
Contract 3.17 Releases 3.15(c)
D&O Insurance 6.5(a) Schedule 14D-1 1.1(c)
Dissenting Shares 2.7(a) Schedule 14D-9 1.2(b)
Effective Time 2.2 SEC 1.1(b)
Environmental Claim 3.15(d) Securities Act 3.2(c)
Environmental Laws 3.15(b) Shareholder Meeting 6.9(a)
Environmental Liabilities 3.15(d) Shares Background
Environmental Permit 3.15(a) Significant Subsidiary 3.1(b)
ERISA 3.12(a) Specified Subsidiary 3.12(a)
Exchange Act 1.1(a) Superior Proposal 6.1(d)
Expenses 8.3(b)(iii) Surviving Corporation 2.1
Filed Company SEC Documents 3.4 Taxes 3.13
Governmental Entity 3.7 Tax Returns 3.13
GWB Act 3.7 Tender and Option Agreement Background
Hazardous Material 3.15(c) Termination Fee 8.3(b)
HSR Act 4.4 Transactions 1.2(a)
Independent Director 1.4 Voting Company Debt 3.2(b)
Intellectual Property 3.21 Year 2000 Compliant 3.14
</TABLE>
Section 9.12 Interpretation. The words "hereof," "herein" and "herewith"
--------------
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, paragraph, exhibit and schedule references are
to the articles, sections, paragraphs, exhibits and schedules of this Agreement
unless otherwise specified. Whenever the words "include," "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation." All terms defined in this Agreement shall have
the defined meanings contained herein when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements and
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and all attachments thereto and instruments
incorporated therein. References to a person are also to its permitted
successors and assigns.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, on the day
and year first above written.
ROHM AND HAAS COMPANY
ATTEST:
/s/ John S. Stroebel By /s/ Rajiv L. Gupta
- --------------------------------- ---------------------------------
Vice President
LIGHTNING ACQUISITION CORP.
ATTEST:
/s/ John S. Stroebel By /s/ Bradley J. Bell
- --------------------------------- ---------------------------------
Vice President
LEARONAL, INC.
ATTEST:
/s/ Richard Kessler By /s/ Ronald F. Ostrow
- --------------------------------- ---------------------------------
President
-49-
<PAGE>
ANNEX A
to
Agreement and Plan of Merger
----------------------------
Conditions to the Offer. Notwithstanding any other provision of the
Offer but subject to the terms and conditions of the Merger Agreement, in
addition to (and not in limitation of) Purchaser's rights pursuant to the
Agreement to extend and amend the Offer in accordance with the Merger Agreement,
Purchaser shall not be required to accept for payment or, subject to Rule 14e-
1(c) of the Exchange Act, pay for and may delay the acceptance for payment of
or, subject to Rule 14e-1(c) of the Exchange Act, the payment for, any Shares
not theretofore accepted for payment or paid for, and may terminate or amend the
Offer if (i) a number of Shares representing at least two thirds of the Fully
Diluted Shares shall not have been validly tendered and not withdrawn
immediately prior to the expiration of the Offer (the "Minimum Condition"), (ii)
any applicable waiting period under the HSR Act shall not have expired or been
terminated or (iii) at any time on or after the date of the Merger Agreement and
prior to the time of acceptance of such Shares for payment or the payment
therefor, any of the following conditions has occurred and continues to exist
(and in the case of the conditions set forth in paragraph (c), continue to exist
as of the scheduled expiration date of the Offer or have continued to exist for
at least the previous 10 business days), other than as a result of a breach by
Parent or Purchaser of its obligations under the Merger Agreement (including,
without limitation, Section 6.4 thereof):
(a) the representation and warranty set forth in Section 3.2(a) shall
not be true and correct in all material respects or any other representations
and warranties of the Company in the Agreement (without regard to any
materiality qualifiers contained therein) shall not be true and correct as of
such time (other than to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall not be true and correct as of such date) except where the
failure of such representations and warranties to be true and correct would not
be reasonably likely to have a Material Adverse Effect on the Company and except
where such failure shall have been cured prior to the earlier of (i) 10 business
days following notice of such breach and (ii) two business days prior to the
date on which the Offer expires; provided, however, that the Company shall have
-------- -------
no right to cure such breach in the event that such breach by the Company was
willful or intentional);
(b) the Company shall not have performed and complied with, in all
material respects (without reference to any materiality qualifications therein),
all material covenants or agreements contained in the Agreement and required to
be performed or complied with by it and which breach shall not have been cured
prior to the earlier of (i) 10 business days following notice of such breach and
(ii) two business days prior to the date on which the Offer expires; provided,
--------
however, that the Company shall have no right to cure such breach in the event
- -------
that such breach by the Company was willful or intentional or if such breach
involves a breach of Section 6.1 of the Agreement;
<PAGE>
(c) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange (excluding any coordinated trading halt triggered as a
result of a specified decrease in a market index), (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States by any Governmental Entity, (iii) any mandatory limitation by any
Governmental Entity on, or other event that materially and adversely affects,
the extension of credit by banks or other lending institutions, (iv) a
commencement of a war, armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) any material
adverse change in United States currency exchange rates or a suspension of, or
limitation on, the markets therefor or (vi) in the case of any of the foregoing
existing on the date of the Agreement, a material acceleration or worsening
thereof;
(d) there shall have been instituted or pending any suit, action,
investigation or proceeding ("Actions") by any Governmental Entity, or Parent,
Purchaser or the Company shall have been notified by any Governmental Entity (or
a representative thereof) of its present intention to commence, or recommend the
commencement of, such an Action, (i) challenging the acquisition by Parent or
Purchaser of any Shares, seeking to make illegal, materially delay, make
materially more costly or otherwise directly or indirectly restrain or prohibit
the making or consummation of the Offer and the Merger or any of the other
Transactions, or seeking to obtain from the Company, Parent or Purchaser any
damages that are material in relation to the Company and its subsidiaries taken
as whole, (ii) seeking to prohibit or materially limit the ownership or
operation by the Company, Parent or any of their respective subsidiaries or
affiliates of a material portion of the businesses or assets of the Company and
its subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a
whole, or to compel the Company, Parent or any of their respective subsidiaries
or affiliates to dispose of or hold separate a material portion of the
businesses or assets of the Company and its subsidiaries, taken as a whole, or
Parent and its subsidiaries, taken as a whole, or any of their respective
subsidiaries or affiliates, as a result of the Offer, the Merger or any of the
other Transactions, (iii) seeking to impose material limitations on the ability
of Parent or Purchaser to acquire or hold, or exercise full rights of ownership
of, any Shares accepted for payment pursuant to the Offer including, without
limitation, the right to vote the Shares accepted for payment by it on all
matters properly presented to the shareholders of the Company, (iv) seeking to
prohibit Parent or any of its subsidiaries or affiliates from effectively
controlling in any material respect a material portion of the business or
operations of the Company and its subsidiaries, taken as a whole, (v) requiring
divestiture by Purchaser or any of its affiliates of any Shares or (vi) which
otherwise is reasonably likely to have a Material Adverse Effect on the Company
or Parent;
(e) there shall be any statute, rule, regulation, judgment, order or
injunction (including with respect to competition or antitrust matters) enacted,
entered, enforced, promulgated or issued with respect to or deemed applicable
to, or any consent or approval withheld, or any other action shall be taken with
respect to (i) Parent, the Company or any of their respective subsidiaries or
affiliates or (ii) the Offer or the Merger or any of the other Transactions by
any Governmental Entity or court, including without limitation any required
approvals or waiting periods under the GWB Act, other than the application to
the Offer or the Merger or any of the other Transactions of applicable waiting
periods under the HSR Act, that has resulted or is
-2-
<PAGE>
reasonably likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) though (v) of paragraph (d) above;
(f) since the date of the Agreement there shall have occurred any
event, change, effect or development that, individually or in the aggregate, has
had or is reasonably likely to have, a Material Adverse Effect on the Company;
(g) the Board of Directors of the Company or any committee thereof
shall have (i) withdrawn, or modified, amended or changed (including by
amendment of the Schedule 14D-9), in a manner adverse to Parent or Purchaser,
its approval or recommendation of the Offer, the Merger Agreement and the Merger
or any of the other Transactions, (ii) approved or recommended to the Company's
stockholders an Acquisition Proposal or any other acquisition of Shares other
than the Offer and the Merger or (iii) adopted any resolution to effect any of
the foregoing;
(h) the Merger Agreement shall have been terminated in accordance
with its terms; or
(i) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Parent, Purchaser, any of their
affiliates, or any group of which any of them is a member, shall have acquired
beneficial ownership of more than 20 percent of the Shares or shall have
consummated or entered into a definitive agreement or an agreement in principle
to consummate an Acquisition Proposal;
which, in the sole judgment of Purchaser, in any such case, makes it
inadvisable to proceed with the Offer or with such acceptance for payment,
purchase of, or payment for Shares.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may, subject to the terms of the Merger Agreement, be waived by Purchaser or
Parent, in whole or in part, at any time and from time to time, in the sole
discretion of Purchaser or Parent. The failure by Purchaser or Parent or any of
their respective affiliates at any time to exercise any of the foregoing rights
will not be deemed a waiver of any right, the waiver of any such right with
respect to particular facts and circumstances shall not be deemed a waiver with
respect to any other facts and circumstances and each right will be deemed an
ongoing right which may be asserted at any time and from time to time.
-3-
<PAGE>
Exhibit (c)(2)
Confidentiality Agreement, dated as of October 21, 1998, by and between Parent
and the Company.
<PAGE>
CONFIDENTIALITY AGREEMENT
In connection with the consideration of a possible transaction between each
of the parties that have signed this agreement and/or its respective
subsidiaries, affiliates or divisions (each such party being hereinafter
referred to, collectively with such subsidiaries, affiliates and divisions, as a
"Company"), each Company (in its capacity as a provider of information hereunder
being referred to as a "Provider") is prepared to make available to the other
Company (in its capacity as a recipient of information hereunder being referred
to as a "Recipient") certain information concerning the business, financial
condition, operations, assets and liabilities of the Provider. As a condition to
such information being provided to each Recipient and its Recipient
Representatives (as hereinafter defined), each Recipient agrees to treat any
information concerning the Provider (whether prepared by the Provider, such
Provider's Representatives (as hereinafter defined) or otherwise and
irrespective of the form of communication) which is furnished to the Recipient
or such Recipient's Representatives now or in the future by or on behalf of the
Provider (herein collectively referred to, with respect to information furnished
by or on behalf of either Company in its capacity as a Provider to the other
Company in its capacity as a Recipient, as the "Evaluation Material") in
accordance with the provisions of this agreement, and to take or abstain from
taking certain other actions as hereinafter set forth. As used in this
agreement, a "Recipient's Representatives" shall include the directors,
officers, employees, agents, partners or advisors of such Recipient (including,
without limitation, attorneys, accountants, consultants, bankers and financial
advisors).
The term "Evaluation Material" also shall be deemed to include all notes,
analyses, compilations, studies, interpretations or other documents prepared by
either Recipient or such Recipient's Representatives which contain, reflect or
are based upon, in whole or in part, the information furnished to such Recipient
or such Recipient's Representatives pursuant hereto. The term Evaluation
Material does not include information which (i) is or becomes generally
available to the public other than as a result of a disclosure by the Recipient
or such Recipient's Representatives in breach of this Agreement, (ii) was within
the Recipient's or such Recipient's Representatives' possession prior to its
being furnished to the Recipient or such Recipient's Representatives by or on
behalf of the Provider pursuant hereto, provided that the source of such
information was not known by the Recipient to be bound by a confidentiality
agreement with, or other contractual, legal or fiduciary obligation of
confidentiality to, the Provider or any other party with respect to such
information or (iii) becomes available to the Recipient or such Recipient's
Representatives on a non-confidential basis from a source other than the
Provider or any of its directors, officers, employees, agents or advisors
(including, without limitation, attorneys, accountants, consultants, bankers and
financial advisors) (collectively, "Provider Representatives"), provided that
such source is not known by the Recipient to be bound by a confidentiality
agreement with, or other contractual, legal or fiduciary obligation of
confidentiality to, the Provider or any other party with respect to such
information.
Each Recipient hereby agrees that such Recipient and such Recipient's
Representatives shall use the Evaluation Material solely for the purpose of
evaluating a possible
<PAGE>
transaction between the Companies and for no other purpose, that the Evaluation
Material will be kept confidential and that the Recipient and such Recipient's
Representatives will not disclose any of the Evaluation Material in any manner
whatsoever: provided, however, that (i) the Recipient may make any disclosure of
such information as to which the Provider gives its prior written consent, and
(ii) any of such information may be disclosed to the Recipient's Representatives
who need to know such information for the sole purpose of evaluating a possible
transaction between the Companies, who are provided with a copy of this
agreement and who you shall cause to be bound by the terms hereof to the same
extent as if they were such Recipient. In any event, each Recipient agrees to
undertake reasonable precautions to safeguard and protect the confidentiality of
the Evaluation Material, to accept responsibility for any breach of this
agreement by any of such Recipient's Representatives, and at such Recipient's
sole expense to take all reasonable measures (including but not limited to
court proceedings) to restrain such Recipient's Representatives from prohibited
or unauthorized disclosure or uses of the Evaluation Material.
In addition, each Recipient agrees that, without the prior written
consent of the Provider, such Recipient and such Recipient's Representatives
will not disclose to any other person the fact that the Evaluation Material has
been made available to such Recipient, that discussions or negotiations are
taking place concerning a possible transaction between the Companies or any of
the terms, conditions or other facts with respect thereto (including the status
thereof); provided, however, that such Recipient may make such disclosure in
the circumstances set forth in clause (i) or clause (ii) of the immediately
preceding paragraph.
In the event that either Recipient or any of such Recipient's
Representatives are requested or required (by oral questions, interrogatories,
requests for information or documents in legal proceedings, subpoena, civil
investigative demand or other similar process) to disclose any of the Evaluation
Material, such Recipient shall provide the Provider with prompt written notice
of any such request or requirement so that the Provider may seek a protective
order or other appropriate remedy and/or waive compliance with the provision of
this agreement. If, in the absence of a protective order or other remedy or the
receipt of a waiver by the Provider, the Recipient or any of such Recipient's
Representatives are nonetheless, as advised by counsel, legally compelled to
disclose Evaluation Material to any tribunal or else stand liable for contempt
or suffer other censure or penalty, such Recipient or such Recipient's
Representatives may, without liability hereunder, disclose to such tribunal only
that portion of the Evaluation Material which such counsel advises the Recipient
is legally required to be disclosed, provided that the Recipient exercises its
best efforts to preserve the confidentiality of the Evaluation Material,
including, without limitation, by cooperating with the Provider to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded the Evaluation Material by such tribunal.
If either Company decides that it does not wish to proceed with a
transaction with the other, it will promptly inform the other of that decision.
In that case, each Company will promptly deliver to the other Company all
Evaluation Material (and all copies thereof) furnished to such Company in its
capacity as a Recipient or such Recipient's Representatives by or on
-2-
<PAGE>
behalf of the other Company in its capacity as Provider pursuant hereto. In the
event of such a decision, all other Evaluation Material prepared by either
Company in its capacity as a Recipient or such Recipient's Representatives
shall, at the Recipient's option, be destroyed or returned and no copy thereof
shall be retained and the Recipient shall provide to the other Company a
certificate of compliance with this sentence. Notwithstanding the return or
destruction of the Evaluation Material, each Company in its capacity as a
Recipient and such Recipient's Representatives will continue to be bound by
such Recipient's respective obligations of confidentiality and other obligations
hereunder.
Each Company understands and acknowledges that neither Company, in its
capacity as a Provider, nor such Provider's Representatives, makes any
representation or warranty, express or implied, as to the accuracy or
completeness of the Evaluation Material furnished by or on behalf of such
Provider and shall have no liability to the other Company in its capacity as a
Recipient or to any of such Recipient's Representatives relating to or resulting
from the use of the Evaluation Material furnished to such Recipient or any
errors therein or omissions therefrom. Only those representations or warranties
which are made in a final definitive agreement regarding any transactions
contemplated hereby, when, as and if executed, and subject to such limitations
and restrictions as may be specified therin, will have any legal effect.
To the extent that any Evaluation Material may include materials
subject to the attorney-client privilege, work product doctrine or any other
applicable privilege concerning pending or threatened legal proceedings or
governmental investigations, each Company understands and agrees that the
Companies have a commonality of interest with respect to such matters and it is
the desire, intention and mutual understanding of both Companies that the
sharing of such material is not intended to, and shall not, waive or diminish in
any way the confidentiality of such material or its continued protection under
the attorney-client privilege, work product doctrine or other applicable
privilege. All Evaluation Material provided by either Company that is entitled
to protection under the attorney-client privilege, work product doctrine or
other applicable privilege shall remain entitled to such protection under these
privileges, this agreement, and under the joint defense doctrine.
Each Company, in its capacity as a Recipient, acknowledges and agrees
that such Recipient is aware (and that such Recipient's Representatives are
aware or, upon receipt of any Evaluation Material, will be advised by such
Recipient) of the restrictions imposed by the United States federal securities
laws and other applicable foreign and domestic laws on a person possessing
material non-public information about a public company and that such Recipient
and such Recipient's Representatives will comply with such laws.
Each Company understands and agrees that no contract or agreement
providing for any transaction between the Companies shall be deemed to exist
between the Companies unless and until a final definitive agreement has been
executed and delivered, and each Company hereby waives, in advance, any claims
(including, without limitation, breach of contract) in connection with any such
transaction unless and until both Companies shall have entered into a
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<PAGE>
final definitive agreement. Each Company also agrees that unless and until a
final definitive agreement regarding a transaction between the Companies has
been executed and delivered, neither Company will be under any legal obligation
of any kind whatsoever with respect to such a transaction by virtue of this
agreement except for the matters specifically agreed to herein. Each Company
further acknowledges and agrees that the other Company reserves the right, in
its sole discretion, to reject any and all proposals made by the agreeing
Company or any of the persons who are Recipient Representatives or Provider
Representatives with respect to the agreeing Company with regard to a
transaction between the Companies, and, subject to the next paragraph of this
agreement, to terminate discussions and negotiations with the agreeing Company
at any time. Neither this paragraph nor any other provision in this agreement
can be waived or amended in favor of either Company except by written consent of
the other Company, which consent shall specifically refer to this paragraph (or
such provision) and explicitly make such waiver or amendment.
[LeaRonal, Inc.] agrees that during the period commencing on the date
hereof and ending on the earlier of February 28, 1999 and three days after the
date on which [LeaRonal, Inc.] notifies [Rohm and Haas Company] in writing of
its intention to terminate discussions in regard to the transactions described
in the first paragraph of this agreement, neither [LeaRonal, Inc.] nor any of
its Provider or Recipient Representatives shall take any action to directly or
indirectly, encourage, initiate, solicit or engage in discussions or
negotiations with, or provide any information to, any entity or person other
that [Rohm and Haas Company] (and its Provider and Recipient Representatives)
concerning any Alternate Transaction (as defined below). For purposes hereof,
and "Alternate Transaction" shall mean (a) any stock purchase, merger,
consolidation, reorganization, change in organizational form, spin-off, split-
off, recapitalization, sale of equity interests or other similar transaction
involving [LeaRonal, Inc.] or any of its majority-owned affiliates which would
prejudice the ability of [Rohm and Haas Company] and [LeaRonal, Inc.] to
complete the transactions described in the first paragraph of this agreement, or
(b) any sale of all or any significant portion of [LeaRonal, Inc.'s] or any of
its majority-owner affiliates' business, operations or assets, or (c) any other
transaction or series of transactions which has substantially similar economic
effects.
Each Company represents to the other Company that neither it nor its
majority-owned affiliates beneficially own more than 1% of any class of
securities entitled to be voted generally in the election of directors of the
other Company (including for this purpose any direct or indirect options or
other rights to acquire any such securities) ("Voting Securities"). Each
Company agrees that, for a period of two years from the date of this agreement,
except pursuant to the terms of a specific written request from the other
Company that has been approved by its board of directors, neither such Company
nor any of it majority-owned affiliates will (or will assist or encourage others
to):
(1) propose or publicly announce or otherwise disclose an intent to
propose, or enter into or agree to enter into, singly or with any
other person or directly or indirectly, any form of business
combination, acquisition, restructuring,
-4-
<PAGE>
recapitalization or other transaction relating to the other Company or any
majority-owned affiliate thereof,
(2) acquire, or offer, propose, seek or agree to acquire, by purchasing or
otherwise, ownership (including as a beneficial owner) of any Voting
Securities or any other securities, assets or businesses of the other
Company or any of its majority-owned affiliates or any of their respective
successors, or any options or other rights to acquire any such ownership
from a third party or otherwise,
(3) make, or in any way participate in, any solicitation of proxies with
respect to any Voting Securities (including by the execution of action by a
written consent) or take any similar action with respect to any Voting
Securities, become a participant in any election contest with respect to
the other Company, or seek to advise or influence any person with respect
to any Voting Securities or demand a copy of the other Company's list of
stockholders,
(4) participate in or encourage the formation of any group that owns or seeks
or offers to acquire beneficial ownership of any Voting Securities or seeks
to affect control of the other Company or for the purpose of circumventing
any provision of this agreement,
(5) otherwise act, alone or in concert with others (including by providing
financing for another person), to seek, offer or purpose to control or
influence, in any manner, the board of directors, management or policies of
the other Company,
(6) publicly make or announce, or otherwise disclose an intent to propose, any
demand, request or proposal to amend, waive or terminate any provision of
this agreement,
(7) enter into any discussions, negotiations, arrangements or understandings
with any third party to facilitate or encourage the efforts of such third
party with respect to any of the foregoing,
(8) disclose any intention, plan or arrangement inconsistent with the
foregoing,
or
(9) take any action that would require the other Company to make a public
announcement regarding a possible transaction involving the other Company.
-5-
<PAGE>
provided that (i) it is understood that the provisions of this paragraph shall
not prohibit the ongoing discussion between the management of the respective
Companies in respect of the transaction described in the first paragraph of this
agreement in accordance with the other provisions of this Agreement, and (ii) if
a Company enters into a definitive agreement with a third party pursuant to
which such third party will make a tender or exchange offer for, or otherwise
acquire (by merger, consolidation, purchase or otherwise), 50% or more of the
common stock or other equity interests, assets or earning power of such other
Company: then the other Company shall be permitted to contact privately the
chairman of the board of directors of such Company (or any person designated by
such chairman) and submit to such chairman or other person an offer to acquire
Voting Securities or assets of such Company and/or a request to negotiate with
such Company with respect to such offer.
Each Company agrees that, for a period of eighteen months from the
date of this agreement, it will not, directly or indirectly, solicit for
employment or hire any employee of the other Company or any of the other
Company's majority-owned affiliates with whom it has had contact or who was
specifically identified to such Company during the period of its investigation
of the other Company in connection with its consideration of a transaction
between the Companies so long as such employee is employed by such other
company; provided that the foregoing provision will not prevent either Company
from employing any such person who contacts such Company on his or her own
initiative without any direct or indirect solicitation by or encouragement from
such Company; and provided further that such solicitation or hiring shall not be
deemed a breach of this agreement if (i) the personnel who performed such
solicitation have no knowledge of any Evaluation Material provided by such other
Company, and (ii) none of the soliciting or hiring Company's personnel who have
knowledge of any such Evaluation Material have actual advance knowledge of such
solicitation. For purposes of this paragraph, "solicit to employ" shall not be
deemed to include any general solicitations of employment not specifically
directed towards employees of the other Company.
It is understood and agreed that no failure or delay by either Company
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
future exercise thereof or the exercise of any other right, power or privilege
hereunder.
It is further understood and agreed that money damages would not be
sufficient remedy for any breach of this agreement by either Company or any of
its Recipient or Provider Representatives, as the case may be, and that the
Company against which such breach is committed shall be entitled to equitable
relief, including injunction and specific performance, as a remedy for any such
breach. Such remedies shall not be deemed to be the exclusive remedies for a
breach by either Company of this agreement but shall be in addition to all
other remedies available at law or equity to the Company against which such
breach is committed. In the event of litigation relating to this agreement, if a
court of competent jurisdiction determines that either
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<PAGE>
Company or any of the persons who are Recipient Representatives or Provider
Representatives with respect to such Company has breached this agreement, then
the Company which, or the Recipient Representatives or Provider Representatives
of which, is determined to have so breached shall be liable and pay to the other
Company the reasonable legal fees incurred by the other Company in connection
with such litigation, including any appeal therefrom.
This agreement is for the benefit of each Company, the persons who are
Recipient Representatives or Provider Representatives with respect to such
Company and their respective directors, officers, stockholders, owners,
affiliates, and agents, and shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
performed entirely within such State.
This agreement shall terminate immediately upon written notice given
by either Company to the other, provided that in any event the confidentiality
(and related enforcement) provisions in this agreement shall survive until
the fifth anniversary of the date hereof.
This agreement contains the entire agreement between the Companies
regarding the subject matter hereof and supersedes all prior agreements,
understandings, arrangements and discussions between the Companies regarding
such subject matter.
This agreement may be signed in counterparts, each of which shall be
deemed an original but all of which shall be deemed to constitute a single
instrument.
IN WITNESS WHEREOF, each Company has caused this agreement to be
signed by its duly authorized representatives as of the date written below.
Date: October 21, 1998
[ROHM AND HAAS COMPANY] [LEARONAL, INC.]
By: /s/ Pierre Brondeau By: /s/ Ronald F. Ostrow
----------------------- -------------------------
Name: Pierre Brondeau Name: Ronald F. Ostrow
Title: Vice President Title: President
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<PAGE>
Exhibit (c)(3)
Tender and Option Agreement, dated as of December 20, 1998, by and among Parent,
Purchaser and certain stockholders of the Company.
<PAGE>
TENDER AND OPTION AGREEMENT
---------------------------
TENDER AND OPTION AGREEMENT, dated as of December 20, 1998 (the
"Agreement"), among Rohm and Haas Company, a Delaware corporation ("Parent"),
Lightning Acquisition Corp., a New York corporation and a wholly owned
subsidiary of Parent ("Purchaser"), LeaRonal, Inc., a New York corporation (the
"Company") and each of the persons listed on Schedule A hereto (each a
"Stockholder" and, collectively, the "Stockholders").
WHEREAS, Parent, Purchaser and the Company propose to enter into an
Agreement and Plan of Merger dated as of the date hereof (as the same may be
amended or supplemented, the "Merger Agreement") providing for, among other
things, the making of a cash tender offer (as such offer may be amended from
time to time as permitted under the Merger Agreement, the "Offer") by Purchaser
for all of the issued and outstanding shares of common stock, par value $1.00
per share, of the Company (referred to herein as either the "Shares" or "Company
Common Stock") and the merger of the Company and Purchaser on the terms and
conditions set forth in the Merger Agreement (the "Merger");
WHEREAS, each Stockholder is the beneficial owner of the Shares set
forth opposite such Stockholder's name on Schedule A hereto; such Shares, as
such Shares may be adjusted by stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company, together with Shares issuable
upon the exercise of options (including the Options set forth in Schedule A) (as
the same may be adjusted as aforesaid), being collectively referred to herein as
the "Shares" of such Stockholder; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholders enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
Section 1. Certain Definitions. Capitalized terms used but not
-------------------
otherwise defined herein have the meanings ascribed to such terms in the Merger
Agreement.
Section 2. Representations and Warranties of the Stockholders. Each
--------------------------------------------------
Stockholder, severally and not jointly, represents and warrants to Parent and
Purchaser, as of the date hereof and as of the Closing (as defined below), as
follows:
(a) The Stockholder is the 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 (including the Options), free and clear of any
mortgage, pledge, hypothecation, rights of others, claim, security
<PAGE>
interest, charge, encumbrance, title defect, title retention agreement, voting
trust agreement, interest, option, lien, charge or similar restriction or
limitation, including any restriction on the right to vote, sell or otherwise
dispose of the Shares (each, a "Lien"), except as set forth in this Agreement.
(b) The Shares (including the Options) constitute all of the
securities (as defined in Section 3(a)(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.
(c) Except for the Shares (including 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,
restriction or relationship (whether or not legally enforceable), other than
this Agreement, that provides for such Stockholder to vote or acquire any
securities of the Company. The Stockholder holds exclusive power to vote the
Shares and has not granted a proxy to any other person (as defined in the Merger
Agreement, which meaning will apply for all purposes of this Agreement) to vote
the Shares, subject to the limitations set forth in this Agreement.
(d) This Agreement has been duly executed and delivered by the
Stockholder and, assuming due authorization, execution and delivery of this
Agreement by Parent and Purchaser, is a valid and binding obligation of the
Stockholder enforceable against the Stockholder in accordance with its terms.
(e) Neither the execution and delivery of this Agreement nor
the performance by the Stockholder of the Stockholder's obligations hereunder
will conflict with, result in a violation or breach of, or constitute a default
(or an event that, with notice or lapse of time or both, would result in a
default) or give rise to any right of termination, amendment, cancellation, or
acceleration 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 the Stockholder is a party or by which the Stockholder is
bound or (ii) any injunction, judgment, writ, decree, order or ruling applicable
to the Stockholder; except for conflicts, violations, breaches, defaults,
terminations, amendments, cancellations, accelerations or Liens that would not
individually or in the aggregate be reasonably expected to prevent or materially
impair or delay the consummation by such Stockholder of the transactions
contemplated hereby.
(f) Neither the execution and delivery of this Agreement nor
the performance by the Stockholder of the Stockholder's obligations hereunder
will violate any law, decree, statute, rule or regulation applicable to the
Stockholder or require any order, consent, authorization or approval of, filing
or registration with, or declaration 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"), foreign antitrust or competition laws or the federal securities laws.
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<PAGE>
(g) The Stockholder understands and acknowledges that Parent is
entering into, and causing Purchaser to enter into, the Merger Agreement in
reliance upon the Stockholder's execution and delivery of this Agreement.
Section 3. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to Parent and Purchaser, as of the date hereof and as of
the Closing, as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, 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.
(b) This Agreement has been duly executed and delivered by the
Company and, assuming due authorization, execution and delivery of this
Agreement by the Stockholders, Parent and Purchaser, is a valid and binding
obligation of the Company, enforceable against it in accordance with its terms.
(c) Neither the execution and delivery of this Agreement nor
the performance by the Company of its obligations hereunder will conflict with,
result in a violation or breach of, or constitute a default (or an event that,
with notice or lapse of time or both, would result in a default) or give rise to
any right of termination, amendment, cancellation, or acceleration or result in
the creation of any Lien on the assets or properties of the Company under, (i)
its certificate of incorporation or bylaws, (ii) any Contract, commitment,
agreement, understanding, arrangement or restriction of any kind to which the
Company is a party or by which the Company is bound or (iii) any judgment, writ,
decree, order or ruling applicable to the Company; except in the case of clauses
(ii) and (iii) for conflicts, violations, breaches, defaults, terminations,
amendments, cancellations, accelerations or Liens that would not individually or
in the aggregate be reasonably expected to prevent or materially impair or delay
the consummation by the Company of the transactions contemplated hereby.
(d) Neither the execution and delivery of this Agreement nor
the performance by the Company of its obligations hereunder will violate any
law, decree, statute, rule or regulation applicable to the Company or require
any order, consent, authorization or approval of, filing or registration with,
or declaration 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, foreign antitrust or competition laws or the federal
securities laws.
(e) The Company has taken all necessary corporate or other
action (including approval by the Board of Directors of the Company) to render
inapplicable to this Agreement and the Merger Agreement and the transactions
contemplated hereby and thereby Section 912 of the NYBCL.
Section 4. Representations and Warranties of Parent and Purchaser.
------------------------------------------------------
Parent and Purchaser represent and warrant to the Stockholders, as of the date
hereof and as of the Closing, as follows:
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<PAGE>
(a) Each of Parent and Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of their
respective jurisdiction of incorporation, 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.
(b) This Agreement has been duly executed and delivered by
Parent and Purchaser and, assuming the due authorization, execution and delivery
of this Agreement by the Company and the Stockholders, is a valid and binding
obligation of each of Parent and Purchaser, enforceable against each of them in
accordance with its terms.
(c) Neither the execution and delivery of this Agreement nor
the performance by Parent and Purchaser of their respective obligations
hereunder will conflict with, result in a violation or breach of, or constitute
a default (or an event that, with notice or lapse of time or both, would result
in a default) or give rise to any right of termination, amendment, cancellation,
or acceleration under, (i) their respective certificates of incorporation or
bylaws, (ii) any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which Parent or Purchaser is a party or by which
Parent or Purchaser is bound or (iii) any judgment, writ, decree, order or
ruling applicable to Parent or Purchaser; except in the case of clauses (ii) and
(iii) for conflicts, violations, breaches or defaults that would not
individually or in the aggregate be reasonably expected to prevent or materially
impair or delay the consummation by Parent or Purchaser of the transactions
contemplated hereby.
(d) Neither the execution and delivery of this Agreement nor
the performance by Parent and Purchaser of their respective obligations
hereunder will violate any law, decree, statute, rule or regulation applicable
to Parent or Purchaser or require any order, consent, authorization or approval
of, filing or registration with, or declaration 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.
(e) Any Shares acquired upon exercise of the Purchase Option
(as defined below) will be acquired for Parent's or Purchaser's own account, for
investment purposes only and will not be, and the Purchase Option is not being,
acquired by Parent and Purchaser with a view to public distribution thereof in
violation of any applicable provisions of the Securities Act of 1933, as amended
(the "Securities Act").
Section 5. Transfer of the Shares. During the term of this Agreement,
----------------------
except as otherwise expressly provided herein, each Stockholder agrees that such
Stockholder will not (a) tender into any tender or exchange offer or otherwise
sell, transfer, pledge, assign, hypothecate or otherwise dispose of, or encumber
with any Lien, any of the Shares, except for (i) transfers to any spouse or
descendant (including by adoption) of such Stockholder, or any trust or
retirement plan or account for the benefit of such Stockholder, spouse or
descendant; provided any such transferee agrees in writing to be bound by the
terms of this Agreement and (ii) transfers by operation of law provided that any
such transferee shall be bound by the terms of this Agreement, (b) acquire any
shares of Company Common Stock or other securities of the Company (otherwise
than in connection with a transaction of the type described in Section 6 or by
exercising any of the
-4-
<PAGE>
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, (d) enter into any Contract, option or
other arrangement (including any profit sharing arrangement) or undertaking with
respect to the direct or indirect acquisition or sale, transfer, pledge,
assignment, hypothecation or other disposition of any interest in or the voting
of any Shares or any other securities of the Company or (e) take any other
action that would in any way restrict, limit or interfere with the performance
of such Stockholder's obligations hereunder or the transactions contemplated
hereby or which would otherwise diminish the benefits of this Agreement to
Parent or Purchaser.
Section 6. Adjustments.
-----------
(a) In the event (i) of any stock dividend, stock split,
recapitalization, reclassification, combination or exchange of shares of capital
stock or other securities of the Company on, of or affecting the Shares or the
like or any other action that would have the effect of changing a Stockholder's
ownership of the Company's capital stock or other securities or (ii) a
Stockholder becomes the beneficial owner of any additional Shares of or other
securities of the Company, then the terms of this Agreement will apply to the
shares of capital stock held by such Stockholder immediately following the
effectiveness of the events described in clause (i) or such Stockholder becoming
the beneficial owner thereof, as described in clause (ii), as though they were
Shares hereunder.
(b) Each Stockholder hereby agrees, while this Agreement is in
effect, to promptly notify Parent and Purchaser of the number of any new Shares
acquired by such Stockholder, if any, after the date hereof.
Section 7. Tender of Shares. Each Stockholder hereby agrees that such
----------------
Stockholder will validly tender (or cause the record owner of such shares to
validly tender) and sell (and not withdraw, except in the event the Purchase
Option is exercised, in which case such withdrawal shall be for the limited
purpose of consummating the Purchase Option) pursuant to and in accordance with
the terms of the Offer not later than the fifth business day after commencement
of the Offer (or the earlier of the expiration date of the Offer and the fifth
business day after such Shares are acquired by such Stockholder if the
Stockholder acquires Shares after the date hereof), or, if the Stockholder has
not received the Offer Documents by such time, within two business days
following receipt of such documents, all of the then outstanding shares of
Company Common Stock beneficially owned by such Stockholder (including the
shares of Company Common Stock outstanding as of the date hereof and set forth
on Schedule A hereto opposite such Stockholder's name). Upon the purchase by
Purchaser of all of such then outstanding shares of Company Common Stock
beneficially owned by such Stockholder pursuant to the Offer in accordance with
this Section 7, this Agreement will terminate as it relates to such Stockholder.
In the event, notwithstanding the provisions of the first sentence of this
Section 7, any Shares beneficially owned by a Stockholder 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. Each Stockholder
acknowledges that Purchaser's obligation to accept for payment and pay for the
shares of Company Common Stock tendered in the Offer is subject to all the terms
and conditions of the Offer.
-5-
<PAGE>
Section 8. Voting Agreement. Each Stockholder, by this Agreement,
----------------
does hereby (a) agree to appear (or not appear, if requested by Parent or
Purchaser) at any annual, special, postponed or adjourned meeting of the
stockholders of the Company or otherwise cause the Shares such Stockholder
beneficially owns to be counted as present (or absent, if requested by Parent or
Purchaser) thereat for purposes of establishing a quorum and to vote or consent,
and (b) constitute and appoint Parent and 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 all the Shares such Stockholder beneficially owns at the time of such vote,
at any annual, special, postponed or adjourned meeting of the stockholders of
the Company (and this appointment will include the right to sign his or its name
(as stockholder) to any consent, certificate or other document relating to the
Company that laws of the State of New York may require or permit), in the case
of both (a) and (b) above, (x) in favor of approval and adoption of the Merger
Agreement and approval and adoption of the Merger and the other transactions
contemplated thereby and (y) against (1) any Acquisition Proposal, (2) 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 (3) 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 any of its subsidiaries; (ii) a sale, lease
or transfer of a material amount of assets of the Company or any of its
subsidiaries, or a reorganization, recapitalization, dissolution or liquidation
of the Company or any of its subsidiaries; (iii) (A) any change in a majority of
the persons who constitute the board of directors of the Company or any of its
subsidiaries as of the date hereof; (B) any change in the present capitalization
of the Company or any amendment of the Company's or any of its subsidiaries'
certificate of incorporation or bylaws, as amended to date; (C) any other
material change in the Company's or any of its subsidiaries' corporate structure
or business; or (D) any other action that is intended, or could reasonably be
expected, to impede, interfere with, delay, postpone, or adversely affect the
Offer, 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
coupled with an interest, and each Stockholder declares that it is irrevocable
until this Agreement shall terminate in accordance with its terms. Each
Stockholder hereby revokes all and any other proxies with respect to the Shares
that such Stockholder may have heretofore made or granted. For Shares as to
which a Stockholder is the beneficial but not the record owner, such Stockholder
shall use his or its best efforts to cause any record owner of such Shares to
grant to Parent a proxy to the same effect as that contained herein. Each
Stockholder hereby agrees to permit Parent and Purchaser to publish and disclose
in the Offer Documents and the Proxy Statement and related filings under the
securities laws such Stockholder's identity and ownership of Shares and the
nature of his or its commitments, arrangements and understandings under this
Agreement. Notwithstanding the foregoing, Alonna Ostad, Sharone N. Ostrow and
Jonathan Ostrow are not bound by the terms of this Section 8.
Section 9. No Solicitation. Each Shareholder agrees that neither such
---------------
Stockholder nor any of such Stockholder's officers, directors, employees,
trustees, representatives, agents or affiliates (including, without limitation,
any investment banker, attorney or accountant retained by any of them) will
directly or indirectly initiate, solicit or encourage (including by way of
furnishing
-6-
<PAGE>
non-public information or assistance), or take any other action to facilitate,
any inquiries or the making or submission of any Acquisition Proposal, or enter
into or maintain or continue discussions or negotiate with any person or entity
in furtherance of such inquiries or to obtain or induce any person to make or
submit an Acquisition Proposal or agree to or endorse any Acquisition Proposal
or assist or participate in, facilitate or encourage, any effort or attempt by
any other person or entity to do or seek any of the foregoing or authorize or
permit any of its officers, directors, employees, trustees or any of its
affiliates or any investment banker, financial advisor, attorney, accountant or
other representative or agent retained by any of them to take any such action.
Each Stockholder shall immediately advise Parent in writing of the receipt of
request for information or any inquiries or proposals relating to an Acquisition
Proposal.
Section 10. Grant of Purchase Option. The Stockholder hereby grants
------------------------
to Parent and Purchaser an irrevocable option (the "Purchase Option") to
purchase for cash, in a manner set forth below, any or all of the Shares (and
including Shares acquired after the date hereof by such Stockholder)
beneficially owned by the Stockholder at a price (the "Exercise Price") per
Share equal to $34.00 (the "Offer Price"). In the event of any stock dividends,
stock splits, recapitalizations, combinations, exchanges of shares or the like,
the Offer Price will be appropriately adjusted for the purpose of this Section
10.
Section 11. Exercise of Purchase Option.
---------------------------
(a) Subject to the conditions set forth in Section 13 hereof,
the Purchase Option may be exercised by Parent or Purchaser, in whole or in
part, at any time or from time to time after the occurrence of any Trigger Event
(as defined below). The Company and each Stockholder shall notify Parent
promptly in writing of the occurrence of any Trigger Event, it being understood
that the giving of such notice by the Company or the Stockholder is not a
condition to the right of Parent or Purchaser to exercise the Purchase Option.
In the event Parent or Purchaser wishes to exercise the Purchase Option, Parent
shall deliver to each Stockholder a written notice (an "Exercise Notice")
specifying the total number of Shares it wishes to purchase from such
Stockholder. Each closing of a purchase of Shares (a "Closing") will occur at a
place, on a date and at a time designated by Parent or Purchaser in an Exercise
Notice delivered at least two business days prior to the date of the Closing.
(b) A "Trigger Event" means any one of the following: (i) the
Merger Agreement becomes terminable under circumstances that entitle Parent or
Purchaser to receive the Termination Fee or the Expenses under Section 8.3(b) of
the Merger Agreement (regardless of whether the Merger Agreement is actually
terminated and whether such Termination Fee or Expenses are then actually paid),
(ii) the Offer is consummated but, due to the failure of the Stockholder to
validly tender and not withdraw all of the then outstanding shares of Company
Common Stock beneficially owned by such Stockholder, the Purchaser has not
accepted for payment or paid for all of such shares of Company Common Stock,
(iii) a tender or exchange offer for at least 20% of the shares of Company
Common Stock shall have been publicly proposed to be made or shall have been
made by another person, or (iv) it shall have been publicly disclosed or Parent
or Purchaser shall have otherwise learned that (A) any person or "group" (as
defined in Section 13(d)(3) of the Exchange Act) (other than Parent or
Purchaser) shall have acquired or proposed to acquire beneficial ownership of
more than 20% of any class or series of capital stock
-7-
<PAGE>
of the Company (including the Company Common Stock), through the acquisition of
stock, the formation of a group or otherwise, or shall have been granted any
option, right or warrant, conditional or otherwise, to acquire beneficial
ownership of more than 20% of any class or series of capital stock of the
Company or any of its subsidiaries, or (B) any person or group (other than
Parent and Purchaser) shall have entered into or publicly offered to enter into
a definitive agreement or an agreement in principle with respect to a merger,
consolidation or other business combination with the Company or any of its
subsidiaries.
(c) If requested by Parent and Purchaser in the Exercise
Notice, such Stockholder shall exercise all Options (to the extent exercisable)
and other rights (including conversion or exchange rights) beneficially owned by
such Stockholder and shall sell or, if directed by Parent and Purchaser, tender
the Shares acquired pursuant to such exercise to Parent or Purchaser as provided
in this Agreement.
(d) In the event (i) Parent or Purchaser exercises the Purchase
Option and purchases Shares pursuant to this Section 11 representing at least
20% of the then outstanding shares of Company Common Stock on a fully diluted
basis (the "Purchase Event"), (ii) no Acquisition Proposal shall have been
consummated and (iii) the Merger Agreement shall have terminated and the Company
shall not have been in material breach of the Merger Agreement at the time of
such termination, upon the written request of the Company made within five
business days after the Purchase Event, Parent shall cause Purchaser or another
subsidiary of Parent to commence, as soon as reasonably practicable, a tender
offer for all shares of Company Common Stock at a cash price equal to the Offer
Price, on terms and subject to conditions substantially similar to those
contained in the Merger Agreement.
(e) If, within twelve months following the exercise of the
Purchase Option by Parent or Purchaser, Parent or Purchaser sells any or all of
the Shares acquired upon exercise of the Purchase Option to an unaffiliated
third party (a "Subsequent Sale") at a per Share price in excess of the Offer
Price (the "Subsequent Sale Price"), then Parent or Purchaser will pay to each
Stockholder, within five days of receipt of payment by Parent or Purchaser, an
amount equal to such Stockholder's pro rata share of 50% of the excess of the
Subsequent Sale Price over the Offer Price multiplied by the number of shares
sold in the Subsequent Sale.
Section 12. Termination of Purchase Option. The Purchase Option will
------------------------------
terminate (a) if this Agreement terminates pursuant to Section 7 or (b) upon the
earliest of: (i) the Effective Time; (ii) termination of the Merger Agreement
other than upon, during the continuance of or after a Trigger Event; or (iii) 90
days following any termination of the Merger Agreement upon, during the
continuance of or after a Trigger Event (or if, at the expiration of such 90 day
period the Purchase Option cannot be exercised by reason of any applicable
judgment, decree, order, injunction, law or regulation, 10 business days after
such impediment to exercise has been removed or has become final and not subject
to appeal). Upon the giving by Parent or Purchaser to the Stockholder of the
Exercise Notice and the tender of the aggregate Exercise Price, Parent or
Purchaser, as the case may be, will be deemed to be the holder of record of the
Shares transferable upon such exercise, notwithstanding that the stock transfer
books of the Company are then closed or that certificates representing such
Shares have not been actually delivered to Parent.
-8-
<PAGE>
Section 13. Conditions To Closing. The obligation of each
---------------------
Stockholder to sell such Stockholder's Shares to Parent or Purchaser hereunder
is subject to the conditions that (i) all waiting periods, if any, under the HSR
Act, applicable to the sale of the Shares or the acquisition of the Shares by
Parent or Purchaser, as the case may be, hereunder have expired or have been
terminated; (ii) all consents, approvals, orders or authorizations of, or
registrations, declarations or filings with, any court, administrative agency or
other Governmental Entity, if any, required in connection with sale of the
Shares or the acquisition of the Shares by Parent or Purchaser hereunder have
been obtained or made; and (iii) no preliminary or permanent injunction or other
order by any court of competent jurisdiction prohibiting or otherwise
restraining such sale or acquisition is in effect.
Section 14. Closing. At any Closing with respect to Shares
-------
beneficially owned by a Stockholder, (a) such Stockholder will deliver to
Parent, Purchaser or their respective designee a certificate or certificates in
definitive form representing the number of the Shares designated by Parent or
Purchaser, as the case may be, in its Exercise Notice, such certificate to be
registered in the name of Parent, Purchaser or their respective designee and (b)
Parent or Purchaser, as the case may be, will deliver to the Stockholder the
aggregate Exercise Price for the Shares so designated and being purchased by
wire transfer of immediately available funds.
Section 15. Registration Rights.
-------------------
(a) Following termination of the Merger Agreement, Parent or
Purchaser may in its sole discretion (but shall not be required) by written
notice (the "Registration Notice") to the Company request the Company to
register under the Securities Act all or any part of the shares of Company
Common Stock acquired under the Purchase Option (the "Registrable Securities").
(b) The Company shall use commercially reasonable efforts to
effect, as promptly as practicable, the registration under the Securities Act of
the Registrable Securities; provided, however, that (i) Parent and Purchaser
will be entitled to no more than one effective registration statement hereunder
and (ii) the Company will not be required to file any such registration
statement during any period of time (not to exceed 40 days after such request in
the case of clause (A) below or 90 days in the case of clauses (B) and (C)
below) when (A) the Company is in possession of material non-public information
that it reasonably believes would be detrimental to be disclosed at such time
and that such information would have to be disclosed if a registration statement
were filed at that time; (B) the Company is required under the Securities Act to
include audited financial statements for any period in such registration
statement and such financial statements are not yet available for inclusion in
such registration statement; or (C) the Company determines, in its reasonable
judgment, that such registration would interfere with any proposed financing,
acquisition or other material transaction involving the Company or any of its
affiliates. The Company shall use its reasonable best efforts to cause any
Registrable Securities registered pursuant to this Section 15 to be qualified
for sale under the securities or blue-sky laws of such jurisdictions as Parent
or Purchaser may reasonably request and shall continue such registration or
qualification in effect in such jurisdiction; provided, however, that the
Company will not be required to qualify to do business in, or to consent to
general service of process in, any jurisdiction by reason of this provision.
-9-
<PAGE>
(c) The registration rights set forth in this Section 15 are
subject to the condition that Parent and Purchaser shall provide the Company
with such information with respect to their Registrable Securities, the plans
for the distribution thereof, and such other information with respect to such
holder as, in the reasonable judgment of counsel for the Company, is necessary
to enable the Company to include in such registration statement all material
facts required to be disclosed with respect to a registration thereunder.
(d) A registration effected under this Section 15 will be
effected at the Company's expense, except for underwriting discounts and
commissions and the fees and the expenses of counsel to Parent and Purchaser
(which will be paid by Parent and Purchaser, and the Company shall provide to
the underwriters (in connection with an underwritten offering) such
documentation (including certificates, opinions of counsel and "comfort" letters
from auditors) as are customary in connection with underwritten offerings as
such underwriters may reasonably require. In connection with any such
registration, the parties agree (i) to indemnify each other and the underwriters
in the customary manner, (ii) to enter into an underwriting agreement in form
and substance customary for transactions of such type with the underwriters
participating in such offering and (iii) to take all further actions that will
be reasonably necessary to effect such registration and sale (including, if the
underwriters deem it necessary, participating in road-show presentations).
Section 16. Termination. This Agreement will terminate (a) as to any
-----------
Stockholder upon the purchase of all the Shares beneficially owned by such
Stockholder pursuant to the Offer in accordance with Section 7, (b) except for
Sections 10, 11, 12, 13, 14 and 15 hereof, which will only terminate as and when
provided therein, on the earlier to occur of (i) the Effective Time or (ii) the
date the Merger Agreement is terminated in accordance with its terms, or (c) by
the mutual consent of each Stockholder as to its rights and obligations
hereunder, the Board of Directors of the Company and the Board of Directors of
Parent.
Section 17. Expenses. Except as otherwise expressly provided herein
--------
or in the Merger Agreement, all costs and expenses incurred by any of the
parties hereto will be borne by the party incurring such costs and expenses.
Section 18. Further Assurances. Each party hereto will execute and
------------------
deliver all such further documents and instruments and take all such further
action as may be reasonably necessary in order to consummate the transactions
contemplated hereby. The Company covenants to Parent and Purchaser that it and
its Board of Directors shall (i) take all action necessary to ensure that no
state takeover statute or similar statute or regulation is or becomes applicable
to the Purchase Option, the Offer, the Merger, this Agreement, the Merger
Agreement or any of the other transactions contemplated by the foregoing (the
"Transactions") and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to any of the Transactions, take all action
necessary to ensure that the Purchase Option and the other Transactions may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and the Merger Agreement and otherwise to minimize the effect of such
statute or regulation on the Purchase Option and the other Transactions.
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<PAGE>
Section 19. Publicity. A Stockholder shall not issue any press
---------
release or otherwise make any public statements with respect to this Agreement
or the Merger Agreement or the other transactions contemplated hereby or thereby
without the consent of Parent and Purchaser, except as may be required by law or
applicable stock exchange rules.
Section 20. Stop Transfer Order; Legend. The Company agrees with, and
---------------------------
covenants to, Parent and Purchaser that the Company shall not register the
transfer of any certificate representing any Stockholder's Shares unless such
transfer is made in accordance with the terms of this Agreement. Each
Stockholder agrees to place the following legend on any and all certificates
evidencing the Shares:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT TO THAT CERTAIN TENDER AND OPTION
AGREEMENT, DATED AS OF DECEMBER 20, 1998, BY AND AMONG ROHM AND HAAS COMPANY,
LIGHTNING ACQUISITION CORP., LEARONAL, INC. AND CERTAIN STOCKHOLDERS OF
LEARONAL, INC. ANY TRANSFER OF SUCH SHARES OF COMMON STOCK IN VIOLATION OF THE
TERMS OF SUCH AGREEMENT SHALL BE NULL AND VOID AND OF NO EFFECT WHATSOEVER.
Section 21. Stockholder Capacity. No person executing this Agreement
--------------------
makes any agreement or understanding herein in such Stockholder's capacity as a
director or officer of the Company or any subsidiary of the Company. Each
Stockholder signs solely in such Stockholder's capacity as the beneficial owner
of such Stockholder's Shares and nothing herein shall limit or affect any
actions taken by a Stockholder in such Stockholder's capacity as an officer or
director of the Company or any subsidiary of the Company to the extent
specifically permitted by the Merger Agreement.
Section 22. Enforcement. Each Stockholder and the Company acknowledge
-----------
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 Parent and 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 they are entitled at law or in equity.
Each Stockholder and the Company further agree to waive any requirement for the
securing or posting of any bond in connection with the obtaining of any such
injunctive or other equitable relief. The provisions of this paragraph are
without prejudice to any other rights that any party hereto may have against
another party hereto for any failure to perform its obligations under this
Agreement. In addition, each Stockholder (i) consents to submit to the personal
jurisdiction of any Federal court located in the State of New York or any New
York state court in the event any dispute arises out of this Agreement or any of
the transactions contemplated hereby, (ii) agrees not to attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (iii) agrees not to bring any action relating to this Agreement or
any of the transactions contemplated hereby in any court other than a Federal
court located in the State of New York or a New York state court and (iv) waives
any right to trial by jury with respect to any claim or proceeding related to or
arising out
-11-
<PAGE>
of this Agreement or any of the transactions contemplated hereby. Each
Stockholder hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in the courts of the State of New York
or of the United States of America located in the State of New York, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
Section 23. Miscellaneous.
-------------
(a) All representations and warranties contained herein will
survive for twelve months after the termination hereof. The covenants and
agreements made herein will survive in accordance with their respective terms.
(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 writing and 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 to insist upon strict
adherence to that term or any other term of this Agreement.
(c) This Agreement, the Merger Agreement, the Other Agreements
and the Confidentiality Agreement constitute the entire agreement among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements among the parties 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 New York, without regard to the
conflicts of laws principles thereof.
(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. Wherever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." Words in the singular include the plural, and
words in the plural include the singular.
(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:
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<PAGE>
If to the Company to:
LeaRonal, Inc.
272 Buffalo Avenue
Freeport, NY 11520
Attention: Ronald F. Ostrow
Telecopy: 516-867-5917
With a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attention: Robert F. Quaintance, Jr.
Telecopy: 212-909-6836
If to Parent or Purchaser to:
Rohm and Haas Company
100 Independence Mall West
Philadelphia, PA 19106
Attention: John S. Stroebel
Telecopy: 215-592-3227
Lightning Acquisition Corp.
Suite 104 - Rodney Building
3411 Silverside Road
Wilmington, DE 19810
Attention: John S. Stroebel
with copies to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: William G. Lawlor
Telecopy: 215-994-2222
If to a Stockholder, at the address set forth on Schedule A hereto.
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.
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<PAGE>
(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 Parent and Purchaser will have the right to assign to any direct or
indirect wholly owned subsidiary of Parent or Purchaser any and all rights and
obligations of Parent or Purchaser under this Agreement, provided that any such
assignment will not relieve either Parent or Purchaser from any of its
obligations hereunder.
(i) In the event any term or 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. 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 fullest 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.
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<PAGE>
IN WITNESS WHEREOF, each of the Company, Parent and Purchaser has
caused this Agreement to be signed by its officer or director thereunto duly
authorized and each Stockholder has signed this Agreement, all as of the date
first written above.
ROHM AND HAAS COMPANY
By: /s/ Rajiv L. Gupta
_______________________________________________
Name: Rajiv L. Gupta
Title: Vice President
LIGHTNING ACQUISITION CORP.
By: /s/ Bradley J. Bell
_______________________________________________
Name: Bradley J. Bell
Title: Vice President
LEARONAL, INC.
By: /s/ Ronald F. Ostrow
_______________________________________________
Name: Ronald F. Ostrow
Title: President
STOCKHOLDERS:
/s/ Barnet D. Ostrow
__________________________________________________
Barnet D. Ostrow, individually, as Trustee and
General Partner of Ostrow Properties Limited
Partnership #1
/s/ Annette Ostrow
_________________________________________________
Annette Ostrow, individually, as Trustee and
General Partner of Ostrow Properties Limited
Partnership #2
[signatures continue on next page]
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<PAGE>
/s/ Fred I. Nobel
_________________________________________________
Fred I. Nobel, individually and as General Partner
of Nobel Limited Partnership
/s/ Ronald F. Ostrow
_________________________________________________
Ronald F. Ostrow, as Trustee and individually
/s/ Michael Katz
_________________________________________________
Michael Katz, as Trustee
/s/ Kenneth L. Stein
_________________________________________________
Kenneth L. Stein, as Trustee
/s/ Richard Kessler
_________________________________________________
Richard Kessler
/s/ Sol Berg
_________________________________________________
Sol Berg
/s/ Donald Thomson
_________________________________________________
Donald Thomson
/s/ David L. Rosenthal
_________________________________________________
David L. Rosenthal
/s/ Alonna Ostad
_________________________________________________
Alonna Ostad
/s/ Sharone N. Ostrow
_________________________________________________
Sharone N. Ostrow
/s/ Jonathan Ostrow
_________________________________________________
Jonathan Ostrow
-16-
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number Number
of of
Stockholder Address Shares Options
----------- ------- ------ -------
<S> <C> <C> <C>
Barnet D. Ostrow and (1) 420,928
Michael Katz, as
Trustees of Revocable
Trust f/b/o Barnet D.
Ostrow
Annette Ostrow and (1) 351,354
Michael Katz, as
Trustees of Revocable
Trust f/b/o Annette
Ostrow
Fred I. Nobel, individually (1) 1,217,660
and as general partner (1) 5,917
on behalf of Nobel
Limited Partnership
Ronald F. Ostrow (1) 284,018
Ronald F. Ostrow and (1) 263,671
Kenneth L. Stein, as
Trustees f/b/o Ronald
Ostrow
Michael Katz, as Trustee (1) 50,000
f/b/o Ronald Ostrow
Barnet D. Ostrow as (1) 242,500
General Partner on
behalf of Ostrow
Properties Limited
Partnership #1
Annette Ostrow as (1) 15,000
General Partner on
behalf of Ostrow
Properties Limited
Partnership #2
Richard Kessler (1) 76,715 217,382
Donald Thomson (1) 53,942 106,096
David L. Rosenthal (1) 19,731 171,400
Sol Berg 1453 Landings Circle 754,519
Sarasota, FL 34231
Alonna Ostad (1) 48,566
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number Number
of of
Stockholder Address Shares Options
----------- ------- ------ -------
<S> <C> <C> <C>
Sharone N. Ostrow (1) 50,596
Jonathan Ostrow (1) 48,565
__________ ---------
Totals 3,619,664 778,896
========== =========
</TABLE>
(1) c/o LeaRonal Inc., 272 Buffalo Avenue, Freeport, NY 11520
<PAGE>
Exhibit (c)(4)
Form of Employment Agreements, dated as of December 20, 1998.
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT made as of the 20th day of December, 1998, by and between
LEARONAL, INC., a New York corporation, having its office and place of business
at 272 Buffalo Avenue, Freeport, New York 11520 (the "Company") and [ ],
residing at [ ] (the "Executive").
BACKGROUND
----------
The Company has entered into an Agreement and Plan of Merger dated
December 20, 1998 among the Company, ROHM AND HAAS COMPANY ("Parent") and
LIGHTNING ACQUISITION CORP. ("Purchaser") (the "Merger Agreement").
Parent, Purchaser and the Company want to continue the employment
relationship between Executive and the Company following the effective date of
the contemplated merger (the "Merger") and the Executive wants to continue in
that employment, in each case on the terms and conditions set forth herein.
AGREEMENT
---------
Accordingly, in consideration of the mutual promises contained herein,
and intending to be legally bound, the Company and the Executive agree that
contingent upon, and effective upon the date of the earlier of the consummation
of the Offer or the Merger (as such terms are defined in the Merger Agreement),
(a) all prior employment agreements and amendments thereto are hereby amended
and restated in their entirety as follows, and simultaneously with the earlier
to occur of the Offer or the
<PAGE>
Merger, will be of no further effect, and (b) that the Executive will remain
employed by the Company on the terms and conditions set forth herein.
1. Employment; Duties:
(A) The Company hereby continues the employment of the Executive
and the Executive hereby accepts such continued employment on the terms and
conditions hereinafter set forth. During his employment hereunder, the Executive
shall serve as [ ] of the Company, and shall have and perform such duties
and responsibilities relating to the business and operations of the Company as
may be appropriate to such position, and as the Board of Directors from time to
time may assign to him, consistently with the requirement that his duties be
appropriate to his position, subject to reasonable vacation periods and other
leaves of absence.
(B) During his employment hereunder, the Executive shall devote
his full time, attention and best efforts to the business of the Company and to
the furtherance of its interests, and shall not, without the prior written
consent of the Board of Directors of the Company, directly or indirectly, engage
in, or enter into the employment of, or otherwise render services to or for, or
act as a director, officer or employee of any other business, partnership,
association, corporation or other entity (other than established trade
associations of which the Company is a member) except for non-remunerative
participation in charitable organizations.
-2-
<PAGE>
(C) The principal place of performance of the Executive's
services hereunder shall be Freeport, New York, subject to reasonable travel
requirements on behalf of the Company.
(D) The Executive represents and warrants that he is free to
enter into this Agreement and the performance of his obligations and duties in
the manner contemplated hereunder will not violate the provisions of any other
agreement or understanding to which he is a party or by which he is bound.
2. Term: The term of this Agreement shall be for the period
----
commencing on the earlier of the date of the consummation of the Offer or the
date of the Merger and ending on the third anniversary of that date.
3. Compensation:
------------
(A) As compensation for the Executive's services hereunder, the
Company shall pay and the Executive shall accept an annual salary ("Base
Salary") of not less than [ ] Dollars per year, or such greater sum as the
Company may from time to time deem appropriate, payable in such installments and
at such regular intervals as the Company may from time to time use for the
payment of salaries, but not less frequently than monthly.
(B) Executive shall also be entitled to participate in an annual
bonus program that shall provide an opportunity to receive an annual bonus,
including for the year, if any that begins before and ends after the Effective
Time, that is as a dollar amount at least consistent with the opportunity
provided to him in accordance with the Company's practices and policies in
effect before the Effective Time, based on
-3-
<PAGE>
performance objectives established by the Board, in consultation with the Chief
Executive Officer, following the Effective Time.
(C) In addition to the compensation set forth in (A) above, to
induce the Executive to remain in the employ of the Company, and as additional
compensation for the critical services to rendered by the Employee during the
difficult period of integration and transition following the Effective Time, the
Executive shall be entitled on the first anniversary of the effective date of
this Agreement, to an amount equal to 60% of the annual Compensation then
payable under (A) above, provided that the Executive is employed on the payment
date. If the Executive's employment is terminated by the Company without Cause,
or by the Executive for Good Reason, the Executive shall be paid a pro rata
portion of the amount otherwise payable under this Section 3(C) determined by
dividing the number of days elapsed from the beginning of the term of this
Agreement (determined under Section 2) by 365. If the Executive's employment
hereunder is terminated for any other reason, no payment shall be made under
this Section 3(C).
4. Additional Benefits:
-------------------
(A) The Company shall provide the Executive with such
retirement, medical and other fringe benefits as the Company or the Parent may
from time to time decide to generally provide for the Company's similarly
situated executive personnel, provided that during the term of this Agreement,
the total of such benefits shall be substantially comparable in the aggregate to
those provided to the Executive before the Effective Time. Until the third
anniversary of the Effective Time, as defined
-4-
<PAGE>
in the Merger Agreement, there shall be no adverse change or reduction in the
level or amount of any Executive perquisite made available to the Executive
immediately before the Effective Time.
(B) The Company shall reimburse the Executive for all reasonable
and necessary travel, entertainment and other expenses incurred by the Executive
in connection with the performance of his duties hereunder, provided such
expenses are documented and vouchers supported by receipts are submitted; the
good faith determination of the Company as to the reasonableness and necessity
of any such expense shall be binding and conclusive. Any reimbursed expense
which is disallowed as the result of any audit of the Company's tax returns by
any governmental taxing authority shall be refunded by the Executive to the
Company promptly following such disallowance.
5. Stock Option Payments: Executive agrees with respect to each
---------------------
outstanding stock option (each "Option") heretofore granted under the Company's
1990 Nonqualified Stock Option Plan, dated June 1, 1990 (the "1990 Plan") and
the Company's 1996 Long-Term Incentive Plan (the "1996 Plan", and together with
the 1990 Plan, the "Company Stock Option Plans"), to be bound by the terms of
Section 2.10 of the Merger Agreement.
6. Termination:
-----------
(A) The Company may terminate the Executive's employment at any
time for "Cause" or upon 90 days notice for any other reason. The Executive may
-5-
<PAGE>
terminate employment hereunder upon 90 days written notice, with or without
"Good Reason."
(B) If the Executive's employment is terminated for "Cause" or
by the Executive without "Good Reason" the Executive shall have no further
rights under this Agreement, except the right to receive the Compensation
payable under Section 3 up to the date of termination by the Company of the
Executive's employment hereunder, and the right to receive any vested benefits
under any plan or arrangement described in Section 4. The Executive's employment
shall be deemed to have been terminated for "Cause" if his employment is
terminated for: (i) embezzlement, theft, or other misappropriation of any
property of more than nominal value of the Company; (ii) the Executive's neglect
of, or failure substantially to perform or comply with, his duties,
responsibilities and obligations as an officer of the Company (other than any
such failure resulting from his incapacity due to physical or mental illness, as
determined by a physician appointed by the Company) after a demand for
substantial performance is delivered to the Executive by the Board which
specifically identifies the manner in which such Board believes that the
Executive has not substantially performed his duties and the Executive fails or
refuses to remedy such failure to the reasonable satisfaction of the Board
within ninety (90) days after the receipt of such notice; (iii) the Executive's
willful and material breach of his restrictive covenants set forth in this
Agreement; (iv) any act which if the subject of a criminal proceeding could
reasonably result in a conviction for a felony; (v) an act or acts of dishonesty
on the Executive's part intended to result or resulting in substantial gain or
personal enrichment to him at
-6-
<PAGE>
the expense of the Company or (vi) a material breach of the Parent's Code of
Business Conduct or other policies governing employee conduct.
(C) In the event the Executive's employment is terminated by the
Company without "Cause" or by the Executive with "Good Reason," the Executive
shall have the right to receive (a) the Compensation payable under Section 3 and
(b) continuation of the benefits in which the Executive is participating under
Section 4 on the date of termination, in each case for the remaining term of
this Agreement following the date of such termination without "Cause." The
amount payable under (a) above shall be paid in a lump sum within 30 days of the
date of the Executive's termination without "Cause."
(D) "Good Reason" shall mean, without the Executive's express
prior written consent, the occurrence of any one or more of the following:(i)
The assignment of the Executive to duties materially inconsistent with the
Executive's authorities, duties, responsibilities, and status (including titles
and reporting requirements) as an officer of the Company, or a material
reduction or alteration in the nature or status of the Executive's authorities,
duties, or responsibilities from those in effect as of the effective date (or as
subsequently increased), other than an insubstantial and inadvertent act that is
remedied by the Company promptly after receipt of notice thereof given by the
Executive; (ii) The Company's requiring the Executive to be based at a location
in excess of twenty five (25) miles from the location of the Executive's
principal job location or office as of the effective date, except for required
travel on the Company's business to an extent substantially consistent with the
-7-
<PAGE>
Executive's present business obligations; (iii) A reduction by the Company of
the Executive's Base Salary as in effect on the effective date, or as the same
shall be increased from time to time; (iv) A failure by the Company to provide
the benefits described in Section 4, other than an immaterial failure that is
remedied by the Company promptly after the receipt of timely notice thereof
given by the Executive. For this purpose, the Company may eliminate and/or
modify existing programs and coverage levels; provided, however, that the
Executive's level of coverage under all such programs must be at least as great
as is such coverage provided to executives who have the same or lesser levels of
reporting responsibilities within the Company's organization;
(E) Any provision hereof to the contrary notwithstanding, if
this Agreement shall not have previously expired or the Executive's employment
hereunder shall not have otherwise been sooner terminated, the Executive's
employment hereunder shall automatically terminate upon:
(i) the Executive's becoming physically or mentally disabled so as to
be unable to perform the essential duties of his employment with
or without reasonable accommodation for a period aggregating six
months in any twelve (12) month period; provided that the
Executive shall be entitled to continue to receive his then
effective annual salary, in such installments and intervals as
then payable, less the sum of any payments to which the Executive
or the Executive's family may then be entitled under Social
Security, the Company's disability insurance plan, if any, and
any other source of disability income, for the balance of the
then remaining term hereunder or six months, whichever is longer,
but only for so long as the Executive is living; or
(ii) the Executive's death; provided that the Executive's widow shall
be entitled to receive payments equal to fifty (50%) percent of
the Executive's then effective annual salary, less the sum of
payments
-8-
<PAGE>
to which the Executive's widow may then be entitled under Social
Security, and the Company's pension or retirement plans, if any,
for the balance of the then remaining term hereunder or six (6)
months, whichever is longer, but only for so long as the
Executive's widow survives him.
(F) Upon the expiration of this Agreement or the sooner
termination of the Executive's employment hereunder, the Executive shall
promptly return all copies of all documents and records reflecting any trade
secrets, confidential information, formulae, proprietary data or other matter
pertaining to the business of the Company, its customers or suppliers, to which
access by the public is restricted, all of which are and shall remain the
Company's property. The Company may withhold any monies due the Executive
hereunder or otherwise until all such property is returned.
7. Confidential Information:
------------------------
Executive acknowledges that the Company owns, possesses or controls
trade secrets, proprietary information, formulae, methods, products, processes,
data customer lists, sources of supply, and other information pertaining to the
business of the Company (singly and collectively, the "Confidential
Information") , that it may from time to time develop or improve upon such
Confidential Information, and acquire additional Confidential Information,
sometimes from third parties upon the express condition that such Confidential
Information will not be disclosed, that all of such Confidential Information
constitutes a unique and valuable asset of the Company, and that disclosure of
any such Confidential Information to or use by anyone other than in the ordinary
course of the Company's business and for its benefit would result in irreparable
and continuing damage to the Company. The Executive shall keep all such
-9-
<PAGE>
Confidential Information and other matters pertaining to the business of the
Company, its customers or Suppliers, which is not generally available to the
public, in strict secrecy and confidence, and shall not at any time during the
term of his employment hereunder, or thereafter for so long as access thereto is
not generally available to the public, directly or indirectly, make use of,
disclose or furnish to any person, firm or Company or other third party any such
Confidential Information, nor participate in the use, disclosure or publication
of any elements thereof, either alone or in conjunction with others, except as
may be required in the ordinary course of the Company's business, or as may be
mandated under applicable law by competent authority.
8. Executive Knowledge:
-------------------
(A) Executive shall from time to time communicate and make known
to the Company all knowledge possessed by him relating to any methods,
developments, inventions or improvements, whether patented, patentable or
unpatentable, which relate to the business of the Company, whether acquired by
him prior to or during his employment by the Company; provided, however, that
nothing herein shall be construed as requiring any such communication where the
method, development, invention or improvement is lawfully protected from
disclosure as the trade secret of a third party or by any other lawful bar to
such communication existing prior to the commencement of such employment.
(B) Any such methods, developments, inventions or improvements,
whether patentable or unpatentable, which Executive may conceive of or develop
while in the Company's employ, shall be and remain the exclusive property
-10-
<PAGE>
of the Company. Executive shall, on request, execute patent applications, and
any other records or memoranda requested by the Company, utilizing,
incorporating or based on any such methods, developments, inventions or
improvements, including instruments deemed necessary by the Company for the
prosecution of any patent application or the acquisition of Letters Patent in
this, any foreign country, or otherwise.
(C) Executive shall keep records in connection with his
employment as the Company may from time to time direct, and all such records
shall be the sole and exclusive property of the Company. At any time and from
time to time, within five (5) days after the Company's request, Executive shall
surrender to the Company any and all documents, memoranda, books, papers
letters, price lists, notebooks, reports, logbooks, code books, salesmen
records, customer lists, activity reports, video or audio recordings, computer
programs, any and all data and information, and any and all copies thereof
relating to the Company's business or any Confidential Information.
9. Restrictive Covenants:
---------------------
(A) The services of Executive are unique, extraordinary and
essential to the business of the Company, particularly in view of Executive's
access to Confidential Information. Accordingly, if the Executive's employment
by the Company shall at any time be terminated for any reason whatsoever (other
than as a result of the Company's failure to make payments due to Executive
hereunder), for a period equal to eighteen (18) months, twelve (12) months if
the Executive's employment is terminated by the Company without Cause or by the
Executive for Good Reason, commencing with
-11-
<PAGE>
the date of such termination without the Company's prior written approval, the
Executive shall not, actively or inactively, directly or indirectly, for himself
or for others (i) employ, become employed by, or associate in any business
relationship with any person who was an employee of the Company, or any
business, partnership, association, corporation or other entity which was
affiliated with, or was a customer or supplier of the Company, during the twelve
(12) month period preceding such termination, where such employment, association
or relationship would result in the Executive's being engaged in a commercial
enterprise which competes with or contemplates competing with the Company; nor
(ii) engage in any business which competes or then contemplates competing with
the Company; nor (iii) solicit for competitive purposes any prospective or
existing account of the Company which at the time of such termination was then
actively being solicited by or doing business with the Company; nor (iv)
purposefully affect to the Company's detriment any relationship of the Company
with any customer, supplier or employee of the Company or cause any customer or
supplier to refrain from entrusting additional business to the Company. In the
event that any of the provisions of this Section 8 shall be adjudicated to
exceed the time, geographic or other limitations permitted by applicable law in
any jurisdiction, then such provision shall be deemed reformed in such
jurisdiction to the maximum time, geographic or other limitations permitted by
applicable law.
(B) As specifically used in Sections 6, 7 and 8 hereof as well
as in this Agreement throughout, the term "Company" shall mean and include any
parent
-12-
<PAGE>
or subsidiary of the Company, as well as any and all corporations or other
entities as may succeed to all or substantially all of the business or assets of
the Company.
10. Injunctive Relief: The Executive acknowledges that the Company's
------------------
remedies at law for the breach of any of the confidentiality or other
requirements and restrictive covenants of Sections 6, 7 or 8 of this Agreement
would be inadequate, that the harm to the Company's business likely to arise
from any threatened or actual breach thereof would be material and irreparable,
and, accordingly, that the Company shall be entitled to enforce such
requirements and restrictive covenants by temporary and permanent injunction or
other mandatory remedies restraining the Executive from committing or continuing
any threatened or actual violation of such requirements or restrictive
covenants, without the necessity of proving damages and without prejudice to any
other rights and remedies available to the Company under this Agreement or
otherwise, at law or in equity.
11. Notices: All notices or other communications required or
-------
permitted to be given hereunder shall be in writing and shall be deemed
sufficient if delivered against receipt or mailed by registered or certified
mail, return receipt requested, as follows: if to the Company, to its offices at
272 Buffalo Avenue, Freeport, New York 11520, or such other address as the
Company may hereafter designate for that purpose; and if to the Executive, to
him at 9 Gilder Court, Northport, NY 11768, or such other address as he may
hereafter designate for that purpose.
12. Binding Effect: This Agreement shall be binding upon and inure to
---------------
the benefit of the legal representatives, successors and permitted assigns of
the
-13-
<PAGE>
parties, including any corporation or other entity into which the Company may
consolidate or merge or to which it may transfer substantially all of its
assets, provided that the rights and obligations of the Executive hereunder
shall not be assignable or delegable without the prior written consent of the
Company.
13. Merger: This Agreement is intended as the final and sole
-------
expression of the agreement between the parties regarding the subject matter
thereof. Neither party shall be bound by any representations, promises or
inducements not set forth herein, none of which have been made or relied upon in
the making of this Agreement. No change, modification, discharge or termination
of any of the provisions of this Agreement or the obligations of either party
thereunder shall be valid unless in writing signed by the parties hereto.
14. Waiver: Any waiver by either party hereto of any right, default,
-------
terms, conditions, options or remedies hereunder in any one or more instances
shall not thereafter be deemed a waiver of the future enforceability of any such
right or of any subsequent default, or any such term, condition, option or
remedy.
15. Severability: The invalidity or unenforceability of any
-------------
paragraph, term or provision hereof shall in no way affect the validity or
enforceability of the remaining paragraph, terms and provisions thereof. In any
such event, it is the parties' intention and agreement that any such paragraph,
term or provision which is held or determined to be unenforceable, as written,
shall nonetheless be in force and binding
-14-
<PAGE>
to the fullest extent permitted by law as though such paragraph, term or
provision had been written in such a manner and to such an extent as to be
enforceable under the circumstances. Without limiting the foregoing, with
respect to any confidentiality requirement or restrictive covenant contained
herein, if it is determined that any such provision is excessive as to duration
or scope, it is intended that it nevertheless be enforced for such shorter
duration or with such narrower scope as will render it enforceable.
16. Headings: Headings to paragraphs contained herein are for
---------
reference purposes only and are not to be given any substantive effect or
meaning.
17. Governing Law: This Agreement has been made in the State of New
--------------
York, shall be interpreted and construed in accordance with the laws of that
State, without giving effect to conflict of law and principles requiring the
application of the substantive laws of another jurisdiction.
IN WITNESS WHEREOF, the parties hereunto have duly executed this
Agreement as of the day and year first above written.
LEARONAL, INC.
By:__________________
-15-
